Port of Melbourne Corp v Melbourne City Council & Valuer General Victoria

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

VALUATION, COMPENSATION & PLANNING LIST

S CI 2013 03164

PORT OF MELBOURNE CORPORATION

Plaintiff

MELBOURNE CITY COUNCIL
and
VALUER GENERAL VICTORIA

First Defendant

Second Defendant

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JUDGE:	EMERTON J
WHERE HELD:	Melbourne
DATE OF HEARING:	8-10, 13-17 and 22-24 April 2015
DATE OF JUDGMENT:	11 December 2015
CASE MAY BE CITED AS:	Port of Melbourne Corp v Melbourne City Council & Valuer General Victoria
MEDIUM NEUTRAL CITATION:	[2015] VSC 714

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VALUATION OF LAND – Municipal valuation – Site value – Port of Melbourne – Treatment of occupancies – Whether occupancies to be valued as stand-alone parcels – Whether occupancies ‘form part of’ a ‘larger property’ – Whether reclamation works are ‘works relating to a port’ – Meaning of ‘associated works’ – Meaning of ‘apron’ in the context of a port – Valuation of Land Act 1960 ss 2(3), 2(2AA).

VALUATION OF LAND – Review of disallowance objections – Application to Victorian Civil and Administrative Tribunal – Order that application to Victorian Civil and Administrative Tribunal be treated as appeal to the Supreme Court – Valuation of Land Act 1960 s 23(3).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Delany QC with Dr C Parkinson	Minter Ellison
For the Defendants	Mr J Pizer QC with Ms L Hannon and Mr I Munt	Victorian Government Solicitor’s Office

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The Act............................................................................................................................................... 10

Statutory, regulatory and policy framework for the port......................................................... 14

Application of s 2(3)......................................................................................................................... 19

The competing positions............................................................................................................ 20
Valuers’ approaches.................................................................................................................... 24
Mr Brown............................................................................................................................ 24
Mr Torr................................................................................................................................ 27
Mr Bowman........................................................................................................................ 29

Analysis........................................................................................................................................ 30
Construing s 2(3)................................................................................................................ 31
Is the port a ‘larger property’?......................................................................................... 50

Conclusion on s 2(3).................................................................................................................... 59

Section 13DC(9)................................................................................................................................ 59

Application of s 2(2AA).................................................................................................................. 60

The competing positions............................................................................................................ 66
Analysis........................................................................................................................................ 69
Construing s 2(2AA)......................................................................................................... 70
Does s 2(2AA) apply to reclamation works at the port?.............................................. 75
‘Works relating to a port’.................................................................................... 75
‘being buildings, breakwaters, berths, wharfs, aprons, canals’..................... 79
‘or associated works’............................................................................................ 89

Conclusion on s 2(2AA)........................................................................................................... 101

Conclusion overall......................................................................................................................... 102

APPENDIX A.................................................................................................................................. 103

Evidence........................................................................................................................................... 103

APPENDIX B................................................................................................................................... 107

HER HONOUR:

Introduction

This is an appeal brought by the Port of Melbourne Corporation (‘PoMC’) pursuant to s 23(3) of the Valuation of Land Act 1960 (‘the Act’) challenging the assessment of the site value of land owned by PoMC within the City of Melbourne (‘subject land’) as at 1 January 2012 (‘relevant date’).

Pursuant to s 25(1) of the Act, the Court may confirm, increase, reduce or otherwise amend any valuation and make any other order it thinks fit.

The Melbourne City Council (‘MCC’) assessed the collective site value of the subject land at the relevant date as $523.295 million. However, MCC now says that the site value of the subject land at the relevant date ought to be assessed by the Court as $650 million; Valuer-General Victoria (‘VGV’), which was jointly represented at the trial by Senior Counsel for MCC but tendered separate valuation reports, contends that it should be assessed as $665 million.

POMC contends that the site value of the subject land at the relevant date was only $150.5 million.

The discrepancy between the site value for which PoMC contends and the values contended for by MCC and VGV stems from the different valuation methods used by the valuers to assess site value. There is disagreement as to whether the assessment of site value involves valuing the land as a whole and then carrying out an apportionment in respect of individual occupancies on the land or whether the occupancies must be valued on a stand-alone basis without reference to the value of the land as a whole. There is also a significant dispute as to which works and materials are to be disregarded as ‘improvements’ when assessing site value.

The appeal therefore turns on the construction and application of provisions in the Act concerning the valuation of occupancies for site value purposes and as to what are ‘improvements’ on land relating to a port, where there is a special rule about the treatment of improvements made by the Crown or public statutory bodies.

The resolution of these issues involves some fact finding concerning the history and operation of the Port of Melbourne (‘port’) and the development of the port of Melbourne land and waters since 1876.

As Australia’s largest container and general cargo port, the port has been extensively developed over a period of 130 years, evolving from a series of berths on the Yarra and Maribyrnong Rivers and on Hobson’s Bay to a modern port comprising 34 commercial berths at five docks, along with river wharfs and Gellibrand and Station Piers. The development of the port land has involved, among other things, changing the course of the Yarra River (involving the construction of the Coode Canal and the filling of part of the original river course), and the transformation of hundreds of hectares of unstable swamp land into land capable of supporting the infrastructure that makes up a modern port. Over the years, the port of Melbourne land has been extensively reclaimed and remodelled to effect and support the construction of berths, wharfs, container terminals and other port infrastructure, including canals, railways and roads. Webb Dock, on Port Phillip Bay, has been almost entirely reclaimed from the water.

In 1876, when the original Harbor Trust was established, the port area looked as represented in this historical map:

By 2012, the port area looked like this:

At the relevant date, the port occupied approximately 530 hectares of land spanning four different municipalities, 431 hectares of which were in the City of Melbourne.[1] PoMC held all but two small parcels[2] of the port of Melbourne land in fee simple on 36 different titles.[3]
[1]Melbourne City Council - 431 hectares; Maribyrnong City Council - 31 hectares; Hobson's Bay City Council - 29 hectares; and Port Phillip City Council - 11 hectares.
[2]All land at the relevant date was held in fee simple except one parcel at Anne Street, Williamstown and one parcel at Station Pier, Port Melbourne.
[3] Between 1877 and 1978, the lands and waters within the port were defined in schedules to the various port enactments. From 1978 to 1995, the port land was vested in the Port of Melbourne Authority (‘PMA’) pursuant to s 45 of the Port of Melbourne Authority Act 1958, and the Surveyor General identified the vested land on a map produced annually pursuant to s 106A of that Act. In general terms, as the needs of the port increased, the swampland that had been reserved for port use was vested in the port and developed for port uses. Following the enactment of the Port Services Act 1995, as part of the land transfer processes, there was a rationalisation of land that had previously been vested in or managed by the PMA. Land surplus to the requirements of the Melbourne Port Corporation (‘MPC’) was not transferred to it from the PMA. Surplus land was retained by the Crown and management rights to such land were transferred to authorities such as Parks Victoria. Although riverbed and seabed had been vested in the PMA, such land was not vested in the MPC under the Port Services Act. The Port Services Act made provision for MPC to hold freehold title. From its establishment MPC held small land holdings as freehold owner. On or about 28 April 1998 most of the land then managed by MPC was converted to freehold title by a series of Crown Grants. Land under water on the south bank of the Yarra River (Vol 10372 Fol 660) was transferred on or about 20 July 1998. Land at Victoria Dock (Vol 10407 Fol 939) was transferred on or about 3 May 1999. Thereafter MPC purchased additional freehold land from time to time.

The port of Melbourne land was (and is) divided into four main areas: the area to the north of the Yarra River and south of Dynan Road comprising Swanson, Appleton, and Victoria Docks; South Wharf, which runs along the southern bank of the Yarra River at Lorimer Street; Webb Dock, which has two large areas of land protruding into Port Phillip Bay; and a smattering of areas to the west of the Maribyrnong River. These four principal areas are separated from one another by the port of Melbourne waters and, in the case of Webb Dock, by (non-port) land. The four areas were (and are) covered by a single planning scheme administered by the Minister for Ports and were managed by PoMC as the Port of Melbourne.

PoMC does not undertake any stevedoring or logistics work at the port, but manages the use of infrastructure and common land and waterways to facilitate the movement of ships into the port, the loading and unloading of cargo and the movement of that cargo outside the port by its tenants. It provides commercial facilities in the form of container terminals, multi-purpose terminals (including for break bulk, motor cars and coastal trade), dry bulk berths and storage, and bulk liquid berths and storage. It provides a number of common user berths as well as berths licenced to particular users.

As the owner of the port of Melbourne land, PoMC acts as a landlord and has leased large parts of the port of Melbourne land to tenants, who conduct business operations from the leased land and, in most cases, from adjacent licenced berths. Typically, where a lease directly abuts a wharf there is a ‘preferential berthing licence’. That licence relates to the wharf and entitles the tenant to operate on the wharf as a licensee of PoMC under the terms and conditions of the berthing licence. At the relevant date, it was common for the berthing licence to be referred to within and cross-linked to the lease. Preferential berthing rights were also in place in favour of some tenants whose leasehold land did not directly abut a wharf.

At the relevant date, 282.7 hectares of the port of Melbourne land were tenanted.[4] The tenancies were ground leases, and the leased areas did not necessarily, or even usually, correspond with the freehold titles held by PoMC. Broadly speaking, at the relevant date, PoMC’s tenants conducted stevedoring and logistics operations involving the loading and unloading of cargo and the transportation of cargo to and from the port. The five major tenancies were as follows:
[4]As at the relevant date, the remaining port of Melbourne land was used as follows: 3.2 hectares were common user areas; 1.2 hectares were navigational channels; 40 hectares were non navigational channels; 25 hectares were open space; 1.7 hectares were piers and jetties; 1.2 hectares were for miscellaneous PoMC use; 10.4 hectares were for railway services; 20.6 hectares were for road services; 5 hectares were for miscellaneous services; 65.6 hectares were undeveloped; 26.9 hectares were vacant (untenanted land); and 17.8 hectares were wharves.

