Boland v Yates Property Corporation Pty Ltd

[1999] HCA 64

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GAUDRON, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

Matter No S24/1999

JOHN BOLAND  APPELLANT

AND

YATES PROPERTY CORPORATION
PTY LIMITED & ANOR  RESPONDENTS

Matter No S28/1999

JOHN WEBSTER  APPELLANT

AND

YATES PROPERTY CORPORATION PTY
LIMITED & ANOR  RESPONDENTS

Boland v Yates Property Corporation Pty Limited
Webster v Yates Property Corporation Pty Limited
[1999] HCA 64
9 December 1999
S24/1999 and S28/1999

ORDER

1. Appeals allowed with costs.

1. Set aside the orders of the Full Court of the Federal Court of Australia made on 5 August 1998 (as varied by the orders made on 30 November 1998), and in place thereof, order that the appeals to that Court (other than the appeal of Ian Francis Yates against the order as to costs made against him by Branson J on 14 August 1997) are dismissed with costs.

1. Remit to the Full Court for further consideration the appeal of Ian Francis Yates against the orders as to costs made against him by Branson J on 14 August 1997.

2.

On appeal from the Federal Court of Australia

Representation:

Matter No S24/1999

R B S Macfarlan QC with A G Bell for the appellant (instructed by
Minter Ellison)

D M Quick QC with C D Curtis for the respondents (instructed by Bruce and Stewart)

Matter No S28/1999

D F Jackson QC with S T White and E A White for the appellant (instructed by Moray and Agnew)

D M Quick QC with C D Curtis for the respondents (instructed by Bruce and Stewart)

Notice:  This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Boland v Yates Property Corporation Pty Limited
Webster v Yates Property Corporation Pty Limited

Negligence – Professional negligence – Legal practitioners – Standard of care.

Acquisition of land – Determination of compensation – Special value of land to dispossessed owner – Theory of "head start" to developers.

Legal practitioners – Professional liability – Negligence – Barristers and solicitors – Immunity from action.

Words and phrases – "market value" – "special value" – "head start".

Trade Practices Act 1974 (Cth), s 52.
Public Works Act 1912 (NSW), s 124.
Darling Harbour Authority Act 1984 (NSW), s 12C.

1. GLEESON CJ.   These two appeals were heard together.  They arise out of actions for damages for professional negligence.

2. Each appellant is a legal practitioner.  The first respondent, Yates Property Corporation Pty Limited ("Yates") was the client of the appellants.  The first appellant, Mr Boland, was sued by Yates as a representative of Abbott Tout Russell Kennedy ("Abbott Tout"), a firm of solicitors engaged to act for Yates in the conduct of a compensation claim before the Land and Environment Court of New South Wales.  The second appellant, Mr Webster, is a barrister who acted as junior counsel in the proceedings before the Land and Environment Court.  Mr Webster was led in those proceedings by Mr Simos QC, who was also sued by Yates.  The second respondent to each appeal, Mr Yates, is the controlling shareholder of Yates.  He was not a party to the original actions brought by Yates, but was joined in the proceedings when an order for costs was sought and made against him.

3. The actions were all heard by Branson J in the Federal Court.  She found in favour of the defendants[1].

   [1]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169.

4. Yates instituted two appeals against the judgments of Branson J on liability (No NG 495 of 1997) and costs (No NG 716 of 1997).  Mr Yates appealed from that part of the judgment against him on costs (No NG717 of 1997).  The appeals were consolidated by an order made on 22 September 1997.  Orders for security for costs were made against Yates by Davies J in favour of each of the respondents, including Mr Simos.  No security was provided in respect of Mr Simos and, on 13 February 1998, Davies J ordered that the appeals by Yates against Mr Simos be dismissed.

5. The Full Court (Drummond, Sundberg and Finkelstein JJ) allowed the appeals which remained on foot[2].  It ordered Mr Boland and Mr Webster to pay the costs of the appeals by Yates.  (Nos NG 495 and 716 of 1997).  It ordered those parties and Mr Simos to pay the costs of the appeal by Mr Yates.

   [2]Yates Property Corporation v Boland (1998) 85 FCR 84.

6. Although the primary claim made by Yates against its former legal representatives was for damages for negligence, (including, in the case of the solicitors, breaches of a contractual obligation to exercise care and skill), Yates relied on other causes of action, including allegations of contraventions of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW), (misleading and deceptive conduct), and allegations of breaches of fiduciary duty. Those other claims also failed before Branson J. Subject to one qualification, it was not suggested that they added anything to the claims based on professional negligence. The matter was argued, both in the Federal Court and in this Court, upon the basis that, if Yates could not succeed in establishing professional negligence, it could not make out the factual foundation for its other causes of action. The qualification relates to the question of an immunity claimed by all defendants. Having regard to the way in which they decided the case, it was unnecessary either for Branson J, or for the Full Court, to deal with the question whether the immunity from suit relied upon by Mr Boland and Mr Webster would have defeated the other causes of action. Branson J held there was no negligence. The Full Court of the Federal Court held there was negligence, but that such negligence was not covered by any immunity. It would only be if this Court were to uphold the finding of negligence, but to conclude that it was covered by the immunity, that a question as to the significance of the other causes of action would arise.

7. In order to explain the nature of the allegations of professional negligence, and the issues to which those allegations have given rise, it is necessary to examine, in some detail, the litigation out of which they arose.  The course of that litigation was complicated.  The original compensation proceedings were heard by Cripps J, the Chief Judge of the Land and Environment Court, in early 1990[3].  Both parties were dissatisfied with the outcome.  There was an appeal, and a cross appeal, to the Court of Appeal of New South Wales.  That appeal was heard in late 1990, and judgment was given in July 1991[4].  The Court of Appeal (Kirby P and Handley JA, Mahoney JA dissenting) allowed the appeal in part, allowed the cross appeal, and remitted the proceedings to the Land and Environment Court for rehearing on certain issues.  The matter was reheard before Cripps J in March 1992[5].  At that stage Yates terminated the retainer of Abbott Tout and instructed other solicitors to lodge a further appeal to the New South Wales Court of Appeal.  In November 1992, the further appeal was settled on the basis of payment to Yates of an additional amount.  That put an end to the primary litigation.  Yates then pursued claims against its former legal representatives.

   [3]Yates Property Corporation Pty Ltd v Darling Harbour Authority (1990) 70 LGRA 187.

   [4]Yates Property Corporation Pty Ltd (in liquidation) v Darling Harbour Authority (1991) 24 NSWLR 156.

   [5]Yates Property Corporation Pty Ltd (in liquidation) v Darling Harbour Authority, unreported, Land and Environment Court of New South Wales, Cripps J, 1 April 1992.

8. During the course of the relevant events, Yates went into liquidation.  That fact, and the respective roles of the liquidator, and the second respondent, were material to some aspects of the case, but they are not presently significant, and may be disregarded.

   The primary litigation

9. In 1981 Yates purchased land in the Darling Harbour area.  The purchase price was $5.1 million.  Yates decided to investigate the possibility of developing the land as a retail market place.  The company sought expressions of interest from prospective stallholders, and obtained written agreement from 40 of them to take a stall if the market were constructed.  In 1983, consultants were engaged to carry out the work necessary to obtain approval from the Sydney City Council to develop the land as a market.  Such approval was given.  Yates also engaged architects to prepare plans for a market building.  In 1984 the existing structures on the land were demolished and a builder was retained to carry out the construction of the building in accordance with the plans that were prepared.  In July 1984 Yates obtained the authority of the Sydney City Council to construct a market building that would house 896 market stalls.  Expenditure incurred to reach that stage exceeded $2.7 million. 

10. In June 1984 it was announced by the New South Wales Director of Public Works that the land was likely to be resumed for the purposes of the Darling Harbour Authority.  Yates was told to hold its development proposals in abeyance.  In May 1985 the land was acquired by the Darling Harbour Authority pursuant to the Darling Harbour Authority Act 1984 (NSW).  Pursuant to s 12C of the Darling Harbour Authority Act, Yates was entitled to receive compensation.  A claim for compensation was to be dealt with as if it were a case in which a claim had been made by reason of the acquisition of land for public purposes under the Public Works Act 1912 (NSW). The Public Works Act contained provisions setting out the basis on which compensation was to be calculated. By virtue of s 124 of that Act, for the purpose of ascertaining the compensation to be paid, regard was to be had to the value of the land taken, and to the damage (if any) caused by the severing of the land taken from any other lands of the owner or by the exercise of any other powers by the resuming authority otherwise injuriously affecting such other lands. Jurisdiction to deal with any disputed claim for compensation was vested in the Land and Environment Court.

11. The function of the court was to assess the compensation payable according to the value of the land at the time the land was resumed. The "value of the land" means "value of the land to the owner"[6]. What is to be noted, however, is that the basis of compensation was the value of the land taken and not, apart from the specific kinds of damage referred to in s 124, the general or particular financial harm otherwise suffered by Yates as a consequence of the resumption.

    [6]Pastoral Finance Association Ltd v The Minister [1914] AC 1083.

12. The parties to the proceedings in the Land and Environment Court were Yates as applicant and the Darling Harbour Authority as respondent.  Mr Simos QC and Mr Webster, instructed by Abbott Tout, appeared for Yates.  The proceedings lasted for eight weeks.  Forty-one witnesses were called, more than 20 of whom were experts dealing with matters such as town planning, financial feasibility, and valuation. Six expert valuers were called.  Their valuations of the subject land ranged between $12.74 million and $75 million.  On behalf of the Darling Harbour Authority, Mr Weir assessed the value at $12.74 million, Mr Vaughan, a valuer from the Valuer-General's Department, assessed the value at $16.75 million and Mr Gilbert assessed the value at $16.6 million.  Three valuers were called on behalf of Yates.  Each was found in the Federal Court to be an experienced and highly regarded expert in his field.  Mr Parkinson fixed compensation at $75 million, made up of "market value" of $53 million and "special value" of $22 million.  Mr Woodley valued the land at $60.6 million, including special value.  Mr Egan fixed a market value, based on comparable sales, of $27 million, to which he added $10.8 million for "special value".  The range of the six valuations, in relation to land which had been acquired in 1981 for $5.1 million, indicates, if any indication be necessary, that the valuation of land is not an exact science.

13. At the conclusion of the first hearing, Cripps J fixed compensation in the sum of $22,334,500. 

14. One of the issues raised and argued before Cripps J was whether compensation ought to be fixed on the basis that the land had a "special value" to Yates.  It is convenient to say something briefly about that concept at this point.  It will be necessary to return to it in due course.

15. It was common ground that the starting point for the determination of the value of land was the principle stated in Spencer v The Commonwealth[7], that is to say, to consider, from the point of view of persons conversant with the subject at the relevant time, what, according to then current opinion of land values, a willing but not anxious purchaser would have to offer to induce a not unwilling vendor to sell the land.  That is the market value.

    [7](1907) 5 CLR 418 at 432.

