oars HL J, Green, Gort, Print, Melb. IN THE HIGH COURT OF AUSTRALIA. REASONS FOR JUDGMENT. Judgment delivered at___ weppouREE On. EUDBRADAY ,-23RD-KAY, 1945. ——— We RBASONS YOR JUDGMENT. SATHAR Gud ~ This is an appeal frou a cecision of the Suprene Court of Western Australia upon a review under the provisions of the Hational Security (Generel) Regulations referring to compensation for, inter alia, property taken under the regulations, Three peerling luggers were teken in February 1944, after having been used under a temporary requisition einee about February 1942. A Compensation Board assessed sertain moneys as representing whet should fairly be payable by way of compensation in pursuance of the regulations, An epplication was made to the Supreme Court of Western Australis for review, and 1% ie from the decision upon that review that the appeal ie brought to 'this court. The largest and most valuable of the luggers taken wos the "Gloria", and it has been agreed between the parties upon thie appeal that the value of the other two vessels concerned, the "Rosef and the "Hiobe", bear the proportion respectively of 70% and 50% to the value of the "Gloria". The luggers are pearling luggers used at Broome, and are specialised vessels constructed for pearling et Broome. They are built at Broome, end no similar vessels are built anywhere elee. The Navy, however, required the use of these vessels, and acquired then under the regulations. Ko luggers were available for purchase upon the market. There were no eales of luggers from tine to tine which would enable a court to escertain and apply a criterion of value, it wae therefore necessary to ascertain what a willing purchaser would be prepared to pay to a not unwilling vendor in aecordance with the general principle which has been stated in this court in Spencer's Cage, 5 0.1.8., 418. A method of ascertaining / 2, ascertaining the value in accordance with that principle would he to secertain what 1 would cost to build # lugger. The parties in effect agree, beemase evidence on the point wes not ehallenged, that the cost of constructing @ lugger much es the "Gloria" in shout February 1544 wuld have been about £2600. Hie Honour adopted that figure, wut he then made a deduction om account of the age of the lugger acquired, namely cone seven years, and depreciated that figure at a redueing rate of 7/5 on las], riguing and engine, applying the seme percentage te all those elements of value. Mo figure applied for purpoecs of depreciation can be absolutely preeiee. It is eontended upon this appeal that the engine should have been depreciated at a higher rete than the other elements saentionec, Our attention, however, has been called to a passage in the transeript on page 140, where it was conceded on behal¢ of the Commonwealth that 7)% all over would not be an unfeiy rate of depreciation. There was evidence to support an aliowancs of cepreciation at that rate, the application ef this rate ef depreciation reduces the sum of £2600 te £1500, : It de argued, however, that, ax the possibility of the resumption of pearling Gepenéed, for fairly obvious reasons, upon the termination of the war, the inprokability of being able te use say Iugger whieh sight be built curing a eubstential, though intefinite, pering would be an clenent leading a buyer to offer « iower price than otherwise wuld be the case, iiic Honour, it appears to me, did take this clenent inte sonsideration. Agsinst {t Nis Ronour Mr, duetice Dayer set eff the allowances whieh ie often sade for compuleory taking (for "Ineidentale"), and he elso considered that the future level ef soate ef building luggere was uncertain, eo that it could not be said with any degree of assurance that the coste would go down to any yartioular level. On the whole, I sm of opinion that in wash a matter as this, into which a large element of judgecnt entera, 1t is impossible for thie dourt to be satiefied that His Honour / 3. Ginmiased. : A partiouler question arises as to the allowanes of interest. Counsel has challenged the allowanse of interest, disyating the power of the Compensation Board and the Court upon doview to allow intarent. The matter, however, hes not been avgaed at all, I consider that there showld de full argument before a natter of such importante is decided by thie Court, We have Deen informed that in any event the Minister would sllow interest under reg. GOJ. In ny opinion, in these cireunstances, we should allow the jedguent to stand without deciding whether or not either just terns of compensation necessarily include an Gliowanss for interest, or (putting the matter in another way), whether an exelusion of en allowance for interest is inconsistent with the provision of just tems. in sy opinion for these reasons the appeal should be Cisnissed. wn RIGH _, Im thie particular case I consider that the trial judge wee Fight in adopting as @ methed ef valuation the wartine Peplecement cost of the lugger Gloria lean depreciation. It wae ongeded that at the date of acquisition the sum of 22,600 was the replacement cost. Hie Honor then took inte consideration the fector of war sonditions end proceeded te reduce the sum tae arrived at. The amounts for depreciation and wartine feetors depend on the facts of cach case to which no hard and fast vale can be applied, Whether I should have mace larger or aualler Gedustions is of ns inyortancs and I am content with the learned judge's finding ef £1,500 as the replacenent cost of the Gloria lese éepreciation, I agree that interest should aleo be allowed and with the erder proposed by the Chief Justice. Ve STARKE.J. " The three pearling luggers in this oase were acquired