Commissioner of Taxation v Nischu Pty Ltd

[1991] HCATrans 210

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No Pll of 1991

B e t w e e n -

COMMISSIONER OF TAXATION

Applicant

and

NISCHU PTY LTD

Respondent

Application for special

leave to appeal

MASON CJ
DEANE J

McHUGH J

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TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 9 AUGUST 1991, AT 12.07 PM

Copyright in the High Court of Australia

Nischu 1 9/8/91

MR E.M. HEENAN, QC:  May it please Your Honours, I appear

with my learned friend, MR J.R. PACKINGTON, for the

applicant. (instructed by the Crown Solicitor for

Western Australia).

MR D.R. WILLIAMS~:  May it please Your Honours, I appear

with my learned friend, MR D.S. ELLIS, for the

respondent.	(instructed by Freehill Hollingdale &
Page)

MASON CJ: Yes.

MR HEENAN:  Your Honours, we have forwarded to the Court

with some authorities and materials - - -

MASON CJ:	We have your outline of submissions.
MR HEENAN:	Your Honours, the Court is aware that under the

Stamp Act of Western Australia there are

differential rates of duty applying in relation to

the acquisition or transfer of certain types of

properties. There is a sliding ad valorem scale of

a high rate in relation to conveyances dealing with

land and there is a scale at a lower rate in

relation to marketable securities and shares and

corporations.

Because of this differential there is the

potential for land owning corporations to achieve a

saving in stamp duty arranging an effective

control ..... the asset of value by conveying the

realty by transferring all or a majority of the

shares which control the corporation.

MASON CJ:  And section 76AI is directed to that situation?

MR HEENAN: Exactly, Your Honours.

MASON CJ:	And the question is whether the applicant's land represented 80 per cent or more of the value of all
its property?
MR HEENAN:	Yes, Your Honour, and the statutory provision

that deals directly with that is section 76AI(2) of

the Stamp Act. I doubt whether Your Honours would

wish me to take the Court in any detail through the

statutory regime.

MASON CJ:  I do not think there is any occasion to do that,

Mr Heenan.

MR HEENAN:  Very well, Your Honours. Now, the questions of

importance, and we would identify them as being two

in this case is, firstly to determine the correct

method of accommodating the influence of what has

here been called mining information when coming to

make a valuation for the purposes of

Nischu 2 9/8/91

section 76AI(2), or whenever the question of

valuation of mining tenements arises.

I deliberately classified a question as

accommodating the influence of mining information

because I would wish to avoid any implication that

that intangible advantage has any kind of corporate

property, whether personalty or realty.

It was disclaimed, at first instance and in the Full Court, on the basis of the decision in

Pancontinental and the preceding line of authority,

that mining information was not property, and we

have put forward, in our outline of submissions, a

series of well known and accepted authorities which

demonstrate that proposition. They are set out

under paragraph 1 of our outline. Perhaps the best

known are the remarks of Chief Justice Latham in

the United Aircraft Corporation case. They were

incorporated and applied by Mr Justice Lusher in

Crows Nest v Commissioner of Stamp Duties (N.S.W.)

at first instance and adopted, with approval, by

Your Honour Justice McHugh in the Court of Appeal

in New South Wales in that case. And, perhaps, the

Victoria Park Racing & Recreation Ground Ltd

v Taylor case in 1937 is a graphic illustration of

the lack of any proprietary interest in

information.

That was the case where, as Your Honours will

recall, there was a broadcaster who erected a stand
on land adjacent to a racecourse and used the

advantage to broadcast races to his customers or

clients, and was faced with an action by the

proprietor of the racecourse to restrain the

infringement of the supposed rights on the basis

that there was no tangible or proprietary right

..... and that what was being done in disseminating

information of that kind was not, in any way,

actionable, the essential reason for the decision

denying any quality of property to the information.

Now, perhaps these submissions and the

proposition from those authorities is entirely

orthodox and has been acknowledged, at first

instance and in the Full Court, but we suggest,

with respect, that it has only been given lip

service and then that Their Honours below have

slipped, perhaps unintentionally, but nevertheless

in the result into the position of attributing to

the information the tangible effects of property

rights.