16. In some circumstances, land may have a "special value", which reflects a value to the owner over and above the price which a hypothetical purchaser may pay.  What is often referred to as a useful explanation of the concept appears in Pastoral Finance Association Ltd v The Minister[8].  That was a case in which a dispossessed owner conducted a wool and meat freezing business on Kirribilli Point across Sydney Harbour from Darling Harbour.  The business expanded, and the owner bought land at Darling Harbour, which was a site to which the business could suitably have been transferred.  The owner then obtained plans and estimates for the erection of buildings adapted to the needs of the business.  Before commencement of the erection of the buildings, the owner learned of an intended resumption, and did not proceed with construction.  The land was resumed.  The Privy Council said[9]:

    "That which the appellants were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land, but for the value of the land to them.  No doubt the suitability of the land for the purpose of their special business affected the value of the land to them, and the prospective savings and additional profits which it could be shewn would probably attend the use of the land in their business furnished material for estimating what was the real value of the land to them.  But that is a very different thing from saying that they were entitled to have the capitalized value of these savings and additional profits added to the market value of the land in estimating their compensation.  They were only entitled to have them taken into consideration so far as they might fairly be said to increase the value of the land.  Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it."

    [8][1914] AC 1083.

    [9][1914] AC 1083 at 1088-1089.

17. The three valuers called on behalf of Yates each expressed an opinion that the subject land had a special value.  Mr Parkinson, for example, having expressed an opinion as to the market value of the land, went on to assess special value by reference to what it would cost to acquire an alternative market[10].  This he treated as a basis for estimating an amount, in addition to market value, which a hypothetical purchaser in the position of the owners would have been willing to pay to return the subject land.

    [10]Yates Property Corporation v Boland (1998) 85 FCR 84 at 89.

18. In his reasons for judgment, Cripps J did not adopt and apply the opinions of any one of the valuers who gave evidence.  Rather, his Honour made comments on some aspects of the valuation evidence, expressed a preference for some parts of it over others, and then stated his own conclusions.

19. In relation to the matter of special value, Cripps J made particular reference to Pastoral Finance Association Ltd v The Minister, Housing Commission of New South Wales v Falconer[11], and Kennedy Street Pty Ltd v The Minister[12].  He accepted that the subject land had "a special value".  He rejected a submission made by the Authority that the principle enunciated in the Pastoral Finance case could have no application to vacant land or, if it could, could have no application to vacant land where the dispossessed owner was not carrying on a business elsewhere[13].  Cripps J said[14]:

    "I am of the opinion that conformably with the above-mentioned authorities, the subject land did have a 'special value' to Yates.  That is, a purchaser in the position of Yates would have regard to the potentiality of the subject site by reason of its size and location for use as a market and for that reason would be prepared to pay something above the land value rather than not obtain it."

    [11][1981] 1 NSWLR 547.

    [12][1963] NSWR 1252.

    [13](1990) 70 LGRA 187 at 200.

    [14](1990) 70 LGRA 187 at 201.

20. Later, his Honour said[15]:

    "Yates did a considerable amount of work in preparation for the markets.  It hoped it could replace Paddys [Markets] but if it could not it was prepared to compete with it.  Of special significance is the circumstance that approximately 718 recorded registration forms were received from people interested in becoming stall holders at the Harbour Street markets.  Each paid $50 to register interest.  Perhaps of more significance is the circumstance that about forty people paid rent in advance, about $100,000 for the right to occupy stalls in the market yet to be built.

    …

    Having regard to the evidence of Mr Byrne and Mr Banks, I am of the opinion that a prudent purchaser in the position of Yates would have considered that there was some potential for a successful market and there was a possibility that such a market would be highly successful.  However, he would also be aware that there was a risk of failure and a high risk that the markets would not function at anything like the profit levels forecast by Mr Dimasi."

    [15](1990) 70 LGRA 187 at 203-204.

21. After considering the evidence of individual valuers, including evidence of special value, Cripps J said[16]:

    "As will be seen, I have fixed compensation by reference to a rate per square metre derived from comparable sales.  In arriving at my conclusion, I have had regard to relevant comparable sales and to what I find to be the special value of the land to Yates.  Yates had available a large area of land which had the potential for use as a market.  The subject land was close to the CBD and Chinatown and within an area where market use was established albeit under the authority of the State.  It presented Yates with an opportunity to establish a profitable market of the type proposed.  It is true that in part the opportunity available to Yates was the result of the entrepreneurial skills of Mr Yates.  On my understanding of the authorities, I can make no allowance in favour of Yates for this because Yates' entrepreneurial skills were not affected by the resumption.  (In the proceedings I was asked to assume an identity between Mr Yates and his corporation.)  But the opportunity also arose by reason of the size of the land and its location.  In my opinion, it is that which gave the land a special value to Yates.  Because, as I find, there was no other land immediately available for market purposes, upon resumption Yates lost the opportunity to exploit its land for its market potential.  As I have said, I do not accept that a reasonably minded purchaser would have accepted Mr Dimasi's figures without qualifications and that he would have paid almost no regard to Mr Parkinson's estimates.  Nonetheless, the expressions of interest received by Yates and the receipt of almost $100,000 rent in advance before any building works were undertaken support Yates' optimism concerning the success of the market.  Yates had development consent and building approval from the Sydney City Council.  In my opinion, someone in Yates' position would have been prepared to have paid something more than what I might describe as 'land value' sooner than lose it."  (emphasis added).

    [16](1990) 70 LGRA 187 at 210.

1. Cripps J did not make separate assessments of market value and special value, but included special value in the compensation which he ultimately fixed in the sum of $22,334,500.

2. Yates appealed to the Court of Appeal of New South Wales, and the Darling Harbour Authority cross appealed.  At the hearing of the appeal, both sides agreed that Cripps J had made one error, although there was argument as to whether it was an error of fact or an error of law.  In the course of his judgment, Cripps J said that no claim was made by Yates for abortive expenditure.  This was a reference to expenditure incurred in relation to the proposal to develop and use the land as a market.  Before the Court of Appeal, both sides agreed that this was an error, and that Yates had claimed that a sum of $217,443.78 should be taken into account.

3. One of the other issues the subject of argument in the appeal concerned special value apart from the matter of abortive expenditure.  The Darling Harbour Authority argued that Cripps J erred in holding that special value could be taken into account in the circumstances of the case.  That argument failed.  Mahoney JA was of the view that there was no demonstrated error of law in the approach taken by Cripps J to the matter of special value.  With that view, Kirby P and Handley JA disagreed, but the extent of their disagreement was limited.

4. Kirby P said[17]:

   "It is incontestable, following Pastoral Finance, that the appellant was entitled to compensation for 'special value' if it could establish that it qualified for such compensation.  Cripps J concluded that it had so qualified.  However, the basis upon which he so concluded is unclear.  In so far as it is explained it appears to relate to considerations apt for the assessment of 'market value' and insufficient for the determination of 'special value'.  It therefore appears that an error in law has occurred in the provision of reasons which entitles the appellant to have its claim for 'special value' compensation re-determined.  It could not be re-determined by this Court.  The re-determination should carefully avoid the danger of duplicating compensation for aborted expenditure and 'special value' to the owner."

   [17](1991) 24 NSWLR 156 at 162.

5. Certain observations made in the reasons for judgment of Handley JA were later taken up in support of the claim for professional negligence now advanced.  In dealing with the matter of special value, Handley JA criticised the reasons of Cripps J as ambiguous.  He referred to a submission made on behalf of the Darling Harbour Authority that the case of Kennedy Street Pty Ltd v The Minister[18], upon which Mr Simos had relied, was wrongly decided, and rejected that submission.  He noted the acknowledged error in relation to the abortive expenditure.  He also referred to a line of authority relating to the duty of a judge to give adequate reasons to explain a judicial decision.

   [18][1963] NSWR 1252.

6. Handley JA, in discussing the claim for special value, and the decision in  Kennedy Street Pty Ltd v The Minister, referred to the work done by Yates which confirmed the suitability of the subject land for use as a market in the hands of any owner.  This, his Honour said, was a factor which, in accordance with Spencer, would be taken into consideration by any prudent purchaser.  However, in relation to the information which Yates had obtained concerning the names and addresses of persons expressing interest, and of persons prepaying rent, Handley JA said that the documents recording that information would not pass to a purchaser on a sale of the land.  (That proposition has been contested on this appeal.  The appellants contend that Handley JA appears to have assumed that, as an act of self-denial, a vendor would decline to provide a purchaser with information which might motivate the purchaser to pay more for the subject land).  His Honour referred to a Western Australian case on the subject of stamp duty, which turned upon the conclusion that a hypothetical purchaser would not be entitled to such a document.  Handley JA said [19]:

   "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."

   [19](1991) 24 NSWLR 156 at 187.

7. This, it may be noted, was a rather narrow basis for a claim of special value, and was unlikely to have been of such significance having regard to the amounts of money involved in the dispute as to market value.  Furthermore, the criticism which the present appellants make of the reasoning behind it is valid.

8. Handley JA went on to say[20]:

   "The findings by the trial judge in relation to the other matters which made the land suitable for markets raised questions of law as to which of them were relevant to market value and which were relevant only to special value.  It is not clear whether [Cripps J] misdirected himself in deciding these questions and indeed whether they were decided in favour of the appellant or the Authority."

   [20](1991) 24 NSWLR 156 at 188.

9. In brief, putting to one side the abortive expenditure, and the documents recording information about prospective tenants, Handley JA's decision concerning special value turned upon the proposition that it was impossible to tell from the reasons of Cripps J whether he had given proper consideration to the question of special value, and to the relationship between market value and special value.

10. Handley JA said, in a passage that turned out to be critical,[21]:

    "The existence of the appellant's work etc may have given the appellant an advantage or head start over other purchasers in the development of markets on this land.  The judge made no finding to that effect.  If such an advantage or head start did exist it would generally be worth money to a developer in the position of the owner.  Hence it would generally give rise to some special value.  These issues raise questions of fact.

    However it is impossible to determine on the face of his Honour's reasons whether he made any allowance for special value determined on this basis.  Had his Honour separately assessed a sum for special value this problem may not have arisen."  (emphasis added)

    [21](1991) 24 NSWLR 156 at 188.

11. Later, Handley JA said [22]:

    "In my respectful opinion the trial judge failed to give a sufficient indication of the basis of his decision on the question of special value and he therefore erred in law.

    It may be that during the trial neither party supported a finding of special value based on Kennedy Street.  However facts were found capable of supporting such a finding and the judge may have found special value on this basis.  While he may not have erred in law in ignoring an entitlement to special value which was not relied upon, at the same time he would not have erred in law if he allowed for an element of special value which lay between the forensic positions adopted by the parties.

    The existing evidence may, or may not, enable the amount of such special value, if any, to be fixed with precision.  The principles previously referred to may nevertheless enable a judicial valuer to arrive at a proper award.  In any event the appellant has its alternative claim for abortive expenditure.

    In remitting these issues for further determination I should make it clear that the appellant is not entitled to compensation for both the expenditure it incurred and any increased market or special value produced by that expenditure.  The development and building approvals eliminated uncertainty and reduced the risks costs and delay faced by a purchaser wishing to establish markets on the land.  Accordingly they would have increased the price which a prudent purchaser wishing to use the land for that purpose would have been prepared to pay.  The appellant would not also be entitled to the cost of obtaining such approvals.  Such expenditure would not have been abortive.

