Winky Pop Pty Ltd v Mobil Refining Australia Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0084

WINKY POP PTY LTD & ANOR	Applicants
v
MOBIL REFINING AUSTRALIA PTY LTD & ANOR	Respondents

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JUDGES:	WARREN CJ, ASHLEY and OSBORN JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	23 May 2016
DATE OF JUDGMENT:	5 August 2016
MEDIUM NEUTRAL CITATION:	[2016] VSCA 187
JUDGMENT APPEALED FROM:	[2015] VSC 348 (Digby J)

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TORTS – Damages – Damage to land – Claim for loss of opportunity damages – Claims for diminution in value of land or cost of reinstatement not pursued – Opportunity allegedly lost was opportunity to have land rezoned from industrial to residential use and to obtain a planning permit for residential development – Whether judge erred in concluding that plaintiffs had failed to establish existence of opportunity as alleged – Whether judge erred in concluding that defendant’s admitted breach of duties was immaterial to whether land could be rezoned and residentially developed – No error in judge’s conclusions.

TORTS – Damages – Damage to land – Usual basis of assessing damages is diminution in value or else cost of reinstatement, together with consequential damages in certain circumstances – Whether damages for loss of opportunity may be awarded in substitution for usual bases of assessment – Principles relevant to awarding loss of opportunity damages – Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 – Critical question is what basis of assessment will most appropriately ensure an award of fair and reasonable compensation in the particular case – Risk of overcompensating plaintiff if damages assessed on loss of opportunity basis avoided if due account taken of probabilities and possibilities, but reliability of assessment made on alternative bases in the particular case relevant to basis selected.

PRACTICE AND PROCEDURE – Evidence – Application to adduce further evidence on appeal – Evidence not precisely identified – Whether proposed evidence related to ‘comparable land’ – Whether, so far as proposed evidence was in existence before the trial concluded with publication of reasons and entry of judgment, there was a high degree of probability, if evidence received at trial, that result of proceeding would have been different – Whether, so far as proposed evidence came into existence after trial, it would satisfy test stated in Foody v Horewood [2007] VSCA 307 – Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Applicants	Mr C M Scerri QC with Mr S R Senathirajah and Ms M H Foley	King & Wood Mallesons
For the First Respondent	Mr C M Caleo QC with Ms P Neskovcin and Ms F C Spencer	Ashurst Australia
For the Second Respondent	Mr S R Horgan QC with Ms E Latif	Clayton Utz

TABLE OF CONTENTS

Circumstances generally described

The writ

The applicants’ claim as pursued at trial

The evidence at trial

The judge’s reasons

Proposed grounds of appeal

The application to adduce further evidence

Reasons for refusal of application for leave to adduce further evidence

Grounds 1 to 4

Planning controls

Planning history

The opinion evidence

The industrial use of the applicants’ land

Pre-existing contamination

The EPA buffer policy

Interface issues

Access constraints

Conclusion concerning rezoning

The hypothetical development plans

Conclusion with respect to hypothetical development proposals

Grounds 8 and 9

Conclusion as to loss of opportunity grounds of appeal

Grounds 5, 6 and 7

Conduct of the trial

Applicants’ submissions

Mobil’s submissions

Victoria’s submissions

Analysis

Grounds 10 to 14

Warren CJ:
ASHLEY JA:
oSBORN JA:

By order dated 19 October 2015, a judge in the Trial Division ordered that, save in respect of an amount of $104,273.93, a proceeding brought by Winky Pop Pty Ltd and OR Australia Pty Ltd against Mobil Refining Australia Pty Ltd be dismissed with costs. The order further recited that the proceeding by the plaintiffs as against a second defendant, the State of Victoria, be adjourned for directions on a date to be fixed, and that the costs of that defendant in the trial which had been held be reserved.

Now, the largely unsuccessful plaintiffs seek leave to appeal, and, if leave to appeal is granted, that the appeal be allowed. In the event that their appeal is allowed, they seek judgment ‘in such sum as the court deems appropriate by way of damages for loss of the commercial opportunity to residentially develop their land’.

In pursuit of their application for leave to appeal (and their appeal if leave be granted), the applicants seek to rely upon evidence which was not before the trial judge, and which, they assert, ‘was not available at the time of the trial, and has only become available recently’. They contend that this further evidence ‘is material to the appeal and there is a high degree of probability that the result of the proceeding below would have been different had the evidence been received at the trial’.

An oral hearing, which included submissions with respect to the application for leave to adduce further evidence, took place on 23 May 2016. On that day, the Court refused the further evidence application, for reasons to be given.

We are of opinion, for the reasons which follow, that the applicants should have leave to appeal, but that their appeal should be dismissed. We explain also why we refused the application for leave to adduce further evidence.

Circumstances generally described

The applicants are companies that form part of the Hallmarc Group. It is a vertically integrated group of companies which develops residential and commercial properties.

Pursuant to contracts of sale dated 6 April 1998, the applicants purchased four parcels of land in the near vicinity of Akuna Drive, North Williamstown.[1] At trial, the four parcels of land were described as lots A, B, 35 and 36. In all, the area of land was about 8 hectares. The purchase price was $730,000.
[1]Winky Pop became the registered proprietor of lot A, and OR Australia became the owner of the other three properties.

At time of purchase, as revealed by an environmental audit report which formed part of the vendor’s statement, and as confirmed by a due diligence report obtained by the applicants, polycyclic aromatic hydrocarbons and metals in excess of criteria for human health were present in the soil of the land. There was no testing of the groundwater beneath the land. Such contamination, however, was thought to be unlikely.

At time of purchase, the land was zoned Garden Industrial (now an Industrial 3 zone) under the Hobsons Bay Planning Scheme. Some of the land, for many years up until about 1989, had been the site of an abattoir. The land was unimproved when purchased by the applicants. It has so continued until this day.

The disposition of the land is conveniently seen in an aerial photograph adduced at trial, a copy of which we now set out.[2]

[2]This photograph was part of the report of Mr R Milner, an expert witness called for Mobil at trial. We have removed a notation made by Mr Milner on the photograph. But the subject of the notation is referred to later in these reasons.

The orientation of the photograph is as follows: to the north is the Melbourne to Geelong railway line. The outlined block immediately south of the railway line, with industrial development on its eastern flank, is lot A. To the south and south west of the industrial development is lot B. The small lots 35 and 36 are wedged between the industrial development, and thus front Akuna Drive. That road, as can be seen, presently terminates at its western end with the eastern boundary of lot A. At its eastern end, it terminates at Champion Road. On either side of Akuna Drive, as can be seen, there is industrial development.

It is convenient to now depict and refer to another aerial photograph.[3]

[3]Exhibit CMM-1 to the affidavit of Chloe Marion Moore sworn 25 October 2016.

Addressing that photograph, the following matters may be noted.

To the west of the applicants’ land, there is vacant land, owned by Mobil. It was described at trial as ‘the Mobil land’.

Further to the west is Mobil’s Altona Petroleum Refinery. The refinery has operated at that site for many years.

Running diagonally across the photograph, to the east of the applicants’ land, is Champion Road — to which we referred at [11] above.

South of the applicants’ land is an inverted ‘L’ shaped area outlined in blue. It is the site of the Hobson’s Bay Caravan Park, which at date of trial had been in existence for close on 40 years. Photographs put in evidence at trial showed that it was in heavy use for residential purposes at relevant times. The site has a frontage to Kororoit Creek Road.

Adjacent to the caravan park, also with a frontage to Kororoit Creek Road, is what was called at trial the ‘Arundel stud’ land. Essentially, it forms, together with the caravan park land, an oblong. On its western side is Hygeia Avenue. The caravan park and Arundel stud land was the subject of recent rezoning by Amendment C96 — of which more later.

To the south of Kororoit Creek Road, and in part slightly west of the Arundel stud land, is what was called at trial the ‘Williams Cove’ residential development. As can be seen, it partly fronts Kororoit Creek Road, and in part fronts an inlet from Port Phillip Bay.

At material times, a pipeline some kilometres in length, owned and operated by Mobil, carried petroleum hydrocarbons from the refinery. In part, the pipeline was situate in the vicinity of Champion Road.

Around December 2006, the pipeline perforated. It did so where it passed under Champion Road. In excess of 486,000 litres of petroleum hydrocarbon leaked from it, creating a plume in the groundwater underneath nearby land, including the applicants’ land. In part, the contaminating material sat on top of the groundwater. In part, it dissolved into the groundwater.

The Environment Protection Authority (‘EPA’) served a clean-up notice on Mobil. It required the company to (1) actively clean up the hydrocarbons which had been discharged, together with land and groundwater pollution, (2) actively prevent the further migration of hydrocarbons and hydrocarbon contaminated groundwater, (3) submit an environmental audit report which addressed, inter alia, recommended measures to reduce any risk of harm to an acceptable level, (4) submit a remediation action plan for the clean-up of polluted land and groundwater, and (5) thereafter, upon instruction from the EPA, implement the plan.

Mobil submitted an environmental audit report dated August 2007 to the EPA. It noted that Mobil had carried out the immediate clean-up requirements, made recommendations on steps to reduce risks by undertaking a review of Mobil’s remediation action plan, and stated that a remediation strategy prepared by Mobil’s consultant was generally sound and applicable.

A remediation action plan was submitted to the EPA in September 2007. An updated plan was submitted on 14 January 2008.

In the period thereafter, Mobil has taken steps to remediate the consequences of the leak in accordance with the plan. It has removed significant quantities of hydrocarbons from the groundwater, and will continue remediation until it achieves ‘clean-up to the extent practicable’ (‘CUTEP’). At trial, there was evidence as to likely timeframes for completion of the clean-up, but no projected — that is, certain or reasonably certain — date for completion.