eompaleorily, and the satter the Judge had to determine was < ¥hat was the value of the luggers so sequired to the owner? There wae no market value upon which he could rely, so he adopted the artificial method of asscasment known as that of replacement value; that is to say, the cost of sonstruction, taking the dato of acquisition as the replacement date, less depreciation, I can seo nothing ia hie jadguent which suggests that he misepglied or misused that nathoc. Therefore I agree with vke judgnent proposed, Ve STURGES. BIXON ST. / The leawned Judge had a difficalt task, I think that he sought to pérforn it by ascertaining what a hypothetical bayer, treating hin as what hee been called an intellectual automaton, might be expected to give. Yor that purpose he took as his commencing figure the replacement cost of the lugger ac in Broome, and he then procesded to depreciate it at a rate of depreciation which upon the evidence it wis open to him to adopt, and he applied the reducing Dalance or dimishing inetalment method of depreciation, which it wae alee open to him to adopt. I think that, quite correctly, he took into account the conditions erising from the war which precluded the use of luggers for some tine to cone; a future period which he eoula only fix by conjecture. But I heve some misgivings ae to the mode of reasoning whieh at this point he proaseded to pursue. For, although he would otherwiee have reduced the amount of compensation Ry Preference to the consideration I heave just mentioned, nevertheless ae against it he then took into account certain countervailing circumstances, i Rave more than a little difficulty in following the View that be took of these cireumstances, Mr. Louch, however, hae given an explanation whieh ie intelligible, and, although I am not aatisfied with the reasoning, yet on the facts it is perhaps not untenable, in matters of valuation I think a Court of Appeal should be careful not to substitute ite judgaent on a matter of fact where a large element of discretionary judgeent must be employed, simply because the conclusion of fact in arrived at rather by general considerations or a mode of reasoning than by acting on opinion evidence / 2. evidense or direct testimony. After all, they are questions of fact, and in the present case I am not prepared to say that it mecessarily appears on the face of the judgnent that His Honour's reasoning is erroneous. Although I am not entirely satisfied, I am not preparedto dissent, snd therefore agree in the judgeent which has been propounced. I showld perhaps add thet one of the counter wailing circumstances which the learned Judge tock into account was his own feeling that the amount accepted as the initial estimate of replacement walue, before depreciation, was inadequate to cover what he would regard as the full cost when all inoidentels were taken into account. I do mot regard hie judguent es meaning that ke applied the old rule of adding something for compulsory taking. Theat rule has been considered in In. re Wilson ami the state Hlestricity Commission of Vistoria, 1929 V.L.R., 459, and has been excluded for most purposes within the jurisdiction governed by decision of the Supreme Court of Victoria. I should require farther time for consideration if I thoughtthat that was the basis of His Honour's judgment. I think thet Hie Honour merely gave effect to an opinion he had formed of the actual costes as they appeared to him om his view of the evidence and on his general knowledge of the circumstances arising from the war. ; As to interest, there is a question outstanding on the construction of the regulation, buat I think thet it does not arise ae & practical matter in this case, at el] events it has not been seriously discussed, 1 therefore agree. ve MQRIEREAN2. * 2 agree with the reasons for judguent of the Chief Justice, Ve NALAIANS J, I agree. Ko reliance can, in my opinion, be placed upon the seles of other inggers by Robison end Fornan pty. Ltd. to the Navy about the date of the requisition, having regard to the cirvomstanses under which they were made, &2 giving any real gaide to the values of the threo vessels impressed. His Honour was, therefore, forced, I think, on the material before him, to rely aimost exclusively on replacement costs less deyresiation for age to determine their value to the sclier, The rates of depreciation he adopted for this purpose are eupported by the evidence sad there is nothing to suggest that the inereses in costes on prevar figures he scoptec wae unressomible or unlikely to comtime in the future or such as not to afford & reasonabie basie for a bargein between seller snd buyer. His Honour in thia way arrived at # figure of £1500 for the "Glerie* and that in ay opinion on Hie Konour's reusoning was her value on that date. ie Homour then mace certain acditionsl calculations which | eancelied out each other, ' T maet not be taken as agreeing that it wae proper to make theese caloulations and in particular nothing should, in my opinion, be added to the replacement cost to cover the period it would take to build a new ship becsuse thi salowlation of thie cest does not produse the soney to build a new ship, nor is it intended to place the seller in a position %& do so but is intended to give the seller an equivelent in money for hie old ship, But once Hie Honour arrived at tue figure of 61500 any other cireunstanses suggeated during the argument to vary that amount are too problematical, in my opinion, to form any bosie for holding that Hite Honour wae wrong in not reducing this figure. On the question of interest, for the reasons which i gave in the Huon Case, I think that the order wac right.