    The expenditure incurred other than in securing such approvals may have contributed to any special value which the land had for the appellant.  It would be entitled to compensation for the loss of such special value but, in that event, not for the expenditure which created it.  If the expenditure incurred was greater than the special value it created the difference was lost to the appellant for reasons other than the resumption and cannot be allowed for.  If the special value created exceeded its cost the appellant would be entitled to compensation for the higher figure.  In many cases no doubt parties agree to compensation being awarded for expenditure rendered abortive by the resumption without an elaborate inquiry into whether it was all productive or whether the value it created was greater than its cost."

    [22](1991) 24 NSWLR 156 at 189.

12. In the above passage, his Honour speculated that it may be that during the trial neither party supported a finding of special value based on Kennedy Street.  At the trial, the Darling Harbour Authority argued that no claim for special value was available.  The written submissions and the record of oral argument show that Yates undoubtedly made a claim for special value based particularly on Kennedy Street.  Cripps J referred to Kennedy Street in support of his finding of special value.

13. When the case went back to Cripps J, Mr Simos, for Yates, endeavoured to tender additional evidence said to be relevant to the claim for special value. In brief, that evidence fell into two categories.  First, there was an attempt to put a modest value, ($79,000), upon the documents containing information about potential occupiers of the proposed markets, which Handley JA had suggested could have a separate value.  Secondly, there was evidence relating to the costs, estimated at several million dollars, of re-locating the proposed markets to a different site.  As will appear, the nature of that evidence was misunderstood by the Full Court of the Federal Court.  Cripps J rejected the evidence on the ground that it added nothing material to what he already knew.  However, he added the abortive expenditure of $217,443.78, which included expenses incurred in consequence and in furtherance of the development and building approvals, costs of conducting investigations in relation to the proposed markets, and expenses incurred in signing up proposed stallholders, to the amount he awarded.

14. Cripps J summed up his conclusions as follows, referring in part to his earlier reasons:

    "I adopted a per square metre estimate of the value of the land.  I said that compensation payable for the acquisition of the Harbour Street land should be fixed at a square metre rate of $1450 per square metre and the James Street land at $1500 per square metre (less $58,000 demolition costs).  I do not understand that method to be inappropriate provided, of course, that I did not duplicate compensation.  In an endeavour to put an end to this litigation, I indicate that I fix (and did fix) the sum of approximately $35 per square metre on the Harbour Street property as 'the special value' component of the compensation.  That amounted to approximately $500,000 being the amount of money over and above the 'market value' a person in the position of Yates would have paid sooner than not obtain the land because of the special value the land had to Yates by reason of the work done and expenditure incurred and referred to in the decision of Handley JA.

    I have been asked to add to the compensation I awarded the sum of $217,443.78.  As I have said, a part of that was referrable to expenditure incurred in actually obtaining these expressions of interest.  I do not think, however, that it is appropriate to deduct that sum from the figure agreed upon ie $217,443.78.  When I considered the 'special value' to Yates, I knew that some money had been spent but I paid no particular regard to the actual amount because I was of the opinion that, however Yates acquired that interest, it was relevantly of special value to it.  I propose to allow all the amounts in exhibit 14 as 'abortive expenditure' and in doing so I have been careful not to duplicate compensation.

    In accordance with these findings, I fix compensation for the resumption of both parcels of land in the sum of $22,551,944."

15. As was noted above, Yates again appealed to the Court of Appeal.  This further appeal was compromised, the Darling Harbour Authority agreeing to pay Yates an additional sum of $1.25 million.  The additional amount paid by the Darling Harbour Authority to settle the threatened second appeal to the Court of Appeal is not presently material.  In brief, it involved an agreement to pay a sum to Yates based on stamp duty and legal and other expenses that would have been incurred in relation to acquiring an alternative site.  Since it was paid by way of a negotiated settlement, it is fruitless to consider the legal basis on which the payment was justified.  Perhaps it could be explained by reference to "disturbance", a concept which will be considered below.  It seems to have had nothing to do with "head start".  That also gave rise to a misunderstanding on the part of the Full Court of the Federal Court.

    The alleged negligence

16. Yates sued Mr Simos, Mr Webster, and Abbott Tout, in the Federal Court, asserting that it had suffered financial loss by reason of the fact that the "special value" aspect of its claim for compensation had not been adequately presented, and that this was a consequence of breach of professional duty by each of the defendants.

17. At the time of the primary litigation, Mr Simos was a senior member of the New South Wales Bar, with substantial experience in land and valuation matters.  He had appeared as junior to Mr Mahoney QC in the Kennedy Street case.  Mr Webster, as well as being a junior barrister, was himself a qualified valuer, and had worked for a number of years as an officer in the New South Wales Valuer-General's Department.  There has never been any suggestion that Abbott Tout were negligent in the selection of counsel to represent the interests of Yates in the primary litigation.  On the contrary, the negligence action was conducted upon the basis that Yates was represented in the primary litigation by experienced senior and junior counsel who had a reputation for competence in the field which warranted their being retained on behalf of Yates.

18. The central criticism which Yates made of the lawyers was that they failed to identify, and pursue, by way of evidence and argument, what has come to be called "the head start case".  That expression is taken from one of the passages in the reasons of judgment of Handley JA set out above.  The contention was that Yates, at the resumption date, was in a position of advantage relative to any other prospective purchaser wishing to build markets on the land.  That position was said to have arisen by reason of a number of matters which may be summarized as follows:

    1.Yates had undertaken investigations and market research concerning the use of the land for the purpose of markets.  Those investigations and research had brought it to the point, by June 1984, of receiving registrations of interest in the markets proposal from prospective stallholders.  Those registrations of interest accounted for more than 100% of the available space.  Yates had also procured licence agreements and prepaid rents from a number of interested participants.

    2.Yates had undertaken work and incurred expenditure in designing and obtaining development and building approvals for a structure on the land to house the markets and a carpark.  By mid 1984 all relevant Council consents (subject to satisfaction of conditions) had been obtained.

    3.Further preparation had been undertaken for the construction of the structure by the preparation of working drawings relating to the final form of the building.

    4.Yates had negotiated with the Sydney City Council to purchase from the Council a property at 23 Pier Street, Haymarket, to be used for car parking associated with the markets in order to comply with the conditions of the amended development consent.  Yates was also the assignee of leasehold interests in lands owned by the State Rail Authority which was adjacent to the resumed land and which was to be used for car parking and other amenities in connection with the markets.

    5.By mid 1984 Yates was in a position to commence construction (the estimated time for construction being 23 weeks) having negotiated and selected a builder of the structure to be constructed on the land and having obtained finance.

19. It was said that any prospective purchaser would have been required to repeat the steps taken by Yates and that it would have taken at least 20 months to do so.  Having regard to a factual issue that arose before Branson J, proposition 5 above is of particular significance.

20. Yates contended that its legal advisers should have propounded a case of special value on the basis that a hypothetical purchaser in the position of the owner would have paid more for the subject land than an ordinary hypothetical purchaser because the hypothetical purchaser in the position of the owner could have commenced development of the land more quickly than any other hypothetical purchaser.  This was because, although both the hypothetical purchaser in the position of the owner and the ordinary hypothetical purchaser have the benefit of the development approval and the building approval, only the hypothetical purchaser in the position of the owner would commence development of the land immediately after purchase, whereas the ordinary hypothetical purchaser would delay for 20 months before commencing to develop the land, during which period it would either obtain a new development approval and building approval more suited to its requirements, or repeat the work done by the dispossessed owner in order to be satisfied that the existing development approval and building approval were, in fact, suitable to its requirements.

21. The allegations of negligence were met head on.  The legal practitioners who were sued denied that there was any material inadequacy in the manner in which the special value aspect of Yates' claim for compensation was presented and argued in the primary litigation.  They contended that the criticisms of their performance were misconceived, and that the so called "head start" claim as now formulated by Yates was based upon both factual error and a misunderstanding of valuation principles.  They said there was no failure to lead any relevant evidence, or address any legally and factually supportable argument, in the primary litigation.  They argued that such of the matters associated with "head start" as might legitimately be taken into account in a claim for compensation were taken into account in the evidence and arguments advanced in the primary litigation, either in connection with the estimation of market value, or in connection with the estimation of special value.  They denied any failure to present Yates case to its best advantage.  It was also submitted that, if there were any respects in which Yates' claim could have been put differently, or better, in the primary litigation, that did not, in the circumstances, amount to professional negligence, and at most involved a matter of professional judgment.  In particular, Mr Webster and Abbott Tout relied upon the experience and judgment of Mr Simos, and said that there was no act or omission for which they were responsible that amounted to negligence.  Additionally, all three relied upon a principle of immunity from action which they said they were entitled to invoke.

22. At first instance in the Federal Court, Branson J found in favour of all defendants on all grounds[23].  Her Honour held that there was no negligence on the part of any of the defendants, and that in any event all three defendants were immune from action, although it was unnecessary for them to invoke that immunity.

    [23]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169.

1. The appeal against the decisions in favour of Mr Webster and Abbott Tout was successful[24].  The Full Court of the Federal Court held that there had been negligence on the part of Mr Webster and Abbot Tout, and that there was no relevant immunity from action.  The court ordered that the matter be remitted to a single judge to assess damages.

   [24]Yates Property Corporation v Boland (1998) 85 FCR 84.

   The decision of Branson J[25]

   [25]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169.

2. In the proceedings before Branson J, the defendants gave evidence.  In addition, there was further evidence from expert valuers, and from senior counsel experienced in valuation law and practice.  Her Honour relied upon that evidence, and upon her own opinions and judgment, in reaching her conclusions.

3. Branson J addressed the contention by Yates that it was in an advantageous position at the date of the resumption of the subject land relative to any other prospective purchaser of the land wishing to build markets, and that this was the basis of a special value case that should have been, but was not, put in the primary litigation[26].  Her Honour observed that the expression "head start", in the context of special value, appeared to have been coined by Handley JA, and was not previously used in judgments, or professional literature, on the subject of valuation[27].  She then considered two decided cases referred to by Handley JA and relied upon by Yates to support its argument, namely, Kennedy Street Pty Limited v The Minister[28] and Baringa Enterprises Pty Ltd v Manly Municipal Council[29].  She noted that Mr Simos had appeared as junior counsel in Kennedy Street, and that the decision had been referred to both in argument before, and in the reasons for judgment of, Cripps J.  She analysed the facts and decisions in the two cases.

   [26]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 198-199.

   [27]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 192.

   [28][1963] NSWR 1252.

   [29](1965) 15 LGRA 201.

4. Branson J referred to evidence given before her by Mr Simos concerning his opinion on the relevant issues.  She also referred to evidence given by two legal experts, Mr McClellan QC and Mr Davison SC.  Mr McClellan was called by Yates, and Mr Davison was called on behalf of the defendants.  Mr McClellan was not asked to, and did not, express an opinion on whether the approach adopted by Messrs Simos and Webster to the subject of special value was one which could reasonably have been taken by competent senior and junior counsel[30].  Mr Davison, a barrister with extensive experience of valuation law and practice, expressed the opinion that the views which had informed the presentation and conduct of the primary litigation by Mr Simos and Mr Webster were views which could reasonably have been held by competent senior counsel at the time of the proceedings and, in addition, were views with which Mr Davison personally agreed[31].