That, in our respectful submission,

Your Honours, deals with the first issue, the

question of how to classify the influence of this

information. And there are three ways in which it

Nischu 9/8/91

can be dealt with:  it can be associated with the

land, say, that it is the correct solution; it can

be associated with chattels in which it reposes,

that was the solution at first instance in the Full

Court.	We say, with respect, that that is most
unsatisfactory and artificial.	The chattels are

nondescript and of insignificant value as

His Honour Mr Justice Pidgeon pointed out.	They
achieve the kind of premium that they have

accomplished only because of secrecy and scarcity

of the information ...... duplication or

dissemination of the information, the chattels are

in no way diminished in their intrinsic value,

information is no longer at a premium value and,

perhaps most importantly of all, information of

that is only of use to the landholder.

It can only be deployed to the better use or

advantage of the land. It might be said that the

information, conceivably, has a value in the
marketplace, but ..... of that proposition leads to

the reflection that the only conceivable market for

the information is by a person who has an interest

in the land and can thereby directly or

derivatively apply the information to his

advantage.

And the third factor which we say favours an

association of the information with the land is

that the information reflects the potential of the

land. It is peculiar to the proper development and improvement of the land and is, in our respectful

submission, intimately part of the use and

advantages of proprietorship of the land.

DEANE J: Is it really so, Mr Heenan, that in Western

Australia mining and mineral information is only of

value to the owner of the land? In New South Wales,

at least, much mineral information will be owned by

the owner of a mining interest and be completely

unknown to the owner of the land.

MR HEENAN:  I accept Your Honour's remark without

reservation. It is, I am afraid, the result of a

somewhat loose use of the word "land" in my

submissions. I have been using the word "land" in

the sense contemplated in the Act, where it

includes an interest in a mining tenement, but

Your Honour is entirely correct. If one takes the

conventional description of land, owner of the

fee simple may well be entirely innocent of the

potential of the land. Mining development may not

occur unless that was so, but that, in our

respectful submission, does not detract from the

position.

Nischu 4 9/8/91

There is another question, Your Honour. There might be an intermediate market in mining

information; there may be businessmen or

opportunists who make a living out of assembling

relevant mining information and putting it on the

market, but that is accommodated, in my submission,

that ultimately the information is only of use in

that it can be employed by the person who has the

rights over the land, whether they be mining rights

or freehold rights.

The third possibility, Your Honours, in

dealing with the effect of mining information, is

to take it entirely out of the calculation

contemplated in section 76AI(2) on the basis that

it is not property; it is not land; it is therefore

not other property. Now that would result in the subtraction, the value of this mining information

from the aggregate value of $24 million, which was

assigned to Murchison's assets, as well as the

subtraction from the value of the land. It is not

done in this case because there was an

acknowledgement on all sides that $24 million did

represent the market value or all ..... and that was

determined by a recent comparative sale.

Your Honours - - -

MASON CJ: But it was included indirectly in the value of

property by reason of the fact that it fell within

the documents?

MR HEENAN: In the $24 million, yes.

MASON CJ:	And they were included in property, but not, of course, in land.
MR HEENAN:	Yes, and the significance of that result,

Your Honours, is that the value of information is

then segregated entirely towards personality and

the premium value of the information vests in the

books, magnetic tapes, stone cords and electronic

which His Honour Mr Justice Pidgeon, as I have	data which make up the information; the chattels,	already indicated, thought were of themselves
insignificant value. Now, Your Honours, if, by
doing that, it is to treat, in our respectful
submission, the information as if it were property
or if one is trying to preserve the Pan Continental
rule, eschew any infringement of its dictates, one
is forced into the fiction of attributing that
value to these chattels. As I have already
submitted, the problem there is that immediately the secrecy or the scarcity of the information is
removed, the chattels resume their former minor
value.

Nischu 9/8/91

So, the question of importance is how to

accommodate the influence of this information. We

wish to contend that it should be accommodated by

associating it with the realty rather than these

chattels and that that has business and historical

tradition to support it. Obviously, Your Honours,

if we could demonstrate that there were errors in

the court below on this point a decision in our

favour would have profound implications for the

valuing of mining tenements or, in fact, any other

property where intangibles have to be considered in

..... as to the value.

Now, the result which was produced by the Full Court was justified by His Honour the

Chief Justice on the basis that the provisions in

the Act are, themselves, artificial. The

incongruous result associating this premium value

of information with chattels was a product of that

artificiality.

DEANE J: Except can one really take the global approach to

the information that you are taking, in that I

mean, one can well understand if the information

was that there is gold in a particular place that

there is a strong argument that that adds to the

value of the land. But if the information is that

there is no mineral in three-quarters of the land

that is valuable information for the owner of the
land but in one sense it detracts from the value of

the land.