(a) Patrick Stevedores Operations No 2 Pty Ltd at Swanson Dock East;

(b) Patrick Stevedores Operations No 2 Pty Ltd at the rear of Swanson Dock East;

(c) DP World Melbourne Ltd at Swanson Dock West;

(d) Patrick Stevedores Operations No 2 Pty Ltd at Webb Dock East; and

(e) Australian Amalgamated Terminals Pty Ltd at Webb Dock West.

There were also a number of businesses providing associated services, such as car detailing for imported vehicles and equipment hire for container transport. The Australian Customs Service was an important tenant.

The tenancies, as occupancies on the subject land, were separately rated by MCC pursuant to s 13DC(1) of the Act, which requires the computation of capital improved value, net annual value and, if required, site value for each occupancy on rateable land. However, s 2(3) of the Act makes provision for the computation of the capital improved value and site value of an occupancy to take place by way of an apportionment based on the value of a ‘larger property’ where the occupancy ‘forms part of’ that larger property.

Section 13DC(9) of the Act also calls for an apportionment of value where land comprising one undertaking extends continuously beyond the boundaries of any municipal district.

Under the Act, site value is to be determined assuming that any improvements on the land had not been made. There is a general definition of ‘improvements’ in s 2(1) of the Act that excludes from the definition ‘work done or material used for the benefit of the land by the Crown or by any public statutory body’. However, s 2(2AA) of the Act provides for ‘[w]orks relating to a port, being buildings, breakwaters, berths, wharfs, aprons, canals or associated works’ to be improvements, irrespective of who carried out those works.

Aside from the berths, wharfs, roads, railways and services infrastructure on the port of Melbourne land, most of the visible improvements at the relevant date were improvements made by the tenants. For the purposes of assessing site value at the relevant date, the treatment of the tenants’ improvements was uncontroversial. The tenants’ improvements included nearly all the buildings on the subject land and extensive areas of hardstand. However, the reclamation or filling works carried out by PoMC and its predecessors since 1877 are the foundation on which the port has been developed. Whether the reclamation or filling works are to be treated as improvements under s 2(2AA) when assessing site value at the relevant date is a matter of controversy.

The appeal raises the following questions:

(a)Is the port of Melbourne land (or any part or parts of it) a ‘larger property’ of which the individual occupancies form a part for the purposes of s 2(3) of the Act, such that the determination of the site value of each occupancy involves an apportionment based on the site value of the larger property?
In the alternative, does s 13DC(9) require an apportionment?
(b)What works and materials on the subject land are ‘improvements’ to be disregarded when assessing site value? In particular, do reclamation or filling works carried out by PoMC or its predecessors fall within the definition of ‘improvements’ in s 2(2AA) of the Act?

PoMC submits that the evidence, including lay evidence and expert planning and valuation evidence, establishes that the whole of the port of Melbourne land, including the subject land, constitutes one ‘larger property’ and that the occupancies on the subject land are to be valued in accordance with s 2(3) of the Act. In the alternative, PoMC submits that s 13DC(9) applies to require the computation of values by way of an apportionment, because the port of Melbourne land and the port of Melbourne waters comprise one ‘undertaking’ that extends beyond municipal boundaries.

For their part, the defendants (MCC and VGV) contend that the land to be valued in assessing site value is each separate occupancy on the subject land, and that no occupancy forms part of a larger property for the purposes of s 2(3). They say that s 13DC(9) is inapplicable for a host of reasons.

As to the second key issue, the scope of operation of s 2(2AA) of the Act, PoMC submits that the port of Melbourne land should be valued for site value purposes assuming that it existed in its 1876 condition, being a swamp with a river running through it. This is because works associated with the buildings, breakwaters, berths, wharfs, aprons and canals included the reclamation and filling works carried out since the birth of the port.

For their part, the defendants contend that, as a matter of law, s 2(2AA) does not encompass the reclamation or filling of land. On the assumption that all the buildings at the port were constructed by the tenants, the only works falling within s 2(2AA) were the wharfs, aprons and berths, together with work directly associated with those structures such as piling or other foundation work. The defendants strongly dispute that the subject land is to be valued for site value purposes in its original state.

Each of the parties retained a valuer to prepare an expert valuation report based on their preferred assumptions. PoMC filed reports by Les Brown dated 18 July 2014 and 31 October 2014; MCC filed reports by Richard Bowman dated 8 August 2014 and 7 November 2014;[5] VGV filed reports by Christopher Torr dated 8 August 2014 and 20 November 2014.[6]
[5]Mr Bowman also prepared a report dated 25 February 2015 for the purposes of the joint conference of valuers.
[6]Mr Torr prepared a supplementary report dated 26 February 2015 to provide values for a number of occupancies that were ‘pending’.

Prior to trial, the parties agreed upon joint questions for the valuers (‘joint questions’).[7] The joint questions identified 20 scenarios, ranging from PoMC’s primary case that the port of Melbourne land must be valued as a single property in its virgin state, to VGV’s primary case that there are 74 different occupancies that must be valued individually as though each was an unencumbered fee simple, and only the strips of hardstand overhanging water where ships pull in are to be disregarded as improvements under s 2(2AA) of the Act.
[7]Dated 13 January 2015.

The valuers prepared a joint report[8] in response to the joint questions. They were able to agree a value for each of the 20 scenarios, with values ranging from $150.5 million on PoMC’s primary case[9] to $665 million on the primary case of VGV.[10]
[8]Dated 13 March 2015. A correction was made on 24 March 2015.
[9]The figure of $150 million arrived at jointly by the valuers represents the site value of land owned by PoMC within the City of Melbourne and within the Port of Melbourne Planning Scheme. There are two sites that fall outside the latter but are within the first two: Todd Road and Wharf Road. The valuers agreed that these sites had a combined value of $5 million.
[10]The capital improved value and the estimated annual value of the subject land, as at the relevant date, were agreed by the valuers to be $706,269,000 and $65,101,900 respectively.

PoMC adduced lay evidence on the history of the port, the role and operations of PoMC and its predecessors, and the operations of its tenants as at the relevant date. The parties relied upon both oral and written valuation evidence from Messrs Brown, Bowman and Torr. The Court undertook two views of the port.[11]

The Act[12]

[11]A listing of the affidavit evidence that was filed and a brief outline of what was observed during the views is contained in Appendix A.

[12]This is the Act as at the relevant date. The Act has since been amended by Act No. 58 of 2012, which had a commencement date of 17 October 2012.

Section 11 of the Act provides that a valuation authority must cause a general valuation of rateable land within its municipal district to be made as at 1 January in every even calendar year and returned to the council before 30 June in that year. Section 10 of the Act provides that the valuation authority in relation to a municipal district is the council.[13] MCC is a valuation authority in relation to the subject land.
[13]By s 10(1) of the Act, the council may nominate the VGV to be the valuation authority in relation to a municipal district.

Section 13DC(1) then provides:

In every valuation for the purposes of the Local Government Act 1989, each separate occupancy on rateable land must be computed at its net annual value, its capital improved value and, if required by a rating authority, its site value …

Hence, whilst the net annual value and the capital improved value of every occupancy must be computed for rating purposes, a computation of site value is only necessary if required by a rating authority. ‘Rating authority’ is defined in s 2(1) to include the Commissioner of State Revenue. The Commissioner requires the computation of site value under s 13DC(1) because, pursuant to s 19(1) of the Land Tax Act 2005, the taxable value of land for a tax year is an amount equal to the site value of the land as at the relevant date.[14]
[14]Although councils may base rates on any one of site value, net annual value or capital improved value (Local Government Act1989, s 157(1)), the Court was told that councils most commonly base their rates upon either net annual value or capital improved value.

‘Rateable land’ is defined in s 2(1) of the Act to have the same meaning as in s 154 of the Local Government Act 1989,[15] which provides that all land is rateable save for certain exceptions set out in ss 154(2) to (4). The exemptions include unoccupied land vested in a public statutory body and land vested in a public statutory body that is used exclusively for public or municipal purposes. This may include some of the subject land, although this question was not explored in the evidence or in submissions. Certainly, the bulk of the subject land at the relevant date was rateable land.
[15]Via the definition of ‘rateable land’ in s 3(1) of the Local Government Act 1989.

The Act contains a number of provisions that specify how rateable land is to be valued.

Section 2(3) of the Act provides:

If it is necessary to determine the capital improved value or site value of any rateable land in respect of which any person is liable to be rated, but which forms part of a larger property, the capital improved value and site value of each part are as nearly as practicable the sum which bears the same proportion to the capital improved value and site value of the whole property as the estimated annual value of the portion bears to the estimated annual value of the whole property.

Sections 13DC(6) to (9) also specify how the valuer is to approach the valuation task in respect of certain land:

(a)If several parcels of land in the same municipal district are occupied by the same person and separated from each other only by a road or railway or other similar area across or around which movement is reasonably possible, the parcels must be regarded as together forming rateable land and valued accordingly (s 13DC(6)).
(b)If any person is liable to be rated in respect of two or more unoccupied parcels of land in the same municipal district and the parcels form one continuous area, the parcels must be regarded as together forming rateable land and valued accordingly (s 13DC(7)).
(c)If a portion of a parcel of land on which a building is erected is occupied separately, or is obviously adapted to being occupied separately, from other land in the parcel, that portion must be regarded as forming a separate rateable property and must be valued accordingly (s 13DC(7A)).
(d)If any portion of a parcel or parcels of land forming rateable land for the purposes of a municipal rate or of a rate to be levied by any other rating authority using the valuation is subject:
(i)to a rate levied in respect of that portion only; or
(ii)to a differential rate which differs from the rate levied in respect of the remainder of that parcel or those parcels;

the value of the land must be apportioned so as to show separately the value of the portion (s 13DC(8)).
(e)If land comprising one undertaking extends continuously beyond the boundaries of any municipal district the value, for the purposes of any rate, of so much of the land as is within any one municipal district, must be assessed as part of the value of the whole of the land (s 13DC(9)).