   [30]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 197.

   [31]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 197.

5. Mr Simos, in his evidence as to the way in which the case was presented to Cripps J, insisted that Spencer's case required hypotheses which negated a supposed "head start" in Yates.  Furthermore, as the case on market value was presented on behalf of Yates, especially in the evidence of Mr Parkinson, it was assumed both that a market development was the highest and best use of the land, and that a hypothetical purchaser would have available, and could use, the information in the possession of Yates, the approvals it had obtained, and the arrangements into which it had already entered.  It was both legally and forensically inconsistent with the way in which the case on market value was presented to argue a case on special value based upon the hypothesis that the hypothetical purchaser would be significantly less ready to develop the land for markets than Yates.  Thus, it was said, the assumption upon which the theory of head start turns was legally impermissible, and potentially damaging to the market value case.  To that may be added the consideration that Branson J also found the hypothesis to involve a factually erroneous assumption as to Yates' readiness and ability to proceed with the development.

6. Branson J said[32]:

   "In the circumstance that no expert has expressed a view which I regard as plainly out of line with the established authorities, I have considered it appropriate to place reliance principally on the expert evidence 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 [Yates] before the Land and Environment Court, a head start claim, conformed to the standard of reasonable care demanded by the law, of competent legal representatives in their respective positions.

   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 [Yates].

   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.

   Even were I of the contrary view to that expressed above, and subject to the alleged errors of principle said to have otherwise tainted the valuers' assessments of special value (which are discussed below), I would not uphold the complaints of the applicant that the second and third respondents should have caused evidence of the kind said by the applicant to support the head start claim to be called in the Land and Environment Court proceeding.  The evidence establishes that the valuers were comprehensively briefed as to the factual background against which their valuations were to be prepared and none of them identified a claim for special value of the head start kind.  The special value claims which they respectively identified were based on premises inconsistent with such claims and, if accepted, had the apparent potential to lead to higher levels of compensation to [Yates] than the head start claim now identified by [Yates].  The second and third respondents were not, in my view, under a duty to require the valuers to consider and give evidence concerning every alternative method of assessing special value which could be advanced consistent with legal principle."

   [32]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 198.

7. Branson J examined criticisms made on behalf of Yates of the evidence of the three valuers called on behalf of Yates in the primary proceedings[33].  She considered the respective roles of lawyers and valuers in compensation litigation and came to the conclusion that it would not be unreasonable for the legal representatives of Yates in the primary litigation to have called the valuation evidence which was led on behalf of Yates[34].

   [33]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 202.

   [34]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 205.

8. In summary, Branson J, having regard to her own understanding of the authorities on the relevant valuation issues, and the evidence before her, including the evidence of Mr Simos, and Mr Davison came to the view that the approach taken by the legal representatives of Yates in their presentation of the special value claim was orthodox, that it was not unreasonable of the legal representatives of Yates to have presented their case as they did, that it was not unreasonable of them to have called the valuation evidence that was called, that the proper performance of their professional duty did not require them to attempt to argue a "head start" claim of the kind for which Yates was now contending, and, that such a claim had the potential to undermine other aspects of Yates' case.  Her Honour rightly criticised the idea that, as barristers conducting litigation, Messrs Simos and Webster were under a duty to call evidence, and advance argument, "concerning every alternative method of assessing special value which could be advanced consistent with legal principle"[35].  Having rejected the complainant's case as to the conduct of counsel, and having rejected the suggestion that Yates' case on special value had not been put to its best advantage in the primary proceedings, Branson J, inevitably, found no fault on the part of the instructing solicitors.

   [35]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 198.

9. Having regard to one aspect of the decision of the Full Court, it is necessary to emphasise a finding made by Branson J, to which the Full Court made no reference.

10. Branson J rejected a substantial part of the factual basis on which Yates claimed to have a head start over a hypothetical purchaser.  It was in the interests of Yates, as a hypothetical vendor, to provide a purchaser with every opportunity to develop the land in accordance with its highest and best use and, in that respect, to provide all relevant information.  Moreover, Branson J found as a fact that Yates would not have been in a position to develop the site for retail markets as promptly as it claimed.  She found that, as at the date of resumption, Yates did not have the financial capacity immediately to erect the markets[36].  She also rejected evidence of Mr Yates concerning the stage he had reached with plans to form a unit trust to develop markets[37].  In that respect she formed an adverse opinion as to Mr Yates' credibility.

    [36]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 174.

    [37]Yates Property Corporation Pty Ltd v Boland (1997) 145 ALR 169 at 177.

11. Mr Hart, who gave evidence before Branson J in support of the head start argument on behalf of Yates, acknowledged in the course of his cross­examination that his theory of head start was based in part upon the assumption that for some reason, which he was unable to explain, the vendor would withhold from a prospective purchaser information which would assist the purchaser to develop the land.  There was no warrant for such an assumption, which is contrary to common sense.  It is also contrary to the principles explained by Isaacs J in Spencer v The Commonwealth[38].

    [38](1907) 5 CLR 418 at 441.

12. Branson J was also aware that the evidence as to market value called on behalf of Yates proceeded, in a number of respects, upon the hypotheses that a hypothetical purchaser would begin to build markets immediately and would complete them within 6 months. 

    The decision of the Full Court of the Federal Court[39]

    [39]Yates Property Corporation v Boland (1998) 85 FCR 84.

13. The fifth occasion upon which a special value claim was considered was before the Full Court of the Federal Court, on appeal from Branson J.  (The appeal to this Court constitutes the sixth occasion).

14. The appeal by Yates against Mr Simos had been dismissed, in the circumstances explained earlier in these reasons, before the hearing by the Full Court.  However, the Full Court held that Mr Webster and the instructing solicitors had been negligent and, by plain implication, they were of the same view concerning Mr Simos.

15. Before examining any details of the reasons of the Full Court in this respect, it is worth noting the position that had been reached in the litigation by the time the Full Court came to deal with the matter.  Cripps J, the Chief Judge of the Land and Environment Court, had considered a special value claim and allowed it to a certain extent.  In the Court of Appeal, the dissenting judge, Mahoney JA, found no error of law in the approach taken by Cripps J to the question of special value.  The majority in the Court of Appeal found that Cripps J had failed to give sufficient reasons for his decision and, in addition, had made an error about a particular matter concerning abortive expenditure.  The case was remitted to Cripps J for further consideration.  When it came back before Cripps J, an attempt was made on behalf of Yates to propound, by evidence and argument, an alternative approach to special value, insofar as the lawyers for Yates were able to reconcile that approach with what they regarded as settled principle.  Cripps J rejected the evidence and the argument, saying that it did not add anything of relevance to what Yates had advanced on the first occasion, although he added to the compensation the amount for abortive expenditure.  A further appeal to the Court of Appeal was compromised on the basis of a payment to Yates of an additional amount of compensation which was not based on a head start approach.  Yates then sued its lawyers for negligence.  At the hearing before Branson J, the lawyers gave evidence explaining the approach they had taken to the matter of special value.  They were supported in their opinions on the subject by the evidence of other senior counsel.  Branson J, on the basis of the evidence before her, and also her own views as to the relevant legal principles, concluded that the conduct of the primary litigation by the lawyers for Yates was reasonable, and in accordance with her own views of the law, and that there was no justification for a conclusion that the claim for special value had been advanced other than competently.

16. In addition, there had to be considered the role of the expert valuers.  Although the lawyers accepted an obligation to check the evidence of the valuers to ensure that it conformed to established legal principles, it was the valuers who were retained to form and express opinions as to the value of the relevant land, whether that be market value, or market value plus special value.  None of the six valuers in the primary litigation expressed an opinion in conformity with the approach for which Yates was contending in the Federal Court.

17. It is to be emphasised that, as Handley JA had pointed out, what was involved was an issue of fact.  That issue had to be litigated and decided in accordance with established legal principles, but it was, ultimately, a factual argument.  Moreover, it was a factual argument that had to be dealt with in conjunction with other factual arguments, some of which might have involved elements of inconsistency.  What was being criticised by the client was the manner in which its lawyers fought one aspect of a complex factual dispute.

18. The Full Court began an examination of the reasoning of Branson J with the observation that it seemed that, in the conduct of the case before her Honour, the parties "lost sight of the real issue that required determination"[40].

    [40]Yates Property Corporation v Boland (1998) 85 FCR 84 at 97.

1. Their Honours said[41]:

   "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.  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.  We agree with this observation.

   The difference between the parties was that Yates submitted that the economic value of this advantageous position formed part of the special value of the land and the respondents asserted that it should form part of the market value of the land.  Here each party proceeded on an unfounded assumption.  The unfounded assumption made by Yates was that if its advantageous position was not compensable as special value it was not otherwise compensable.  The unfounded assumption made by the respondents was that the Land and Environment Court was in a position to assess that advantageous position as part of the market value of the land.  The latter assumption was unfounded for the reason that no evidence had been led to properly identify or quantify the economic value of being in a position to immediately commence the development of a market."

   [41]Yates Property Corporation v Boland (1998) 85 FCR 84 at 98.

2. The above passage contains what is argued on the present appeal to be a significant error in its account of the evidence given by Mr Simos.  That is a matter to which it will be necessary to return.

3. The Full Court examined the cases of Spencer v The Commonwealth[42], Kennedy Street Pty Ltd v Minister[43] and Baringa Enterprises Pty Ltd v Manly Municipal Council[44].  They concluded[45] that those cases, especially the last two, stood for the principle "that land will have a special value to its owner if that owner is in fact in a position where he can develop that site more expeditiously than could the hypothetical purchaser".

   [42](1907) 5 CLR 418.

   [43][1963] NSWR 1252.

   [44](1965) 15 LGRA 201.

   [45]Yates Property Corporation v Boland (1998) 85 FCR 84 at 101.

4. In considering the case against Abbott Tout, the Full Court rejected a contention that, having retained experienced counsel and expert valuers, the solicitors were not obliged to give independent consideration to the precise manner in which the special value claim was presented to Cripps J[46].  Their Honours said that the standard of care required of the solicitors was to carry out their retainer as would a reasonably competent solicitor expert in the law relating to resumption of land, since they professed expertise in that area[47].  They then went on to consider whether a reasonably competent solicitor expert in the law relating to the resumption of land "should have advised Yates to advance a case that Yates was entitled to compensation for the work it had done to bring the proposed market to a point where it was capable of immediate development"[48].  Answering that question in the affirmative, the Full Court said[49]:

   "Subject to one potential qualification there can be no doubt that this is the advice that should have been given and how the case should have been put.  Yates was entitled to be compensated for the economic value of being in a position of commence the market project.  To the extent that it added to the market value of the land, some of that work, (for example, obtaining a development approval and a building approval), would be the subject of compensation in the ascertainment of market value.  The remainder of the work, for example preparing plans for the market development, engaging the services of a builder and gathering together prospective stallholders, would give the land a special value to Yates.  However, for present purposes it makes no difference whether the balance of the work ought to be taken into account as part of the market value of the land as the respondents allege or as part of its special value as we have held.  Once it is accepted that the work had economic value that value should have been put forward as part of the compensation to which Yates was entitled whether for the purpose of assessing the market value of the land or in the assessment of the special value of the land to Yates.  That is to say, a competent solicitor experienced in the law relating to the resumption of land would have appreciated that Yates was entitled to compensation as a result of being in a position to immediately develop the land and he would have advised Yates to put forward that claim whether the solicitor was of the view that the proper characterisation of the claim was as an element of the market value of the land or as an element of its special value.  If there was any doubt about the proper characterisation of the claim, the advice to give was that the claim should be put as falling under one or other head of compensation."