MR HEENAN:  Yes.

DEANE J: But here the approach seems to have been adopted

that even if the information is of value to the
owner of the land it is to be included in valuing
the land even though the facts divulged by the

information reduce the value of the land. Is not

that your approach?

MR HEENAN:	Well, yes, Your Honour. We say that however the information is to be accommodated it should be
associated with the land.  It may have a
depreciating affect upon the value, for reasons
which Your Honour Justice Deane has just
exemplified, or it may have an appreciating value, or its value might be neutral but whatever it
should be associated with, in our respectful submission, it should be the land. It would
not - - -

DEANE J: Well, you are really saying that the information

should have no value if it depreciates or lowers

the true value of the land .

Nischu 6 9/8/91

MR HEENAN: Well, Your Honours, the difficulty is

distinguishing between rights of access to

information which obviously have a commercial value

and whether or not to treat the information itself

as a species of property for the purpose of the

section 76AI(2)(b) calculation. If one is true to

the traditional distinction between real property

and personal property it is not possible

immediately to locate a venue for the information

on the simple ground that it is not property.	So a
decision has to be made as to where it is to be
associated when it comes to value.

Now, the rights to its access may very well

have a significant commercial price and there may

be a market to sell rights of access. But those

rights of access, whether been received or

distributed, in our respectful submission, would

not be rights of property in the test contemplated

in section 76AI(2)(b).

The denunciation by the Full Court of this

distinction is one of artificiality and, in our

respectful submission, does not more than emphasize

that there is a long established division between

real property and personal property in the law.

That is the only distinction which is being made

here. So the choice to be made is where to

associate the property: the land, chattels or to

leave it out of account.

MASON CJ:  Mr Heenan, if we just take the magnetic tapes as

an example, would not the magnetic tapes have a

very significant value in themselves? I am

assuming that they reveal mineralization in the

land that in that sense they may reveal that the
land has a value that people would not be aware of

but for possession and knowledge of the magnetic

tapes. And, also, they may reveal how one could

conduct economic development of any mineral load

that was in the land.	Now, would not the magnetic
tape itself, if it had those properties, have a

significant value, quite apart from the land?

MR HEENAN:  The question which Your Honour the Chief Justice

puts to me can be broadened and the point made in

respect of any other repository of information,

whether it be an engineering blueprint, the key to

a code book or the knowledge of the combination of

a safe. All of those matters are significant

because of the advantages which possession of the

information gives. But they have value only

because of their scarcity or secrecy and once the

scarcity or secrecy has gone the tape, which retains all its other characteristics and is undiminished in any tangible form, reduces in

value.

Nischu 7 9/8/91

The point that Your Honour the Chief Justice

has made is one of the arguments which is most

often advanced by those who would seek to give

valuable information the attribution of property.

The answer which is conventionally given is the one which I have endeavoured to convey.

Your Honours, might I move to the second?

MASON CJ: Yes.

DEANE J: Except, if you took this case, if the owner of the

land said to a mining company, "I'll sell you the
land for 80,000 and the information for 24,000",
the mining company would logically say, "Can I buy

the information for 24,000 before I decide to buy

the land for 80,000?". Indeed, provided it could

be sure that it could buy the land it would be out

of its mind to buy the land if it could get the

mining information for 24,000 first and then,
depending on the information, decided whether it

wanted the land for 80,000.

MR HEENAN:  I respectfully adopt the illustration which

Your Honour has just given as demonstrating the

absurdity of distinguishing between the influence

on value of the information and the land.

DEANE J: Well, it was directed towards distinguishing.

MR HEENAN:  Yes, well the Pan Continental case is an

exemplification of that because in a commercial

contract just as described, the question for a duty

came up, and the only property that was dutiable

was the sale ..... in tenement. The sale of the

information was not regarded as the sale of
property, and ..... consideration which was

apportioned to that was not dutiable .....

basis ..... and here one slips, or I already slipped

into the mistake of speaking about a sale of

information. That is just a compendious

abbreviation. It is a sale of rights of access to

the information coupled with the preservation of

its confidentiality.

McHUGH J:  I suppose in one sense the value of any asset is

always a reflection of information as to what can

be done with that asset.