Pausing, it was evidently the position at trial that there would never be complete remediation of the contamination caused by the leak. But there was also evidence that the EPA may accept CUTEP as sufficient where to do so will restore the protection of beneficial uses of land.

The applicants applied to the Hobsons Bay City Council (‘the council’), both before and after the leak occurred, for the rezoning of their land so as to permit residential development. No application was successful. We add that, before the applicants purchased the land, there had been a rezoning application which had likewise been unsuccessful. Later in these reasons, we must say more about the particular applications pursued by the applicants.

The writ

The applicants commenced a proceeding against Mobil by writ filed 1 May 2009. In late 2012, the writ was amended so as to add the State of Victoria (‘Victoria’) as a second defendant. The statement of claim in its original form was amended at that time so as to raise allegations against Victoria.

At a directions hearing in December 2012, an associate judge ordered that, save for the filing of a defence, Victoria should be relieved of any obligation to take further steps in the proceeding until the hearing and determination of the proceeding against Mobil or further order, ‘save that [Victoria] will be bound by any findings made in the trial against [Mobil]’. At trial, there was some debate as to the precise import of those orders, but for present purposes it is only necessary to consider the proceeding as between the applicants and Mobil.

By their statement of claim, so far as presently relevant, the applicants alleged that (1) they were the registered proprietors of the parts of the land comprising the whole thereof, (2) Mobil was the owner and operator of the pipeline, (3) Mobil failed to properly maintain the pipeline with the consequence that it perforated and leaked petroleum hydrocarbon product so as to contaminate the applicants’ land, (4) contamination continued to spread, (5) Mobil was negligently in breach of its common law duty of care to the applicants, and (6) the applicants had thereby suffered loss and damage.

The applicants also pleaded that, by its conduct, Mobil had caused a nuisance. They asserted an entitlement to an injunction abating the nuisance, or alternatively, to damages.

Further, the applicants raised a claim against Mobil under the Pipelines Act 2005. Pursuant to s 151 of that Act, they pleaded that they were entitled to compensation from Mobil.

The applicants particularised their loss and damage resulting from breach by Mobil of its common law duty as follows:

1.Costs of investigating the contamination of the [applicants’] land.
2.Costs of remediating the [applicants’] land.
3.The diminution in the value of the [applicants’] land.
4.Loss of profits that the [applicants] would have realised from the development of the [applicants’] land but for the contamination. Full particulars of the [applicants’] lost profits will be provided before trial, calculated as follows:
A – B – C = loss of profits where –
“A” is the gross sum the [applicants] would have realised by the development of the uncontaminated land. By way of example, subdivision of the land into 121 residential lots (as depicted in the plan dated 25 May 2006 reference 7996/T13 locality presented to the C33 panel by the [applicants]) and construction of appropriate dwellings on those lots (“the 121 residence development”), is expected to have yielded a gross return of not less than $120 million.
“B” is the cost to the [applicants] of the completed development. By way of example the cost (excluding land) of the 121 residence development was expected to have been approximately $35 million.
“C” is value of the [applicants’] land taking into account the fact that it cannot now be developed for residential purposes because of the contamination with petroleum hydrocarbons from Mobil Pipeline No. 1 including by reason of the stigma attaching to the land as a result of the contamination.

The loss and damage which was alternatively alleged with respect to the claim in nuisance, and in the claim under the Pipelines Act, were particularised by reference back to the particulars which we have just set out.

By its amended defence, Mobil, in substance, admitted that by its breach of a common law duty of care the applicants’ land had been contaminated with petroleum hydrocarbons and their breakdown. It denied that the extent of contamination was not fully defined and that contamination continued to spread. It pleaded that the leakage of petroleum hydrocarbon products was a, not the, source of contamination of the applicants’ land.[4] It denied that the applicants had suffered any loss and damage. The denial embraced all the legal bases — breach of duty, nuisance and statutory breach — upon which the applicants had formulated their claim.
[4]This being obviously a reference to pre-existing contamination. See [8] above.

With respect to the claim laid in nuisance, Mobil denied continuance of the nuisance and failure to abate the same, referring to its remediation work — work carried out despite it being denied access to the applicants’ land between May 2007 and June 2009. Further with respect to the claim laid in nuisance, it denied that it is or was under any obligation to clean up any contamination of the applicants’ land to the standard as would permit the alleged intended use of that land for residential development; and it denied that the applicants were entitled to the injunction which they sought.

The applicants’ claim as pursued at trial

The relief sought by the applicants at trial was distinctly different to the relief as formulated in the statement of claim. The differences were as follows:

(1)The claim for the costs of remediating the land was abandoned. In fact, it was Mobil, not the applicants, which had undertaken, and was continuing to undertake, remediation.
(2)The claim for diminution in value of the applicants’ land was eschewed. Several matters should be noted in that connection.
First, Mobil adduced some evidence of diminution in value, the consequence of which would have yielded damages in the order of $1 million. It may be that valid criticisms might have been made of the analysis which led to that estimate of diminution in value. Be that as it may, the applicants did not directly join issue with it. Furthermore, they made no submission at trial that they were at least entitled to damages for loss in the nature of diminution in value in the event that the way in which they ultimately framed their claim was rejected. In turn, there is no proposed ground of appeal which asserts that the judge erred by not awarding damages in that amount on a diminution in value basis.
Secondly, the judge concluded[5] that the applicants had not pleaded or submitted or adduced evidence to support an entitlement to damages for diminution in value of their land. He stated that whilst diminution in value had been pleaded as a particular of loss and damage, particularisation of that claim showed that it was simply a loss of profits claim in another guise. His Honour referred to further and better particulars dated 19 October 2011 where, asked to provide details of the calculation of the diminution in value of their land, the applicants’ response was this:
The diminution in the value of the plaintiffs’ land is equal to the loss of profits particularised in paragraph 19 of the statement of claim, the loss of profits then being explained by reference to three alternative scenarios for residential development.

It appears to us that the effect of the particulars was that the applicants were contending that, whether their claim was viewed as one for loss of profits (which was the fourth way their claim was particularised in paragraph 19 of the statement of claim), or as diminution in value of the land (which was the third way in which the claim was particularised) exactly the same calculation would be involved. The consequence of the applicants so particularising their loss and damage was that, if the factual basis for the loss of profits claim was undermined, it would affect both heads of damages.
(3)What was described as a claim for ‘loss of profits’ in the particulars to paragraph 19 of the statement of claim was converted into a claim for damages for loss of a valuable opportunity to develop the land residentially.

(4)The claim for an injunction requiring Mobil to abate the nuisance was abandoned. The claim implied that the nuisance caused by the contamination was capable of being abated by remediation. But the thrust of the applicants’ case at trial was that adequate remediation was impossible, this bearing upon the claim for loss of the valuable opportunity to which we referred a moment ago.
[5]Winky Pop Pty Ltd v Mobil Refining Australia Pty Ltd [2015] VSC 348 [733] (‘Reasons’).

The evidence at trial

At the trial, the following evidence was adduced by the parties:

(a) for the applicants: Mr Nunn, as to the method and cost of remediating the applicants’ land following the leak; Mr Gilbert, as to the source and extent of hydrocarbon contamination of the applicants’ land; Mr Ramsay as to the remediation of contamination of the applicants’ land which existed pre-leak; Mr McGurn, as to the planning issues; Mr Pollock, as to the EPA buffer; Mr Papworth, as to the value of the applicants’ three development scenarios; and Mr Williams as a property developer;

(b) for Mobil: Mr Mirkov, as to the level of contamination caused by the leak and the likely course of remediation, achievement of CUTEP and the impact of the leak on the applicants’ ability to residentially develop their land; Mr Milner, as to planning issues; Mr Davies, as to the EPA buffer; Mr Brown, as to the value of the applicants’ land based on different assumptions and the value of the three development scenarios; and Mr Stewart as to the costs of the three development scenarios.

The judge’s reasons

We will later refer to aspects of the judge’s reasons in greater detail. For present purposes, it is enough to say that his Honour reached the following conclusions:

(1)The proper basis for the assessment of damages was diminution in the value of the applicants’ land, not damages for loss of a valuable opportunity to develop the land residentially.
(2)The applicants had not pursued a claim for diminution in value of the land. See [37] above.
(3)The claim founded on loss of opportunity failed because:
(a)the applicants had failed to establish that there was something which could properly be described, before Mobil’s breach, as an opportunity of having the land rezoned and of obtaining a planning permit for residential development;
(b)the leak of petroleum hydrocarbons, in itself, would not prevent or impair the applicants’ ability to develop their land for residential purposes, because, following CUTEP, the land would be neither more nor less susceptible to rezoning and residential development than it was before the leak.

(4)If, however, the applicants were entitled to damages for loss of opportunity, the amount of damages would be $66,829,900.
We pause again to observe that, because his Honour had concluded that no opportunity had been lost, the amount just noted took no account of contingencies, and did not make any discount for present value. So it could not be said to reflect the amount which his Honour would ultimately have awarded had he concluded that the applicants had lost an opportunity of more than negligible value.
(5)The applicants were entitled to be paid $104,273.93 plus interest for costs incurred in investigating the leak.

Proposed grounds of appeal

The applicants seek leave to appeal on the following grounds:

The Applicants had a substantive opportunity to develop the land for residential uses before it was polluted
1.The learned trial judge erred in law in finding that prior to their land being contaminated by the First Respondent, they had no real prospect (ie opportunity) to develop the land for residential purposes because that finding was:
(a)against the weight of the evidence; and/or
(b)contradicted by his Honour’s finding that the Applicants may in the future develop their land for residential uses and that to award them damages for loss of opportunity when they will retain the land and the opportunity continues to exist would be likely to overcompensate them.