   [46]Yates Property Corporation v Boland (1998) 85 FCR 84 at 103.

   [47]Yates Property Corporation v Boland (1998) 85 FCR 84 at 105-106.

   [48]Yates Property Corporation v Boland (1998) 85 FCR 84 at 106.

   [49]Yates Property Corporation v Boland (1998) 85 FCR 84 at 107.

1. The potential qualification referred to at the commencement of that passage related to an important point made on behalf of Abbott Tout and Mr Webster.  It was observed that there was an inconsistency between an argument based upon the assumption that a hypothetical purchaser would not have been in a position to construct markets on the subject land for a substantial period, and the assumptions made by the valuers called on behalf of Yates before Cripps J.  Those valuers had assumed, in estimating market value, prompt development by a hypothetical purchaser.  The "head start" claim now envisaged would have partially undermined their opinions.  The Full Court did not disagree with that, but said that, since no consideration was given to making the head start claim, the question was hypothetical and need not be examined further[50].  This being essentially a dispute about the way a factual argument should have been presented and conducted, the question was not hypothetical; it was of practical consequence.

   [50]Yates Property Corporation v Boland (1998) 85 FCR 84 at 107.

2. As to the contention, accepted by Branson J, that, in all the circumstances, Abbott Tout were entitled to follow the advice of counsel as to how the case was to be run, the Full Court described the proposition as "curious" and involving "real difficulty"[51].  The answer to the contention was said to lie in the fact that no specific advice was ever sought from counsel as to the proper approach to valuation.  Furthermore, even if specific advice from counsel on the point had been taken, there was a duty on the solicitors to consider it and form their own views as to it correctness[52].  It was concluded that Abbott Tout were negligent in failing to advise Yates how its claims should be properly presented, in terms of evidence and argument.

   [51]Yates Property Corporation v Boland (1998) 85 FCR 84 at 107.

   [52]Yates Property Corporation v Boland (1998) 85 FCR 84 at 108.

3. As has been noted, one of the findings of fact made by Branson J went to the crux of the head start claim.  That claim involved the proposition that a prospective purchaser would have taken about 20 months longer than Yates would have taken to be in a position to commence building markets.  Branson J found that at the date of resumption Yates did not have the financial capacity and arrangement immediately to erect the markets.  That finding was based partly on credit.  She also found that it was not reasonable to hypothesise that a prudent purchaser would not repeat all the steps which Yates have taken in relation to the land.  The Full Court did not explain or justify departing from those findings.

4. The conclusions adverse to Mr Webster were based on considerations similar to those concerning Abbott Tout.  However, nowhere in their reasons for judgment did the Full Court refer to the fact that there was no contractual relationship between Mr Webster and the lay client, that the action in negligence against him was framed solely in tort, and that damage was the gist of the action.  There was no finding by the Full Court that the value of any head start claim, properly assessed, would have exceeded, or added to, the amount awarded by Cripps J for special value.  The Full Court left unresolved the question of what, if any, damage resulted from what they found to be Mr Webster's negligence and, therefore, left undecided the question whether such negligence was actionable.  Although the form of the order made by the Full Court remitted the matter for the assessment of damages, in so far as the claim again Mr Webster was concerned, there was an outstanding issue going to liability.

   The Full Court's approach to the facts

5. It was submitted by the appellants in this Court that the decision of the Full Court of the Federal Court was affected by significant factual errors, by a failure to have due regard to findings of fact made by Branson J, and by misunderstandings as to what had occurred at various stages of the primary litigation.  It is necessary to deal with some only of the matters the subject of those submissions, which have been made out.

6. First, on the factual basis of the head start claim, the Full Court incorrectly recorded what was said by Handley JA.  The Full Court said[53] that Handley JA referred to the "fact" that Yates was in a position where it could construct a market on the land more quickly than any hypothetical purchaser, that this gave Yates an "advantage" and that Cripps J had failed to take this into account.  Handley JA had not referred to such a "fact", but to a possibility, as a passage from his judgment quoted above demonstrates.

   [53]Yates Property Corporation v Boland (1998) 85 FCR 84 at 96.

7. Secondly, Branson J made findings contrary to the supposed "fact", which the Full Court disregarded.  It gave no reason for departing from those findings, which were based in part upon evidence that had not been before Cripps J, and in part upon her views as to Mr Yates' credibility.

8. Thirdly, the Full Court made an error in recording the history of the proceedings before Cripps J when the matter was remitted.  Their Honours said[54] that counsel for Yates sought leave to reopen the case "to lead evidence to quantify the economic value to Yates of being in a position to develop a market on the land immediately".  If that were so, it might have been regarded as an implied admission that there was available evidence, as to the head start theory, which should have been addressed in the first place.  The Full Court appears to have misunderstood the nature of the evidence which Yates sought to adduce at the second hearing before Cripps J, and to have believed it was similar to the evidence Yates led at the hearing before Branson J concerning "head start".  Leaving aside the minor matter of the supposed value of certain documents, the evidence tendered at the second hearing before Cripps J constituted an attempt to prove what it would have cost Yates to relocate to an alternative site.  Cripps J took the view that this added nothing material to the evidence that had been before him on the first occasion.

   [54]Yates Property Corporation v Boland (1998) 85 FCR 84 at 96.

9. Fourthly, the Full Court, in describing the way in which the case was presented to Cripps J originally, said that the case was not prepared on the basis that the advanced state of the development project should be reflected in the market value of the land[55].  That is incorrect.  On the contrary, the valuation evidence called on behalf of Yates in the primary litigation treated that as of considerable importance in relation to market value.

   [55]Yates Property Corporation v Boland (1998) 85 FCR 84 at 112.

10. Fifthly, the Full Court, in referring to the evidence given by Mr Simos before Branson J, attributed to him, as though it were a concession, an observation 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[56].  That failed to have regard to the context.  Mr Simos was speaking of market value, and was making the point that the work which had been done, and the information which had been obtained, to advance the development project would be substantially reflected (as Cripps J held) in market value, not special value.  Mr Simos pointed out that Cripps J had before him, in the original proceedings, all available relevant evidence as to the work Yates had done in relation to the project.  Mr Simos was also concerned to make the point that, consistently with the assumptions required and justified by Spencer in relation to market value, there was no warrant for assuming that a hypothetical purchaser would be materially slower than Yates in proceeding with the development and, as has already been noted, Yates' arguments as to market value were to the contrary of such an assumption, and would have been undermined if it had been made.

    [56]Yates Property Corporation v Boland (1998) 85 FCR 84 at 98.

11. Sixthly, as has already been noted, the Full Court appears to have taken the view, incorrectly, that the additional sum paid to compromise the second appeal from Cripps J was calculated to reflect, albeit insufficiently, the supposed head start enjoyed by Yates.

12. It was argued for the appellants in this Court that there were other errors in the reasoning of the Full Court, but that the most important error related to the assessment of the merits of the "head start" theory of special value.  It is necessary to turn now to that issue.

    The "head start" theory of special value

13. It is unnecessary for present purposes to examine fully the theoretical foundation of the concept of "special value to the owner".  At this stage of the matter there is no party wishing to argue that the concept was inapplicable to the facts of the case, although such an argument was advanced, unsuccessfully, on behalf of the Darling Harbour Authority in the primary litigation.  However, in order to consider the head start theory of special value, which is fundamental to the allegations of professional negligence made by Yates, it is necessary to make certain preliminary observations.

14. In Spencer[57], Griffiths CJ pointed out that, in a context such as the present, "value" means "exchange value", which presupposes a person willing to give what is being valued in exchange for money and another willing to give money in exchange for what is being valued.  In the case of chattels for which there is an established market, the exercise may be simple.  In other cases it may not be simple.  There may be no readily identifiable market, or the market may be controlled or for some other reason artificial[58].  There may be room for argument as to the nature of the relevant market.  It is necessary to make the hypothesis of a sale between a willing but not anxious vendor and a willing but not anxious purchaser.  A decision as to what price would be achieved in such a sale involves a factual judgment, and may be made by reference to comparable sales, or a capitalization of profits formula, or, in certain circumstances, by reference to costs of reinstatement or other criteria[59].

    [57](1907) 5 CLR 418 at 431.

    [58]Minister for Public Works v Thistlethwayte [1954] AC 475.

    [59]Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547.

15. It was established in Pastoral Finance Association Ltd v The Minister[60], which has been followed in many subsequent cases, that in some circumstances land may have a special value to the owner which exceeds the market value.  If, in a given case, it is contended that such special value exists, that also raises an issue for factual judgment.  The subject matter of such factual judgment was explained by Bray CJ in Arkaba Holdings Ltd v Commissioner of Highways[61]:

    "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 … The additional element is commonly called 'special value to the owner' ... 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?"

    [60][1914] AC 1083.

    [61][1970] SASR 94 at 100.

16. Bray CJ went on to give, as a typical example of special value, a case where the land is peculiarly adapted to a certain use made of it by the claimant, such as agricultural land worked in connection with a neighbouring residence or farm buildings[62].

    [62]Minister of Works v Robinson (1965) 13 LGRA 390.

17. The idea that an item of property may have a value to one person which exceeds the price it would bring if sold to a third party in an open market is not peculiar to this area of discourse.  It is also reflected in insurance law and practice, where a distinction is sometimes drawn between the market value of property and its value to an insured[63].

    [63]Franke v CIC General Insurance Ltd(The "Coral") (1994) 33 NSWLR 373 at 376; Fire & All Risks Insurance Co Ltd v Rousianos (1989) 19 NSWLR 57 at 65-68; Roumeli Food Stores (NSW) Pty Ltd v New India Assurance Co Ltd [1972] 1 NSWLR 227 at 236-238; Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 at 285-287; Halsbury's Laws of England, 4th ed, vol 25, par 655.