MR HEENAN: That may often be the case, Your Honour. Take

an industrial plant, a chemical refinery - there

are processes at work or - - -

McHUGH J: Well, take a simple product. Take oranges. I

know there is a market in South Australia for them.

They may have more value there than selling them in

New South Wales.

Nischu	9/8/91
MR HEENAN:	But one would not, in that example, attempt to

distinguish between the value of the oranges and

the value of the knowledge of the available market.

McHUGH J:	No, I was putting it in your favour, in a sense.
MR HEENAN:	Yes, well, I am very happy for that assistance,

Your Honour.

Your Honours, the second point is what we say

is the misapplication of the test in Spencer. This
is the subject of paragraph 6 of our outline.

Your Honours will recall that the learned

Commissioner, at first instance, and in the Full

Court, made vigorous, and we would say restrictive,

application of Justice Isaacs' well-known test in

Spencer about the hypothetical ..... purchaser

possessed of a full understanding of ..... being

purchased and sold. I wonder if I might just

trouble Your Honours to look at Spencer's case.

The passage is extremely well known.	It is at
page 441:

The plaintiff is to be compensated; therefore

he is to receive the money equivalent to the

loss he has sustained by deprivation of his

land, and that loss, apart from special damage

not here claimed, cannot exceed what such a

prudent purchaser would be prepared to give

him. To arrive at the value of the land at

that date, we have, as I conceive, to suppose

it sold then, not by means of a forced sale,

but by voluntary bargaining between the

plaintiff and a purchaser willing to trade,

but neither of them so anxious to do so that

he would overlook any ordinary business

consideration.

The next is the critical sentence -

We must further suppose both to be perfectly

acquainted with the land, and cognizant of all

circumstances which might affect its value,

either advantageously or prejudicially,

including its situation, character, quality,

proximity to conveniences or inconveniences -

et cetera.

Now, the learned Commissioner at first

instance, and the judges in the Full Court,
accepted that for the purposes of valuing this land
the hypothetical purchaser would be perfectly
acquainted with all the mining information and
would negotiate a price for his purchase in the

knowledge of all the advantages for the potential

Nischu 9 9/8/91

development of the land that that knowledge would

bring to him.

However, a gloss is put on the test, because

it was then said that the land could only be

developed to advantage and this value sustained, if

he had access to this information, and a purchaser

would have to ensure the information passed to him

before he would be willing to pay a price ..... And,

in fact, unless the information was transferred the

mining ..... ! think there was a break in the sound,

Your Honours.

MASON CJ: Could you not hear us, Mr Heenan?

MR HEENAN:  I sense that something happened a moment ago,

Your Honours, but I can hear the Court quite well.

MASON CJ: Yes.

MR HEENAN:  As a result of this application of

Mr Justice Isaacs' test, evidence was taken as to

the cost of regenerating this information in the

hands of the purchaser and, after examining a lot

of detail, the conclusion was reached that a new

purchaser who did not have permanent access to this

information might have to outlay up to $10 million

in order to put himself in the same position in the

future as he would have been at the moment of

negotiation. Hence, there should be a deduction

from the price.

We say, with respect, that that is an entirely

incorrect application of the Spencer test.

Mr Justice Isaacs' words have been used, we would

say, with respect, wrongfully, in order to restrict

the value, and this is an impermissible approach.

In fact, we would say that it could never have been

intended by the justices in Spencer's case that the

words would have been used in that way. Perhaps

this can be seen most clearly in the judgment of

Justice Barton at pages 436 and 437. At page 436

Justice Barton says:

I should say, in view of the many authorities

cited and upon the sense of the matter, that a

claimant is entitled to have for his land what

it is worth to a man of ordinary prudence and

foresight, not holding his land for merely

speculative purposes, nor, on the other hand,

anxious to sell for any compelling or private

reason, but willing to sell as a business man

would be to another such person, both of them

alike uninfluenced by any consideration of

sentiment or need.

Nischu 10 9/8/91

The emphasis, we say, that Spencer gives to valuation is that a truly commercial value should

be reached, one which will allow the property to be

enjoyed at its ultimate or highest potential. The

approach taken by Their Honours in the Full Court

and the learned Commissioner at first instance is

entirely inconsistent with that.

DEANE J: Except a reference to value for the purposes of

compensation in an acquisition Act occurs in a

completely different context to a reference to the

value of land in section 76AI of this Act. That

may help you in so far as Spencer's case was

referred to. But it is not apparent to me that you

could take over what was said about valuation in

Spencer's case to this Act.