2.The learned trial judge erred in law in finding that prior to the Applicants’ land being contaminated by the First Respondent, because of the existing ‘impediments’ to the rezoning of their land, there was no prospect that the land would be rezoned so as to enable it to be developed residentially because that finding was:
(a)against the weight of the evidence; and/or
(b)contradicted by his Honour’s finding that the Applicants may in the future develop their land for residential uses and denying to them any damages for loss of opportunity for that reason.

3.The learned trial judge erred in law in failing to consider the evidence that:
(a)comparable redundant industrial land within designated Strategic Redevelopment Areas in Hobsons Bay had been rezoned for residential purposes consistent with the recommendations in the Hobsons Bay Industrial Land Management Strategy and the Hobsons Bay Planning Scheme and that constraints relating to residential use, and development of such land for residential purposes had been addressed by the imposition of appropriate planning controls including the Development Plan Overlay and Design and Development Overlay; and
(b)the most comparable property, being the Arundel Stud Farm at 240 Kororoit Creek Road, which was located within the same Strategic Redevelopment Area under the Hobsons Bay Industrial Land Management Strategy and the Hobsons Bay Planning Scheme, had recently been sold for a price which reflected its potential to be rezoned to permit residential use and development.

4.The learned trial judge erred in law in failing to find that prior to their land being contaminated by the First Respondent, they had a substantial (as opposed to, only a speculative) prospect of developing the land for residential purposes because:
(a)the weight of the evidence supported such a finding; and/or
(b)that conclusion was implicit in his Honour’s finding that the Applicants may in the future develop their land for residential uses and denying to them any damages for loss of opportunity for that reason.

The appropriate measure of damages for the harm done to the Applicant’s land is the lost opportunity to derive profit from the land (including by developing the land)
5.The learned trial judge erred in law in holding that the appropriate measure of damages for the harm done to the Applicants’ land is the diminution in value of the land, because that does not adequately compensate the Applicants for the actual loss they have suffered as a result of their land being contaminated by the First Respondent.
6.The learned trial judge erred in law in finding that to award the Applicants any damages for loss of opportunity when they will retain the land and the opportunity continues to exist would be likely to overcompensate the Applicants, because:
(a)the opportunity to develop the land for residential purposes has been lost as a result of the First Respondent’s contamination of the land; and
(b)the fact that the Applicants continue to retain the land does not affect the conclusion identified in (a) above because the weight of the evidence was to the effect that as a result of: (i) the magnitude of the contamination to the Applicants’ land caused by the First Respondent’s pollution; and (ii) the uncertainty as to the level of decontamination of the land that would be achieved by the First Respondent complying with the requirements imposed by the EPA (ie CUTEP) and the uncertainty as to how many further years that would take to accomplish, the land could not be developed for residential use and the Applicants were not proposing to do so.

7.The learned trial judge erred in law in failing to hold that the appropriate measure of damages for the harm done to the Applicants’ land is the lost opportunity to derive profit from the land (including by developing the land for residential use), because only that measure would adequately compensate the Applicants for the actual loss they have suffered as a result of their land being contaminated by the First Respondent.

The Applicants’ opportunity was lost as a result of the First Respondent’s contamination of the land
8.The learned trial judge erred in law in finding that the Applicants’ opportunity was not lost as a result of the First Respondent’s contamination of the land because that finding:
(a)was inconsistent with the uncontradicted evidence adduced at trial that was to the effect that, having regard to:
(i)the magnitude of the contamination to the Applicants’ land caused by the First Respondent’s pollution; and
(ii)the uncertainty as to the level of decontamination of the land that would be achieved by the First Respondent complying with the requirements imposed by the EPA (ie CUTEP) and the uncertainty as to how many further years that would take to accomplish,

the financial, legal and reputational risks associated with undertaking a residential development of the land was now such that neither the Applicants nor any other reasonable and prudent developer would undertake a residential development of the land; and/or
(b)was otherwise against the weight of the evidence.

9.The learned trial judge erred in law in failing to find that the Applicants’ opportunity was lost as a result of the First Respondent’s contamination of the land because that finding:
(a)was required to be made because the uncontradicted evidence adduced at trial was to the effected that, having regard to:
(i)the magnitude of the contamination to the Applicants’ land caused by the First Respondent’s pollution; and
(ii)the uncertainty as to the level of decontamination of the land that would be achieved by the First Respondent complying with the requirements imposed by the EPA (ie CUTEP) and the uncertainty as to how many further years that would take to accomplish,

the financial, legal and reputational risks associated with undertaking a residential development of the land was now such that neither the Applicants nor any other reasonable and prudent developer would undertake a residential development of the land; and/or
(b)was otherwise against the weight of the evidence.

The value of the lost opportunity
10.The learned trial judge erred in law in finding that the value of the opportunity lost by the Applicants was $66,829,900 because that finding was based upon his Honour’s finding that the construction costs should be determined on the basis of the use of unionised labour in undertaking the residential development of the land because that was against the weight of the evidence. The uncontradicted evidence at trial was that the Applicants do not use unionised labour in carrying out their developments.
11.The learned trial judge erred in law in not finding that the construction costs should be determined on the basis of the use of non-unionised labour because the uncontradicted evidence at trial was that the Applicants do not use unionised labour in carrying out their developments — and that as a result, his Honour should have found that the construction costs should be reduced by 25%, thereby increasing the Applicants’ loss by $20,396,750.
12.The learned trial judge erred in law in favouring the evidence of Mr Leslie Brown over the evidence of Mr Bradley Papworth in relation to the valuation of the Applicants’ proposed Higher Density development, when the weight of the evidence demonstrated the unreliability of Mr Leslie Brown’s evidence and as a result, his Honour should have found that the development value was higher, thereby increasing the Applicants’ loss by between $51,575,000 to $91,200,000.
13.The learned trial judge erred in law by in effect holding that a discount of 100% should be applied to the value of the opportunity lost by the Applicants because to do so was:
(a)against the weight of the evidence; and/or
(b)contradicted by his Honour’s finding that the Applicants may in the future develop their land for residential uses and that to award them damages for loss of opportunity when they will retain the land and the opportunity continues to exist would be likely to overcompensate them.

14.The learned trial judge erred in law by failing to apply a modest discount to the value of the opportunity lost by the Applicants because that would have fairly reflected:
(a)the minimal prospect that, even absent the Mobil contamination, the Applicants would not have been able to realise the opportunity; and
(b)the fact that his Honour adopted the lowest estimates for every constituent variable as to value, and highest estimate for every constituent cost, in determining the value of the opportunity that was lost.

The application to adduce further evidence

By application filed 25 November 2015, the applicants sought leave, pursuant to r 64.13(2) of the Supreme Court (General Civil Procedure) Rules 2015, to introduce further evidence at the hearing of the appeal. The application itself did not describe the evidence which it was sought to introduce, but was supported by the affidavit of Chloe Marion Moore sworn 25 November 2015. That affidavit, again, did not distinctly state the particular evidence sought to be introduced; but it did identify and refer to the content of certain documents.

The proposed further evidence evidently related to amendment C96 to the Hobsons Bay Planning Scheme, and a planning permit application relating to part of the land encompassed by that amendment.

We refer again to the aerial photograph depicted at [12] above.

Amendment C96 related to rezoning the caravan park and the Arundel stud land.

Ms Moore’s affidavit discloses the following sequence of events:

(1) Amendment C96 and a planning permit application for a two lot subdivision and erection of an aged care facility went on public exhibition between 21 August and 3 October 2014.

(2) After the receipt of submissions, the council resolved, on 18 November 2014, to request the Minister to appoint a panel.

(3) There was a panel hearing in February 2015 which extended over a five day period.

(4) The panel’s report, dated 17 April 2015, recommended adoption of the C96 amendment and the issue of a planning permit.

(5) The council adopted amendment C96 on 26 May 2015 and submitted it to the Minister for approval on 3 July that year.

(6) The Minister approved the amendment on 5 November 2015.

Ms Moore deposed in her affidavit that what she compendiously described as the ‘further evidence’ — it included reference to amendment C96, the planning application, the panel’s report with respect to amendment C96 and the planning application, a ministerial briefing note which assessed amendment C96, and a copy of the explanatory report published at the time the Minister approved amendment C96 — were relevant because:

(1) The applicants’ case at trial was that, before the leak which contaminated their land, they had a substantive opportunity to develop the land for residential use, which was lost as a result of the contamination of their land by Mobil’s negligence.

(2) The further evidence established that that land, which was comparable to the applicants’ land in terms of its location and strategic attributes (being located within the same strategic redevelopment area and identified as redundant industrial land under the Hobsons Bay Industrial Land Management Strategy (‘ILMS’) of June 2008), had recently been rezoned to a residential zoning.

(3) The impediments or constraints to rezoning of the applicants’ land which had been accepted by the judge, including issues of access, the presence of a buffer between the applicants’ land and the refinery, and interface issues, were all addressed by appropriate planning controls or considered not to be impediments to the rezoning of the Arundel stud land. The C96 panel had dismissed arguments against rezoning the applicants’ land which had been pursued by Mobil at trial.

(4) For the reasons discussed, there was a ‘high degree of probability that the result of the proceeding at trial would have been different had the further evidence been available at the trial’.[6]

[6]Quite apart from the position at common law, this Court has power under rule 64.13 of ch 1 to admit further evidence by ‘otherwise order[ing]’. At common law, as was made clear in Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 141–2, the appeal court must be persuaded that the failure to produce the evidence at trial was not due to want of reasonable diligence on the part of the unsuccessful party; and that it is reasonably clear that the fresh evidence would have produced the opposite result. In Foody v Horewood [2007] VSCA 307 [59]–[66], Chernov JA explained in some detail the nature and extent of difference in approach where an unsuccessful litigant seeks to rely, on the one hand, on evidence which was available before trial’s end, and, on the other hand, upon evidence only coming into existence after trial’s end. His Honour’s analysis has been cited, approved and applied in later cases, including Apostolidis v Kalenik [2011] VSCA 307 [56]–[63] and Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237 [503].