18. There is a difficulty which has been adverted to by the courts, but which they have not permitted to stand in the way of allowing just compensation to a dispossessed owner[64].  There is a degree of tension between the concept of value as exchange value, which carries with it the notion that the value of something is the price the owner can get for it, and the concept of a special value to the owner over and above the price which a hypothetical purchaser would pay.  However, as was pointed out in Minister for Public Works v Thistlethwayte[65], the hypothesis of a willing seller and purchaser is merely a useful and conventional method of arriving at market value.  Market value, or the amount that would be realised from a sale in a market where the price is agreed by freely contracting parties, provides a measure of value from the perspective, not only of the particular purchaser and vendor, but also of others in the market who are not parties to the particular transaction.  Special value to the owner directs attention to the perspective of the vendor.  What is insisted upon is that, leaving to one side any claim for damages founded upon the relevant statutory provisions, what is in question is the value of the land or other resumed or acquired asset, not the fixing of compensation for all loss resulting from the resumption or acquisition.  The dividing line between those two ideas sometimes becomes blurred by claims for special value based upon what is called "disturbance", or upon wasted ("abortive") expenditure upon resumed land.  Although such claims have on occasion been accepted as legitimate, in a statutory context such as that which applied to the present case, they can only be justified if they support the conclusion of special value, and not merely some form of loss or damage to the dispossessed owner.  In The Commonwealth v Milledge[66] Dixon CJ and Kitto J said:

    "There remains the item of the plaintiff's claim described as business disturbance.  Though it was considered convenient in this case, as it often is, to deal with this topic as a separate matter, it must always be remembered that disturbance is not a separate subject of compensation.  Its relevance to the assessment of the amount which will compensate the former owner for the loss of his land lies in the fact that the compensation must include not only the amount which any prudent purchaser would find it worth his while to give for the land, but also any additional amount which a prudent purchaser in the position of the owner, that is to say with a business such as the owner's already established on the land, would find it worth his while to pay sooner than fail to obtain the land.  … Disturbance, in other words, is relevant only to the assessment of the difference between, on the one hand, the value of the land to a hypothetical purchaser for the kind of use to which the owner was putting it at the date of resumption and, on the other hand, the value of the land to the actual owner himself for the precise use to which he was putting it at that date."

    [64]cf Turner v Minister of Public Information (1956) 95 CLR 245 at 292 per Kitto J.

    [65][1954] AC 475 at 491.

    [66](1953) 90 CLR 157 at 164.

19. Their Honours went on to make a point about consistency, which has some bearing on the present case.  They observed that if the market value of land is determined on the basis of the suitability of land for the more profitable form of use to which the owner was putting it, there could be no justification for finding a special value, on the basis of disturbance, related to such use.  That, it was said, would involve an obvious inconsistency, the inconsistency arising out of the assumption on which market value had already been ascertained.  There is a similar form of inconsistency involved in the application of the head start theory to the present case, by reason of the assumptions upon which arguments as to market value were advanced.

20. In Milledge, the references to a claim for special value based upon disturbance were made in the context of a consideration of an existing, especially profitable, business being conducted on the resumed land by the dispossessed owner.  Ten years later, in Kennedy Street Pty Ltd v The Minister[67], a decision which has received mixed reviews, Hardie J applied a similar process of reasoning to a case, not where an existing business was being conducted on the subject land, but where such a business was about to be conducted.  The plaintiff company had been formed for the purpose of acquiring certain land, subdividing it, and selling the subdivided lots.  At the date of assessment no subdivision approval had been obtained.  A claim for compensation included a claim for special value.  Hardie J allowed a modest amount for special value, which he described giving rise to a difficult question.  He said[68] that there was a particular relationship between the plaintiff company and the subject land which caused him, as a matter of fact, to conclude that the case was one of special value.  The relationship existed because the plaintiff company had been specifically formed for the purpose of acquiring, developing, and selling the land.  It had paid stamp duty and legal fees to acquire the land, and it had paid surveying and engineering fees and a council fee in relation to a subdivision application.  These monies, and the knowledge and expertise acquired by the principal shareholders in preparing for subdivision, were, as a result of the resumption, largely wasted.  The plaintiff's profit earning capacity was diminished, one factor relating to that being the length of time reasonably required by the plaintiff to undertake another similar venture.  Hardie J considered it reasonable to assume that it would take the plaintiff two or three months to re-establish itself in the business of selling vacant land in subdivision.  He inferred that the plaintiff, having expended the amounts referred to and undertaken the work considered, so as to be in a position to proceed expeditiously with the completion of the purchase and the subdivision of the land, and being confronted with cost and delay in re-establishing a similar venture elsewhere, would have paid an amount over and above what a hypothetical purchaser would have paid.  This amount was special value.

    [67][1963] NSWR 1252.

    [68][1963] NSWR 1252 at 1256.

21. The decision of Hardie J was one of fact.  His Honour referred to Pastoral Finance Association Ltd v The Minister, but did not expound upon the principles.  The correctness of the decision of Hardie J was doubted in some later cases[69].  However, it has been accepted as correct in other cases[70].  In Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works[71] abortive expenditure similar to that which had been considered in Kennedy Street was taken into account in a finding of special value.  Kennedy Street was considered, and explained, by the Court of Appeal of New South Wales in Housing Commission of New South Wales v Falconer[72].  In that case, Hope JA, considering an allowance for future increases in costs during delays in an owner's building programme following resumption, discussed special value in terms of "disturbance"[73].  Mahoney JA[74] referred to both Kennedy Street and Baringa Enterprises in the context of disturbance.

    [69]Rosenbaum v Minister for Public Works (1964) 82 WN (Part 2) (NSW) 220 at 229 per Walsh J; Altona Estate Pty Ltd v Shire of Altona (1966) 20 The Valuer 63; Nahum v Roads and Traffic Authority, unreported, Land and Environment Court of New South Wales, Bignold J, 2 November 1990.

    [70]Chapman v The Minister [1966] 2 NSWR 65; Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VR 427; Fisher v The Minister (1980) 38 LGRA 412; Redwood Court Pty Ltd v Roads Corporation (1992) 76 LGRA 358.

    [71][1970] VR 427 at 433.

    [72][1981] 1 NSWLR 547.

    [73][1981] 1 NSWLR 547 at 557.

    [74][1981] 1 NSWLR 547 at 573.

1. All of these are factual errors going to important matters and would of themselves require that the appeals be upheld.

2. But they do not stand alone.  Important factual findings of Branson J which her Honour was entitled to make were inexplicably either ignored or put aside.  Some of them overlap matters to which I have already referred.  It is unnecessary to repeat all of these but some of the more important ones are the following.

3. Her Honour discussed Mr Yates' attitude to and capacity to influence the evidence to be called before Cripps J.  She made this finding[310]:

   "[O]nce satisfied, as I find [the liquidator] was, that there was no reasonable likelihood of the creditors not being paid in full from the fruits of the compensation claim, he would, I find, have given considerable weight to the views of Mr Yates.  I find that Mr Yates would have been strongly resistant to the idea of abandoning the approach to the valuation of the subject land adopted by Mr Parkinson." 

   [310] (1997) 145 ALR 169 at 199.

4. Her Honour gave careful attention to Yates' financial capacity.  Her finding was in these terms[311]:

   "I am not satisfied that as at the date of resumption of the subject land (ie 7 May 1985) [Yates] had confirmed finance available to it to allow it to proceed promptly with the erection of the markets.  Indeed, I find positively that it did not as at that date have the financial capacity immediately to erect the markets."

   [311] (1997) 145 ALR 169 at 174.

5. The next finding to which I would refer was of great importance[312]:

   "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.  I do not regard the subject land in 1985 as such a case."

   [312] (1997) 145 ALR 169 at 201.

6. It is difficult to understand why the Full Court attached no weight to a finding in the following terms[313]:

   "The evidence before me shows that Mr Yates was meticulous in ensuring that each of the valuers was familiar with the work that had been done by or on behalf of [Yates] to advance its proposal".

   [313] (1997) 145 ALR 169 at 183.

7. This finding underlines again the role, indeed the effective control perhaps that Mr Yates was exercising over the valuation methods.  It is also indicative of Mr Yates' likely understanding of the use to which the valuers were putting the work that Yates had done on the project.  The last of the factual errors of the Full Court related to the critical issue of judgment.  Her Honour had made a finding in these terms[314]:

   "The special value claims which [the valuers] respectively identified were based on premises inconsistent with such claims and, if accepted, had the apparent potential to lead to higher levels of compensation to [Yates] than the head start claim now identified by [Yates]."

   [314] (1997) 145 ALR 169 at 198.

8. In short a choice was made to pursue a particular, and it was thought, more promising line of attack than a claim for what Handley JA would come to describe as a "head start", a choice which, in view of her Honour's other findings was one to which the respondent in all likelihood assented.  The Full Court was not entitled to ignore or make findings in contradiction of her Honour's finding on this matter.

9. The next matter is one of omission on the part of the Full Court.  As I have said the Full Court took the view that the conduct of the appellants was obviously negligent, and that this was so because any competent practitioner in the field would have been aware of the "head start" principle giving rise to an item of separate compensable, special value.  Even if it were to be accepted (contrary to what was the actual position) that this was part of the law of valuation at the time of the relevant conduct, the Court should have taken into account that its existence must have been very obscure for it was not apparent to the authors of the major texts and competent practitioners in the field.

10. No textbook as at 1990 had cited Kennedy Street or Baringa as examples of the application of a head start principle[315].  No judge before Handley JA in Yates had cited Kennedy Street or Baringa as authority for the proposition referred to by the Full Court. 

    [315]   See Hyam, The Law Affecting the Valuation of Land in Australia (1983) at 147­149; Brown, Land Acquisition, 2nd ed (1983) at 192, 193.

11. Before the appellants' retainer, Queen's Counsel were retained by Yates to advise in relation to its entitlement to compensation and never advised that a claim for "head start" should be made.  Mr Hemmings QC was briefed on 8 June 1984 to advise Yates in relation to the resumption proceedings and continued to do so from time to time until late 1987.  Mr Tobias QC was briefed to advise and gave advice in conference on 7 November 1984.  Mr Tamberlin QC gave advice in writing to Yates in or about early 1985.  Mr O'Keefe QC was retained in January 1988 on behalf of Yates until about mid-1989.  And none of Messrs Parkinson, Woodley and Egan who were regarded as foremost in their field as valuers purported to assert an entitlement to special value based on any notion of a head start.

12. The Full Court had no regard to these matters.  They may or may not have been decisive but they were relevant and important as showing that the principle that was said to be obvious, the "head start" principle was not obvious to a body of well qualified and experienced text writers and practitioners.  The Full Court should have considered them and dealt with them.  The Court's failure to do so is another reason why the appeals must be upheld.

    Errors of law

13. It was said by their Honours in the Full Federal Court that the work done and knowledge acquired by the dispossessed owner were not connected with the character or quality of the land and that it therefore had a special value to the respondent[316].  The knowledge acquired by the respondent was connected with the character and quality of the land.  That knowledge (and the approvals to which it led) and its application to the land gave the land the character or quality of making it developable for a market which could be constructed upon it and in respect of which a number of licensees had made commitments.     

    [316] (1998) 85 FCR 84 at 98.

    Should Kennedy Street and Baringa be applied?

14. Something should be said about the two cases upon which the Full Federal Court relied and which it thought applicable to the situation here.  The first is Kennedy Street Pty Ltd v The Minister[317] a decision of Hardie J in the Land and Valuation Court of New South Wales.

    [317] [1963] NSWR 1252.

