oOh!media Fly Pty Limited v Transport for NSW [2023] NSWLEC 26

Land and Environment Court New South Wales

Medium Neutral Citation: oOh!media Fly Pty Limited v Transport for NSW [2023] NSWLEC 26 Hearing dates: 5, 6, 9, 10, 11, 16 and 17 May 2022; supplementary written submissions by 31 May 2022 Decision date: 07 September 2023 Jurisdiction: Class 3 Before: Moore J Decision: See directions at [480] and [481] Catchwords: COMPULSORY ACQUISITION ‑ claim for compensation ‑ resumption of leasehold interest ‑ 18 advertising billboards owned by claimant ‑ billboards located on road between international and domestic terminals at Sydney Airport ‑ compensation claim for hypothetical digitisation of signs prior to date of acquisition ‑ no legal basis for a claim ‑ if wrong, contingent determination of number of signs which might have been digitised ‑ two signs would have been digitised COMPULSORY ACQUISITION ‑ method to be used for calculating value of leasehold interest ‑ discounted cashflow method appropriate basis of calculation ‑ determination of input factors for such calculation COMPULSORY ACQUISITION ‑ claim for "Digital advantage" ‑ "Digital advantage" claim separate from "Halo effect" claim ‑ no proper evidentiary basis for "Digital advantage" advantage claim ‑ claim rejected COMPULSORY ACQUISITION ‑ claim for "Halo effect" ‑ "Halo effect" said to arise because of claimant's ability to market billboards in combination at multiple airport locations in other cities ‑ no proper evidentiary basis for claim ‑ claim mere assertion ‑ claim rejected COMPULSORY ACQUISITION ‑ claim for fees of forensic accountant ‑ fees claimed pursuant to s 59(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 ‑ fees said to be incurred as part of providing legal advice to claimant ‑ fees properly claimed - reimbursement of claimed fees to be ordered DIRECTIONS ‑ matter adjourned to permit the parties to consider the findings and calculate compensation based on them and to bring in orders to reflect the determined outcomes Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991 Land Tax Act 1956, s 3AL State Environmental Planning Policy No. 64 ‑ Advertising and Signage Cases Cited: Antonino Gaudioso v Transport for New South Wales [2021] NSWLEC 91 Attard v Transport for NSW (2014) 205 LGERA 396 Boland v Yates Property Corporation Pty Ltd and Another (1999) 74 ALJR 209; (1999) 167 ALR 575 Bronzel v State Planning Authority (1979) 44 LGRA 34 Burns v Eurobodalla Shire Council (2006) 149 LGERA 227 Canal Aviv Pty Ltd v Roads and Maritime Services [2018] NSWLEC 52 Chong v Fairfield Municipal Council (1968) 16 LGRA 407 Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 Housing Commission of NSW v Falconer [1981] 1 NSWLR 547 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Prince Alfred Park Reserve Trust v State Rail Authority (NSW) (1997) 96 LGERA 75 Roads and Traffic Authority of New South Wales v Mosca (2006) 146 LGERA 335; [2006] NSWCA 159 Russellan Pty Ltd v Roads & Traffic Authority (NSW) (1992) 75 LGRA 263 Sales and Ors v Transport for NSW (No 2) [2021] NSWLEC 96 Sydney Local Health District v Macquarie International Health Clinic Pty Ltd [2020] NSWCA 274 Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391 Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56 Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 Texts Cited: Oxford Australian Law Dictionary (3rd ed) Category: Principal judgment Parties: oOh!Media Fly Pty Limited (Applicant) Transport for NSW (Respondent) Representation: Counsel: Mr I Hemmings SC/Ms J McKelvey, barrister (Applicant) Mr N Hutley SC/Mr M Astill, barrister (Respondent)

Solicitors: Thomson Geer (Applicant) Clayton Utz (Respondent) File Number(s): 113184 of 2021 Publication restriction: No

JUDGMENT Preamble The list of matters for determination My determinations Summary of principal conclusions Rent at the times of lease renewal Corrections to the transcript Introduction Location and naming convention of Company's signs The evidence The documentary material The oral evidence The lay witnesses The expert evidence The Chronology/Statement of Agreed Facts The hearing Representation The relevant statutory provisions The issues for determination The claim for compensation for the Company's digitisation project Introduction Digitisation of signs Introduction Consideration How many signs would have been digitised (contingent)? Introduction The evidence The evidence on "digital readiness" The evidence on Ms Young's position and powers within the Company The submissions The submissions for the Company The submissions for TfNSW ARTC Owner's Consent Consideration Quantum of Deduction for Cost of Digitisation in the Market Value Assessment Introduction Quantum of deduction for digitisation: capital expenditure Introduction Further evidence Submissions Consideration Additional Issue Quantum of deduction for digitisation: development application costs The appropriate methodology for quantifying market value Introduction Allowance for specific risk when determining market value The alternative valuation methodologies Introduction Determination of the appropriate methodology Inputs for the Discounted Cashflow methodology Introduction The digitisation multiple Introduction The evidence on the digitisation multiple The Company's evidence TfNSW's evidence The Whitford/Herring joint report The Company's submissions TfNSW's submissions Consideration The base revenue to apply the digitisation multiple The applicable operating expenditure Fixed or variable operating expenditure Introduction The evidence The relevant lay evidence The advertising expert evidence The forensic accounting expert evidence The submissions for the Company The submissions for TfNSW Consideration Accounting for indirect costs Introduction The competing evidence The submissions for the Company The submissions for TfNSW. Consideration The impact of COVID 19 Introduction The impact of COVID 19 on revenue up to the acquisition date Evidence Submissions The Company's position TfNSW's submissions Consideration Introduction Digital signs The static signs COVID 19 recovery Introduction The expert outdoor advertising evidence The written evidence The oral evidence The Forensic Accounting Evidence The submissions The Company's submissions TfNSW's submissions Consideration Application of Profit Rent Method Tax Gross Up Introduction The submissions The Company's submissions TfNSW's submissions Consideration The Special Value claims Introduction Digital advantage Introduction Consideration The "Halo effect" Introduction The lay evidence The outdoor advertising evidence The forensic accounting evidence The Company's submissions TfNSW's submissions The Company's reply submissions on the "Halo effect" The supplementary submissions on the "halo effect" Consideration Introduction All 18 sites are always "Halo" packaged Not all Qantas Drive advertising was always "Halo" packaged The severance analogy Conclusion on the "Halo effect" Disturbance ‑ Mr Halligan's fees Introduction Consideration Eligibility Quantum Giving effect to the outcome on Mr Halligan's fees Directions