In opposing reception of the so-called new evidence, Mobil raised and relied upon the following matters.

(1)Ms Moore’s affidavit did not identify what evidence the applicants sought to adduce.
(2)Whilst there had been some evidence at trial with respect to the Arundel Stud land, it had addressed evidence given by a valuer, Leslie Brown, as to the value of the applicants’ land, not rezoning.
(3)The applicants relied upon a false and unproven assertion as to the comparability of the land the subject of amendment C96 and their land.
(4)It was far from reasonably clear that the proposed further evidence would have led to any different outcome at trial.
(5)If the evidence was to be received, it would inevitably mean that there would have to be a fresh trial.

In response to the oral submission of applicants’ senior counsel that reliance was placed only upon the amendment, which took effect from the time of the Minister’s approval in November 2015, Mobil’s counsel observed that the applicants had relied in the course of trial upon many documents earlier in the planning process which preceded the amendment.

The confined way in which applicants’ counsel identified the further evidence upon which his clients sought to rely, and the apparent contrast with the material referred to in Ms Moore’s affidavit, highlighted the question whether, as deposed at paragraph 5 of that affidavit —

The further evidence upon which the applicants wish to rely was not available at the time of trial, and has only become available recently.

and that —
The application … has been made promptly upon the applicants becoming aware of the existence of the evidence upon which they wish to rely.

Reasons for refusal of application for leave to adduce further evidence

We concluded that the application to adduce further evidence should be refused for a number of reasons.

First, Ms Moore’s affidavit did not satisfactorily identify the material which it was sought to adduce, or the way in which the applicants would seek to adduce it.

Secondly, it is the fact that both the applicants’ land and the land the subject of amendment C96 and the related planning application were zoned industrial, and were within the ILMS of June 2008. Further, each parcel was located within the so-called Strategic Redevelopment Area (‘SRA’) Precinct 13, in respect of which it was stated — though with qualifications — that ‘a residential outcome for the majority of the precinct could be considered, provided appropriate justification for a residential outcome can be provided to the Council’. But to extrapolate from those circumstances a conclusion that the applicants’ land and the land the subject of amendment C96 were comparable was no more than bare assertion. Ms Moore’s affidavit did not suggest that the applicants proposed to call evidence to demonstrate the comparability of the land in the context of a rezoning application; and we think that such evidence would have been needed, or at least was very desirable. Absent such evidence, it appears to us that there is much which suggests that the two areas of land were not relevantly comparable. Thus:

(1) Amendment C96 was, as the panel noted, site specific.

(2) The majority of the land comprised within amendment C96 had in fact been used for residential purposes (by the Hobsons Bay Caravan Park) for nearly 40 years. The panel described the amendment proposal as essentially ‘infill development’.

(3) The panel observed that development of the site would not result in residential use any closer to the industrial facilities to the west than adjoining existing residential development. That would not be the case with much of the applicants’ land, as can be seen from the aerial photograph depicted at [12] above.

(4) Access to the C96 amendment land is quite different to the access available to the applicants’ land. There are frontages to Kororoit Creek Road and Hygeia Avenue, the latter of which was required to be constructed to a suitable standard. Further, provision was to be made for an access road within the rezoned area.

(5) The EPA did not oppose residential development of the C96 amendment land by reason of the requirement for a buffer between the refinery and land for residential use. The EPA had not indicated it would not oppose residential development of the applicants’ land.

(6) There was also evidence, which the C96 amendment panel accepted, that a ‘directional buffer’ was in point; and that the effect of a directional buffer placed the C96 land outside the recommended EPA buffer. Contrast the judge’s conclusions respecting evidence given by Mr Pollock, an expert called by the applicants, about a directional buffer in the present case.[7]
[7]Reasons [431], [434].

(7) The modelling presented by Mr Pollock to the C96 panel in support of the rezoning differed from that presented at trial in the present case. It showed odour plumes from two stacks at the refinery directly affecting the applicants’ land. In turn, the C96 panel observed:

The Panel does observe the model buffer, as shown in figure 7 above, does appear to cover a significant portion of the balance of Precinct 13 from the elevated stacks, and this may have implications for council’s future plans for the balance of the SRA.[8]

(8) The judge accepted the evidence of Mr Milner, a town planner who gave evidence on behalf of Mobil, that there was no opportunity to obtain a rezoning of the applicants’ land prior to the leak. That opinion did not assume that the C96 land would not be rezoned residentially. Rather, Mr Milner expressly acknowledged in cross-examination that there were good prospects of obtaining such a rezoning. It follows that the C96 rezoning is entirely consistent with the town planning evidence which the judge accepted.

[8]Strategic Redevelopment Area.

Thirdly, approaching the matter on the footing that the applicants only sought to rely upon the fact of approval of the C96 amendment in November 2015, the Court would be dealing with evidence coming into existence after trial. We were not at all persuaded that the proposed evidence would meet the test explained by Chernov JA in Foody v Horewood:

…ordinarily, the discretion to receive evidence of events after trial is exercised only rarely, and generally only if it bears upon matters falling within the field or area of uncertainty, in respect of which the trial court has made an estimate or an assumption that was then common to both parties and then that assumption has clearly been falsified by subsequent events, such that the refusal to admit the further evidence would affront common sense.[9]

The matters set out at [52] above show why that is so.

[9][2007] VSCA 130 [66] (emphasis in original).

Fourthly, assuming that the applicants’ true intended reliance, as Ms Moore’s affidavit would suggest, was upon the content of the sequence of events culminating in the Minister’s approval of the amendment — very largely involving circumstances in existence before the trial concluded with publication of reasons and entry of judgment — we again were far from persuaded that a basis for its receipt had been established. The applicants’ contention that, were the fresh evidence (whatever its precise content) to be received, there was a high degree of probability that the result of the proceeding below would have been different, could not be accepted. The applicants’ claim failed at a number of levels. It failed because the judge rejected loss of valuable opportunity for rezoning and residential development as the proper basis for assessment of damages. It failed because the judge concluded that there was no such valuable opportunity. And it failed because the judge concluded that, even if there had been a valuable opportunity, it had not been lost by reason of Mobil’s breach of duty. The most that the proposed further evidence could do was address the existence of a valuable opportunity. Applicants’ counsel was unable to point to any authority to the effect that evidence which would address only a part of an unsuccessful party’s case was enough to justify its reception.

Fifthly, we agree with the submission for Mobil that, were the fresh evidence, whatever its precise content, to be received, it would necessitate a retrial. It would not be realistic to imagine that this Court could receive a body of evidence — perhaps partly oral — and then attempt to assess probabilities or possibilities by reference to that evidence and by reference to conflicting oral and documentary evidence adduced at trial. This emphasises, in our view, the significance of the failure by the applicants to draw the judge’s attention to the documents relating to the evolving C96 amendment and the associated planning application before his Honour entered judgment. It also points up the failure by the applicants’ side to give any explanation for either being unaware of the progress of the C96 amendment and planning application during 2014 and 2015 (if that was the case); or alternatively, to give any explanation for not drawing the matter to the judge’s attention before entry of judgment.

Grounds 1 to 4

As we have explained, the applicants’ claim for loss was put at trial on the basis that what had been lost was a valuable opportunity which the applicants had enjoyed prior to the contamination of their land caused by the leak.[10]
[10]Reasons [46].

As such, the applicants’ claim was not for a loss of development potential affecting the value of the land, or the profits that could be calculated to have been lost by the leak, but rather for the loss of a present opportunity which they asserted would have been realised by 2012, which was when the claim was instituted. Moreover, the claim was not one for delay in achieving development potential, but for the absolute loss of an opportunity.[11]
[11]Ibid [47].

As we have already observed, the trial judge concluded, for a series of alternative reasons, that the contamination of the applicant’s land (including the groundwater beneath it) resulting from the leak did not deprive the applicants of a real opportunity to develop the land residentially.

His Honour’s ultimate conclusions in this regard were expressed as follows:

I find that, pre-leak, there was no opportunity to rezone and develop the plaintiffs’ land residentially. Therefore, the plaintiffs had no prospect of acquiring the benefits of residential development of their land because of the impediments which existed and were highly likely to prevent rezoning of the plaintiffs’ land to residential use and further highly likely to consequently prevent the issue of development permits for residential development. Accordingly, I find that there was no opportunity, of the type asserted by the plaintiffs, which has been lost.
For the reasons I have identified above, I find that the groundwater contamination caused by the Mobil leak does not prevent the plaintiffs from developing their land residentially. This is because, notwithstanding the present state of groundwater contamination caused by the Mobil leak, the plaintiffs are able to obtain a Statement of Environmental Audit which will permit the residential development of their land (that is if the other impediments to rezoning addressed above are resolved to the satisfaction of the Planning Authority), subject to a likely condition that the development works do not breach the depth of the underlying groundwater contamination.
I also find, for the same reasons, that the opportunity to develop their land residentially, identified by the plaintiffs, was in any event, at all material times of negligible or no value because the asserted opportunity was unrealisable, or highly likely to be unrealisable.[12]

[12]Ibid [584]–[586] (citation omitted).

The applicants’ claim involved two elements relating to planning approval. First, they alleged that they had lost the opportunity to rezone the land to a residential zone and, secondly, they alleged that they had lost the opportunity to develop the land in accordance with specific plans, which in turn formed the basis of a hypothetical development calculation by reference to which they sought to quantify their alleged loss. These two elements reflect two stages of planning decision-making. First, the applicants needed to demonstrate that their land would have been rezoned to a residential zone and, secondly, they had to demonstrate that the form of subdivision and development they desired would have received permit approval under the provisions of that zone. The judge’s conclusions thus reflected different levels of adverse finding:

(1)There was no prospect of rezoning prior to the leak or prior to trial;
(2)There was no prospect of the grant of a permit for any of the forms of development claimed prior to the leak or prior to trial; and
(3)The leak contamination was not, in itself, a bar to future residential zoning and development if the other constraints affecting the land were resolved.