MR HEENAN:  Your Honours, at first instance and in the Full

Court, the case proceeded on the basis that the principles for determining the value of your land are set out in Spencer's case, and I should openly

acknowledge that that is the footing on which the

case is being conducted.

DEANE J: It is not apparent to me that, even if one thought

that the decision of the Full Court was correct in

this case, it would say anything at all to a case

of valuation for the purposes of a resumption case.

MR HEENAN:  Your Honours, it may do so in instances where

there was information which bore upon land for

compensation, information associated perhaps with

the development potential of land which was

secret ..... available to the general market.

DEANE J: Or take for example architects' plans for a house

on the land. On your argument, would they be

included in the value of the land?

JfR HEENAN:  No, we would distinguish between architects'

plans, because they do not reveal the potential of

the land. Geologists' plans, perhaps.

DEANE J: But the point I was making is it is not apparent

to me that in some circumstances architect's plans

would not be relevant for the purposes of

compensation.

MR HEENAN: That may be so, Your Honour. Your Honours, I do

not know whether it is necessary for me to
elaborate on the potential significance of this

decision. In the written outline of submissions

which we have put in, we have somewhat troubled

Your Honours by appending a journal article which

was written about the decision in this case at

first instance in a stamp duty bulletin circulating

in Australia, and the last page of that bulletin

Nischu 11 9/8/91

speaks about the consequences of the decision and

puts forward the view that the decision is of
considerable importance in relation to the valuing
of any mining tenements, not only for the purposes
of division 3B of this Act, Your Honours, but where

there is a question of exchange of shares in a land

owning corporation. Whenever there is a sale of
mining tenements between individual holders and the

value of the tenement or the chattels, according to ..... the determination is enhanced or diminished by knowledge of the potential geology, this question

can arrise, and there is great potential ..... avenue

if a large apportionment of value can be put to

..... rather than tenements and it may well have

implications outside ..... revenue statutes.

Those are our submissions may it please

Your Honours.

MASON CJ: Yes, thank you, Mr Heenan. Yes, Mr Williams.

MR WILLIAMS:	Your Honours, the respondent submits that the decisions of the Commissioner at first instance,
and of the Full Court, which was unanimous, are correct and they are attended of no doubt whatever.

In the applicant's submissions there is an

attempt to segregate information contained from the chattels containing the information. In some cases the chattels record the information and in some

cases they actually embody the information. In our

submission, that distinction is simply not a valid

one.

The questions that are asked by the case,

arising out of the terms of section 76AI, are two:

they are what would a hypothetical purchaser in a

Spencer v The Commonwealth transaction receive for

the land, or more precisely the mining tenements,

and secondly, what would the hypothetical purchaser

in the Spencer v The Commonwealth transaction

receive for all property in the transaction.

It needs to be said at once that this is not a

Pancontinental case. In Pancontinental what was at

issue there was a contract in which the parties had

appropriated different parts of the consideration

to different items. In respect of mining

information the contract provided that an amount in

excess of $4 million was appropriated to something

called "mining information", arising from or as a

result of feasibility studies and exploration work,

conducted with respect to the joint venture area

and being confidential information provided to

Pancon.

Nischu 12 9/8/91

The contract in this case was entirely

different, that is the real one and, we would

submit, the hypothetical one. The nature of it can

be seen in the statement of agreed facts which is

set out in the judgment of Mr Justice Wallace at

pages 63 and 64. Paragraph 2, in the middle of the

page, he recites that:

The assets of the Company -

at the relevant date comprised certain things -

an undivided ..... interest in a joint

venture .....

Miscellaneous mining tenements -

and then it said -

By its ..... interest in the ..... Joint Venture,

the Company is beneficially entitled to an

undivided ..... interest as tenant in common

in .....

(a) the ..... Joint Venture;

(b) the mining tenements .... .

(c) all improvements .... .

(d) all fixtures, facilities, machinery,

equipment and -

et cetera -

(e) all ..... rights to mine -

then in paragraph (f) -

all surveys, maps, mosaics, photographs,

electromagnetic tapes -

et cetera -

and any other data concerning, relating to or

derived from the Tenements.

The statement of agreed facts then recites that -

All the mining information relating to

the ..... Joint Venture is embodied in books,

papers, reports -

et cetera, which are defined as -

"the information documents" -

Nischu 13 9/8/91

and then, in paragraph 3 -

The information documents are goods, wares and merchandise for the purpose of ..... the

Stamp Act ..... and are chattels."