Section 5A sets out certain principles of valuation to which consideration must be given in all cases to which the Act has application, including the valuation of rateable land. It provides:

(1)Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account.
(2)In considering the weight to be given to the evidence of sales of other lands when determining such value, regard shall be given to the time at which such sales took place, the terms of such sales, the degree of comparability of the lands in question and any other relevant circumstances.
(3)Without limiting the generality of the foregoing provisions of this section when determining such value there shall, where it is relevant, be taken into account –
(a)the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;
(b)the effect of any Act, regulation, local law, planning scheme or other such instrument which affects or may affect the use or development of such land;
(c)the shape size topography soil quality situation and aspect of the land;
(d)the situation of the land in respect to natural resources and to transport and other facilities and amenities;
(e)the extent condition and suitability of any improvements on the land; and
(f)the actual and potential capacity of the land to yield a monetary return.

‘Land’ is not defined for this Part of the Act. However, ‘land’ is defined in s 38 of the Interpretation of Legislation Act 1984 as follows:

land includes buildings and other structures permanently affixed to land, land covered with water, and any estate, interest, easement, servitude, privilege or right in or over land; …

Section 2(1) of the Act contains the following definition of ‘site value’:

site value of land, means the sum which the land, if it were held for an estate in fee simple unencumbered by any lease, mortgage or other charge, might in ordinary circumstances be expected to realise at the time of the valuation if offered for sale on such reasonable terms and conditions as a genuine seller might be expected to require, and assuming that the improvements (if any) had not been made; …

The assumption that improvements had not been made requires consideration of the definition of ‘improvements’ in s 2(1):

improvements, for the purpose of ascertaining the site value of land, means all work actually done or material used on and for the benefit of the land, but in so far only as the effect of the work done or material used increases the value of the land and the benefit is unexhausted at the time of the valuation, but, except as provided in subsection (2AA), does not include-
(a)work done or material used for the benefit of the land by the Crown or by any statutory public body; or
(b)improvements comprising-
(i)the removal or destruction of vegetation or the removal of timber, rocks, stone or earth; or
(ii)the draining or filling of the land or any retaining walls or other works appurtenant to the draining or filling; or
(iii)the arresting or elimination of erosion or the changing or improving of any waterway on or through the land-

unless those improvements can be shown by the owner or occupier of the land to have been made by that person or at that person's expense within the fifteen years before the valuation; …

Section 2(2AA) also specifies what is an improvement, in the context of a port. It provides:

Works relating to a port, being buildings, breakwaters, berths, wharfs, aprons, canals or associated works are improvements within the meaning of this Act.

As a result of s 2(2AA), certain work done or material used for the benefit of land by the Crown or a statutory public body is to be treated as an ‘improvement’ and disregarded when assessing the site value of land.

Statutory, regulatory and policy framework for the port

Since 1 July 2010 and at the relevant date, the development and operation of the port has been governed by the Port Management Act1995 (‘PM Act’), together with the Transport Integration Act2010 (‘TI Act’).

The PM Act provides generally for the establishment, management and operation of commercial trading ports and local ports in Victoria. It contains definitions of the ‘port of Melbourne land’ and the ‘port of Melbourne waters’, as well as a requirement for port authorities to provide every four years a ‘Port Development Strategy’ setting out trade projections, current and projected land use, infrastructure and transport infrastructure requirements.[16]
[16]Port Management Act 1995, s 91K.

The TI Act was enacted in 2010 to provide a framework for an integrated and sustainable transport system.[17] It covers a variety of transport systems and corporations, including PoMC. Section 141D(1) provides that the primary object of PoMC is to manage and develop the port consistently with the ‘vision statement’ and the ‘transport system objectives’ (found in s 6 and Division 2 of Part 2 of the TI Act respectively). The primary object of PoMC includes:

(a)to ensure, in collaboration with relevant responsible bodies, that the port of Melbourne is effectively integrated with the transport system and other systems of infrastructure in the State;
(b)to facilitate, in collaboration with relevant responsible bodies, the sustainable growth of trade through the port of Melbourne;
(c)to ensure that essential port services of the port of Melbourne are available and cost effective;
(d)to establish and manage channels in port of Melbourne waters for use on a fair and reasonable basis.

[17]Transport Integration Act 2010, s 6.

Pursuant to s 141E of the TI Act, PoMC has the following functions:

(a)to plan for the development and operation of the port of Melbourne;
(b)to provide land, waters and infrastructure necessary for the development and operation of the port of Melbourne;
(c)to develop, or enable and control the development by others of, the whole or any part of the port of Melbourne;
(d)to manage, or enable and control the management by others of, the whole or any part of the port of Melbourne of Melbourne;
(e)to provide, or enable and control the provision by others of, services for the operation of the port of Melbourne;
(f)to promote and market the port of Melbourne;
(g)to facilitate the integration of infrastructure and logistics systems in the port of Melbourne with the transport system and other relevant systems outside the port of Melbourne;
(h)to manage and, in accordance with the standards developed by the Director, Transport Safety, to dredge and maintain channels in port of Melbourne Waters;
(i)to provide and maintain, in accordance with the standards developed by the Director, Transport Safety, navigation aids in connection with navigation in port of Melbourne waters;
(j)to generally direct and control, in accordance with the Marine Safety Act 2010 (Vic), the movement of vessels in port of Melbourne waters;
(k)to perform functions in accordance with a direction given by the Minister under section 141H; and
(l)to perform any other functions or duties conferred on the PoMC by any other Act or any regulations under any other Act.

PoMC must carry out these functions consistently with State policies and strategies for the development of the Victorian port and freight networks.[18]
[18]Transport Integration Act 2010 s 141E(2).

In accordance with the requirements of s 91K of the PM Act, PoMC has prepared a Port Development Strategy (‘PDS’). A PDS must be prepared every four years and must include trade projections, current and projected land use requirements, current and projected infrastructure and transport infrastructure requirements for land and water in the port. The relevant iteration of the PDS is the 2009 ‘Port Development Strategy - 2035 Vision’. The PDS states that it ‘aims to create a clear picture of the short to medium and long term development plans of the Port of Melbourne. This will give the port's tenants, stakeholders and the wider Victorian community a clearer understanding of:[19]
·forecast trade volumes and terminal productivity in the port freight and logistics industry that will have an impact on the port and its development
·the infrastructure improvements required by the port and the implications for land and water use
·the funding strategy the port will use to deliver infrastructure projects
·the environmental and social principles the port will follow in its development of the port and facilitation of port growth.
[19]Port of Melbourne Corporation, ‘Port Development Strategy - 2035 Vision’, August 2009, p 4.
The short to medium term plans in the PDS included:

(a)the development of Webb Dock East for international containers;
(b)the consolidation of motor vehicle operations at Webb Dock West;
(c)increased size and intensification of international container terminal facilities at Swanson Dock;
(d)the integration of the Dynon and Swanson precincts to support the port's activities; and
(e)the consolidation of general cargo at Appleton, Victoria Dock and South Wharf.

The long term plan for 2035 reflects an anticipated fourfold increase in containerised cargo, the tripling of Bass Strait trade, and the doubling of the quantity of bulk products moving through the port. The 2035 Strategy anticipates, among other things, extensive re-development of the Webb Dock and Dynon precincts, the extension of Swanson Dock northwards, the connection of the Webb Dock precinct to the rail network and the integration of port operations with the Metropolitan Freight Transport Network identified in the State policy document ‘Freight Futures’.

‘Freight Futures’ was identified in the expert planning evidence as is a key policy affecting the port by setting out the strategy to integrate the port with other transport modes, including rail.

The use and development of the port of Melbourne land is also regulated by the Port of Melbourne Planning Scheme made and administered by the Minister under the Planning and Environment Act 1987.[20]
[20]A dedicated planning scheme providing for the specialised use and development of land across several municipal areas is unusual. Only the port and the Alpine Resorts are treated in this manner.

Pursuant to the Port of Melbourne Planning Scheme, the principal zoning of the port of Melbourne land is Special Use Zone 1 (‘SUZ1’), which applies to the landside areas of the port and provides for its development as a major commercial port of State significance, accommodating a range of port related uses. The specific purposes of SUZ1 are to provide for the ongoing operation and development of the port as a key area of the State for the interchange, storage and distribution of goods and to provide for uses which derive direct benefit from co-establishing with a port. Within SUZ1, permitted uses include ‘industry’, ‘shipping container storage’, and ‘warehousing’, provided that such uses are directly associated with and reliant upon the port.

The water bodies, including the Yarra River and the individual docks, are covered by Special Use Zone 4 (‘SUZ4’). The relevant purpose of SUZ4 is to provide navigable channels and access for shipping to the port as ‘a key area of the State for the interchange, storage and distribution of goods’. No permit is required for use of the waterways; however, a permit is required for their use for industry, as a transport terminal or as a warehouse, with the condition that those uses must be directly associated with and reliant upon the port.

The Planning Scheme contains the Port Strategic Statement (cl 21). Relevantly, cl 21.01 describes PoMC’s strategic focus to be to secure the port as a national gateway for Australia’s international and domestic sea freight by facilitating improved transport links to and from the port and cargo handling capacity for cargo owners and shipping lines. It recognises that PoMC’s physical services relate to the provision and use of specialised, high quality port land and facilities, and that PoMC provides the road, rail and associated infrastructure within the port and develops this infrastructure to offer long-term security for port customers and opportunities for business growth.

