Perilya Broken Hill Limited v Valuer General (No 4)
[2014] NSWLEC 97
•15 July 2014
Land and Environment Court
New South Wales
Medium Neutral Citation: Perilya Broken Hill Limited v Valuer General (No 4) [2014] NSWLEC 97 Hearing dates: 15 July 2014 Decision date: 15 July 2014 Jurisdiction: Class 3 Before: Biscoe J Decision: Orders as per [20] of judgment.
Catchwords: PRACTICE AND PROCEDURE - valuation appeal - error of law by primary judge - remitted by Court of appeal to this Court to redetermine - order made by this Court that factual findings made by primary judge and not disturbed by Court of Appeal are not to be reopened without leave of the court - applicant moves for leave to reopen factual findings - whether the motion should be stood over to the hearing or determined prior to the hearing. Legislation Cited: Valuation of Land Act 1916 s 6A Cases Cited: Perilya Broken Hill Ltd v Valuer-General [2012] NSWLEC 235
Perilya Broken Hill Limited v Valuer General (No 3) [2013] NSWLEC 215
Valuer-General v Perilya Broken Hill Limited [2013] NSWCA 265, (2013) 195 LGERA 416Category: Procedural and other rulings Parties: Perilya Broken Hill Limited (Applicant)
Valuer General (Respondent)Representation: COUNSEL:
R P L Lancaster SC (Applicant)
T S Hale SC and M Carpenter (Respondent)
SOLICITORS:
Sparke Helmore (Applicant)
Crown Solicitors' Office (Respondent)
File Number(s): 30076/11
Judgment
In this remitter from the Court of Appeal, the applicant moves for leave to reopen facts determined at the first hearing and not disturbed by the Court of Appeal. The issue before me is whether the motion should be stood over to the final hearing, as the applicant proposes, or whether it should be determined before the hearing, as the respondent proposes.
The proceedings are a valuation appeal in Class 3 of the Court's jurisdiction by Perilya Broken Hill Limited against the Valuer-General's determination pursuant to s 6A of the Valuation of Land Act 1916 that the land value of mining land at Broken Hill was $20.9 million. Lloyd AJ allowed the appeal and determined the land value as $4.9 million: Perilya Broken Hill Ltd v Valuer-General [2012] NSWLEC 235. The Valuer-General appealed to the Court of Appeal, which allowed the appeal for error of law and remitted the matter to this Court for redetermination in accordance with its decision: Valuer-General v Perilya Broken Hill Limited [2013] NSWCA 265, (2013) 195 LGERA 416. Shortly thereafter, I made the following order, which has occasioned the applicant's leave motion:
Facts determined by Lloyd AJ at the first hearing and not disturbed on appeal are not to be reopened without leave of the Court.
The Valuer-General then moved for separate and preliminary determination of one of the questions in the matter but, when that motion was called on for hearing, the Valuer-General consented to it being dismissed with costs. On that occasion, I dealt with the background to the proceedings and the issues in some detail in a costs judgment: Perilya Broken Hill Limited v Valuer General (No 3) [2013] NSWLEC 215.
Thereafter, the Valuer-General filed and served evidence including as to a new valuation methodology to replace the one held to be legally erroneous by the Court of Appeal. The Valuer-General now contends that land value was in the approximate range of $68 million to $318 million (in 12 alternative scenarios), but does not say that the Court should increase the Valuer-General's original valuation assessment.
In March 2014, the Valuer-General filed a notice of motion in the following terms seeking leave to reopen facts determined by Lloyd AJ and not disturbed on appeal:
1. To the extent necessary, the respondent have leave pursuant to paragraph 1 of the directions made 20 September 2013:
(a) to rely upon the total figures for the proved and probable reserves of zinc, lead and silver published by the applicant in its document entitled "Perilya Broken Hill Limited. Resource & Reserves Estimate 30th June 2007" being a part of Exhibit A admitted when this matter was heard before Lloyd AJ (see Blue Appeal Book page 269S) namely:
"Zinc 6.7% of 11,198,00 tonnes;
Lead 4.9% of 11,198,000 tonnes;
Silver being 49.5 grams per tonne of 11,198,000 tonnes"; and
(b) if it becomes necessary to adopt any after tax cash-flow analysis, to calculate depreciation in accordance with s 40.6 of the Income Tax Assessment Act 1997 (Cwth)
On 11 March 2014, by consent, I ordered that the Valuer-General's notice of motion be stood over to the final hearing. However, today the parties have agreed that that order should be varied by now giving the Valuer-General leave in terms of paragraph 1(a) of the notice of motion, leaving only the residue to be stood over to the hearing.
Thereafter, the applicant filed and served evidence that would reopen a number of findings made by Lloyd AJ at the first hearing.