Grounds 1, 2 and 4 of the notice of appeal assert that the applicants had ‘a substantive opportunity’ to develop the land prior to the land being contaminated by the leak. In turn, these grounds raise two basic propositions, namely that the trial judge erred in finding that, prior to contamination of the land by the leak, the applicants had no real opportunity to develop the land for residential purposes because:

(1) that conclusion was against the weight of the evidence; and
(2)that conclusion was inconsistent with the further finding that the applicants may in future develop the land for residential purposes.

Ground 3 raises a specific complaint that the trial judge failed to consider aspects of the evidence bearing on these issues.

In our view, there is nothing in the complaints of inconsistent findings, nor in the complaint that the judge failed to consider aspects of the evidence. The applicants alleged an existing ‘substantive opportunity’ to develop the land prior to the contamination. There is no inconsistency between finding that such an opportunity did not exist at the date claimed and finding that oil-leak contamination has not precluded the possibility of future development. More particularly, his Honour’s findings with respect to an absence of opportunity to develop the land at one point in time did not preclude a finding that the oil-leak contamination did not affect any long-term potential the land had for residential development dependent upon the resolution of other impediments to rezoning.

Likewise, for reasons to which we shall return, we are not persuaded that the trial judge failed to consider the relevant evidence.

The real issue is whether the conclusions that his Honour reached concerning the substantive opportunity were against the weight of the evidence. That evidence bore on a number of factors relevant to the probability of obtaining planning approval for residential development, but also gave rise to a primary conflict of opinion between two town planning experts as to the net effect of planning policy when properly applied to lots A and B.

In the course of his Reasons, the trial judge addressed the following matters:

(1)       the planning law framework affecting use and development of the land;
(2)       the planning history of the land both before and after the leak;
(3)       the impediments to rezoning of the applicants’ land for residential use; and
(4)the impediments to approval by way of a development permit for the hypothetical developments postulated by the applicants as realistic for the purposes of assessment of the loss of opportunity claimed.

The trial judge concluded that, because the applicants’ land was affected by an EPA buffer protecting the Altona petroleum refinery, there was no prospect of the land being rezoned for residential use.[13] Nor was there any such prospect in the ascertainable future.
[13]Ibid [439].

His Honour further concluded that he was not satisfied that the applicants had established that a series of impediments were likely to be resolved to clear the way for the rezoning. The applicants had not established that they had any real prospect of varying the buffer constraint. Additionally, the land was affected by other constraints, namely access issues, interface issues, pre-existing contamination, industrial interface issues, service issues, amenity issues and a s 173 agreement affecting the use that could be made of the land.[14]
[14]Ibid [441].

His Honour specifically accepted the reasons given in the opinion evidence of Mr Milner, a town planner, who gave expert evidence on behalf of Mobil, as supporting the conclusion that it was presently, as it had been at the time of the leak, most unlikely that the applicants’ land would be rezoned for residential development.[15]
[15]Ibid [442].

In addition, the judge found that none of the three development plans put forward by the applicants was likely to obtain development approval even if the effects of the leak were removed from consideration.[16]
[16]Ibid [453].

Finally, the judge accepted Mr Milner’s opinion that there was an increased prospect that the south-east portion of the applicants’ land, directly abutting residential development, may be able to be developed residentially. But he further found first that, if this land were so able to be developed, there would be no loss of relevant opportunity with respect to it by reason of the leak and, further, and in any event, no proof of any quantifiable opportunity loss in respect of potential part-development only of the land had been put forward on behalf of the applicants.[17]
[17]Ibid [454].

In order to assess the weight of the evidence supporting his Honour’s conclusions, it is necessary first, as his Honour did, to say something about the zoning controls and the planning history of the land. We turn first to the planning controls which were in place at the time of the leak and thereafter.

Planning controls

Land use and development planning in Victoria is regulated by the Planning and Environment Act 1987 (‘the P&E Act’). The objectives of planning in Victoria as set out in s 4 of the P&E Act relevantly include:

·to provide for the fair, orderly, economic and sustainable use, and development of land;
·to secure a pleasant, efficient and safe working, living and recreation environment for all Victorians and visitors to Victoria;
·to facilitate development in accordance with these objectives;
·to balance the present and future interests of all Victorians.

The P&E Act provides for the preparation and administration of detailed planning schemes in each municipality. The framework, format and basic content of planning schemes are provided for by standard provisions.[18]
[18]See P&E Act pt 1A.

In accordance with these provisions, the Hobsons Bay Planning Scheme at all relevant times first set out a State Planning Policy Framework (‘SPPF’) and Local Planning Policy Framework (‘LPPF’). The SPPF covers strategic issues of state importance. It lists policies under nine headings — settlement, environment and landscape values, environmental risks, natural resource management, built environment and heritage, housing, economic development, transport and infrastructure. The SPPF is common to all planning schemes in Victoria.

The LPPF contains a municipal strategic statement (‘MSS’) and local planning policies. The LPPF identifies long-term directions for land use and development in the municipality, presents a vision for its community and other stakeholders, and provides the rationale for the zone and overlay requirements and particular provisions in the scheme.[19]
[19]Hobsons Bay Planning Scheme User Guide cl 3.

The policy framework set out in the scheme at both the state and local level is intended to inform decision-making both with respect to amendment of the planning scheme and with respect to the grant of planning permits or other development approvals under zoning and other provisions contained within it.

The SPPF makes clear that both when strategic decisions are made with respect to rezoning and when decisions are made with respect to approval of particular development proposals, the ultimate test for the planning authority is whether the rezoning or the development approval will result in net community benefit and sustainable development. These tests implicitly recognise that the planning decisions involved are multifactorial and may require the balancing of factors for and against a proposal by reference to planning objectives and policies. Clause 10.04 of the planning scheme relevantly states:

Society has various needs and expectations such as land for settlement, protection of the environment, economic well-being, various social needs, proper management of resources and infrastructure. Planning aims to meet these by addressing aspects of economic, environmental and social well-being affected by land use and development.
Planning authorities and responsible authorities should endeavour to integrate the range of policies relevant to the issues to be determined and balance conflicting objectives in favour of net community benefit and sustainable development for the benefit of present and future generations.[20]

[20]SPPF cl 10.04.

Both Mr McGurn, who gave expert town planning evidence for the applicants, and Mr Milner, for Mobil, ultimately gave opinions which sought to synthesise the relevant policy objectives and apply them to the factual matrix relating to the applicants’ land, in order to determine whether it was probable that the relevant planning decision-makers would be persuaded that a residential rezoning would result in net community benefit and sustainable development. In turn, Mr Milner went on also to consider whether planning permits for residential development in one of the forms put forward by the applicants would result in net community benefit and sustainable development.

The applicants’ land is contained within an Industrial 3 Zone. As one of the purposes of the zone expressly states, that zone is intended to provide a buffer between more sensitive uses and major industrial uses.

In the present case, the buffer zone sits between the Altona petroleum refinery and other industrial uses within an industrial zone to the west and sensitive land uses including a residential zone to the east. The relevant zoning map is below.[21]

[21]CB H2508.

Within the zone, only the Akuna Drive land and land facing Champion Road is developed industrially. The applicants’ land and the Mobil land is vacant, and the Arundel stud land is also undeveloped. The street plan below gives further detail of the street and land use framework within which the applicants’ land sits. As we understand it, the streets marked with dashes have not been constructed. The environs of the land are shown below.[22]

[22]CB H2506.

Residential use (other than a caretaker’s dwelling) is a prohibited use within an Industrial 3 Zone. In order to develop the applicants’ land for residential purposes, it was thus necessary that the applicants first obtain a rezoning to a zone which permitted residential use before obtaining development approval for a particular form of residential development upon the land.

Before any rezoning could proceed, the planning authority was required to consider relevant aspects of the SPPF. As we have said, grounds 1, 2 and 4 of appeal are directed to the trial judge’s conclusion with respect to the absence of a substantive opportunity prior to the leak. Whilst the zoning of the applicants’ land did not change in the period between the leak and trial, both policy framework statements in the planning scheme and the provisions of other policy documents referred to in the planning scheme policy provisions did change.

At trial, the town planning witnesses addressed both the past and present prospects of a rezoning of the applicants’ land. Ultimately, his Honour concluded not only that no substantive opportunity existed prior to the leak but also, as we have said, that the applicants’ land (disregarding the contamination caused by the leak) had no present prospects of a residential rezoning.

The form of the planning scheme tendered at trial and relied upon on the appeal is that containing amendments made up until 9 May 2013. We shall (unless otherwise stated) also refer to the planning scheme in the form that it was as at that date, although it had been amended after the date of the leak and before the trial. In so doing, however, it will be necessary to highlight relevant changes since the date of the leak and to keep in mind that grounds 1 to 4 are specifically directed to the situation at the date of the leak.

At the time the town planning evidence was adduced at trial, the relevant policies included the following:

(1) settlement policies which include:
·planning is to prevent environmental problems created by siting incompatible land uses close together;
·planning is to facilitate sustainable development that takes full advantage of existing settlement patterns, and investment in transport and communication, water and sewerage and social facilities;[23]
[23]SPPF cl 11.

(2) urban growth policies which endorse the notion of urban consolidation;[24]
[24]SPPF cl 11.02–1; MSS cls 21.02-2, 21.02-3 and 21.02-7.
(3)structure planning policy which envisaged effective planning and management of the land use and development of any area through the preparation of strategic plans, statutory plans, development and conservation plans, development and contribution plans and other relevant plans;[25]
[25]SPPF cl 11.02-3.