Clause 21.04 sets out a plan for the port to accommodate future growth. Its objectives are to ensure that adequate port land and infrastructure is available to meet the forecast trade and passenger growth in the port over the next 10 years and beyond; to ensure that the use of land in the port is flexible in its ability to respond to changing economic conditions; to provide efficient land and sea transport links and intermodal connections; and to identify land use and development opportunities throughout the port that will meet short and long term planning outcomes and facilitate continued economic growth.

To this end, it is proposed, among other things, to extend Swanson Dock to encourage increased international container trade, and to redevelop Victoria and Webb Docks in accordance with the relevant concept plans. The concept plans involve changes to the physical layout of the land, changes to roads and railways, the reconfiguration of lease boundaries and so on.

PoMC’s Annual Report for 2011/2012 describes the Port Capacity Project that is presently underway. The Port Capacity Project is illustrative of the way in which areas of the port can be reconfigured by PoMC to meet strategic requirements. It involves the redevelopment and reconfiguration of Webb Dock East to provide significant additional container-handling capacity. It also involves the establishment of new road links to connect Webb Dock directly to the West Gate Freeway, the development of a new automotive facility at the northern end of Webb Dock and the construction of additional shipping berths at Webb Dock West. The Port Capacity Project is responsible for the single biggest change at the port since the relevant date, which involves the development of a new container terminal at Webb Dock East and the cessation of the Patrick automotive terminal on that site.

Application of s 2(3)

Section 2(3) of the Act sets out a method for ascertaining the capital improved value and the site value of certain rateable land. Relevantly, it provides that where it is necessary to determine the site value of any rateable land in respect of which any person is liable to be rated but which forms part of a larger property, the site value is to be determined by means of an apportionment.

It was common ground that the occupancies on the subject land were on ‘rateable land in respect of which a person was liable to be rated’. The parties also agreed that whether an occupancy on rateable land formed part of a ‘larger property’, and the metes and bounds of that larger property, were questions of fact. However, the parties were at odds as to whether s 2(3) applied to require the site value of the different occupancies on the subject land to be computed by reference to the site value of the port of Melbourne land as a whole.

The competing positions

PoMC contends that the whole of the port of Melbourne land (including the subject land) is, as a matter of fact, a ‘larger property’ for the purposes of s 2(3) of the Act, and as such must be valued as one property, and value apportioned to individual occupancies in accordance with the method set out in s 2(3). In the alternative, PoMC contends that the port of Melbourne land and port waterways together satisfy the description ‘larger property’. As a further alternative, PoMC contends that if the port of Melbourne land, alternatively the port of Melbourne land and port waterways, is not a ‘larger property’, then there are three ‘larger properties’: the Appleton/Swanson/Victoria Dock precinct, the South Wharf precinct and the Webb Dock precinct.

For their part, the defendants submit that the occupancies must be valued on a stand-alone basis and not as part of a larger property. This is because s 13DC(1) of the Act is the starting point for all valuations under that Act and, by its terms, s 13DC(1) identifies what must be valued as each separate occupancy on rateable land.

According to the defendants, occupancy is the basic unit of valuation for rating purposes. A single occupancy might – but need not – correspond with the land identified in the certificate of title. There might be more than one occupancy on a single lot or title, or a single occupancy might span more than one lot or title. So much, the defendants say, is explicitly recognised by ss 13DC(6) and 13DC(7A) of the Act. In valuing the land, the valuer is required by s 13DC(1) to assume that the occupancy corresponds with an estate in fee simple, even when it does not.

According to the defendants, the identification of occupancy rather than title as the basic unit of valuation is supported by the way in which the Act and the Local Government Act1989 work in harmony. Section 158A of the Local Government Act provides that if a council levies a rate or charge on any land, it must separately levy that rate or charge in respect of each portion of the land for which it has a separate valuation. The defendants argue that s 158A contemplates that the council will have a separate valuation under the Act for different portions of the land that together form one title and, given the context, it is clear that each portion represents an occupancy. Likewise, s 21(2) of the Land Tax Act2005 provides that the Commissioner may use for land tax purposes a valuation made under the Act that has determined the value of each separate occupancy on land, and include in the notice of assessment a description of the occupancy.

Thus, so the defendants contend, both the Local Government Act and the Land Tax Act contain specific provisions to deal with the fact that valuations under the Act are performed on an occupancy basis and there is no difficulty from either a rating or land tax perspective with the fact that an occupancy might not correspond with a lot or title.

As to when an occupancy on rateable land will form part of a ‘larger property’, the defendants submit that this is a question of fact that will depend on all the circumstances of the case. Such circumstances might include the extent to which it is possible to treat the separate occupancy as a hypothetical estate in fee simple, the existence of other separate occupancies, the physical proximity of the occupancies, the physical relationship between the occupancies, and the extent to which the occupancies are, from an operational or functional perspective, integrated or inseparably interdependent.

Critically, however, the defendants submit that a separate occupancy on rateable land will only form part of a ‘larger property’ so as to engage s 2(3) of the Act if the occupancy cannot be valued fairly and accurately in isolation from the other occupancies or shared facilities that also form part of that property. Then, and only then, will a separate occupancy be regarded as forming part of something larger.

This proposition was described in the course of argument as imposing a form of ‘necessity test’ for the engagement of s 2(3). There was some debate between the parties as to whether the defendants’ were proposing one test or two, in the form of ‘soft’ and ‘hard’ versions of the test. The ‘hard’ version would allow for s 2(3) to be applied only if no other valuation method could be used; the ‘soft’ version would allow it to be applied if necessary to produce a fair and accurate valuation.

In fact, based on the submissions made by Senior Counsel for the defendants and the evidence given by the valuers, I understand the test proposed by the defendants to be a ‘hard’ test, notwithstanding the use of the words ‘fairly’ and ‘accurately’. If occupancies can be described separately (where there is a defined land area for each occupancy and an exclusive occupant) and valued on that basis as hypothetical estates in fee simple, then they must be valued separately (that is, on a stand-alone basis) and s 2(3) does not apply. Section 2(3) is to be applied only when necessary, that is, when the site value of an occupancy cannot be established on the basis of a stand-alone valuation because the occupancy is integrated or ‘inseparably interdependent’[21] with other occupancies.
[21]This description is derived from case law that is discussed below.

The defendants submit that Parliament created the mechanism in s 2(3) to solve a problem, and there will only be a need to engage s 2(3) if a problem arises because an occupancy cannot be fairly and accurately valued in isolation from other occupancies. They say that this produces consistency between valuations and therefore the fairest valuation outcomes. However, in my view, the necessity test is concerned not so much with what is the best valuation ‘fit’ – which method produces the most accurate value – as with identifying a particular approach that must be followed unless it is impossible to do so.

According to the defendants, that circumstance exists most strikingly where the site value of a separate occupancy in a multi-storey apartment building must be determined. However, a similar problem might arise when determining the site value of a single level occupancy where there was a shared roof, shared air-conditioning, shared car-parking, shared access or other shared amenities. An occupancy in a shopping centre, for example, could not be valued in isolation if its use and development was dependent upon the continued use and development of the other occupancies in the centre and shared facilities.

The defendants submit that it is not necessary to engage s 2(3) in this case. They say that there is nothing about any of the separate occupancies at the port that requires them to be considered together with the whole of the port land (or with any one or more of the three areas identified by PoMC as potential ‘larger properties’) in order to fairly and accurately assess their value because:

(a) there is no difficulty in describing the separate occupancies as hypothetical estates in fee simple to be valued;

(b) once described, the separate occupancies can readily be valued on an individual basis; and

(c) there is no other reason why the separate occupancies must be valued together. They do not, for example, form an homogenous whole and they are not inseparably interdependent.

For its part, PoMC submits that the plain terms of s 2(3) do not include a ‘necessity test’ such as that proposed by the defendants. The ordinary meaning of the words in ss 13DC(1) and 2(3) of the Act is clear, namely that each separate occupancy on rateable land must be computed at its site value (if required), as well as its capital improved value and net annual value, and whenever a separate occupancy on rateable land forms part of a larger property, its site value and capital improved value must be computed as directed by s 2(3) of the Act, that is, by using the specified method of apportionment. Whether a property is a ‘larger property’ is a question of fact.

In the alternative, PoMC submits that, having regard to the evidence, even if the necessity test were applicable, the port of Melbourne land would have to be valued as one (‘larger’) property because the occupancies on the port of Melbourne land could not practically be sold individually, and because subdivision and securing roads would be contrary to the planning scheme for the long term use of the land as a port. The ‘fair and accurate’ way to determine the value of the port and the various parts of it is to value the port as a whole and then carry out an apportionment. According to PoMC, this approach is required on the basis that:

(a)it was agreed by the planning expert, Robert Milner, and by the valuers, that the highest and best use of the land, including for site value purposes, was as a port;
(b)it was agreed by the valuers that the port of Melbourne land would be sold as one property, and that it would in fact be impossible to sell individual parcels;
(c)it was clear that the configuration of the port of Melbourne land at the relevant date was not its highest and best use, such that the occupancies did not reflect the highest and best use of the land; and
(d)even if it were possible to subdivide the land in accordance with the occupancies, it would not be accurate to compare the value of the occupancies net of the costs of the subdivision with sales of land in an already saleable form.

Valuers’ approaches
Mr Brown

Les Brown gave evidence that the port should be assessed as one holding even though the port of Melbourne land is not contiguous. He treated the port of Melbourne land as one property for the following reasons:[22]

Given the way the land is controlled by legislation under the Port Services Act, the Planning Scheme … The port operations are clearly operated as one undertaking. Whilst there are various tenants throughout the port, it is controlled by the port [PoMC] itself in terms of where activities will and will not occur… the port is divided into various precincts or sectors in relation to the activities that will be undertaken in those areas. So, for example, Webb Dock is where the car loading unloading occurs. That doesn’t occur at Swanson Dock. Coode Island is where the storage of bulk materials will occur. That doesn’t occur at Webb Dock. So the port [PoMC] controls the operations in terms of usage and the tenants that will be in the respective areas.
Clearly the port is a significant economic driver for Victoria. We need a port to bring goods in and send goods out. It is something that needs to be in a governmental sense … protected in terms of its operations. That again is something that the port [PoMC] is responsible for looking after in addition to things like security, maintenance of roads and all sorts of things in providing services to the respective tenants.

