i e & IN THE HIGH COURT OF AUSTRALIA. REASONS FOR JUDGMENT. ve MINISTER OF STATE FOR THE NAVY SipeweNt STARKE J. Applications for reviews of assessments of compen— sation by a Compensation Board made pursuant to the National Security (General) Regulations (See reg. 60G). The parties agreed to the reviews being heard before this Court although there is some question whether it is a competent Court within the meaning of reg. 60(8). Several reviews have been heard by this Court and I was informed that a new regulation is now under consideration dealing with the matter. Under the circumstances the reviews may proceed. On 20th July "tone 'the freasurer in pursuance of reg. 57 of the regulations requisitioned and took a lighter or bargé. called the "Wombat" and two other lighters or barges, and on loth September 1942 the Minister of State for Com- merse, also in pursuance of the same regulation, requisit- ioned and took a tug known as the "James Wallace" all be- longing to the Marine Board. of Launceston. fhe Marine Board pursuant to the regulations made @ claim in writing tor compensation in respect of these lighters or barges and the tug as follows:~ "Wombat™ £ 8,000 2 Barges, each £7,500 £15,000 Tug £26,000 Ultimately the claims were referred to a Compensation Board duly appointed pursuant to the reguletions which assessed the compensation as follows:- "Wombat" £ 5,000 2 Barges £12,544. 17. 0 Tug £18,000 Interest at the rate of 4% was also awarded from date of acquisition to date of payment. And it is from these assessments that the Marine Board of Launceston has applied to this Court for a review. The material adduced before the Compensation Board was placed before the Court and also the decision of the A Board, This material was not treated as in evidence on ~" these reviews unless specially tendered and admitted. Both partiee conducted their dase as on the trial of a cause in the original jurisciction of this Court snd gave in evidence considersble material that had not been placed before the Compensation Board, The tug "James Wallace" was built in Glasgow in 92h. It was purchased by the Marine Board of Launceston in 1933 for the sum of £17,050 - (Cash £14,800 and Exchange Value of Tug "Wybiat £2,250). The Soard also expended on new equipment £60), 11, 6 And the Board also claims to have expended a sum of about £2,500 on the tug, within two or three years after purchase, on a special overhaul which Ancreseed her cost to the Board ani her value to about the gum of £19,000. Before the Compensation Board, M.A. Bllerker, an experienced ship-broker and valuer celled by the Marine Board, deposed that at the time of the requisition of the tug she was worth £18,000; he regarded that as @ fair price for a willing vendor to sell to s willing purchaser, And the Board teking all the circumstances into account consider ed that sum a fair price on just terms for the scquisition of the tug. Ellerker was not called as a witness on the proceedings before me, but a shorthand note of his deposition was tendered by the Minieter for the Navy and admitted in evidence, It wag admitted because it was material before the Board, and also because the evidence had been tendered ond relied upon by the Marine Board before the Compensation Board (See Richens vy. Morgan 4 B.& S. 642; Taylor on Evidence loth ed. Sec. 763 pe 545). There is no doubt, I think, that purchasers might | 3. have been found for tuge at and about the time of the requisition of the "Temes Wallace" if the Karine Board had been willing to sell and the war had not intervened, But the price that would have been paid is another matter; tugs were not solid like ordinary commodities. Now the Marine Board has adduced before me & con- siderable body of evidence of the replacement cost. of &. tug such ag the "Jones Yallect" at the time of her requisi- tion, which was not before the Compensation Board, and qlaius that this evidence mekes it clear that the value of the tug to the Marine Board ought to be assessed at a much higher velue than £18,000, Thus one witness estimated the cost of replacement of a tug cuch as the "James Wallace" at « sum of no lees than £70,312 and another at a sum of £65,486, But both these estimates must be considerably diseounted for they provide for triple expansion engines, independent pumps, a working pressure on boiler of 20061bs per square inch, whereas the tug "James Wallace" had two cylinder enines, and pumps driven by the main engine, and @ low pressure boiler working at 13$lbs per square inch. And there were aleo differences in the thrust blocks. All this involved extra cost, which a Lioyds surveyor, whose evidence I regard es trustworthy, estimated et about £2,050 sterling, and consequent increases in exchange, primage, customs duties and sales tex. And these dif ferences also involved increased cost in installation, which the Lloyds surveyor also estimated at about £1,000 sterling. True it is that the witness for the Board who estimated the replacement cost at £70,312 was of opinion that these Gifferences would not reduce his estimate by more than £2,000. But i think that estimate is too low, and estine~ ting ae best I can, the reduction that must be made in both estinates of replacement cost, I think that those estimates must each be reduced by a eum of not lese than £5,000. Taking the lower estimate, £65,486, (which I regard as the more reliable) that estimate would be reduced to £60,500 be in round figures, And even this involves coste of material and labour, overhead expenses and cther allowances which I have no means of verifying or checking, According to the evidence the tug "James Vallace" had a working life of 50 years at the time of requisition. she was 18 years old. Aseuming the figure £60,500, and allowing for depreciation at an even rate, the value of the tug at the time of requi ition would be #7s0tns of 260,500 or s2bxo00 in round : figures, But we have other extimates as well. 