JUDGMENT

Preamble

The list of matters for determination 1. To commence, it is appropriate to set out the terms of the document agreed by the parties as listing the issues for determination, it being a document which not only summarised those issues but also concisely noted the positions of each of oOh!media Fly Pty Limited (the Company) and Transport for NSW (TfNSW) as to how each issue should be determined. The terms of this summary document are set out below: Issue for Determination Applicant's Position Respondent's Position A. Application of the statutory disregard 1 Absent the proposal to carry out the public purpose, how many of the acquired signs would have been digitised prior to the date of acquisition? Six (6) Two (2) (but the Respondent's primary position is that this is irrelevant. Refer to Issue 1 in the Respondent's Closing Submissions) 2 How would a deduction be made for the cost of digitisation in the market value assessment having regard to the provisions of the Just Terms Act? Decrease in value Decrease in value 3 What would the quantum of the deduction for digitisation be? (a) Capital expenditure As per paragraph [25] of Mr Huang's Affidavit minus 10% As per paragraph [25] of Mr Huang's Affidavit (b) DA Costs $22,000 per sign or in the alternative $26,000 per sign $30,000 per sign or in the alternative $26,000 per sign 4 Whether any allowance for specific risk is required when determining market value of the Acquired Lease? No No B. How would the market value the Acquired Lease 5 What methodology would a hypothetical purchaser employ to quantify the market value of the Acquired Lease? Whichever methodology (profit rent or discounted cashflow (DCF)) resulted in the higher value DCF 6 What would be the outcome of the application of the DCF method after determining the following disputed inputs in relation to the projected cashflows: (a) the applicable digitisation multiple (to individual signs assumed to be digitised by 1 January 2020); 8x as an average over the remaining lease term, applied to the 6 signs that would have been digitised 3 - 4 x as an average over the remaining lease term, applied only to the 2 to 6 individual signs that would have been digitised (b) the base revenue to apply the digitisation multiple 2020 revenue (adopting Halligan's Q4 adjustments) 2019 revenue for the individual signs digitised (c) the applicable operating expenditure; (i) fixed or variable; Fixed $6,750/static sign $41,000/digital sign Fixed $13,000/static sign $41,000/digital sign (ii) accounting of indirect costs; None required If indirect costs are to be accounted for, the applicant notes that Dr Ferrier has quantified indirect costs to be $108,190 at Exhibit C, Tab D3, Folio 1242.21, paragraph [64] There would be some costs involved in adding the Acquired Signs to a hypothetical purchaser's business (would not be nil but something between 0 and 7%) (d) COVID-19 impact Actual impact on the Acquired Signs to the Acquisition Date of 18 September 2020 Static: Actual impact on the Acquired Signs to the Acquisition Date. Digital: the COVID impact on the notionally digitised signs would mirror the actual impact of COVID on the Applicant's digital signs in the Sydney and other Airport precincts. (e) COVID-19 recovery By the end of 2023 in a 'straight line' at a rate of 3.05% per annum in 2021, 2022 and 2023 By the end of 2023. Recovery would be lumpy and would be slow at the beginning of the period and accelerate towards the end. 7 What would be the outcome of the application of the Profit Rent method after determining the following disputed items: (a) the projected turnover for the remaining lease term (as determined using the relevant DCF inputs above); To be determined having regard to Issue 5 To be determined having regard to Issue 5 (b) the applicable discount rate ‑ business or real estate rate Real estate rate of 7% Business discount rate of forensic accountants converted to a pre-tax equivalent of 16.3%. (c) the outcome of rent review in 2020, on the assumption of digitisation by 1 January 2020 The option was exercised and the lease was renewed. The Minimum Rent did not change nor did the Turnover rent provision. Disregarding the public purpose, ARTC would have marked the rent to market (considering the effect of both COVID and any notional digitisation). (d) the outcome of the rent review in 2030 having regard to the proper construction of the Acquired Lease 'Minimum rent' fixed at 15.5% amount of turnover 65% of net revenue generated under the Acquired Lease C. Tax Gross Up 8 Is there a tax gross up to be paid on the compensation payable for market value? Yes No D. Special Value - Digital Advantage 9 Is the Applicant entitled to compensation for special value for the Digital Advantage, being the difference between the digitisation multiple applied by the market in the DCF method and the digitisation multiple the Applicant claims it would have achieved on digitisation of the Acquired Signs? Yes No (a) If so, what was the digitisation multiple able to be achieved by the Applicant? 12.4x - (b) What is the difference in the net present value of the cashflows based on the higher digitisation multiple and that which is determined in accordance with the DCF method above? To be determined having regard to the response to issues 6(a) and 9(a) - E. Special Value - Halo Effect 10 Is the Applicant entitled to compensation for special value for the Halo Effect, being the reduction in revenue of other signs operated by the Applicant because of the taking of the Acquired Signs? Yes No 11 If so, what percentage of revenue would have been lost on those other signs? 30% - F. Mr Halligan's Fees 12 Is the Applicant entitled to be compensated for the pre-acquisition costs of Mr Halligan as 'legal fees' pursuant to s. 59(1)(a) of the Just Terms Act? Yes No

My determinations 1. In order to provide an early understanding of the outcomes in this judgement, I provide, first, a short summary of my major conclusions and, second, a table setting out my determinations, in short form, of all the matters identified by the parties in the decision-making matrix which they provided to me. These are set out below:

Summary of principal conclusions 1. the Company is not entitled to have its market value compensation determined as if any of the acquired signs had been digitally converted prior to the date of acquisition; 2. if I am wrong in this conclusion, only two signs would have been so digitised prior to the date of acquisition; 3. the digital multiplier uplift applicable to any such digitised signs is 4x; 4. the methodology to be adopted for determining the market value of the acquired signs is the Discounted Cash Flow (DCF) methodology; 5. the use of a profit rent calculation to determine the market value of the acquired signs is rejected; 6. determinations have been made concerning various input factors necessary for the DCF methodology's use; 7. the Company's claim for a "tax gross up" is rejected; 8. the Company's claim pursuant to s 57 of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act) for what was described as the Company's "digital advantage" is rejected; 9. the Company's claim pursuant to s 57 of the Land Acquisition Act for what was described as the "Halo effect" is rejected; and 10. the Company is entitled to be reimbursed, pursuant to s 59(1)(a) of the Land Acquisition Act, for the fees charged by Mr Halligan for work done prior to the commencement of this litigation on the basis that that work was undertaken in order to permit the Company's legal representatives to provide legal advice to the Company for the purposes of the litigation. Summary of all determinations 1. Set out below is a table containing, on a topic-by-topic basis, summaries of my determinations with respect to each issue contained in the parties decision-making matrix set out at [1] above: Item for determination Determined outcome 1 No compensation is due to the Company for hypothetically digitised signs. Although the Company had an intention to digitise two signs of the Qantas Drive group of signs acquired by TfNSW, it had taken no steps of any concrete nature to implement this intention prior to acquisition. For reasons later explained, the Company is not entitled to compensation for prospective digitisation of signs in circumstances where the Company merely had an unrealised potential for such digitisation but had not taken any steps to obtain development consent to entitle it to realise that potentiality. However, if legal position set out above is found to be incorrect, only two signs would have been digitised. 2 As agreed between the parties 3(a) As per paragraph [25] of Mr Huang's Affidavit minus 10% 3(b) $26,000 per sign as agreed between the parties 4 No allowance - as agreed between the parties 5 Discounted Cash Flow (DCF) method 6(a) A multiple within the range of 3x - 4x as submitted by TfNSW is appropriate to be applied as an average over the remaining lease term if the legal conclusion in (1) above is incorrect. The multiple (if arising) therefore to be applied is 4x as the relevantly more favourable position to the dispossessed owner of the acquire interest in the site. 6(b) 2019 revenue for the individual signs digitised adjusted downward by the pre-COVID demonstrated decline in revenue shown in the 2020 actuals 6(c)(i) Fixed $13,000 per static sign. $41,000 per digital sign. 6(c)(ii) $108,190 on the basis calculated by Dr Ferrier 6(d) Actual impact on the acquired static signs only as there are no notionally digitised signs. If two signs are to be taken to be digitised (contrary to my finding in (1)), the impact on these notionally digitised signs is to reflect the actual impact on the already digitised signs in Sydney only. 6(e) Linear to end of 2023 from the relevant total base revenue immediately prior to the acquisition of the signs. If two signs are taken to be digitised (contrary to my finding in (1)), the relevant base revenue for such signs is to be the revenue immediately prior to the acquisition of QDW1-I and QDW8-O adjusted by the digital multiple of 4x determined in (6)(a). 7(a) – (d) Not required to be considered in light of determination at (5) and the reasons for that determination. 8 There is no right to a tax gross up to be added to the compensation entitlement. 9(a) and (b) The Company is not entitled to any Special Value compensation for what it describes as the "Digital Advantage". 10 The Company is not entitled to any Special Value compensation for what it describes as the "Halo Effect". 11 Not required to be considered 12 The Applicant is entitled to be compensated for the pre-acquisition costs of Mr Halligan as 'legal fees' pursuant to s. 59(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act).

Rent at the times of lease renewal 1. Given that I have, for reasons later explained, determined that there is to be no allowance made for any hypothetical digitisation of any of the acquired Qantas Drive signs (although some matters do need to be determined on a contingent basis as if such digitisation was to be taken to have occurred), there is no increased revenue as a consequence of digitisation arising for the purposes of a 2020 lease renewal. 2. At (151) of the Company's written closing submissions, it was proposed that I should determine, for the purposes of the DCF model valuation, what would happen at the time of the Company hypothetically exercising its option to renew the lease in 2030. The question that arises for determination, given the automatic adjustment clauses in the lease, is whether the ARTC would have exercised its right to "mark to market" and make some additional adjustment to the rental beyond that which would be the consequence of the escalation clause. 3. There is nothing in evidence which would cause me to conclude that there was any probability that the attitude of the ARTC was likely to change its position, when it came to the Company's hypothetical exercise of its renewal option in 2030, from that which it had adopted in the past. I therefore conclude that the lease would be renewed on the same terms (including the escalator clause) as presently applies but that the ARTC would not seek to "mark to market" by undertaking some further market rent assessment and increasing process.

Corrections to the transcript 1. By document dated 27 May 2022, the parties provided me with a lengthy list of agreed corrections to the transcript of the proceedings. To the extent that I have quoted from the transcript in this judgement, I have endeavoured to ensure that all the corrections provided in this document have been made in any incorporated transcript extracts. It is to be noted, however, that there are also quoted passages from the transcript where it appears to me that corrections may have been necessary, but those corrections do not appear to have been listed in the corrections document. Under these circumstances – with the exception of two obviously incorrect identifications of the witness answering questions on page 208 of the transcript (see later at [242]), I have not made any corrections beyond those provided to me by the parties.