[22]Transcript of Proceedings, Port of Melbourne Corporation v Melbourne City Council & Anor (Supreme Court of Victoria, S CI 2013 03164, Emerton J, 8-10, 13-17 and 22-24 April 2015) 429-20 – 430-17.

Mr Brown gave evidence that the Port of Geelong was sold as one property, continues to be operated as one property by its owner and, in his opinion, would be valued as one property. In Mr Brown’s view, the Port of Portland would also be valued as one property.

Mr Brown was cross-examined about the conceptual difference between his position and that of Messrs Torr and Bowman as to the ‘starting point’ for a rating valuation. He said that the starting point in any valuation is to establish the land that is being valued and, wherever possible, to obtain the title or titles for that land. He confirmed that ‘a fundamental in valuation must relate to a saleable parcel of land which at a minimum must refer to a title’. He did not accept that the basic unit of valuation is an occupancy.

In this context, Mr Brown opined that a valuation approach based on valuing the individual occupancies on a stand-alone basis was unsatisfactory because it inflated their value. It involved valuing occupancies which could not be sold in their current (un-subdivided) condition by reference to comparable sales of properties that were in saleable form. This ignored the costs of putting the occupancies into a separately saleable form.

Mr Brown conceded that his approach was not consistent with VGV’s guidelines, ‘General Provisions for Specialist Guidelines’,[23] which provide that an occupancy should be assessed, as required by s 13DC(1) of the Act, as if it were held for an estate in fee simple in accordance with the definitions of ‘capital improved value’ and ‘site value’. The assumption that the land is held as an estate in fee simple is to be made irrespective of the actual status of the land.
[23]Valuer-General Victoria and Municipal Group of Valuers, ‘General Provisions for Specialist Guidelines’ (August 2011) (Exhibit D9).

As to the question of whether the port was a ‘larger property’, it was Mr Brown’s view that the port of Melbourne land stood in the same position as a shopping complex like Chadstone, where individual occupancies would be valued for site value purposes by apportioning value, based on the value of the shopping complex land as a whole. He gave evidence in relation to the valuation principles that would apply in valuing a number of multi-occupancy industrial estates and shopping centres in and around Melbourne,[24] opining that they would be valued as one larger property for the purposes of s 2(3) of the Act and that they were relevantly very little different from the port. According to Mr Brown, the relevant similarities between the industrial estates, shopping centres and the port included:
[24]The estates to centres to which Mr Brown referred where: (a) Caribbean Gardens, a high quality industrial estate owned by one family in Melbourne’s eastern suburbs of around 150 hectares on 3 titles with a privately owned road; (b) Francis St, Brooklyn, an industrial park on around 23.5 hectares under common ownership, with multiple occupancies and internal roads within the title; (c) Chadstone, a shopping centre on a number of titles zoned Commercial 1, which has internal private roads, and different occupancies and tenancies; (d) Point Cook Town Centre, a shopping centre with mixed uses on 6 titles, including land for future development, divided by public roads; (e) Craigieburn Shopping Centre, a shopping centre divided by a road; (f) Highpoint Shopping Centre, a shopping centre on one title which has a public library within the title; (g) Southland Shopping Centre, a shopping centre divided by a road.
In cross-examination, Mr Brown also said that Malvern Central shopping centre would be valued as a larger property.

(a) a common owner responsible for managing the undertaking, with the ability to undertake future developments that change the configuration of the site;

(b)the presence of a number of separate occupancies, some of which are competitors, like Coles and Woolworths, and DP World and Patrick;
(c)a combination of large and small tenants;
(d)the shared use of common areas, such as internal roads or walkways;
(e)shared facilities, such as sewage, drainage and potentially electricity services; and
(f)a mix of activities, often in precincts.

Mr Brown considered that the occupancies at the port should be valued on the basis that they formed part of the port as a ‘larger property’ pursuant to s 2(3) of the Act.

Mr Torr

Mr Torr treated the subject land as 74 separate occupancies because he identified the occupancies as separate occupancies that could be practically valued individually. He described occupancy as the ‘foundation stone of what is to be valued’ under the Act, and said that only where an occupancy could not practically be valued as a stand-alone parcel should s 2(3) be applied.

Mr Torr explained that when valuing, for example, the Murray Goulburn tenancy at the Swanson Dock East, his first step was to determine whether he was dealing with a separate occupancy. This involved establishing that there was an identified occupant of the land, that the occupancy was exclusive and that the land that was occupied was definable. In the port tenancies, the occupied land was clearly defined in the lease. Mr Torr then considered the condition of the land around the occupancy and determined whether the occupancy could be practically valued as a stand-alone parcel on the assumption that it was an unencumbered fee simple. In the case of the Murray Goulburn tenancy, the occupancy sat within a developed and operating port surrounded by roads and services. Once it was assumed that the land was an unencumbered fee simple, it became compatible with sales and rental evidence. Mr Torr did not treat the Goulburn Murray occupancy as forming part of a larger property because in the first step of his valuation process, he identified the property as a separate occupancy that could be practically valued in that form.

Mr Torr did consolidate some leases. He treated the three Patrick leases at Swanston Dock East as a single occupancy because the use of the land across the leases appeared to him to be fairly closely integrated and there were no obvious divisions between the leased areas such as boundary fences. In relation to the DP World leases, however, Mr Torr treated land to the north of Coode Road as a separate occupancy, in part because of the physical separation caused by Coode Road and in part because the land north of Coode Road had a separate function.[25]
[25]So far as Mr Torr was aware, the land north of Coode Road was used for empty container storage and repair, whereas the land south of Coode Road was used for more direct stevedoring and container storage and handling. However, the evidence at trial was that the land to the north and south of Coode Road was used for the same purpose.

When it was put to Mr Torr that his approach involved comparing unsaleable occupancies with actual sales of freehold titles and the two were not comparable, Mr Torr confirmed that he had not adjusted for costs associated with such things as the creation of certificates of title or easements, or the provision of services to separate titles. He agreed that in the ‘real world’, to put the port occupancies into a saleable condition, services to the land would need to be dealt with in some way.

Mr Torr gave evidence about the difference between the Chadstone shopping centre and the port. He said that because Chadstone had overlapping tenancies ‘in a horizontal sense’, that made the assessment of site value by reference to comparable sales highly arbitrary. It involved splitting the interest in the physical land between different strata levels. Furthermore, Chadstone had many occupancies that seemed to be very highly integrated in a single set of buildings. That, he said, along with the pooled car parking, made it very difficult to relate occupancies to a physical land area.

Mr Torr accepted that a number of areas that he had identified as separate occupancies at the port, such as rail corridors and electricity substations, were the sorts of things that in a shopping centre context would be provided by the shopping centre owner to enable the occupancies in the centre to function effectively as an integrated development.

Mr Bowman

Mr Bowman identified 64 separate occupancies on the subject land but, pursuant to s 13DC(6), he aggregated a number of tenancies to create 11 aggregated occupancies.[26] Mr Bowman explained that he grouped leased areas into a single occupancy based on a coincidence of occupant and use. For example, in relation to the Patrick leases at Swanston Dock East, Mr Bowman considered the use of the land and the occupant of the land and concluded that they were one and the same. He took the same or similar approach to a number of other leases.[27] He also combined some of the tenancies at Coode Island on the basis that there was one lease and one occupant although there were, in each case, two leased sites that were not contiguous.
[26]In his report, Mr Bowman treated the Terminals tenancies and the Pacific Terminals tenancies as each being one (aggregated) occupancy under s 13DC(6), and each of the remaining 9 tenancies as being a ‘larger property’ under s 2(3). By the time of the trial, Mr Bowman regarded each of the 11 tenancies as being a separate (aggregated) occupancy under s 13DC(1) or (6).
[27]To the DP World leases, the Qube Shipping and Logistics leases, the Continental Freight Services on South Wharf, Australian Cement Limited and Independent Cement and Lime at South Wharf, the Toll Shipping and Toll Transport leases and the Patrick leasehold interests at Webb Dock.

In Mr Bowman’s opinion, s 2(3) of the Act had no application to the port of Melbourne land. While the port demonstrated some attributes of a larger property, a valuation could be undertaken without the need to resort to s 2(3). As a valuer, he was able to reasonably hypothesise a separate estate in fee simple for each of the occupancies and was reasonably able to value each of those occupancies by reference to a recognised valuation methodology using comparable sales evidence.

Mr Bowman stressed that it was not difficult to identify the individual parcels to be valued. The occupancies were essentially self-contained in that each occupancy had its own dedicated boundary, each had its own buildings and car park contained within that boundary, and the tenants could operate their businesses completely independently of any other occupant in the port. Each tenant had its own road frontage and could come and go from its tenancy at any time of the day.

In Mr Bowman’s view, if it was possible to hypothesise an estate in fee simple for an occupancy and to measure the value of that occupancy by assuming that the site could be transacted in the hypothetical marketplace, then the valuation could and should be carried out on that basis. Only if it was not possible to value the occupancy on this basis should s 2(3) be applied. Mr Bowman observed that in the case of Chadstone, the valuer would head down the s 2(3) path rather quickly, because it was difficult to see how you could arrive at a site value for, say, a fashion shop on its second floor without using the s 2(3) process.