Consequently, on 7 July 2014 the applicant filed a notice of motion seeking leave to do so in the following terms:
1. To the extent necessary, the Applicant have leave pursuant to paragraph 1 of the directions made on 20 September 2013, to rely on evidence relevant to proof of the following facts as at 1 July 2007 (including, as the circumstances require, in respect of the knowledge or understanding of reasonable and fully informed parties to a hypothetical sale transaction as at 1 July 2007):
(a) The estimated cost to obtain / reconstruct mining information (that is, information that is not in the public domain that is necessary or appropriate for the operation of a mine at Perilya Broken Hill) to an adequate level of confidence that would allow responsible operation of the Perilya Broken Hill mine is $270,691,000.
(b) The estimated time to obtain / reconstruct mining information to an adequate level of confidence that would allow responsible operation of the Perilya Broken Hill mine is 7.8 years.
(c) The estimated time required to assess mining information and seek approval to purchase infrastructure and other equipment necessary for the operation of the Perilya Broken Hill Mine is 0.2 years.
(d) The estimated cost of care and maintenance of the Perilya Broken Hill Mine for a period of ten years is $266 million.
(e) The estimated cost of care and maintenance of the Perilya Broken Hill Mine for a period of two years is $53.2 million.
(f) The forecast rate of production for the Perilya Broken Hill Mine from 1 July 2007 is 1.88 million tonnes per annum, indicating a mine life of 5.96 years.
(g) The forecast mineral prices, determined in accordance with the consensus estimate methodology, are:
FY2008
FY2009
FY2010
FY2011
Long Term
Zinc A$/t
4,100
3,410
2,900
2,470
1,970
Lead A$/t
2,010
1,600
1,220
1,160
1,100
Silver A$/kg
570
580
580
460
500
(h) The discount rate applied in the valuation is to be in the range of 18% to 20% after tax.
2. Further or in the alternative to paragraph 1, to the extent necessary, the Applicant have leave pursuant to paragraph 1 of the directions made on 20 September 2013 to rely on the following statements and reports as evidence in the proceedings:
(a) statement of evidence of Edward Gleeson dated 19 May 2014; and
(b) statement of evidence of Ken Pendergast dated 27 June 2014.
It is that notice of motion with which I am now dealing. Paragraph 2 is not pressed. The only issue in respect of which the notice of motion is listed for determination today is whether it should be stood over to the final hearing or determined before the final hearing. However, the parties acquiesced in my determining today whether leave should be granted in respect of paragraph 1(e), 1(f), 1(g) and 1(h) of the notice of motion.
The applicant submits that the matters in paragraph 1(a)-(d) of its notice of motion are responsive to expert evidence supporting a revised methodology adduced by the Valuer-General. As it was put in paragraph 3 of a letter of 8 July 2014 from the applicant's solicitors, Sparke Helmore, to the Valuer-General's solicitor:
The facts set out in proposed order 1, paragraphs (a) to (d) of the Notice of Motion relate to the consideration of mining information in valuation of mining titles. Mr Gleeson and Mr Pendergast have addressed the value of the mining information and the cost to obtain or reconstruct that information in response to the revised methodology relied on by the Valuer-General in these proceedings. Perilya relies on that material in direct response to the case now pursued by the Valuer General in the proceedings. The revised methodology proposed by the Valuer-General's retained expert Mr Gemmell in his statement dated February 2014 involves determining the "total project value" and deducting certain cost components resulting in a value for "mining property", which includes mining titles an mining information. For example, in paragraph 7 of Mr Gemmell's statement he confirms that he has "assumed that all data relating to current land status, ore reserves and mining operations is known and readily available to both the current land owner and the potential acquirer". At paragraph 35 of Mr Gemmell's statement he confirms that he has calculated the value of the "mining property", which includes mine data or mining information, as confirmed by the following statement at paragraph 36:
"...The resultant net present value is the sum value of those project components that have not been included in the inputs. In the models under consideration, this includes land, mine data, and entrepreneurial or managerial reward."
In those circumstances, the applicant contends that it is appropriate for leave to be granted for it to rely on the facts set out in the statements prepared by Mr Gleeson and Mr Pendergast to address and respond to Mr Gemmell's methodology.
The Valuer-General disputes that paragraph 1(a)-(d) of the notice of motion are responsive to the Valuer-General's evidence, and submits that it opens up a large new area of the case; that the Valuer-General will incur substantial time and costs estimated to far exceed $100,000 if it has to respond to it, and it is apprehensive that once it puts on its own evidence in reply it will all be admitted into evidence even if the applicant's evidence is not responsive. Therefore, the Valuer-General submits, the issue of whether it is responsive should be determined before the final hearing.
The applicant submits that in order to determine whether its evidence is responsive there would have to be a substantial mini-trial before the final hearing; therefore, that it should be deferred to the final hearing when the trial judge will be best placed to rule on it; and that this would be even-handed given that the Valuer-General's notice of motion for leave was stood over by consent to the final hearing.