Introduction 1. Qantas Drive at Mascot is the public road connecting the international and domestic terminals of Sydney's Kingsford Smith Airport. Along its northern boundary, toward its eastern end, 18 static billboard structures have, in the past, provided highly visible outdoor advertising opportunities to display product or other messages to passing motorists. 2. The billboards were generally arranged in pairs, with each pair angled so that one element of the pair faced slightly toward vehicles travelling in an eastward direction from the international terminal whilst the countervailing billboard was angled slightly to be presented to motorists travelling in the opposite direction. As the billboards were located within the curtilage of a freight rail line, the land upon which the billboards were located (Acquired Land) was owned by Rail Corporation New South Wales (RailCorp) and leased to the Australian Rail Track Corporation (ARTC) under the Metropolitan Freight Network Deed of Lease and Licence (MFN Lease). 3. The Company is one of a number of subsidiaries of oOh!media Ltd (the Parent Company), a major outdoor advertising Company. 4. As at 17 September 2020, the Company held a leasehold interest from the ARTC in the Acquired Land, upon which it owned and operated these 18 billboards. On 18 September 2020, the Company's leasehold interest in the Acquired Land was compulsorily acquired by TfNSW for the purposes of the Roads Act 1993 (the Roads Act) in connection with the construction, operation, and maintenance of the Sydney Gateway Project (the public purpose). 5. As a consequence of the compulsory acquisition of its leasehold interest, the Company is entitled to be compensated for the value of that interest by virtue of the operation of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act). The amount of compensation to be paid to the Company fell to be determined by the Valuer General. By notice of determination dated 10 February 2021, the Valuer General determined that the compensation to be paid to the Company for the acquisition of its leasehold interest was $3,797,993. 6. The Company considered that the amount of compensation determined by the Valuer General did not adequately reflect the value of its leasehold interest. As a consequence, the Company exercised its right pursuant to s 66 of the Land Acquisition Act to commence proceedings in this Court seeking to have a judicial determination made of what should be the correct compensation for the loss of its leasehold interest in the Acquired Land.

Location and naming convention of Company's signs 1. It is useful to set out at this point the locations and abbreviated naming convention of the Company's outdoor advertising signs around Sydney Airport in order to facilitate understanding of the evidence regarding not only the digitisation project (later addressed), but other aspects of this proceeding. 2. In the course of this proceeding, reference may be made to the Company's signs at Qantas Drive, Joyce Drive, and surrounding roads. A diagram setting out the location of relevant roads and signs is attached at Annexure A to this judgment (being a plan at page 17 to the affidavit of Ms Sarah Young, Group Director ‑ Bid and Mobilisation of the Parent Company). 3. A list of signs around Sydney Airport owned and operated by the Company in March 2015 is attached at Annexure B to this judgment. This list is set out in paragraph 13 of Ms Young's affidavit. The signs are often referred to by the Company's internal reference name, typically comprising an identification of the road on which the sign is located (for example, "QD" for "Qantas Drive", "JD" for "Joyce Drive", "RN" for "Robey Street Bridge", etc.), a letter indicating the general cardinal location of the sign on those roads or other special identifying feature of the sign ("E" for east, "W" for west, "V" for "V-Sign", etc.), where necessary, a number distinguishing the sign from other similarly-located signs ("1", "2", "3", etc.), and a letter identifying the sign's orientation with respect to domestic terminal traffic ("I" for "inbound" or "O" for "outbound"). 4. Hence, for example, a sign designated "QDW2-O" stands for "Qantas Drive West 2 ‑ Outbound", meaning one of several signs located on the western half of Qantas Drive and oriented to face traffic travelling outbound from the domestic terminal. It is worth noting, however, that this convention is not always strictly adhered to (for example, BE-I and BEP-O stand for "Bookend ‑ Inbound" and "Bookend Portrait ‑ Outbound", respectively, with both signs being located on Joyce Drive).

The evidence

The documentary material 1. The documentary material (including affidavits and expert reports) was primarily tendered electronically on a number of USB thumb drives - these having been filed before the hearing or tendered during the course of the hearing. The electronic documentary material comprised: * the Court Book (Exhibit A); * the Evidence Book (Exhibit B); * the Agreed Bundle of other documentary material (Exhibit C); * the Supplementary Tender Bundle (Exhibit D); and * the Cross-Examination Bundle (Exhibit 1). 1. A hard copy of a document agreed between the parties entitled The Chronology/Statement of Agreed Facts was tendered, becoming Exhibit E. It is reproduced later.

The oral evidence

The lay witnesses 1. Oral evidence was given on behalf of the Company by: * Mr Szu-Hsuan Huang, Program Director ‑ oOh!media Ltd; * Ms Sarah Young, Group Director - Bid and Mobilisation ‑ oOh!media Ltd; * Ms E'Van Lau, Group Financial Planning and Analysis Manager ‑ oOh!media Ltd; and * Mr Robert Dery, Chief Commercial and Product Officer ‑ oOh!media Ltd. 1. The evidence in chief for each of these witnesses was given by affidavit. Some elements of the lay witness affidavit evidence were not relied upon by the Company. The effect of the written and oral evidence of each of the lay witnesses is later described.

The expert evidence 1. Expert evidence was given for the parties in five areas of expertise. The experts and their areas of expertise are listed below in the order in which their area of expertise was addressed during the course of the hearing. The experts gave oral evidence concurrently in the pairings set out below. This written and oral evidence is later discussed on a topic-by-topic basis as relevant. * town planning ‑ Mr Tim Blythe for the Company and Mr Paul Mitchell for TfNSW; * traffic ‑ Mr Damien Bitzios for the Company and Mr Brett Maynard for TfNSW; * outdoor advertising ‑ Mr Adam Whitford for the Company and Mr Richard Herring for TfNSW; * forensic accounting ‑ Mr Brendan Halligan for the Company and Dr Rodney Ferrier for TfNSW; and * land valuation ‑ Mr Michael Dyson for the Company and Mr David Lunney for TfNSW.