Mr Bowman disagreed that it was difficult for a valuer to make use of comparable sales to value the occupancies in the port because they were not in fact separately saleable. Like Mr Torr, he said that he was required by the legislation to assume a hypothetical estate in fee simple for each occupancy and he could then compare that to sales that had occurred in other areas proximate to the port. No adjustments needed to be made for the purposes of this comparison. This approach was consistent with the VGV’s guidelines, ‘General Provisions for Specialist Guidelines’.

Analysis

The parties agree that s 13DC(1) requires net annual value, capital improved value and, if required, site value, to be ‘computed’ for each occupancy on rateable land and that, where s 2(3) applies, it tells the valuer how to value the occupancy. Whether a separate occupancy forms part of a larger property is a question of fact and depends on all the circumstances of the particular case.

Although the parties were in heated agreement that it was a question of fact whether the tenancies in the port formed part of a larger property for the purposes of s 2(3), there was a clear conceptual difference between them as to when s 2(3) will apply. PoMC says that s 2(3) provides for the site value of an occupancy to be determined by way of an apportionment under s 2(3) if it forms part of a larger property and that is simply a question of fact; the defendants say that s 2(3) will only apply when the occupancy cannot be fairly and accurately valued in isolation from other occupancies. This difference of approach involves the interpretation of s 2(3) of the Act and a determination of whether the words ‘which forms part of a larger property’ are to be construed so as to require some form of functional or structural interdependency before an occupancy will ‘form part of’ a larger property.

Construing s 2(3)

In Thiess v Collector of Customs,[28] the High Court of Australia reaffirmed that the task of statutory construction begins and ends with a consideration of the text. The statutory text must be considered in its context, which includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text.[29]
[28]Thiess v Collector of Customs (2014) 250 CLR 664 (‘Thiess’).
[29]Ibid 671 [22].

In line with this authority, in Treasurer of Victoria v Tabcorp Holdings Ltd,[30] the Court of Appeal recently stated that because the legislature expresses its intention through the language that it uses in the statute itself, if the words in the statute are clear and unambiguous and can be intelligibly applied to the subject-matter, the provision must be given its ordinary and grammatical meaning.[31]
[30][2014] VSCA 143.
[31]Ibid [2]; see also Tuite v R [2015] VSCA 148, [71]; DiPaolo v Salta Constructions Pty Ltd [2015] VSCA 230, [26]-[39].

In this case, the task is to ascertain the meaning of s 2(3) and, in particular, the words ‘rateable property … which forms part of a larger property’. ‘Rateable property’ has a legal rather than an ordinary meaning which is ascertained by reference to s 154 of the Local Government Act. It poses no particular difficulties in the present context. The words ‘which forms part of a larger property’ can be given their ordinary and grammatical meaning.

However, the defendants argue that s 2(3) must be read in the context of s 13DC(1) and the requirement that ‘each separate occupancy’ be computed at the values specified. They say that this shows ‘each separate occupancy’ to be the starting point or ‘basic unit of valuation’ in a rating valuation and that, as a result, occupancies must be valued on a stand-alone basis unless and until there is a need to resort to s 2(3).

PoMC submits that the test formulated by the defendants involves reading additional words into s 2(3), namely, ‘If valuation of that occupancy cannot be made or computed fairly or accurately, then …’ and that the preconditions for reading words into the statute, let alone these words specifically, have not been satisfied in this case. The defendants respond that there is no need to read words into s 2(3) because, properly construed, the words used in s 2(3) mean that a separate occupancy will only form part of a larger property in the circumstances they describe: it is only when an occupancy is integrated or inseparably interdependent with others that it can be said to ‘form part of’ the larger property.

According to the defendants, this construction is supported by the purpose of s 2(3), its history and the context in which it appears in the Act. The defendants base their preferred construction on a number of things, specifically:

(a) the primacy s 13DC(1) accords to occupancy as the basic unit of valuation;

(b) the need to interpret s 2(3) of the Act by reference to surrounding provisions in the Act, notably ss 2(4), 2(5), 13DC(1), (6), (7), (7A) and (9);

(c) (what they appear to contend is) a principle of land valuation[32] that land is not to be valued using an apportionment mechanism if it can be fairly and accurately valued on a stand-alone basis; and

(d) the legislative history of s 2(3).

[32]Also described by Senior Counsel for the defendants as a ‘notion that has its roots in valuation law’.

In support of the proposition that an occupancy is the basic unit of valuation, the defendants referred to the legislative history of s 13DC(1) of the Act. Section 13DC(1), when originally enacted in the Local Government Act in 1989, provided:

In every valuation for the purposes of the Local Government Act 1989, the rateable land must be computed at its net annual value, capital improved value and, if required by a rating authority, its site value [emphasis added]

According to the defendants, this changed the basic unit of valuation for rating purposes from ‘occupancy’ to ‘rateable land’. However, the provision in this form was never proclaimed and the Local Government (Rating) Act 1991 (the ’1991 amending Act’) was enacted in order to restore occupancy as the basic unit of valuation.[33] The 1991 amending Act introduced a new s 13DC(1) in the terms that were in force at the relevant date.
[33]Section 1(a) of the 1991 amending Act states that one of the purposes of the 1991 Act is to ‘require rating valuations to be based on occupancy rather than ownership’. To the same effect, the Explanatory Memorandum stated that s 13DC(1) had been replaced in order to require valuations to be returned on an occupancy basis. Furthermore, the second reading speech for the 1991 bill referred to the fact that a working party considering potential problems with the administration of owner liability and owner assessment for ratings had endorsed the concept of owner liability but recommended the retention of rate assessments structured on the basis of occupancy (Victoria, Parliamentary Debates, Legislative Assembly, 19 September 1991, p 754, Mr Steve Crabb, Minister for Conservation and Environment).

I am not persuaded that the 1991 amending Act and the requirement in s 13DC(1) for ‘each separate occupancy’ to be computed at the specified values sheds light on when s 2(3) is to be applied. On its ordinary and grammatical meaning, s 13DC(1) requires a council to ‘compute’ each separate occupancy at its net annual value, its capital improved value and, if required, its site value. While computations must be made in respect of each occupancy on rateable land, the word ‘compute’ is not limited to the act of carrying out the valuation of the occupancy as a stand-alone parcel. Even where it is impossible to do so (whether because of the ‘inseparable interdependency’ of occupancies on the land or otherwise) and the methodology in s 2(3) must be used, s 13DC(1) requires the computation of each separate occupancy at the specified values. The task mandated by s 13DC(1) applies whether site value is to be determined by way of an apportionment under s 2(3) or by way of the valuation of each occupancy on a stand-alone basis.

I therefore reject the proposition that, by reason of the language in s 13DC(1), occupancy is the ‘starting point’ or ‘foundation stone’ for a ratings valuation. Section 13DC(1) tells a council that it must produce at least two, and possibly three, values for each occupancy on rateable land, but it does not say how this is to be done. The method to be used depends on other provisions in the Act, including s 2(3).

As to the broader legislative context of s 2(3), the defendants submit that ss 2(4) and 2(5) of the Act, which deal with the valuation of units in a strata subdivision and lots in a cluster subdivision respectively, inform when s 2(3) applies because those provisions specify when a property will or will not form part of a larger property. Section 2(4) provides for a unit in a strata subdivision to be part of a larger property for site value purposes, but s 2(5) provides that a lot in a cluster subdivision does not form part of a larger property for either site value or capital improved value purposes.

The defendants submit, in substance, that as a strata subdivision involves the division of land in three-dimensional space, while lots in a cluster subdivision can be represented in two-dimensional space (that is, they have individual footprints), ss 2(4) and (5) indicate that the ‘larger property’ methodology was intended to apply to divisions of land in three dimensional space but not to properties that have an individual footprint and can be valued fairly and accurately in isolation from their neighbours. The different treatment of strata units and cluster lots by reference to the larger property concept, so the defendants say, supports the necessity test in s 2(3).

In my view, ss 2(4) and (5) of the Act cannot be read as part of a coherent scheme displaying an underlying logic that would inform the meaning of s 2(3). Sections 2(4) and 2(5) are concerned with the treatment of very limited categories of land, evidenced by the fact that only some forms of ‘unit’ development are captured by s 2(4), specifically units that are historical relics governed by Schedule 2 of the Subdivision Act 1988. Why the legislature singled out these categories of land for special attention is not apparent. The historical material identified by the defendants[34] points to a concern by the legislature to avoid different valuation methodologies for what were similar types of property or different ways of owning the same kinds of property.[35]
[34]Local Government Act 1958 ss 254(1) (definition of ‘unit’), s 254(3A) (dealing with ‘home units’) and 254(3B) (dealing with ‘cluster’ lots). Section 254(3A) was inserted by the Land Tax Act 1973; s 254(3B) was inserted by the Local Government Act 1975. The definition of ‘unit’ was introduced into the Local Government Act by s 11(1)(a)(iv) of the Local Government Act 1972.
[35]See Victoria, Parliamentary Debates, Legislative Assembly, 25 March 1975, 4427.

In my view, ss 2(4) and 2(5) are narrow provisions dealing with narrow circumstances and, while part of the legislative context, are of limited assistance in construing other provisions in the Act. They do not preclude or limit the application of s 2(3) to the valuation of other kinds of rateable land.

The defendants also point to s 13DC(7A) as limiting the operation of s 2(3). Section 13DC(7A) provides that if a portion of a parcel of land on which a building is erected is occupied separately from other land in the parcel, that portion must be regarded as forming a separate rateable property. The defendants argue that because a portion of a parcel of land on which a building is erected that is capable of being separately occupied is taken to form a ‘separate rateable property’ it cannot, therefore, form part of a ‘larger property’ for the purposes of s 2(3).

Again, I disagree. There is no reason why a ‘separate rateable property’ cannot form part of a ‘larger property’. The term ‘separate rateable property’ in s 13DC(7A) appears to be a remnant of the terminology used in the predecessor provisions to ss 13DC(6) – (9) enacted in 1969 (which are discussed below). As such, it is not inconsistent with the larger property concept, the antecedents of which have existed since 1914.