(4) environmental risk policy:
Planning should adopt a best practice environmental management and risk management approach which aims to avoid or minimise environmental degradation and hazards. Planning should identify and manage the potential for the environment, and environmental changes, to impact upon the economic, environmental or social well-being of society;[26]
[26]SPPF cl 13.
(5)specific air quality policy directed to the objective of assisting the protection and improvement of air quality. The stated strategy is relevantly to ensure, wherever possible, that there is suitable separation between land uses that reduce amenity and sensitive land uses. The policy guidelines state that planning must consider EPA publications:[27]
·State Environment Protection Policy (Air Quality Management) (‘SEPP(AQM)’).
·Recommended Buffer Distances for Industrial Residual Air Emissions (Environmental Protection Authority, 1990) in assessing the separation between land uses that reduce amenity and sensitive land uses (‘the EPA buffer policy’);

(6)urban design policy, including a strategy requiring development to respond to its context by way of a site analysis;[28]
(7)housing policy, which seeks to promote integration, diversity and affordability of housing;[29] and
(8)economic development policy with respect to industry, which incidentally seeks to protect industrial activity in industrial zones from the encroachment of unplanned commercial, residential and other sensitive uses which would adversely affect industry viability.[30]

[27]SPPF cl 13.04–2.

[28]SPPF cl 15.01-1.

[29]SPPF cl 16.

[30]SPPF cl 17.02–1.

These policies have two fundamental thrusts which are potentially in conflict. On the one hand, the policies support the viability of industry, avoidance of the juxtaposition of incompatible land uses, best practice risk management in respect of air pollution and the provision of adequate buffers between industry and sensitive uses. All of these considerations favour the continuation of the purpose which the Industrial 3 Zone was intended to fulfil. On the other hand, efficient development of the urban area, taking full advantage of existing settlement patterns, and urban consolidation policy relating to the provision of increased density of housing within the urban area both favour the use of vacant land in the zone to add to the adjoining residential area.

Because of its potential individual significance, we will return to a more specific discussion of the effect of the EPA buffer policy, and the evidence relating to it, after we have dealt with other aspects of the planning evidence.

In addition to the SPPF, the LPPF also contains local policies further articulating settlement, residential and industry policies. It is necessary to say something further about these policies also because they bore directly upon the opinions ultimately expressed by the town planning witnesses.

The LPPF first contains the MSS which, after 25 October 2012, identified the following among the key issues with respect to settlement and housing facing the municipality:

·pressure to rezone and develop Strategic Redevelopment Areas (‘SRAs’) identified on a Strategic Framework Plan prior to completion of a necessary planning framework;
·defining a new neighbourhood character for the SRAs which balances character and costs associated with remediation of former industrial sites;
·accommodating urban growth largely in SRAs to facilitate urban consolidation;
·encouraging environmentally sustainable development.[31]

Each of these issues potentially affected the applicants’ land.

[31]Clause 21.02–3.

The MSS further identified as the first key issue facing the municipality with respect to economic development:

·protecting national and state significant industries, including some of Victoria’s largest petroleum, chemical and manufacturing industries from encroachment of residential or other sensitive uses.

Again, the need for, and extent of, appropriate protection of this kind was a fundamental issue with respect to the applicants’ land.

The MSS also stated a strategic vision[32] for the municipality:

Working together to achieve a vibrant, diverse and sustainable community that simultaneously pursues economic success, environmental quality and social equity to provide opportunities for all.

[32]Clause 21.02–4.

The statement of strategic vision incidentally affirmed a strong commitment to recognising the contribution of the municipality’s national and state significant and major industrial enterprises and protection and support for their continued operations. It also expressed a strong commitment towards managing and appropriately addressing the interface between industry and other sensitive uses.

The MSS went on to state:

The key to achieving this vision is the recognition that various parts of the municipality have to be managed differently and that development potential must consider and respond to local neighbourhood context. A ‘one size fits all approach’ across the municipality cannot be applied.

The MSS also contained a Strategic Framework Plan which incidentally identified SRAs.[33]

The applicant’s land comprises part of a designated SRA and can be identified on the above plan adjacent to the Akuna Drive industrial area.

[33]CB H6833.

The LPPF went on to state settlement policy, which included specific provisions with respect to SRAs.[34]
[34]Clause 21.03–2.

Objective 1
To successfully manage the transition and strategic redevelopment of redundant industrial areas identified as Strategic Redevelopment Areas through the development of Outline Development Plans (ie a master plan) or other appropriate planning controls to achieve net community benefit.
Strategies
·Manage change in Strategic Redevelopment Areas carefully; protect the existing and ongoing viable use of existing industries; retain employment generating uses where possible; and subject to appropriate justification, introduce new land uses.
·Require the following matters be addressed, as appropriate, in consideration of applications for change in Strategic Redevelopment Areas:
·The extent of contamination.
·Range of future uses.
·All infrastructure requirements including community facilities and open space.
·Potential off site impacts, and measures to manage them.
·Traffic management plans which address connectivity within and between sites.
·Staging of development.
·Mechanisms/proposals to protect ongoing viable industries from encroaching sensitive uses such as buffer distances and acoustic measures to attenuate noise levels within the new development.
·Future character of the area and potential impact on neighbouring residential character.
·Measures to protect ongoing viable industry.
·Social Impact Assessment.
·Incorporation of Environmentally Sustainable Design Principles.
·Diversity in housing choice including affordable housing.
·Appropriate zoning and planning controls to guide future development and manage the potential impact of interface issues on adjoining land uses.

·Require the preparation of an Outline Development Plan (ie a master plan), for Strategic Redevelopment Areas that are no longer suitable for traditional industrial uses and are in multiple ownership in consultation with land owners, adjoining land owners, key government stakeholders and the Council to ensure that the Strategic Redevelopment Area as a whole can integrate with its surrounds and address significant interface issues.
·Support applications for site specific rezoning only if the applicant can demonstrate that the proposal will not prejudice the future development of the remainder of the precinct and that it is consistent with an Outline Development Plan or Master Plan that has been prepared to manage overall change in the precinct.
·Ensure that there is an appropriate interface between conflicting land uses when planning for the redevelopment of redundant industrial sites identified as Strategic Redevelopment Areas.
·Require residential and other new sensitive land uses to include appropriate measures to protect residential amenity including noise attenuation within new buildings and appropriate design and siting of private open space to protect occupants’ amenity.
·Ensure that there is an appropriate interface between existing and future land uses within redundant industrial areas identified as Strategic Redevelopment Areas when planning for redevelopment of the precinct.
·Where appropriate, consider the potential for new character in future residential areas of the Strategic Redevelopment Areas.
·Ensure the provision of appropriate community infrastructure or an adequate contribution to support new communities.
·Ensure that the existing road layout and subdivision pattern that defines and characterises the broader neighbourhood is considered and respected by new development.

Implementation
These objectives and strategies will be implemented by:
Policy Guidance (criteria for the exercise of discretion)
·Use local policy at Clause 22.01 to ensure that heritage issues are given appropriate consideration at an early stage when making decisions about the future uses and development of industrial sites.
·Use local policy at Clause 22.02 to ensure the viability of ongoing industries.
·Use local policy at Clause 22.11 to ensure that signs respond to the character and amenity of areas and do not detract from the character of a locality, building or site.

Application of zones and overlays:
·Apply the Design and Development Overlay, or a Development Plan Overlay or other appropriate planning control to implement the Hobsons Bay Industrial Land Management Strategy 2008 to manage the transition of redundant industrial land identified as a Strategic Redevelopment Areas for alternative uses.
·Apply the Development Plan Overlay or the Design and Development Overlay to ensure that new, refurbished and converted developments for new residential and other noise sensitive uses constructed in proximity to existing industry include appropriate acoustic measures to attenuate noise levels within the building and private open space areas.
·Apply the Environmental Audit Overlay to contaminated sites.
·Apply the Land Subject to Inundation Overlay and the Special Building Overlay to land identified as being flood prone.
·Apply the Heritage Overlay to conserve characteristics that contribute to the individual identity of heritage places and precincts within Hobsons Bay and ensure that their cultural significance is not diminished by the loss of any fabric which contributes to the significance of the heritage place or precinct and inappropriate new development.

Further Strategic Work
·Prepare Outline Development Plans (ie a master plan) for entire precincts identified as Strategic Redevelopment Areas in the Industrial Land Management Strategy 2008 prior to consideration of rezoning applications.
·Manage the transition of the Strategic Redevelopment Areas as outlined in the Hobsons Bay Industrial Land Management Strategy 2008, through the development of Outline Development Plans, Development Plan Overlays, Design and Development Overlays or other planning tools, as appropriate, to ensure an integrated development that, amongst other things, ensures appropriate buffer distances are maintained from nearby industry and the ongoing operations of the Port are protected.
·Review the level of existing facilities and services to meet the needs of new communities.[35]

[35]The ILMS 2008 is listed as a reference document.

It can be seen that these provisions contemplated an ongoing process over many years in order to manage potential change within the SRAs. They contemplated the introduction of new land uses subject to appropriate justification. They required a series of specific potential constraints to be addressed. They also contemplated that the transition in use of redundant industrial land would be managed in accordance with the ILMS 2008. We will come shortly to the process which led to the inclusion of these provisions in the planning scheme and to the terms of the ILMS. But it is important to note that this version of the ILMS post-dates the leak and was not referred to in the planning scheme in December 2006, being the date with which grounds 1, 2 and 4 are concerned.

Local policy with respect to the built environment contemplated that the amenity of residential areas would be protected from the effects of noise, air, water and land pollution.[36]
[36]Clause 21.06.