The Chronology/Statement of Agreed Facts 1. The Chronology/Statement of Agreed Facts was in the following terms: 1. The table below details the evolution of the Sydney Gateway Project (Project) and the leasing arrangements over the land known as Lot 20 in DP747023 (Leased Land). 2. While the events listed in the table below are agreed facts, their relevance is not necessarily admitted. Relevance of the listed events will be a matter for submissions and the Court. 3. The abbreviations used in the reference column are: (a) Court Book (CB); (b) Evidence Book (EB); and (c) Tender Bundle (TB). Date Event Document Source Reference 1 July 2000 Two interdependent 10-year leases commenced between State Rail Authority of New South Wales as lessor to Manboom Pty Limited as lessee. Leases expired 30 June 2010, each with 3 x 10-year options (together, the Original Leases). Dealing numbers 7179400 & BK 4292No 467 CB55[7] 30 October 2000 Manboom Pty Limited assigned the Original Leases to Eye Drive Sydney Pty Limited (Eye Drive) pursuant to a Master Sale deed dated October 2000. Master Sale Deed dated 30 October 2000 TB433 18 December 2000 Transfer of Original Leases from Manboom Pty Limited to Eye Drive Sydney Pty Limited Dealing Numbers 7840618 and Book CB55[8] 4318 No. 678 10 December 2007 Eye Drive Sydney Pty Ltd changed its name to Eye Fly Sydney Pty Ltd (Eye Fly). Company search CB55[13] 1 July 2010 Lease between Rail Corporation of New South Wales (now Transport Asset Holding Entity of New South Wales) (RailCorp) as lessor to Eye Fly as lessee over the Leased Land commenced, with 10-year term and 2 x 10-year options. (Second Lease). Unregistered lease CB55[10] 3 August 2012 Leased Land included in lease from RailCorp to Australian Rail Track Corporation (ARTC) under the Metropolitan Freight Network Deed of Lease and License (MFN Lease). The MFN Lease expires on 4 September 2064. MFN Lease CB55[12] Second Lease assigned to ARTC. 27 March 2013 Eye Fly changed its name to oOh!media Fly Pty Limited. Company search CB55[13] 2015 APN (a competitor to Applicant and now part of JC Decaux) wins the Sydney Airport Corporation Limited (SACL) billboard signage contract, including the right to take over the signage rights for Sydney Qantas Terminal 3 from Applicant from July 2019. Dery Affidavit at [14] EB4[14] 9 May 2016 Meeting between oOh! Media representatives, Doug Parris (RMS Project Manager) and other RMS representatives. Young Affidavit at [37] EB57[37] 6 June 2017 Project webpage launched on RMS website. Advises that RMS to carry out geotechnical testing and other field investigations to help inform design concepts and a business case for the Project. Sydney Gateway Website Archives N/A 2018 Applicant wins Qantas' inflight entertainment digital media contract Dery Affidavit at [31] EB16[31] 12 September 2018 Media release from then NSW Premier Gladys Berejiklian and Minister for Roads, Maritime and Freight Melinda Pavey announcing the planned construction of the Project, including major upgrades to Qantas Drive and Joyce Drive around the Domestic Terminal, including a redesigned intersection into the Terminal. NSW Government Media Release (Wednesday 12 September 2021) N/A September 2018 Spring update as to the status of the Project outlining the preferred route. NSW Government Sydney Gateway: Community Spring Update [RMS 18.1004] N/A 18 October 2018 Preliminary design consultation closed. Sydney Gateway Website Archives N/A 16 November 2018 SSI Scoping Report, prepared by the Gateway to Sydney Joint Venture (WSP Australia Pty Limited and GHD Ltd) and RMS. NSW Planning Portal Major Projects Register N/A 20 March 2019 Voluntary Planning Agreement between the Applicant and Bayside Council commences Planning Agreement TB526 23 May 2019 Provides progress update of the Project, lists details for information sessions and contains a map of the concept design, detailing the 5 key aspects of the Project (including changes to existing infrastructure such as widening of Qantas Drive). Sydney Gateway: website copy from 23 May 2019 N/A 27 May to 21 June 2019 Consultation on concept design. Sydney Gateway Website Archives N/A Autumn 2019 Finalised concept design and overview of the Project outlining the reasons, benefits, finalised route, proposed construction process, planning approval timeline, and the next steps to be undertaken of the Project. NSW Government Sydney Gateway: Concept Design Project Overview [RMS.19.1249] N/A Autumn 2019 NSW Government issues update for businesses outlining the Project's concept design, including the new route, and requests feedback from affected businesses. NSW Government Sydney Gateway: Project update for businesses [RMS.19.1251] N/A 20 November 2019 to 21 February 2020 Public exhibition of EIS and related technical papers NSW Planning Portal Major Projects Register N/A 1 July 2020 Undated Lease between ARTC as lessor to the Applicant as lessee (10-year term expiring 30 June 2030 with 1 x 10-year option) commenced (Acquired Lease) Unregistered lease EB1338 27 August 2020 Planning Minister grants Project Approval under section 5.19 of the Environmental Planning & Assessment Act 1979. NSW Planning Portal Major Projects Register N/A 18 September 2020 (Date of Acquisition) Applicant's leasehold interest acquired by TfNSW for the purposes of the Roads Act 1993 in connection with the construction, operation and maintenance of the Project. NSW Government Gazette Notice EB1282 CB11 September 2020 At the Date of Acquisition, the Applicant operated 18 static billboard signs on the Leased Land. CB56[20] 2021 Applicant renews contract with Qantas Dery Affidavit at [40] EB18 [40]

The hearing 1. The hearing was conducted over seven days by audio-visual link (with interruptions on several days due to glitches in the operation of the recording equipment used to permit the preparation of a transcript of the proceedings). As noted below, limited and short supplementary submissions were provided after the conclusion of the hearings.

Representation 1. The Company was represented by Mr Ian Hemmings SC and Ms Janet McKelvey, barrister. TfNSW was represented by Mr Noel Hutley SC and Mr Michael Astill, barrister. It is to be noted that comprehensive written opening and closing submissions were provided for each of the parties. Those written submissions, particularly the closing written submissions from which relevant quotations are later extracted, were of significant assistance to me in determining the matters requiring to be addressed. 2. At the conclusion of Mr Hemmings' oral closing submissions, there was a short interlude concerning whether or not the ARTC would have given owner's consent for the digitisation of the number of signs for which the Company said it was proposing to seek development consent (Transcript 17 May, 2022, page 370 line 43 to page 371 line 23). As later discussed, the parties were provided with the opportunity to provide short supplementary submissions on two topics, the first of which was the question of owner's consent being given by the ARTC. In my later consideration, I set out the terms of the Company's submissions on this point ‑ submissions in the context where TfNSW did not address this topic in its supplementary submissions.

The relevant statutory provisions 1. A number of provisions of the Land Acquisition Act are engaged for consideration (or noting) for the purposes of these proceedings. Those provisions are: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)— (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act— market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)— (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) …, and (c) … (2) … (3) …. 57 Special value In this Act— special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 59 Loss attributable to disturbance (1) In this Act— loss attributable to disturbance of land means any of the following— (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), (c) …, (d) …, (e) …, (f) … (2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who— (a) has membership of the Australian Valuers Institute (other than associate or student membership), or (b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or (c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or (d) is of a class prescribed by the regulations.