I do not consider that s 13DC(7A) supports the construction of s 2(3) advanced by the defendants.

The defendants also rely on s 13DC(9), which they say serves the same purpose as s 2(3) and is declaratory of the established common law position that occupancies are to be valued independently of a larger property or undertaking of which they form a part unless they are inseparably interdependent or there can otherwise be no fair and accurate determination of rateable value based on individual occupancies.

This position, so the defendants say, is established by a number of authorities.

In Melbourne Tramway and Omnibus Co Ltd v Mayor of Fitzroy,[36] the Full Court of this Court considered the method for rating an undertaking in the form of a cable tramway which traversed a number of municipalities. The question for the Court was whether the City of Fitzroy, through which the tram tracks ran, was at liberty to rate separately the tramway buildings and fixtures that were situated entirely within its municipal area. Such a rate would be separate from, and in addition to, its share with all the other rating municipalities of the general rate on the system of tramways by mileage. The Chief Justice described the relevant ‘principles of apportionment’ as follows:[37]

The principles of apportionment of the rateable value of such an undertaking as this tramway, as established by the authorities, is, first, that wherever it is possible reasonably to attribute accurately to each municipality the whole of the advantage which arises from all portions of the rateable property which is locally within its limits, that must be done; and, second, when this ‘parochial plan’ as it is called, cannot, by reason of the inseparable interdependence of all the parts of the rateable property, or of the impossibility on any account of arriving at a fairly accurate appropriation of the rateable value according to the local distribution of the parts of the undertaking, then the Court is to make the fairest distribution which it can, and this often is arrived at by dividing the whole in the proportion of the local mileage of the undertaking within each municipal district, or some other equivalent equitable plan.

[36](1899) 25 VLR 5 (‘Tramway case’).

[37]Ibid 22.

The defendants take from this the proposition that the ‘parochial plan’ – the valuation of the occupancies independently of the larger property or undertaking – is to be applied in rating valuations unless the parts of the rateable property are inseparably interdependent or there can otherwise be no fairly accurate determination of rateable value based on them.

There are two old English authorities in which the parochial plan was also preferred for the rating of docks.

In The Mersey Docks and Harbour Board v The Overseers of Liverpool,[38] the appellants were the owners and occupiers, under Acts of Parliament, of docks in different parishes on different sides of the River Mersey. Under the relevant legislation, the docks constituted one estate under one management. If the parochial principle of assessment had been adopted, the rateable value of the property in the parishes on the Cheshire side of the Mersey would have been very small compared to the rateable value of the property on the Lancashire side. Notwithstanding the common ownership and management of all of the docks, the Chief Justice held that the ‘acreage principle’ (apportionment based on area) was not to be applied except where necessary,[39] that is, ‘where you really cannot apply the other principles’.[40] His Honour distinguished the ‘Hull Docks case’,[41] where the acreage principle was applied over the parochial principle in respect of a series of docks lying contiguous to one another and forming part of one concern, finding that the docks on different sides of the Mersey did not come within the designation of a series or system of docks, notwithstanding that they were to be treated as one for the purpose of general management.
[38](1872) LR 7 QB 643 (‘Mersey Docks case’).
[39]Ibid 649-50.
[40]Ibid 649. Justice Blackburn said that the parochial principle must be followed ‘whenever it is possible’ (651); Justice Lush said that the acreage principle is only to be applied ‘when the parochial principle is impracticable’ (653).
[41]R v Hull Dock Co (1852) 18 QB 325.

Thus, in the 1968 Annual Report, the Chairman of the Harbor Trust referred to the ‘good fortune’ that the legislators throughout the 92 year history of the Melbourne Port Authority had allowed the 250 acre area surrounding Swanson Dock to remain unalienated for future port use, permitting what was at one time considered to be ‘useless swamp’ to be turned into ‘a most valuable development area for the most sophisticated of modern cargo ships and cargo handling methods’. The passages extracted above from the 1969 to 1971 Annual Reports record that the reclamation works at Swanson Dock were carried out in order to create the container terminals, which required large areas of flat, paved land for the delivery, loading, unloading and collection of containers and for related operations such as container maintenance and storage. The port planners identified the need for the port to expand laterally and to evolve from a ‘linear’ to an ‘area’ format. The fill in the areas that became Swanson Dock was deposited and managed over a number of years in anticipation of the reclaimed land being developed as wharfs and hardstand to support what the Chairman described as ‘highly sophisticated cargo handling equipment and methods’.

Likewise, much of Webb Dock is reclaimed land, reclamation works having been carried out in a carefully planned fashion since the early 1950s to extend the port and create new port facilities. The 1973 Melbourne Harbor Trust Development Plan, for example, identified a lack of available port land to meet future requirements and proposed the reclamation of two areas in Hobson’s Bay. It contained an existing conditions plan, followed by plans for 1985 and 2000 showing the progressive development of Webb Dock into Hobson’s Bay through land reclamation. Although Webb Dock East has not been developed to the extent envisaged in the 2000 plan, a series of aerial photographs exhibited by Mr Drummond of Webb Dock in 1931, 1946, 1951, 1968, 1989 and 2002 clearly shows from 1951 onwards the extensive development of Webb Dock through the reclamation of land. That reclamation was undertaken for no other purpose than for the construction of wharfs, aprons and other port-related structures and facilities.

I reject the proposition that the historic reclamation works were incapable of being associated with the primary works because of the time taken by historic fill to settle. I also reject the proposition that the reclamation works were works to land rather than works associated with port-related structures. The reclamation works were not carried out to permit the development of the land generally; they formed part of the development of the land as a port and, in the case of Swanson and Webb Docks, were carried out to create the conditions for specific forms of cargo handling and management that required large land areas.

The evidence therefore establishes a direct connection between the reclamation works carried out to create Swanson and Webb Docks and the construction of the berths, wharfs and aprons at those locations. I find that reclamation works carried out at Swanson and Webb Docks were directly linked to the construction of berths, wharfs and aprons and were therefore works that were ‘associated’ with one or more of the primary works in those locations. That nexus is most clearly illustrated by the development of Webb Dock East, most of which was not solid land of any kind prior to the reclamation works and which was planned and constructed through reclamation in order to extend the port. Even Mr Torr accepted that the filling of Webb Dock to permit its use as a wharf was, at least on one view, ‘associated works’.

What of the reclamation works on the remaining parts of the subject land?

As I understand the defendants’ position, it is not disputed that the fill beneath the wharfs, including those at Victoria and Appleton Docks, and at South Wharf, were associated works. However, the defendants dispute that the fill beneath the aprons adjoining those wharfs amounted to associated works.

I have no difficulty in finding that the reclamation works at the conventional or ‘older style’ docks at Victoria and Appleton Docks, and at South Wharf were works associated with the wharfs, aprons and buildings at those locations. I include the reclamation works under the aprons that were road-side of the sheds or buildings at South Wharf. I also include the areas along South Wharf used by PoMC for various management purposes.

Many other works at the port that were not wharfs or aprons were constructed on filled land. At the relevant date, the filled areas on the subject land included the Patrick leases at Coode Park, Appleton Depot and Appleton Rail, the areas occupied by the Murray-Goulburn, CMC, POAL, Semi-Skel and Customs Service tenancies, the DP World container park area north of Coode Road, the tank farm at Coode Island, the MTO grain facility adjoining the Appleton Dock and the Toll Tasmania lease at Webb Dock. These areas contained buildings, hardstand and other visible works that were recognised by the valuers as tenants’ improvements. There were also many other filled areas owned and managed by PoMC and used for roads, railways, electricity substations, environmental buffers and the like.

Of the works on the remaining land, ‘buildings’ would immediately qualify as improvements under s 2(2AA) if not already disregarded as improvements under s 2(1).

PoMC argued that not only the fill supporting the buildings, but fill supporting works associated with the buildings amounted to associated works and therefore ‘improvements’ for the purposes of s 2(2AA). The defendants’ position was that only filling works that were foundational works for buildings were ‘associated’ with buildings.

I have already explained why I do not consider works associated with a building to be limited to foundational works. On the ordinary and grammatical meaning of the words ‘works associated with a building’, such works would include works surrounding the building or allied to it that help to make it functional or operational. That would include fill to support such works.

Recognising as ‘associated works’ only the fill underlying individual buildings, wharfs or aprons is largely unworkable, in my view, and fails to recognise the integrated nature of the port infrastructure. It also fails to recognise that a port, as a major piece of transport infrastructure, must be expected to grow and evolve over time and that reclamation works carried out as part of the long-term planning for the port will support different types of port-related works at different times depending on such things as changes in trade composition and ship size.

I am satisfied from the evidence concerning the planning and development of the port that the reclamation works were carried out in anticipation of the reclaimed land being used for the construction or extension of berths, wharfs, aprons and buildings. Reclamation works were also carried out in anticipation of the construction of works that were not primary works but were, as PoMC submitted, works that would permit or assist in the functioning or operation of the primary works. These were, in substance, works that made the wharfs operable, including the areas of paving that I have found not to be aprons (the container yards to the north of Coode Road operated by DP World and Patrick, the Appleton Depot and Rail areas and the Toll Tasmania hardstand), loading docks and other areas around buildings, wharfs and aprons required for access or for the staging trucks and trailers, as well as roads, railways and other service areas.

These areas and works were required, as the evidence shows, to facilitate the movement of cargo to and from the wharfs, even though some of them were not directly used for the movement of cargo. There was evidence that ancillary areas and services - involving such things as container storage, cleaning and repair, container packing, unpacking and repacking, logistic and transport services - were required to at the port to facilitate the movement of cargo to and from the wharfs and in order to manage the short dwell times for vessels imposed by terminal capacities. Logistics and storage facilities had to be within the port precinct to enable the container terminals to operate within dwell times. As such, the areas and structures in question were works associated with the primary works, that is, they were works associated with the operation of the berths, wharfs and aprons at the port.