Economic development policy sought to stimulate and facilitate appropriate industrial activity and employment opportunities by differentiating between core and secondary industrial areas, protecting those areas from the impacts of encroachment of residential and other sensitive land uses, and managing the successful transition of identified SRAs through further detailed planning.[37] The Altona petroleum refinery falls within a core industrial area, the adjoining industrial area to the east of the refinery comprises a secondary industrial area, and the applicants’ land falls within the northeast portion of an SRA while the Akuna Drive industrial area is again a secondary industrial area.

[37]Clause 21.08.

Mr Milner summarised the principal competing thrusts of the policy provisions overall as follows:

·     The need to protect the health and safety of the community and through land use planning and urban design create and protect a high standard amenity in which residents are not affected by adverse environmental effects.
·     Prevent environmental problems by not siting incompatible land uses close together.
·     The need to protect industrial activity in industrial zones from the encroachment of unplanned residential and other sensitive uses which will adversely affect industrial viability and sustainability.
·     The need to ensure sufficient land is available for a range of uses including residential and industrial purposes to meet forecast demand. Included among the ways that this might be achieved is by urban consolidation, redevelopment and intensification of existing urban areas.[38]

[38]CB H5136.

In addition to the policy framework governing the ongoing planning of the applicants’ land and other land within its vicinity, the question of the appropriateness of the applicants’ land for residential development also fell to be considered by reference to a Ministerial Direction given under ss 7(5) and (6) of the P&E Act with respect to contaminated land. Minister’s Direction number 1 published on 27 September 2001 governed amendments to a planning scheme that may affect the use of potentially contaminated land. The applicants’ land falls within this category because it is known to have been used for industry and to have formed part of a refuse tip and been the subject of some dumping of waste and fill. The Minister’s Direction requires the council as planning authority to either ensure that a Certificate of Environmental Audit or Statement of Environmental Audit with conditions that are suited to sensitive use (including residential use) has been issued;[39] or include a requirement in an amendment facilitating such use that a certificate or statement be issued before a sensitive use, construction or works in association with the sensitive use commence.[40]
[39]See Environment Protection Act 1970 ss 4, 53R–53ZE.
[40]Reasons [18]–[20].

Planning history

The planning history of the land before the leak shows continuing difficulty and conflict over the manner in which the policy objectives affecting its redevelopment should be resolved.

Before 1989, the applicants’ land was used for the purpose of an abattoir and zoned General Industrial. It appears that the abattoir commenced in about 1930. After it ceased, the land was used in part as landfill.

Between 1989 and 1995, three proposals for rezoning the land from industrial to residential were unsuccessful. In the ordinary course, if authorised by the Minister,[41] planning scheme amendments first undergo a public exhibition process.[42] If submissions are received which give rise to issues of concern,[43] the proposed amendments are referred to an independent panel. After the panel has considered the submissions and conducted a hearing with respect to them, the panel reports to the council.[44] The council may then adopt the amendment with or without changes.[45] The amendment is then subject to ministerial approval[46] and potential parliamentary revocation[47] before it comes into force.
[41]Section 8A.
[42]Section 19.
[43]Section 23.
[44]Section 25.
[45]Section 29.
[46]Section 35.
[47]Section 38.

Counsel submitted that what the judge should have done was decide on the balance of probabilities whether there was a prospect of rezoning at a relevant time (and he should have so found), and then assess the damage according to probabilities and possibilities, making appropriate reductions or discounts. The discount, counsel submitted, should have been very low — in the order of 10 per cent.

Mobil’s submissions

It was submitted in writing for Mobil that the judge had not been satisfied on the balance of probabilities that the applicants had an opportunity at a relevant time to develop the land, which opportunity had been lost because of the leak.

It was further submitted that the judge had been correct to point to a risk of overcompensation if, contrary to the conclusion just mentioned, there had been an opportunity and it had been lost.

Orally, counsel for Mobil submitted that the judge had explained why loss of opportunity damages were not appropriate. Not only had the applicants failed to establish that there had been such an opportunity at a relevant time, the asserted opportunity had not been lost at all because, inter alia, the land could be remediated back to a condition in which its highest and best use — whatever that might be — could be exploited.

Counsel was pressed as to the correctness or otherwise of the judge’s statement that, ‘to award the plaintiffs damages for loss of opportunity when the plaintiffs will retain the land and the opportunity continues to exist would be likely to overcompensate the plaintiffs’.[146] Counsel accepted that if loss of opportunity damages are awarded in a particular case, the whole point of discounting for contingencies is to yield the result that there is no overcompensation.
[146]Reasons [191].

There was this interchange between counsel and the Bench:

ASHLEY JA: But it would be wrong, wouldn’t it, to say, ‘I won’t award loss of opportunity damages because they will overcompensate when you still have, if you like, the raw material or profit’ because, if you understand that loss of opportunity damages are to be reduced for contingencies to make sure that that can’t happen, it’s a bootstraps argument.
MR CALEO: If all the elements of the claim were established, then the part of the analysis where one relying on Sellars discounts or reduces for contingencies would mean you are doing that in an attempt to ensure that one doesn’t have over-compensation.
ASHLEY JA: That really seems to me to be just a criticism that might be made of that last sentence, which is repeated on a number of occasions.
MR CALEO: Your Honour, we would accept that it is a criticism that can be made. We contend that it is irrelevant to His Honour’s analysis of the substantive elements of the claim.
CHIEF JUSTICE: Is it possible, Mr Caleo, it’s just an inappropriate use of language?
MR CALEO: Your Honour, because we contend the last sentence is really nothing more than a reflection of the second last, the notion, ‘What you had, which I have concluded was something of very little value at the time, you will still have’, then we suggest the last sentence really is doing little more than that. If it is doing more erroneously, then it is irrelevant to the way in which His Honour actually analysed the elements of the asserted claim. To take Your Honour Justice Ashley’s example of it becomes a bit bootstraps, you can’t then use this to wind back and say, ‘That infects His Honour’s analysis of the opportunity asserted or whether it is lost’. It is simply a different point.[147]

[147]T61, line 10 to T62, line 12.

Counsel submitted, respecting a loss of opportunity claim, that there is a need to precisely identify the opportunity said to be lost. That opportunity must be an opportunity to secure financial benefits. In this case, although the applicants’ identification of the opportunity had varied over time, the only way in which it could be characterised was the opportunity to secure the financial benefits that might flow from residential development. For such an opportunity to be established, the applicants would have needed to prove, on the balance of probabilities, that the opportunity for residential development was real, this entailing proof that the prospects of rezoning and planning permission were real at the time of breach. That is the way in which the parties had conducted their cases at trial, and the judge had decided the balance of probabilities question adversely to the applicants.

Asked why loss of opportunity damages ought not be available, conceptually, in a claim respecting damage to land, counsel replied as follows:

… it’s not so blanket a proposition because we would say that the way in which one approaches diminution in value is necessarily looking at the contrast between the land pre-leak – I’m just using pre-leak here because of the facts – and the value of the land now. That, as Mr Brown’s report stated, is capable of addressing the question of whether the land pre-leak and what it could have been used for is different to what it could be used for now. So the principles of valuation are capable of giving effect to what might be alleged to have been lost because of the tort.
ASHLEY JA: So that, approached as an issue of diminution in value, loss of opportunity can be built in or should be built in, in an appropriate case, to the before and after.
MR CALEO: Yes, it can be. I hesitate with the word ‘should be’ because it would of course depend upon the facts …[148]

And:
OSBORN JA: The valuation before and after won’t capture the plaintiffs’ loss if there is an existing bargain or some other special value particular to the plaintiff attaching to the land.
MR CALEO: Your Honour is correct.
OSBORN JA: In this case his Honour found that what the complaint was about was the general characteristics of the land which were capable of being evaluated in the marketplace, as it were.
MR CALEO: Yes. With respect, Your Honour, that’s correct, because His Honour said two things. He said of course there are those special cases where, because of particular circumstances, a special value attached to the land or an existing opportunity that was ripe to be taken, much as it had been in Sellars, where the fundamental terms of the contract had been negotiated already to be entered into, but His Honour next found this is not that type of case …[149]
[148]T90, line 30 to T91, line 15.
[149]T91, line 31 to T92, line 16.

Victoria’s submissions

Counsel for Victoria, in written submissions, in substance adopted Mobil’s submissions with respect to grounds 5 to 7. Orally, counsel submitted that the judge had correctly analysed the authorities dealing with compensation for damage to land, and had recognised, correctly, the circumstances in which consequential loss may be compensated. Further, orthodox principles of valuation allowed for the opportunities both before and after Mobil’s breach.

So far as the judge’s reference[150] to the prospect of overcompensation was concerned, counsel described what his Honour said as ‘relevantly inelegant’.
[150]Reasons [191].

Counsel also highlighted the way in which the applicants’ case at trial had varied as to identification of the opportunity said to have been lost.

Analysis

When all is said and done, there was relatively little debate, in this Court, about the principles relating to assessment of damages for damage to land which the judge set out in great detail. By that, we mean that the principles which his Honour set out were largely uncontroversial. Thus, such damages are ordinarily awarded on the basis of diminution in value or cost of remediation. Consequential losses, in respect of profits lost by reason of the land having some special value at the time of the offending conduct, or where some personal present or imminent use of the land is frustrated, may be additionally assessed.

It is next necessary to note that the judge did not exclude the possibility that loss of opportunity damages might in some case concerning damage to land be a substitute for damages based on diminution in value, cost of reinstatement, and added consequential loss damages in a particular instance. His Honour entertained that possibility, although there is scant support for such an approach. Overall, it is crystal clear that his Honour was guided by the overriding need to ensure that damages would be fair and just compensation, so as to put the applicants, so far as money could reasonably do so, in the position in which they would have been if the leak had not occurred.

So far as the way in which a claim for lost opportunity damages should be approached, his Honour was correct to conclude that the valuable opportunity said to have been lost must be properly identified. For without proper identification, there can be no basis for determining whether a plaintiff has established, on balance of probabilities, the existence of an opportunity which had some value.