The issues for determination 1. At the conclusion of the sixth day of the hearing, the parties agreed that two further matters would be addressed, in writing, and provided to me within a fortnight. The first of these was a settled list of issues which the parties agreed required to be determined to resolve the matters in dispute between them. This list was earlier reproduced in the preamble to this judgement. As was seen, the list not only summarised those issues but also concisely noted the positions of the Company and TfNSW as to how each proposed that the issue should be determined. The second was that each of the parties was provided with an opportunity to provide me short supplementary written submissions on: * whether the Company would have obtained owner's consent from the registered proprietor of the Acquired Land, the ARTC, to lodge development applications for the digitisation of 6 signs; and * the basis of the instructed assumption at [37(c)] of Appendix 18 to Mr Halligan's report that "historically, oOh!media Fly has successfully renewed existing licences or won new licences approximately 80% of the time". 1. On 30 May 2022, I was provided with the first of these documents, together with the short supplementary submissions on behalf of the Company (these supplementary submissions are later addressed at the appropriate points in my consideration of the issues). On 31 May 2022, I was provided with short supplementary submissions on behalf of TfNSW. These supplementary submissions addressed the second of the above bullet points (TfNSW not addressing the first of the above bullet points in these supplementary submissions).

The claim for compensation for the Company's digitisation project

Introduction 1. From about 2013 to 2014, conversion of static signs into digital signs began to be introduced into the outdoor advertising industry. Digitising existing signage required significant capital expenditure in order to adapt existing signs and fit them with the necessary electronic technology. Adoption of such technology had the potential to multiply the earnings capable of being achieved by an existing site because that site would gain the ability to display multiple different message advertisements and/or a sequence of differing advertisements for the same product or advertiser. The frequency with which the advertisements on a digital sign are permitted to change (and thus the time for which an individual advertisement is displayed) is known as the "dwell time". Dwell times would be expected to be set by the terms of the development consent granted for digitisation of any sign. 2. Digitisation of any existing sign (including any of the signs on Qantas Drive or Joyce Drive operated by the Company) would require the making of a development application to Bayside Council (the Council) and the granting of development consent for such digital conversion of that sign. The timing of making development applications and obtaining development consent for any conversions in the counterfactual circumstances requires consideration in these proceedings. 3. Relevantly, in 2015, prior to the Company becoming aware of the public purpose and, thus, the proposal for TfNSW to acquire its leasehold interest for the signs on Qantas Drive, the Company had embarked on a project envisaging digitisation of a number of signs in the Sydney Airport precinct. This project involved consideration of sites on Qantas Drive, Joyce Drive and on the railway overbridge over O'Riordan Street (with this latter sign facing south and viewable by traffic departing from the domestic terminals of the airport). 4. As can be seen from the discussion in this section, not only is there dispute between the parties about various matters of detail which would go to calculating compensation for this element of the Company's claim, there is a stark disagreement between the parties as to whether the Company has any entitlement at all for digitisation of signs on Qantas Drive on the basis proposed by the Company. 5. The Company claims that it is entitled to compensation pursuant to s 56(1)(a) of the Land Acquisition Act as if its digitisation project for Qantas Drive signs had proceeded and been implemented prior to the date of acquisition. This compensation claim is disputed by TfNSW both as to a question of legal principle and, if unsuccessful on that point, as to matters of detail. As a consequence, the issues relevant to these proceedings concerning the extent of the digitisation component of the compensation to be paid to the Company for the acquisition of the Qantas Drive sign locations are: * whether there is any basis arising from the proper construction of s 56(1)(a) of the Land Acquisition Act providing a proper foundation for the Company's claim for compensation arising from its digitisation project; * if there is such a basis, how many signs would have been digitised; * when this would have occurred; and * what earnings' multiple should be attributed to such digitised signs in comparison to the earnings derived by static advertising those signs if compensible? 1. The second to fourth of the above factors (if engaged) also potentially feed in as elements of the Company's compensation claim for special value based on what is described as both a "digital advantage" and, separately, the "halo effect" (each being later separately considered).

Digitisation of signs

Introduction 1. It is first appropriate to address the question of whether the Company should be allowed compensation based on the assumption that some of the static billboards would have been, but for the public purpose, converted into digital billboards. This involves construction of the statutory disregard in s 56(1) of the Land Acquisition Act. This provision is, relevantly, in the following terms: (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and … 1. The issue that arises is whether s 56(1)(a) enables compensation to be awarded for any increased value that might arise from development of the land that was not undertaken due to impending acquisition, as if that development had actually occurred. 2. The Company submitted that, if the proposal to carry out the public purpose would have caused the Company to decide not to convert a certain number of static signs into digital signs before the acquisition date, this would have caused a decrease in the market value of the lease (digital signs being capable of generating higher incomes than static signs and therefore being more valuable). The Company proposed that, consistent with s 56(1)(a), any such decrease in value would have to be disregarded for the purposes of determining market value. Such signs as were proposed to be digitised should be valued as if this had taken place. 3. TfNSW submitted that the Company's construction was untenable on four main bases: 1. It would lead to the "strange result" that the increased value arising from the notional development of the land would be accounted for in determining market value, without setting off the costs associated with attaining that higher value physical state; 2. It would be inconsistent with the underlying purpose of the Land Acquisition Act to award "compensation", which TfNSW contends is well understood to mean, prima facie, "compensation…for loss". TfNSW submitted that the Company never had, and never lost, any digital advertising structures at Qantas Drive, and therefore cannot be compensated for them; 3. Nothing in the express wording of s 56(1) could be construed as enabling the Company's construction. Rather, TfNSW submitted that "[t]he basic principle of compensation law is that the land (including an interest in land) must be valued at the relevant date with all its potentialities as potentialities". In other words, it was submitted that ascertainment of market value should proceed on the basis that any potential for digitisation of the billboards on the land be accounted for as a potentiality only, and not as if it had actually physically occurred. Further TfNSW submitted that the lack of express words in the provision allowing costs of realising the notional development to be taken into account when assessing value was also indicative of the fact that the Company's proposed approach was not envisaged under s 56(1); and 4. There was no case law supporting the Company's construction.