As to the areas containing the tank farm at Coode Island and the MTO grain tanks adjacent to Appleton Dock, these were also works that were associated with the operation of the wharfs at those locations. At Coode Island, bulk liquid materials were taken off the ships through pipelines and assembled in the tanks for collection. The wharf could not operate without the tanks. At the MTO grain facility, grain was delivered by rail and collected in tanks awaiting shipment. Again, the physical constraints involved in moving the grain from rail to wharf required it to be first assembled in the tanks.

It follows from this analysis, the reclamation works on most if not all of the subject land were works associated with either primary works or other associated works. They were, in my view, ‘associated works’ for the purposes of s 2(2AA) of the Act. This is consistent with the reclamation works having been carried out in anticipation of the construction and development of port-related structures comprising the primary works or works associated with the primary works in the sense described.

There is a particular area on the subject land that received little or no attention in submissions and which raises issues of its own. The area at Webb Dock to the north of Williamstown Road below the West Gate freeway (which I shall refer to as ‘Webb north’) was undeveloped at the relevant date. However, the map of filled areas on the port of Melbourne land produced by Mr Drummond shows Webb north to contain fill, principally ‘contract to complete’ fill. Plainly, at the relevant date (as now) the reclamation works at Webb north did not support any existing primary works or any existing works associated with primary works.

As part of its closing submissions, PoMC provided to the Court aerial photographs of the subject land marked in colour with the areas that PoMC contends were buildings, wharfs, aprons, canals and associated works at the relevant date. Most of the areas are marked either as primary or associated works. However, Webb north is not marked at all on PoMC’s photographs. It is not claimed to be ‘associated works’. This is not consistent with PoMC’s contention in its written submission that s 2(2AA) requires all works undertaken on the port of Melbourne land since 1877 to be disregarded for site value purposes as all works undertaken on that land since that time are either primary works or associated works.

There is evidence that PoMC has plans for Webb north. The PDS short to mid term vision concept plan shows its uses to be ‘cars’, ‘port-related’ and ‘interim use’; the long term plan shows its use for ‘coastal (including Bass Strait)’ and ‘international containers’. The text records that there will be extensive development of Webb Dock, which could be connected to the rail network, substantially increasing the port’s capacity, and that ‘highly productive and efficient container terminals’ will be located there and at Swanson Dock. It is clear that the reclamation works at Webb north have been carried out with these kinds of port-related purposes in mind.

Based on the logic of the foregoing analysis, the reclamation works at Webb north are also ‘associated works’ in that they have been carried out in contemplation and for the purpose of the development and use of primary works and works associated with primary works (most likely the latter). This is consistent with my earlier conclusion that s 2(2AA) does not include a temporal requirement for works to be ‘associated’ as was held in Winslow.

I therefore find that the reclamation works carried out on the subject land between 1877 and the relevant date were improvements for the purposes of s 2(2AA). I have limited this finding to the works on the subject land (rather than applying it to the whole of the port of Melbourne land) because there are parts of the port of Melbourne land outside the subject land about which no evidence of works was led.

The defendants submitted that a construction that brought all (or nearly all) of the works at the port under s 2(2AA) strained the language of the section and that there were some areas of the subject land that could not on any view be recognised as ‘associated works’. They pointed, by way of example, to an unsealed truck parking area on the north-west corner of Swanson Dock, also described as a ‘paddock’ for DP World’s future expansion.

Apart from Webb north, there may well be small pockets of the subject land that at the relevant date were bereft of any port-related function or purpose. However, the reclamation works were carried out on the port of Melbourne land in order to provide for its use for port-related functions. The specific use and development of the land, within the framework described, was flexible, having regard to the need for the port to grow and evolve. To exclude specific areas from the finding that I have made is to invite a piecemeal and, I consider, largely unworkable approach to the valuation of the subject land.

One of the difficulties with the narrow construction advanced by the defendants is that s 2(2AA) is given virtually no work to do. So much is plain from Annexure B, which shows only the thin strips that represent the wharfs marked in red as improvements under s 2(2AA). So far as the defendants are concerned, only the wharfs and the fill immediately beneath them, and possibly the fill immediately beneath individual buildings, could qualify as improvements under s 2(2AA), leaving all but a tiny fraction of the Crown works at the port to fall outside the special definition of port-related improvements in the Act.

The defendants respond that ports come in many different shapes and sizes and that there is little work for the provision to do in relation to the port of Melbourne because of its particular configuration. The difficulty with this argument is that s 2(2AA) will have little work to do in any port where the bulk of the works involve modern cargo handling facilities requiring large aprons and other areas of hardstand for the management of containers. I consider it unlikely that the legislature intended to limit the operation of s 2(2AA) to what were described in the course of the trial as ‘older style ports’. Having regard to the aerial photographs tendered in evidence, neither of the port of Portland nor the port of Geelong could be so described.

Conclusion on s 2(2AA)

The reclamation works carried out by PoMC and its predecessors on the subject land were works relating to the port and works associated with the construction and operation of the buildings, berths, wharfs, aprons and canals on the subject land. They were ‘associated works’ that fell within the definition of ‘improvements’ in s 2(2AA) of the Act and were to be disregarded when the assessing site value of the subject land at the relevant date.

Conclusion overall

The appeal brought by PoMC pursuant to s 23(3) of the Act challenging the assessment of site value of the subject land as at the relevant date must be allowed.

The site values of the occupancies on subject land must be assessed on the basis that the port of Melbourne land is a ‘larger property’ of which the occupancies form a part and that the reclamation works on the subject land were improvements under s 2(2AA) of the Act.

The capital improved value and estimated annual value of the subject land as at the relevant date was agreed to be $706,269,000 and $65,101,900 respectively. The valuers must now confer to seek to reach agreement as to the apportionment of site value to the various occupancies on the subject land at the relevant date in accordance with s 2(3) of the Act.

If agreement is reached, the Court will be in a position to make final orders in each of the six related proceedings, being SCI 2013 – 3164, 3169, 3171, 3172, 3166 and 3167.

If no agreement can be reached, those values will have to be determined by the Court.

APPENDIX A
Evidence

The parties filed extensive valuation evidence in the proceeding. In each case the expert valuation reports were supplemented by oral evidence.

PoMC filed the following valuation evidence:

(a)report by Les Brown dated 18 July 2014; and
(b)reply report by Les Brown dated 31 October 2014.

MCC filed the following valuation evidence:

(a)report by Richard Bowman dated 8 August 2014;
(b)reply report by Richard Bowman dated 7 November 2014; and
(c)further valuation report – questions for joint conference by Richard Bowman dated 25 February 2015.

VGV filed the following valuation evidence:

(a)two letters from the Department of Transport, Planning and Local Infrastructure, dated 7 & 8 August 2014;
(b)report by Chris Torr dated 8 August 2014;
(c)reply report by Chris Torr dated 20 November 2014; and
(d)supplementary report by Chris Torr dated 26 February 2015.

PoMC filed lay evidence about the operation of the PoMC and the use of the port of Melbourne land at the relevant date.

The following affidavits were made by PoMC employees about its operations:

(a)John Ashwin Bennett, sworn 27 June 2014;
(b)Stephen Leslie Drummond, sworn 21 July 2014;
(c)Neil Marinus Diepstraten, sworn on 6 June 2014;
(d)Ian Frederick Schafter, sworn on 16 July 2014;
(e)Peter Gibbs, sworn 17 October 2014;
(f)Matthew John O’Meara, sworn 16 July 2014; and
(g)Matthew John O’Meara (confidential), sworn 16 July 2014.

Of the foregoing, the defendants cross-examined Bennett and Schafter.

The following affidavits were filed concerning, principally, geotechnical and fill evidence:

(a)Maxwell Charles Ervin, sworn 14 July 2014;
(b)Tim Moorhouse, sworn 16 July 2014; and
(c)Brian Fox-Lane, sworn 18 July 2014.

None of the above was cross-examined.

The following affidavits were made on behalf of PoMC’s tenants concerning their use of the leased land and other port of Melbourne land:

(a)Vladimir Jotic, sworn 15 July 2014;
(b)David Nash, sworn 14 July 2014;
(c)Peter James Lewis, sworn 14 July 2014;
(d)Peter James Conomos, sworn 13 June 2014;
(e)Shaun Harris, sworn 18 July 2014;
(f)Steven Colin Ponton, sworn 15 July 2014;
(g)Paul Gregory Treloar, sworn 15 July 2014; and
(h)Paul Cudmore, sworn 14 July 2014.

The Court undertook two views of the port of Melbourne land.

On day 2 of the trial, the Court undertook a day long view of the port of Melbourne land, and visited:

(a)Coode Island (drive by);
(b)the DP World site at Swanson Dock;
(c)the Patrick site at Swanson Dock;
(d)the Qube site at Victoria Dock;
(e)the Murray Goulburn site (drive by);
(f)MTO (drive by);
(g)the Australian Customs Service (drive by);
(h)the AAT site at Webb Dock West;
(i)the Toll site at Web Dock East;
(j)the Port control tower at South Wharf.

The Court was provided with a series of maps (Exhibit P-4), and the parties agreed a summary of what was seen.

On the afternoon of day 7 of the trial, the Court undertook a further view of a ship loading and unloading containers at the Patrick site at East Swanson Dock, and the record of what the Court saw during that view was read into the transcript.[116] The Parties also prepared a joint report on the site inspection.
[116]Transcript of Proceedings, Port of Melbourne Corporation v Melbourne City Council & Anor (Supreme Court of Victoria, S CI 2013 03164, Emerton J, 8-10, 13-17 and 22-24 April 2015) 472-5 - 473-12.

APPENDIX B

[2015] VSC 714

11 December 2015