There is weight in both parties' submissions. On balance, in my opinion, it is preferable to stand over paragraph 1(a)-(d) of the applicant's notice of motion to the final hearing subject to two terms. The first term is that if it is ultimately determined to be not responsive to the Valuer-General's evidence, then the Valuer-General's costs of replying to it should be paid by the applicant. Secondly, in the event it is found to be not responsive, it is not, without further order of the Court, to be admitted into evidence.
As regards paragraph 1(e) of the applicant's notice of motion, the applicant clarifies that all it actually seeks to do is to tender evidence (with more detailed explanation) of the cost referred to at [13] of Lloyd AJ's reasons for judgment, being evidence tendered before his Honour but which was rejected because it was served too late. Since the respondent is no longer prejudiced by the lateness of the tender, I will give leave to tender such evidence, but will refuse leave in terms of paragraph 1(e) of the notice of motion. The applicant is content with that course.
Paragraph 1(f) of the applicant's notice of motion was addressed at paragraph 5 of Sparke Helmore's letter as follows:
The facts set out in proposed order 1(f) of the Notice of Motion relate to estimated rates of production, Mr Gemmell, at paragraphs 18 to 20 of his expert statement dated February 2014 addresses the question of metal production estimates and states that the Court has underestimated metal production. Mr Gemmell also produces revised models to account for his estimates of future metal production (different to those determined by Lloyd J). It is therefore appropriate for Mr Gleeson to respond by giving his opinion of the production rates and estimates.
Before Lloyd AJ, the parties agreed that the forecast rate of production was 2.1 million tonnes per annum, indicating a mine life of 5.5 years, which his Honour adopted: at [11]. Paragraph 1(f) seeks to reopen this factual finding through new expert evidence that it is 1.88 million tonnes per annum, indicating a mine life of 5.96 years. In my view, no good reason has been put forward for permitting the applicant to depart from the parties' agreed factual position at the original hearing. Accordingly, I decline to grant leave in terms of paragraph 1(f) of the applicant's notice of motion.
Paragraph 1(g) of the applicant's notice of motion was addressed at paragraph 6 of Sparke Helmore's letter as follows:
The facts set out in proposed order 1(g) of the Notice of Motion relate to forecast mineral prices. Since the earlier Land and Environment Court Proceedings, the Applicant has engaged a new expert to provide valuation evidence, Mr Pendergast, who has significant experience in valuing mining property in potential acquisitions. Mr Pendergast's view is that potential purchasers will determine value based on the mineral prices "he or she believes to be most probable over the expected life of the mining project". Mr Pendergast considers that the method most widely applied for assessing forecast commodity prices is to compile a consensus estimate view, with reliance on historic or spot prices being limited. This is Mr Pendergast's expert opinion and it is appropriate for his opinion to be considered by the Court. Perilya contends that the Court should determine land value by reference to matters that are actually considered in current commercial practice in acquisitions of mining property.
This seeks to reopen, through evidence from a new expert which is more favourable to the applicant, anticipated mineral prices determined by Lloyd AJ after considering each party's expert evidence, at [19] of his Honour's reasons for judgment. In my view, no good reason has been advanced as to why this should be permitted. Accordingly, I decline to grant leave in terms of paragraph 1(g) of the applicant's notice of motion.
By consent, I will give leave in terms of paragraph 1(h) of the applicant's notice of motion.
The orders of the Court are as follows:
1. By consent, in respect of the respondent's notice of motion filed 4 March 2014, the Court orders:
(1) The respondent is granted leave to rely upon evidence referred to in paragraph 1(a) of the notice of motion; and
(2) The respondent's prayer in 1(b) is stood over to the hearing.
2. In respect of the applicant's notice of motion filed 7 July 2014, the Court makes the following orders:
(1) Stand over paragraphs 1(a)-(d) to the final hearing;
(2) Refuse the leave sought in paragraph 1(e), but grant leave to the applicant to rely upon the statement of Edward Gleeson dated 8 October 2012, together with evidence in further explanation of that opinion, and noting that the amount of those costs is no more than $60 million;
(3) Refuse the leave sought in paragraphs 1(f) and 1(g);
(4) Grant the leave sought in paragraph 1(h).
(5) Further to order 2(2) above, in the event that the Court at the final hearing determines that the evidence referred to in paragraphs 1(a)-(d) is not responsive to the Valuer-General's case (as it appears from the Valuer-General's served evidence), the applicant is to pay the Valuer-General's costs of replying to that evidence, as assessed or agreed, and the evidence is not, without further order, to be admitted.
3. The respondent's evidence in reply is to be filed and served by 23 September 2014.
4. The applicant's explanatory evidence referred to in Order 2(2) is to be filed and served by 19 August 2014.
5. The matter is listed for directions on 26 September 2014.
Decision last updated: 16 July 2014
Perilya Broken Hill Limited v Valuer General (No 4) [2014] NSWLEC 97
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