15. The business of the plaintiff company there was the acquiring, subdividing and selling of land.  After agreeing to purchase a parcel of land for £18,000, paying a deposit of £1,800 upon it, preparing a survey plan, applying to the local council for and obtaining an approval in principle upon conditions and undertaking some other work with a view to the implementation of the approval, the plaintiff was notified that the land would be resumed.  The plaintiff claimed compensation in the sum of £18,638.  The resuming authority served upon the plaintiff a notice valuing the claim at £18,000 "freehold value – including all interests".  A similar notice was also issued to the unpaid vendor and no attempt was made at that stage to value the respective interests of the plaintiff and the vendor.  Shortly before the hearing the defendant gave a formal notice of valuation to the plaintiff in the sum of £4,000 in respect of the plaintiff's interest as purchaser under the contract.

16. The plaintiff claimed at the hearing that compensation for its estate or interest should be assessed at between £10,000 and £12,000, or, alternatively, on the basis of a special value to the plaintiff of between £13,000 and £15,000. 

17. Hardie J held that the market value of the land should be determined at £19,500 and that in the circumstances the land did have some special value for the plaintiff who, were it the purchaser, would have paid an additional sum of £2,500 over and above its market value.

18. Hardie J said that the matters that caused him to make a finding of special value in favour of the plaintiff were that the plaintiff had given close and careful consideration to the problems associated with the proposed subdivision; it had paid stamp duty to acquire it; it had also paid survey fees and engineering fees, and the council fee in relation to the subdivision application. His Honour went on to say[318]:

    "The knowledge and experience acquired [by one of the principals of the plaintiff] and the time spent by him in examining the land and taking the steps appropriate to ensure an expeditious approval of the subdivision were, in the event that happened, of no value to the company."

    [318] [1963] NSWR 1252 at 1256.

19. To regard these matters as ones entitling the plaintiff to an allowance for special value is to ignore or misunderstand the formulation in Spencer's case of the principles to be applied in assessing compensation.  A vendor armed with the relevant materials, an approval and information which might enable a property to be profitably subdivided would be foolish not to seek and to insist upon obtaining full value for the land or any estate or interest in it having regard to those matters, from any purchaser.  And a prudent purchaser would need to be prepared to pay a price accordingly as the utilization of those materials would enable that purchaser to realise the highest and best use of the property.  Everything the plaintiff had in its possession in Kennedy Street was, as is the situation in this appeal, readily transmissible to, and of value to any purchaser coming into possession of the property.

20. In Kennedy Street Hardie J went on to say that the resumption deprived the plaintiff of a profitable venture and that the plaintiff's profit-earning potential was diminished.  One factor, his Honour said, that was operating in diminution of the potential was the length of time that might be required by the plaintiff to re-equip itself for this type of business.  He thought it relevant that the plaintiff, instead of taking steps to acquire other subdivisible land for sale took a position with another company which kept him fully occupied in the next few months.  Only then was other property purchased by another private company of which he was the principal.  His Honour said that on the somewhat meagre evidence before him he had formed the opinion that a period of some two or three months should be allowed and in some way compensated for in the assessment of compensation under the heading of special value. 

21. This was to overlook that the plaintiff's business was to sell property.  To be offset against any possible delay in finding a replacement property would have to be, but was not taken into account by the trial judge, the advantage of an early, accelerated (notional) sale by the plaintiff on the resumption date, the profit accruing on the small outlay of £1,800 and other expenses, and the elimination of the risks of actively undertaking the subdivision.  What Hardie J did was to misunderstand Spencer's case.  The land which was resumed was not acquired for subdivision and sale over an indefinite or infinite period.  It was acquired for sale and its subdivision would be undertaken only to achieve that end.  Its subdivision and sale would have constituted one project which would have required time for its completion.  When that land was sold it would have been a matter for the plaintiff whether it wished to embark upon another such project.  If it did it would have to find another parcel of land and undertake another separate project.  The location and the acquisition of another piece of land would no doubt have taken some time, whether the subject land had been resumed, or sold in subdivision in the ordinary course, and were matters that were quite irrelevant to the resumption.  This is an entirely different situation from the one that the Privy Council considered in Pastoral Finance[319].

    [319] [1914] AC 1083.

22. Properly analysed Kennedy Street can be seen to be not a case to be applied or followed.  On any view it states no principles of any relevance to this case. 

23. Baringa Enterprises Pty Ltd v Manly Municipal Council[320] is another decision of Hardie J.  In that case his Honour again assessed compensation by including a component for special value based upon what he thought to be a better chance that the plaintiff would have had of obtaining a renewed building approval and successfully undertaking a development than would a purchaser at the time of the resumption.

    [320] (1965) 15 LGRA 201.

24. By the time of the resumption, worthless structures that had been on the land had been demolished and approval in principle had been obtained from the planning authority for the construction of a substantial building to contain shops and flats.  Plans had been prepared by architects who had called and received tenders for the construction of the building.  The plaintiff had also sought unsuccessfully to obtain finance to construct the building.  At that stage it was contemplating the possibility of a less ambitious development because the approved one had proved to be beyond its financial capacity.

25. His Honour said[321] the test to be applied in determining special value is that laid down by the Privy Council in Pastoral Finance Association Ltd v The Minister[322].  Again his Honour thought that because of the information that the plaintiff had at the date of resumption it would have had a better chance of obtaining the fresh building approval which it would have been necessary for it to obtain because the earlier, more ample building approval could not be implemented.  His Honour thought that the plaintiff's information and the approval it could not utilize were matters that should sound in special value.  His Honour said[323]:

    "Looking at the matter from all aspects and bearing in mind the plaintiff's substantial expenditure on the project over and above the cost of the land, some of which gave the land an added value in its hands, and some of which was not reflected in added value, I am of the opinion that … a prudent purchaser in the position of the plaintiff company would have been prepared to pay for the subject property a sum of £8,500 over and above its market value".

    [321] (1965) 15 LGRA 201 at 205.

    [322] [1914] AC 1083.

    [323] (1965) 15 LGRA 201 at 205.

26. On this occasion his Honour acknowledged in effect that some at least of what had been done by the plaintiff would be of utility and value to a purchaser.  But his Honour made no attempt to explain what in fact would have been of utility and what would not have been of utility to a purchaser.  His Honour's statement of the facts does not reveal why a fully conversant purchaser could not, and would not have been put in possession of all of the information and advantages that the plaintiff was said to have.  And indeed there is much in the statement of the facts to suggest that the plaintiff had expended money that not only would a purchaser have been unable to recoup, but also the plaintiff should have been taken to have thrown away because of supervening events quite unrelated to the resumption, such as credit restrictions imposed by the government, changes in the policy of the planning authority, the plaintiff's inability to obtain finance and a consequential need to contemplate a significantly scaled-down project.  Nor did his Honour explain why the highest and best use might not have been for the construction of a building that had been approved and was beyond the dispossessed landowner's means.  If that were the highest and best use there would have been no need for a notional purchaser to seek an approval for a smaller building.

27. Baringa too is a highly questionable decision and on no view can have any valid application to this case.

28. The evidence that the appellants sought to lead on behalf of the respondent when the compensation case was remitted to Cripps J by the Court of Appeal for further consideration was designed in part to exploit the reasoning of Hardie J in Kennedy Street and Baringa.  This was understandable because of the way in which the Court of Appeal had dealt with the appeal.  Indeed the Court of Appeal had effectively forced this course upon the parties.  The attempt to lead the evidence failed for the reason that Cripps J was satisfied that all allowance that could have been made for special value had been made.  Additional reasons why it could not avail the respondent were that Kennedy Street and Baringa had no application and such of the claims as were embraced by the evidence and were not covered by value assessed by reference to highest and best use, were probably too remote.

29. Kennedy Street and Baringa received some passing reference by Mahoney JA in the Court of Appeal of New South Wales in Housing Commission of New South Wales v Falconer[324].  His Honour was the only member of that Court (Hope and Mahoney JJA; Glass JA dissenting) who referred to them and the case cannot be taken to be, as was submitted by the respondent, an endorsement of them.

    [324] [1981] 1 NSWLR 547 at 573.

30. Kennedy Street has been referred to in numerous other cases.  Walsh J in Rosenbaum v Minister for Public Works[325] thought it might require reconsideration.  It was applied in Chapman v The Minister[326], but the reasoning in that decision is itself unconvincing, particularly that of Jacobs and Asprey JJA[327] where their Honours allowed some special value in respect of the incorporation of a company for the purposes of carrying through the proposed subdivision by the dispossessed landowner.  Barber J in Altona Estate Pty Ltd v Shire of Altona[328] declined to follow it.  Hardie J himself distinguished it in Parkes Development Pty Ltd v Burwood Municipal Council[329].  In Queensland Mr Dodds, a member of the Land Court in that State in Consolidated Development Pty Ltd v Commissioner of Main Roads[330] after referring to Pastoral Finance applied Kennedy Street[331], and in Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works[332] Starke J stated that whether special value existed was a question of fact, without expressing any disapproval of Kennedy Street to which he referred.  In Arkaba Holdings Ltd v Commissioner of Highways Bray CJ[333] voiced doubt about its correctness whilst in Tasmania in Fisher v The Minister[334] Nettlefold J accepted its application there.  Cripps J applied Kennedy Street in Wimpey Construction UK Ltd v The Minister[335] but the facts before his Honour may have justified the inclusion in the compensation of a component for special value without reference to Kennedy Street.  In Polegato v Griffith City Council[336] Stein J referred to Kennedy Street with approval.  The last case in the line appears to be Nahum v Roads and Traffic Authority of New South Wales[337], in which, in my view, Bignold J correctly held that Kennedy Street did not establish any principle of valuation law.

    [325]   (1964) 82 WN (Pt 2) (NSW) 220 at 229.

    [326] [1966] 2 NSWR 65.

    [327] [1966] 2 NSWR 65 at 78.

    [328]   (1968) 20 The Valuer 63 at 69.

    [329] (1968) 16 LGRA 6 at 12.

    [330] (1968) 35 QCLLR 109.

    [331] (1968) 35 QCLLR 109 at 129.

    [332] [1970] VR 427.

    [333] [1970] SASR 94 at 102-103.

    [334] (1980) 38 LGRA 412.

    [335] (1983) 53 LGRA 75.

    [336] (1988) 64 LGRA 265.

    [337]   Unreported, Land and Environment Court of New South Wales, 2 November 1990 at 6.

31. Kennedy Street was not, in my opinion, correctly decided and it should no longer be applied.

32. In reaching the conclusions that Hardie J did in the two cases his Honour thought that he was applying Pastoral Finance[338].  Unlike the plaintiffs in KennedyStreet and Baringa, the appellant in Pastoral Finance had been carrying on its business at the one location for many years and intended to continue in that business indefinitely either there or elsewhere.  It found that its activities were expanding beyond the capacity of the existing site to accommodate them.  It acquired a very suitable site on Darling Harbour and procured plans and estimates for buildings adapted to its needs there.  Before the new premises could be constructed notice of resumption was given.

    [338] [1914] AC 1083.