'Thus taking 1939 standards, the witness Ellerker estimated the replace- ment value of the tug at £45,000 and allowing for an increase of 25% in cost to the time of requisition in 1942 the replace ment cost would be about £56,250. And Lloyds surveyor esti- mated that a tug such as the "James Wallace" might have been built in Australia in 1939 for say £32,000 to £33,000 and allowing for an increase of 25% in costs to the tine of requisition in 1942, say £42,000. These figures are subject to the same deduction for depreciation as already indicated, 'then we know that dn 1942 the Marine Board insured the tug for £26,000 when an arrangement wae made with the Navy for towing barges from Launceston to Sydney. And we algo know that the claim of the Marine Board in October 1942 for com- peneation in respect of the requisition of the tug "Janes wallace" was also £26,000. It was suggested that there woulda be a slump in the value of tugs at the close of the war and that thie probability would affect the value of tugs in 1942, I daresay that is trae but it is so uncertain and spectiiative that I cannot act upon it in assessing the value of the tug "James Wallace". the fundamental principle in assessing compensa ion is to discover what the Marine Board hes lost in having its tug taken from it - the value of the tug to the owner, Ordinarily the market value is the best criterion of the amount that should be paid but if there be no market or if the market value is uncertain there are other methods of estimating or of assisting in the estimation of the compen~ 5. sation e,g., ascertaining the replacement cost and allowing for Gepreciation, ixemingng the evidence which has been placed before the Court, much of which, as I said before, was not before the Compensation Board, and estimating as best I can, the compensation tc which the Board is entitled for the tug should, I think be eltghtky higher than the smount assessed by the Compensation Board, the sum of £18,000. Im uy fudgment that eum should be ai6s000" and accordingly I so determine, It hag been suggested that 10% should de added to the latter sum for compulsory ace quisition. But I am not prepared to neke any such addition, It eould only be justified as part cf the valuetion of the thing taken and not as an addition thereto (Cripps on Gom- pensation 7th ed. p. 198-9; Gest Sobea vs Lerritory of Bapaa 67 CLR. Siig at pp. 5554559), And I have allowed im wy aseesement the full value of the tug taken end know of mo ineidentel charges or coste to which the Harine Board would be subject that are not covered by the assessment. The compensation payable in respect of the barge "voubat" and the other two lighters or barges must also be assessed, The Board has awarded the sum of £5,000 for the "Yombat". She was an ola veasel built in 1915 es a sloop, converted into a dredge, then inte a lighter. she hed a probable lite of 50 years from the time she was built. The Board purchased her cheeply in 1936 and converted her from a drecge into a lighter. All told the Board spent upon or in connection with her a gum of £5,757. But the evidence of her value in 1942 ie somewhat scanty, Her replacement cost ac & lighter, has been estimated at from £10,000 to £15,000 plus sales tax. But no detailed estimate hee been put before me and I do not place such reliance upon that estimate, But we do know that the other two lighters or barges were vuilt in 1937/1938 at an average cost to the Board of £6,168, The "Wombat" wae more solidly constructed and of greater dimensions, No doubt she would have cost more to build as a lighter but then she wes 27 years old in 1942 when she was requisitioned, 6. On the evidence before me I find that the gum of £5,000 (which was aleo the Compensation Board's assessment) was the fair value of the "Wombat" at the time of her acquisition and @ just compensation for her taking. The Board has assessed and avarded the cum of £12, 54h.. 1745 O as the value of the other two lighters or barges te the Marine Board at the time of their acquisition, And with that sesesement I agree, I observe that the Board allowed depreciation on a reducing balance over four years and not on the fixed instalment basis, But the mothod used depends upon the circumstences of the case and to some extent upon the individual assessor, Interest has been awarded at the rate of 4 on the balances owing from time to time. The Minister contends that no interest is paydble and as the Justices have differed upon that question I shall reserve it for the opinion of the Poll Court pursuant to the Judiciary Act. Goste are also reserved.