Consideration 1. The commencing point for this consideration is to note that, although the Company had undertaken some exploratory steps that could have provided a proper foundation for development applications to the Council to seek consent for digitisation of signs (the number being irrelevant for present purposes) from amongst its signs along Qantas Drive, those preparatory steps had not crystallised into any applications being lodged with the Council let alone the gaining of any approvals from it. 2. These circumstances provide the factual basis upon which it is necessary to consider whether or not the Company has any entitlement to compensation for hypothetical digital signs along Qantas Drive which, on the Company's case, would have been installed and functioning by the date of acquisition. 3. This position is, I am satisfied, distinctly different from the potential circumstances which might have arisen had the Company obtained development consents for digitisation of signs along Qantas Drive but, upon becoming aware of the proposed public purpose, had not proceeded to acting upon such development consents. What might be the compensation position arising in those potential circumstances is not a matter needing to be determined in these proceedings. 4. This position is different to, and to be distinguished from, the facts required to be addressed by Duggan J in G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 (Drivas) where the applicant in those proceedings ceased seeking to implement a development consent which had been granted because that applicant became aware of the proposed acquisition of its land. Here, the absence of such an entitlement to develop creates entirely different circumstances from those dealt with by her Honour in Drivas. 5. In Roads and Traffic Authority of New South Wales v Mosca (2006) 146 LGERA 335; [2006] NSWCA 159 (cited in footnote 21 to the written closing submissions for TfNSW), Handley JA (Mason P and Bryson JA agreeing) relevantly said, at [15]: 15. … The basic principle of compensation law is that the land must be valued at the relevant date in its existing condition with all its potentialities as potentialities: Yates Property Corporation Pty Ltd v Darling Harbour Authority (1991) 24 NSWLR 156, 175-6 (Yates) citing Raja's case [1939] AC 302, 313 and Turner v Minister for Public Instruction (1956) 95 CLR 245, 268-9. 1. As can be seen from the above quotation, Handley JA relied, by derivation, upon the reasoning of Dixon CJ in Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 (Turner) where, at 268 and 269, his Honour said: 268. … Whatever else may be true as to the process of valuation employed, it is the entire land which must be valued as at the date of resumption. It is, of course, to be valued in cases of compensation with a view to ensuring that the actual value contained in the land is replaced in the hands of the owner by an equivalent amount of money. The value must therefore be the value to the owner which the land possessed to him in its condition at the date of resumption. That value was necessarily affected by all the advantages which the land possessed and these might be a matter of future or even contingent enjoyment. Future advantages or potentialities must not be excluded. At the same time the value of these things must be assessed according to the condition of the land as it stood at the time of resumption: "it is the present value alone of such advantages that falls to be determined": Cedars Rapids Manufacturing & Power Co. v. Lacoste (1914) AC 569, at p 576 . You must not notionally bring what is only potential into actual being and value it as if it existed. 269. In the case of the land in question no steps had been taken for sub-division. It was necessary to survey it, to prepare plans for sub-division, to obtain the consent of the local authority, to make streets or roads and then to place it upon the market. As the land stood it was incapable of sale in sub-division and it was necessary to make improvements or alterations in its physical condition before the sub-divisional prices could be obtained. In those circumstances it could not be sold in sub-division at the time of resumption. It was not therefore possible to ascribe to the owner possession of the present value of its sub-divisional potentialities on the footing that all you should do is to estimate what he would gain if he sub-divided the land at a future date and reduced the result to its then present value. This means too that the conclusion is clearly right which the learned judges of the Supreme Court expressed in the passage already quoted from their judgment, viz.: ". . . the only sale that could be considered is a sale of the land as it was at the date of resumption, that is un-subdivided, but having the clear potentiality that it was fit for subdivision" (1955) 55 SR (NSW), at p 322; 72 WN, at p 203 . 1. Applying that reasoning in the present circumstances, it is clear that, as at the date of acquisition, the Company had an un-realised potentiality for the digitisation of signs along Qantas Drive but did not have, and cannot be assumed to have had, an entitlement to install such digitised signs - let alone any entitlement to compensation for such hypothetical signs based on an assumption that those signs (of whatever number) had been installed and were operational as at the date of acquisition. 2. Although it could be expected, for reasons later discussed, that the Company was likely to be granted development consent from the Council for two signs, it had not lodged applications to the Council for consent for any signs. However, this likelihood of Council approval for the digitisation of two signs would be an element which, for the purposes of s 56(1)(a), the hypothetical purchaser would have regard as part of the potentialities for the signs forming part of the acquired lease. 3. It is to be observed that this approach of acknowledging a potentiality rather than some hypothetical actuality also disposes of the difficulty of contemplating how, if the Company was entitled to compensation on the basis advanced by Mr Hemmings, the hypothetical costs associated with such hypothetical digitisation would have been brought to account. 4. The reasoning of Dixon CJ in Turner makes it clear that, when seeking to value potentiality, a hypothetical model based on the expected net return after deduction of costs and allowing for risk is to be rejected. 5. As a consequence, for the derivation of market value of a hypothetical sale as required by s 56(1)(a) of the Land Acquisition Act, the Company is only entitled to direct compensation for the lost opportunity of digitisation of signs along Qantas Drive and, for the hypothetical transaction, that is a factor which would be taken into account as part of the hypothetical transaction negotiations. 6. As a result of the foregoing, it necessarily follows that the claim by the Company for compensation for notionally digitised signs as at the acquisition date must be rejected. 7. However, on the basis that I might be wrong in reaching this conclusion and that such an entitlement to compensation did exist, I now turn to address the issues which remained in dispute between the parties necessary to be resolved for the purpose of calculating such a compensation entitlement (had it existed).

How many signs would have been digitised (contingent)?