The reference to "goods, wares and merchandise" is

to the familiar form of exemption from conveyance

duty of goods, wares and merchandise. So, it is

expressly contemplated that the chattels contain
the relevant mining information.

Now, when one comes to determine what the

value of the land is the parties, obviously,
contemplated the chattels were separate from it.

When one comes to determine the value of all the

property one contemplates, obviously as the parties

did, that the land and the chattels be taken

together. And it follows from the statement of

agreed facts that the information, in that sense,

go with the chattels.

That does not only reflect the intention of the parties in their contract it reflects common

sense.

This can be seen from the judgment of the learned Commissioner at page 12.	He said at about
line 10:

In my opinion, Murchison's land is to be

valued at 30 June 1987 on the basis that a
willing but not anxious purchaser had
knowledge of all of the mining information for
the purpose of negotiating a price for that

land.

And he refers there, of course, to

Mr Justice Isaacs' "perfect acquaintance".

However -

he says -

it is not to be assumed that, by acquiring the

land, the purchaser will also acquire a

permanent right of access to, and use of, that

information. By the hypothetical purchase,

the notional purchaser will simply acquire the

relevant land.

Now, this was considered in the Full Court,

and in particular in the judgment of the

Chief Justice, Mr Justice Malcolm, with whom

Mr Justice Pidgeon agreed. I would mention,

however, that Mr Justice Wallace referred in his

judgment to the fact that the mining information

Nischu 14 9/8/91

was contained in something like 80	boxes which were
stored in a separate storage room.	So we are
talking about a substantial volume	of chattels and,
by necessity, a substantial volume	of information
contained within them.

Chief Justice Malcolm, at page 50 in his

judgment, said, at the top of the page:

In my opinion there is a proper distinction to

be made between an opportunity by inspection

of the documents and things to become fully
acquainted with the mining information and the
right of ownership of those documents and

things so as to acquire a right of permanent

access to the information.

And at the bottom of the page at line 20, he said:

To the extent that it was accompanied by

chattels containing relevant mining

information it was proper to assign or
apportion a value to that information or, more
accurately, to the chattels. While the
information as such is not property it has a
value. Ownership of the mining tenements does
not include a right of access to the

information. Ownership or possession of the

documents and things which contain the

information must be acquired in order to gain
permanent access to the information. It

follows, in my view, that any relevant value

must be reflected in the value of the chattels

rather than in the value of the mining

tenements.

Now, before the two courts below the applicant

contended that the value of all property was
$24 million and the effect of the exclusion of the
chattels, for the purpose of the valuation of the

land, was accepted on the basis of evidence of all

of the valuation experts and, in particular, the

applicant's leading expert, Mr Robinson, as

reducing the price. This is referred to by the

learned Commissioner at page 19, a passage in the

last paragraph. This is picked up in the judgment

of the Chief Justice at page 53 where he recites

it. It says:

In oral evidence, Mr Robinson agreed that the

value of Murchison's interest in the tenements

could be ascertained by deducting the

proportionate cost of reproducing the

necessary mining information from the value of

Murchison's property, but he added the

qualification that this might not necessarily

give a market value for the interest in the

Nischu 15 9/8/91

tenements. Although the reasons for this

qualification were not expressed by

Mr Robinson, they were, I think, quite clear. Some of them emerge from evidence of Mr McCarthy which revealed the advantages of participation in a joint venture and the disadvantage of delay in realising income from the tenements. A purchaser would be concerned about the risks of incurring unexpected costs

in regenerating the information. The

realization of income from mining the

tenements would be delayed by the time taken

to do the necessary exploration and other
work. Further, the purchaser would have to

negotiate terms on which to participate in a joint venture with the other parties holding interests in the tenements, for the

development of the tenements. By such an

arrangement the purchaser would obtain the

benefit of the management and other expertise

relating to the tenements and the financial

resources of the existing joint venturers.

Consequently, a purchaser who believed that

Murchison's property was worth $24 million

would not be prepared to pay that sum less

31.16% (sic) of the information reproduction

cost, estimated at $10 million for Murchison's

interest in the tenements alone, but would seek a greater deduction from the value of

Murchison's property.