It is next the case that, as his Honour stated, a plaintiff who asserts loss of a valuable opportunity must establish on the balance of probabilities not only that the opportunity existed, but that it was lost, and that the breaching party’s conduct was causative of the loss.

Much emphasis was laid in this Court on the judge’s observation, repeated more than once, that to assess damages on a lost opportunity basis would run the risk of overcompensating the applicants. In his oral reply, applicants’ senior counsel went so far as to submit that ‘[t]he issue of overcompensation is the central issue in his Honour’s reasoning’. The applicants’ submission was that the process of assessment, where account must be taken of probabilities and possibilities, would ensure that overcompensation would not occur.

We accept that, if there is to be an assessment of damages for loss of a valuable opportunity, a risk of overcompensation can and should be addressed in the analysis of probabilities and possibilities. So, if the overriding goal of awarding a plaintiff fair and reasonable compensation is best accommodated by an available claim for loss of opportunity damages, assessment on that basis ought not be rejected by a perceived risk of overcompensation. On the other hand — and here we focus upon claims arising out of damage to land and assume the availability of loss of opportunity damages — awarding damages on a diminution in value basis, this importing consideration of highest and best use of land before and after breaching conduct, may, in a particular case, be a more certain, reliable and thus appropriate way of bringing to account an asserted loss of opportunity than assessment on a lost opportunity basis. It is, we think, well possible to envisage a case in which a judge might be satisfied, on balance of probabilities, that breaching conduct was causative of the loss of an opportunity of some value, but that an assessment of damages based upon a series of cascading hypothetical circumstances would be so uncertain that diminution in value damages, making its assessment of highest and best use before and after the breaching conduct, would be a more appropriate method for assessment of damages.

Further, we do not accept that simply to establish that the applicants are land developers establishes a case that a loss of market value would be inadequate to compensate them. Rather if, as the judge held, the land was not unique and other reasonably comparable sites were available to them, the fact that the applicants are land developers, if anything, favours the view that loss of market value would provide fair and reasonable compensation.

In the present case, the judge rejected a loss of opportunity basis for assessment of damages because he found, on the balance of probabilities, that at the time of Mobil’s tortious conduct, the applicants had not established that they had a valuable opportunity constituted by the prospect of rezoning and residential development of the land. It was submitted for the applicants, in counsel’s reply, that the opportunity which existed before the leak was the opportunity ‘to seek to have the land rezoned’ and to ‘seek to develop it by building the high density option’. But that, with respect, could not be so. If the opportunity to seek rezoning and to seek a planning permit for residential development had no prospect of success, where lay the valuable opportunity? To respond, as applicants’ counsel did, that the question whether the applicants were likely to secure rezoning or to obtain a planning permit for residential development was entirely within the province of assessment, could not be accepted.

The judge in fact found not only that the applicants did not have a valuable opportunity immediately before the leak, but also that the leak was not causative of loss of the supposed opportunity. That was for more than one reason. There were inhibitions to rezoning and development which existed before and after the leak. There was already contamination of the land which affected its development potential. The consequences of the leak would be remediated in time to the point that whatever possibility there was in the distant future of the land being rezoned and a permit for residential development being granted, such possibility was no less than it had been before the leak. Having regard to those findings, the applicants’ submission that the judge decided not to assess damages on a loss of opportunity basis because of what his Honour said about the risk of overcompensation cannot be accepted.

If the applicants had established that the leak was causative of loss of a valuable opportunity, and assuming that loss of opportunity damages may be awarded in a damage to land case in substitution for, or rather than, damages for diminution in value or for cost of reinstatement, then it would have been wrong, in our opinion, for the judge to have rejected assessment of damages on a lost opportunity basis ‘across the board’ by reason of a supposed risk of overcompensation. But it would be relevant in such a case, in our opinion, to consider whether compensation by way of diminution in value was likely to provide the more reliable assessment of damages notwithstanding the nominal availability of a loss of opportunity basis for assessment.

In the present case, as we perceive it, on an assumption that loss of opportunity damages were available, the judge nonetheless concluded that diminution in value damages would be the more appropriate method of assessment. In that connection, we think, it is understandable that his Honour would have preferred a method of assessment which would ensure, reliably, that there was no overcompensation, by contrast with a method of calculation in which, although it ought not occur, the uncertainties of a hypothetical calculation would leave open the risk of overcompensation.[151]
[151]For completeness, we note that, if loss of opportunity were the correct measure of damages, then it may well be that the value of the opportunity to develop the land by way of industrial subdivision in the ‘after’ situation should, in strictness, be deducted from the value of the opportunity to develop it for residential purposes in the ‘before’ situation. After all, the applicants remain land developers with the capacity to develop the land for industrial use. On one view, there is an inherent contradiction in deducting the market value of the land in the land in the after situation as the applicants propose.

Finally, we should mention a submission for the applicants that the judge’s conclusion that diminution in value would have yielded a damages award (had the applicants pursued it) of about $1 million, and his Honour’s provisional assessment of damages on a lost opportunity basis at more than $66 million, showed that to award damages on a diminution in value basis would grossly undercompensate them. The submission was flawed for at least two reasons. First, the applicants failed to make out a lost opportunity. Secondly, the figure of $66 million took no account at all of probabilities and possibilities, save as noted at [355] below. We add that the submission that any discount should have been low, in the order of 10 per cent, was in our opinion without merit and indeed fanciful.

Grounds 5, 6 and 7 must be rejected. Such criticism as was made of the judge’s references to a risk of overcompensation, even if valid, could not advantage the applicants. That consideration was not operative in the judge’s conclusion that loss of opportunity was not established as a basis for compensating the applicants.

Grounds 10 to 14

Grounds 10 to 14 are concerned with the judge’s assessment of loss of opportunity damages in the sum of ‘$66,829,900 subject to interest entitlements’.

Properly, these grounds do not require consideration for two reasons. First, we have concluded that the judge was correct to find that there was no compensable loss of opportunity. Secondly, even if that conclusion was incorrect, it was common ground that, if a compensable loss of opportunity had been established, then quantification of entitlement would have to be remitted for consideration by a different judge on fresh evidence. As we apprehend it, insofar as the applicants pursued any argument with respect to grounds 10 to 14 it was only because of concern that, if there was to be a remitter, the starting point would be the judge’s quantum of damages as stated above. But that would not be so.

In the circumstances, it is, for practical purposes, pointless to say anything about grounds 10 to 14. Nonetheless, in the highly artificial context which we have described, we will say the following.

Grounds 10 and 11 raise a complaint that, in assessing the cost of the projected development, the judge concluded that provision should be made for unionised labour. This finding was criticised for the applicants on the ground that the judge should have accepted evidence given by Warren Keighran, Hallmarc’s construction director, that the group did not use unionised labour on its construction sites. The judge, it was submitted, had erred by preferring the evidence of David Stewart, a witness called by Mobil.

In preferring Mr Stewart’s evidence, his Honour relied upon what he took to be that witness’s greater independence, upon evidence which Mr Stewart gave as to the way in which financing costs are ordinarily estimated with respect to large scale developments, and upon his Honour’s perception that Mr Keighran’s evidence about use of non-unionised labour was based on a single instance of a Hallmarc development.

Had it been necessary to closely examine grounds 10 and 11, we think that there would have been something to the applicants’ submissions. Mr Keighran’s evidence was apparently broader in import than the judge took to be the case. Further, the evidence of Mr Keighran and Mr Stewart did not necessarily collide. The former was speaking about his experience in the conduct of the Hallmarc Group’s business, whilst the latter was simply speaking about a broad issue of financing. Finally, the judge arguably erred when he stated[152] that Mr Keighran’s evidence was ‘insufficient to establish that on the balance of probabilities the plaintiffs’ project will not have to absorb the cost of unionised labour’. In a true loss of opportunity assessment of damages, such an obligation would not have fallen upon the applicants.
[152]Reasons [663].

Ground 12 complains that the judge erred in preferring the evidence of a witness called by Mobil, Leslie Brown, to the evidence of the applicants’ witness, Bradley Papworth, as to the likely yield from sales of houses and apartments in the so-called ‘higher density development’.

Ultimately, in oral argument, the applicants’ complaint resolved itself into a submission that the Court should say, if remitting a loss of opportunity claim for assessment, that the evidence of both witnesses should be taken into account by the judge to whom that matter was remitted. But then it was agreed that any assessment would be made on fresh evidence. In those circumstances, the advisory judgment which was proposed became irrelevant. We shall say no more about this ground.

We turn to grounds 13 and 14.

The complaint there made is that the judge erred ‘by in effect holding that a discount of 100 per cent should be applied to the value of the opportunity lost’; and that the judge erred ‘by failing to apply a modest discount to the value of the opportunity lost’.

Those complaints misunderstand what the judge did. In a footnote to the paragraph in which he assessed loss of opportunity damages at ‘$66,829,900 subject to interest entitlements’, he said:

I note that ordinarily this amount would be discounted by a percentage amount to take into account the degree of probabilities inherent in the plaintiffs’ realisation of the asserted opportunity. However here I have not done so because I consider the opportunity to be of no or negligible value.[153]

[153]Footnote 18.

Thus, his Honour did not discount the supposed value of the opportunity lost by 100 per cent. He simply decided that there was no such opportunity. Had he come to the conclusion that, on balance of probabilities, a loss of opportunity had been demonstrated, then, and only then, would probabilities and possibilities have fallen for consideration. We add that the state of the evidence was such that, had the applicants overcome the causation hurdle, the quantum of damages at which the judge arrived would have required a series of sequential and substantial discounts, notwithstanding that individual items going into his Honour’s calculation themselves reflected some of the uncertainties of the evidence.

For the above reasons, grounds 10 to 14 do not require further consideration. They should be rejected.

[2016] VSCA 187

5 August 2016