1. What was accepted by all parties in Pastoral Finance was that the resumed site had a special suitability for the use to which the appellant proposed to put it.  The case was tried at first instance by a judge sitting with a jury who returned a verdict for £23,550 with a rider, added of their own accord, that they valued the land at £9,950.  His Honour entered judgment for £23,550.  The Full Court of New South Wales on appeal reduced the verdict to £9,950.

2. The Privy Council was of the opinion that the appellant was entitled to receive compensation based on the value of the land to it.  Their Lordships, unlike the Full Court of New South Wales, thought it irrelevant that the appellant's premises had not been constructed by the date of the resumption.  But they had great difficulty in arriving at the meaning of the rider volunteered by the jury.  All they could say was that it was a figure at which the jury had arrived with regard to some matter the nature of which could not be ascertained from the language used by the jury.

3. Their Lordships said this[339]:

   "It would appear that the evidence of prospective savings and additional profits given at the trial was put forward in support of a claim that the capitalized value of the increase in the profits of the business due to them should be added to the market value of the land".

   [339] [1914] AC 1083 at 1088.

4. Their Lordships did not think that such a claim could properly be made notwithstanding that the respondent had accepted its availability.  It was because the respondent had not urged to the contrary that their Lordships advised that the appeal should be allowed, and the judgment entered at first instance be restored.  In these circumstances it is difficult to see how Pastoral Finance can be regarded as a complete exposition of the law relating to special value, or as a case which holds that the possibility that the owner might make certain profits from the land but for the resumption is to be treated as irrelevant.  So to regard it would be to cast doubt on the availability of the hypothetical building method and also the discounted cash flow method of valuation in any circumstance, and upon the correctness of Eastaway v The Commonwealth[340], Australian Provincial[341] and Dymocks [342] and the established practice in compensation courts in this country to receive and act upon such matters.  As to the latter their Lordships did accept that savings and additional profits are relevant matters in the assessment of compensation, just as they would be if the dispossessed owner were purchasing the land: the availability of these savings and profits would guide such a person in determining the price which he should pay for it.  The case is no more than an authority for this, and for the proposition that one way of testing whether there is "special value" is to ask what the dispossessed owner would pay if he or she were the hypothetical purchaser.  This is not the only way of defining or calculating special value and their Lordships do not suggest it is.

   [340] (1951) 84 CLR 328.

   [341]   Australian Provincial Assurance Association Ltd v Commissioner of Land Tax [1942] ALR 156.

   [342]   Dymock's Book Arcade v Federal Commissioner of Taxation of the Commonwealth of Australia (1937) 4 The Valuer 403.

5. There is another respect in which Pastoral Finance may need explanation.  The concept of a price that a dispossessed owner would pay over and above the market price (if he or she were the purchaser) rather than lose the land may not be an entirely reliable guide to what the special value to the dispossessed owner is.  In theory all that the notional purchaser need pay is a dollar more than the next available purchaser (without a special interest in the matter) would pay.  In the highly artificial construct that the law requires in resumption cases, the formulation of the Privy Council in Pastoral Finance may only become workable if the dispossessed owner as notional investor be regarded as having a right to bid or fix a price which included special value.  Another way of viewing the formulation of the Privy Council in Pastoral Finance is to regard it as a means of ascertaining the value of the property to the owner[343].  Part of the difficulty arises from a need or desire to ensure that an owner is compensated for the loss of value of the property to the owner, a value which may not always be the same as the value which the unqualified application of Spencer's case, an exchange value or sale in the marketplace, would yield.  Sometimes such a need will involve a calculation of what might properly be called special value.  The requirement, and I would regard it as a requirement now long accepted by the courts, of the various statutes providing for compensation on resumption, that an owner be paid the value to him or her, may mean that in some cases the direct and exclusive operation of Spencer's case may not be possible.  No doubt that case will cover most situations because although it assumes a willing vendor (the dispossessed owner) it does not contemplate one who would lightly relinquish a property which had a particular value to him or her for less than that value.  Speaking of the provisions of the Lands Acquisition Act 1906-1936 (Cth) Dixon J in The Moreton Club v The Commonwealth[344] said: "It must, however, be steadily borne in mind that compensation depends upon the value to the owner dispossessed."

   [343]   Horn v Sunderland Corporation [1941] 2 KB 26.

   [344] (1948) 77 CLR 253 at 257.

6. It should also be pointed out that in Spencer itself, Isaacs J noted that the "claim for compensation was solely for the value of the land itself, and did not include any claim for damage otherwise"[345]. This was a reference to s 19 of the Property for Public Purposes Acquisition Act 1901 (Cth) which permitted the inclusion of claims for damage caused by severance from other land of the claimant, and by the exercise of any statutory powers otherwise injuriously affecting that other land.

   [345] (1907) 5 CLR 418 at 438.

7. I would respectfully agree with what Dixon J said in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd[346]:

   "[T]here is some difference of purpose in valuing property for revenue cases and in compensation cases.  In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax.  While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test.  In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate."

   [346] (1947) 74 CLR 358 at 373-374.

8. There are two other respects in which the Full Federal Court fell into error.  Let it be assumed for present purposes that there was such a principle as a head start principle and that it gave some special value to the respondent.  When the matter came back before Cripps J on remitter from the Court of Appeal his Honour said this:

   "When I determined the case, I took into account expressions of interest etc referred to by Handley JA in his judgment …  Thus, I have done that which the Court of Appeal said I was entitled to do.  I also had regard to the size of the land and its location.  As I understand the Court of Appeal, those attributes go to 'market value' and not to 'special value'.  I took into account the size of the land and its location, amongst other matters, in determining what was the 'value to the owner'.  That is, these matters were taken into account in deciding what a person in the position of Yates would have paid for the site sooner than not obtain it.  I did not, however, take it into account twice.  I accept that I did not adequately disclose my reasons in the judgment."

   A little later his Honour went on to say that in an endeavour to put an end to the litigation, he would indicate that he would fix (and did fix) the sum of approximately $35 per square metre on the Harbour Street property as the:

   "'special value' component of the compensation.  That amounted to approximately $500,000 being the amount of money over and above the 'market value' a person in the position of Yates would have paid sooner than not obtain the land because of the special value the land had to Yates by reason of the work done and expenditure incurred and referred to in the decision of Handley JA."

9. As I have already said this was an item which appropriately in this case should have been treated as a component of a sale price on the basis of highest and best use of the land.  However his Honour chose to treat it as a component of special value.  He had therefore already done precisely what the majority in the Court of Appeal had held should be done.  There was not the slightest reason to suppose that his Honour had not therefore allowed special value.  The Full Court was not sitting on appeal from Cripps J.  There was no appeal heard from Cripps J on this second occasion and the compromise which was effected of the appeal that was actually filed but not decided, was, as I have already explained, effected having regard to matters which had no connexion with special value properly so called.  The Full Court effectively ignored what his Honour Cripps J had done and misunderstood the basis of the settlement of the second appeal to the Court of Appeal. 

10. I have previously mentioned the passage in the reasons of the Full Court in which their Honours say that the parties lost sight of the real issue between them[347].  I do not think that they did.  It is not for a court to invent, or find issues which the parties have not invited it to decide or which it is unnecessary for a court to decide.  What Barwick CJ said in Ratten v The Queen[348] in the context of a criminal trial is no less true of a civil trial:

    "Each [of the protagonists] is free to decide the ground on which it or he will contest the issue, the evidence which it or he will call, and what questions whether in chief or in cross-examination shall be asked".

    [347] (1998) 85 FCR 84 at 97.

    [348] (1974) 131 CLR 510 at 517. See also Whitehorn v The Queen (1983) 152 CLR 657 at 682 per Dawson J.

    Lawyers' immunity

11. It only remains to refer to the way in which the Full Court dealt with the appellants' submissions that they were in any event entitled to rely upon the decision of this Court in Giannarelli v Wraith[349].  That can be done briefly.

    [349] (1988) 165 CLR 543.

12. As Branson J held at first instance, that case was applicable.  In doing so her Honour was impressed, as I am, by a statement of Gleeson CJ in Keefe v Marks[350] in which his Honour stated that:

    "action or inaction prior to the commencement of the hearing it concerns [is] a matter ... intimately connected with the work ultimately done in Court, that is to say, the presentation of [the case] and any consequential relief to which [a party] was also entitled [and]"

    attracted the immunity of which Mason CJ in Giannarelli said[351]:

    "[T]he common law has for a very long time recognized that the barrister is not subject to … a general duty of care.  The immunity ... is supported by powerful authority, ancient and modern, in England, Scotland and Ireland[352]."

    [350] (1989) 16 NSWLR 713 at 719.

    [351] (1988) 165 CLR 543 at 555.

    [352]   Rondel v Worsley [1969] 1 AC 191; Saif Ali v Sydney Mitchell & Co [1980] AC 198.

13. As Mason CJ also pointed out[353]: "[T]he exception which the law creates is not to benefit counsel but to protect the administration of justice."

    [353] (1988) 165 CLR 543 at 557.

14. Giannarelli is a recent decision of this Court.  It is based on sound policy and legal grounds.  No occasion arises for its reconsideration now.  It would be applicable here as Branson J held.  The Full Court seems to have assumed that simply because the work the lawyers did was done over a long period of time, that in some way divorced it from work done closer in time to the hearing even though the former answered the description of work intimately connected with the forthcoming trial. 

15. The respondent's case against the lawyers purported to be not only in negligence but also in deceptive conduct and breach of the Fair Trading Act.  Subsequently a further claim for breach of fiduciary duty was somewhat unconvincingly articulated.  All were rejected by Branson J.  The last three as I have earlier suggested probably owed their assertion in this case to a perception that the immunity might only apply to a claim in negligence.  Such a perception is not well founded.  

16. In MacRae v Stevens[354], Beazley JA, with whom Meagher JA and Priestley JA agreed, said that collateral challenges designed to circumvent Giannarelli must fail.  Accordingly in this case had any of the causes of action other than negligence in fact been made out against the appellant barrister they too would not have succeeded because the immunity as a matter of public policy would extend to him, and a proper construction of the two statutes involved dictates no different a result. 

    [354] [1996] Aust Torts Rep ¶81-405.

17. Because the solicitors were not negligent or in breach of the Trade Practices Act (assuming it applied to them) or the Fair Trading Act it is unnecessary to consider whether they too were entitled to immunity in the circumstances; or the other point argued by the solicitor appellants, that in terms they limited their obligations under their retainer[355].

    [355]   Astley v Austrust Ltd (1999) 73 ALJR 403 at 423 per Gleeson CJ, McHugh, Gummow and Hayne JJ; 161 ALR 155 at 181-182.

18. These appeals must be allowed.  The judgment of the primary judge (with one exception) should be restored and the respondent should pay the appellants' costs of the application for special leave and of this appeal.  The exception is this.  Branson J made an order that Mr Yates personally be liable for the appellants' costs on an indemnity basis.  Mr Yates appealed against this order.  It was unnecessary for the Full Court to deal with this appeal because the appeal to the Full Court succeeded.  The appeal by Mr Yates with respect to this order should be remitted to the Full Court of the Federal Court for further argument and decision.