Now, in our submission, the extent of the

resulting difference is simply a matter of fact to

be determined on the evidence and in the light of

that analysis, it is our submission that no

question arises as to the attribution or

appropriation of information floating free as a segregable item of property or pseudo property.

McHUGH J: But what troubles me about this case, if this was

a resumption case, you would be arguing that this

land was worth more than $19.2 million.

MR WILLIAMS:  With respect, Your Honour, the principles that

distinguish between the application of Spencer's

case in a revenue situation and those from the

situation where compensation is in question do not

arise in this case. The application of the Spencer v The Commonwealth principle is one which is simply

done by having regard to the nature of the property

that is being sold. Now, in a revenue valuation,

as in a compensation valuation, if you are valuing

the land, the purchaser, a hypothetical purchaser,

is not receiving the chattels that relate to it.

In our submission the question is as simple as

that. The question which arises indirectly is what

is the value of the chattels? If one can, and in

Nischu 16 9/8/91

this case one can value all of the property by
reference to the market sale of all of the
property, you do not need to address the indirect

question of, what is the value of the chattels?

Since there is no comparable sales evidence of a

sale of the mining tenements, as such, without a
permanent right of access to the chattels, the

valuers are obliged to undertake the sort of

exercise they did, in endeavouring to determine

what discount, from the value of all the property,

would result if the chattels did not go with the

land and it is that question to which the evidence

of the valuers was directed.

In our submission, neither the question of the

attribution of information to chattels, to land or

to leaving it on its own, nor the question as to

the application or misapplication of Spencer's case

arises at all. They are our submissions in

response.

MASON CJ: Yes, thank you, Mr Williams. Yes, Mr Heenan.

MR HEENAN:  Your Honours, might I draw attention to a

passage in the judgment of His Honour

Mr Justice Pidgeon at page 76 dealing with the

question of whatever value is in the chattels or in

the information. At line 10 on page 76, His Honour

says:

If the land had been owned by an

individual it would have been open to that

individual to have transferred it to another

person and in the agreement to have

apportioned a figure in the vicinity of
$5 million as the price of the interest in the
tenements, a figure in the vicinity of $19

million in respect of the mining information

and a further figure for the chattels

themselves. This would have been an

insignificant figure.

In our respectful submission, that is a

correct characterization of the intrinsic value of
these chattels. It is only the secrecy and

scarcity of the information which gives them their

premium value.

The passage in the judgment of

Chief Justice Malcolm, referred to by my learned

friend at page 50, about there being a proper

distinction to be made between an opportunity by

inspection of the documents and things to become fully acquainted with the mining information and the right of ownership of those documents so as to

acquire a right of permanent access of the

information throws up the very question, the

Nischu 17 9/8/91

question of whether the value of the information
should be associated with the chattels or with the

land.

In our respectful submission, that is a

question of importance and it is by no means clear

that the choice made by the Full Court is right.

The passage in the evidence of the valuer,

Mr Robinson, that was referred to by my learned

friend comes from the cross-examination of

Mr Robinson. Mr Robinson was the valuer called for

the Commissioner of State Taxation and he took the

conventional approach of forming a valuation for

the mining tenements assuming permanent knowledge

of the details of its potential and the passage

which was being quoted from rises from his

response, the preferred approach of the present

respondent. It is an explanation of how he would

try to undertake the valuation if that was the

approach forced on him. It was not his preferred

method of dealing with the matter. Those are our

submissions in reply, Your Honour.

MASON CJ: Thank you, Mr Heenan. The Court will announce

its decision in this matter at 2 o'clock our time,

which will be 12 o'clock Western Australian time.

MR HEENAN:  May it please the Court.

AT 12.59 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 1.46 PM:

MASON CJ: In the context of a revenue statute which

requires a division of land from any other property

owned by a person, as distinct from an acquisition

statute which is concerned with compensation for

property taken from an owner, we are not persuaded

that the applicant's arguments would have

sufficient prospects of success on an appeal to

warrant the grant of special leave. The

application for special leave to appeal is

therefore refused.

MR WILLIAMS:  Your Honours, the respondent seeks an order

for costs.

MASON CJ:  Yes. You do not resist an order for costs,

Mr Heenan.

Nischu 18 9/8/91

MR HEENAN:	No, Your Honours.
MASON CJ:	The application is refused, with costs, and the

Court will now adjourn sine die.

AT 1.48 PM THE MATTER WAS ADJOURNED SINE DIE

Nischu 19 9/8/91