Introduction 1. As I have concluded that the position advanced for TfNSW on the previous issue is correct, it is not strictly necessary to determine the number of signs which might have been digitised. However, in the event that I am wrong and some digitised signs are required to be accounted for in the compensation calculation, I now turn to determine how many signs should be assumed for that purpose. It is to be noted that, for the Company, the position is advanced that there would have been either four or six such billboards digitised whilst the position advanced for TfNSW is that there would have been a maximum of two billboards digitised. 2. As earlier noted, in 2015, the Company commenced planning for the introduction of digital signs in the vicinity of Sydney Airport by a signage project which would encompass digitisation of signs not only at Qantas Drive but also at Joyce Drive and other locations. For the purpose of the determination of the compensation to be paid to the Company arising from this project (on the assumption that such compensation arises), the first significant element arising concerning the digitisation of signs along Qantas Drive is how many of these signs would have been digitised but for the intervention of the public purpose. 3. Determination of this number, coupled with the earnings multiple to be applied as a consequence of digitisation (a matter also subsequently requiring consideration and determination), has a major impact on the quantum of compensation to which the Company would be entitled if such an entitlement existed. 4. The steps which need to be set out before turning to my consideration as to how this element of the contest between the parties is to be resolved require, first, the setting out the relevant evidence, affidavit and oral, of Ms Young. Because of the critical nature of this determination, this evidentiary material will be somewhat lengthy. Having done so, it is also then necessary to set out the closing submissions of the Company and Transport and, subsequently, the Company's reply submissions on this point. Having done so, I will then set out my analysis of this material and the conclusion to be drawn from it.

The evidence 1. Relevant evidence on the Company's digitisation plans was given by Ms Young. From 2012 until beginning her present role with the Parent Company, she was the Product Development Director at the Company. At all relevant times, she was the person responsible for developing potential digitisation of the signs along the roadways in the vicinity of Sydney Airport (including, but not confined to, the Company's signage sites on Qantas Drive). 2. Ms Young affirmed an affidavit (Exhibit B, Part A, Item A2) dated 24 December 2021. In this affidavit, Ms Young explained details as to the Company's digitisation project. She also gave oral evidence. 3. Ms Young explained, at paragraph 16 of her affidavit, how the first digitisation projects undertaken by the Company were at other domestic airports beginning in 2011: 16. oOh!Fly had been investing in large format digital signs at the airports for which oOh!Fly had licence arrangements since 2011 when the first large format digital sign was built at Melbourne Airport. This was followed by a large format digital sign at Brisbane Airport in 2012. Investment programmes continued across Melbourne and Brisbane Airports with further installs in 2016, 2019 and further plans for Melbourne Airport in 2022/23 as a result of oOh!Fly being awarded a tender in February 2021. 1. In oral evidence, Ms Young explained that the Company's digitisation strategy commenced in 2012 at Qantas terminals (Transcript 6 May 2022, page 59, lines 29 to 34). 2. Ms Young's written evidence described how, in around 2014/15, she became aware of certain road changes around the entry and exit roads to the Sydney domestic terminal which would result in changes to viewing angles to signs in the vicinity of the domestic terminal (including RN-I and GS-A, B, C), which would cause a decrease in the value of those sites. 3. Ms Young described (at paragraph 15 of her affidavit) how, in her experience, the Acquired Signs on Qantas Drive and the signs on Joyce Drive "were obvious candidates to develop for digitisation given their high value which was driven by their proximity to Sydney Airport (Domestic and International Terminals) and their significant, unique size." She described how these signs were larger than industry standards for static signs and larger than the 45 sqm limit for new digital billboards under the State Environmental Planning Policy No. 64 ‑ Advertising and Signage. 4. Ms Young described how the Company's Sydney Airport billboard digitisation project commenced in March 2015. Ms Young's affidavit evidence was that the reason for this project was to maximise revenue: 12 The objective of the Sydney Airport Project was to maximise the revenue of the Sydney Airport precinct, which focused on being able to digitise as many sites as possible, in line with oOh!media's overall business strategy to digitise high value, premium locations. 1. At paragraph 17 of her affidavit, Ms Young described how the Sydney Airport digitisation project was planned "to run concurrently with plans to digitise large format signs at all of the major airports under licence to enable the development of multiport sales packages, which oOh!Fly had experience generated premium revenues". She also noted, at paragraph 18, that: 18 The Sydney Airport Project was developed to not only enhance the existing opportunities but also guard against imminent risks such as competitors and changes to the road network. 1. An internal briefing document was prepared and circulated within the Company by Ms Young on 4 March 2015 (Sydney Externals Plan 1) (Affidavit at Annexure A). This document identified certain "Priority 1 Development Plans" including signs prioritised for digital conversion at Joyce Drive, O'Riordan Street, Robey Street, and the Qantas Terminal Taxi Rank. In oral evidence, Ms Young explained that these signs were "[p]rioritised in response to the news of the road changes" entering and exiting the domestic terminal (Transcript 6 May 2022, page 60, line 52 to page 61, line 24). "Priority 2 Development Plans" provided for four digital conversions on Qantas Drive West (an area subject to the present compulsory acquisition by TfNSW) and three on Joyce Drive East. 2. Sydney Externals Plan 1 was subsequently revised and a new internal document was circulated by Ms Young on 9 April 2015 (Sydney Externals Plan 2). This second plan included a number of changes to the signs proposed to be digitised around Sydney Airport. Notably, this plan appeared to earmark five, rather than four, signs for digitisation on Qantas Drive West "to create a 'story board' of 5 equal sized signs" (Affidavit at paragraph 20). In oral evidence, Ms Young explained that new versions of the Sydney Externals Plan arose out of an "iterative process" (Transcript 6 May 2022, page 62, lines 39 to 47): HUTLEY: Your paragraph 20: it refers, does it not, to a modification or development of the thinking with respect to the digital strategy which was dealt with in the document I took you to-- A. Yes. Q. --being the document commencing at page 61, and that resulted in the document at page 65, correct? A. That is correct. It is an iterative process as we respond to road changes, competitive activity, the market. Yep, so it was an evolution of that plan. 1. Ms Young explained that the new iteration of Sydney External Plans 2 arose out of consultation with Mr Dery and a team of "peers" including commercial managers and salespeople. 2. On 21 May 2015, slightly over a month after Sydney Externals Plan 2 was circulated, a third internal briefing document was produced and circulated by Ms Young (Sydney Externals Plan 3). Importantly, this third revised document proposed to digitise only two signs on Qantas Drive West (QDW1-I and QDW8-O, the first and last signs to be viewed by traffic ‑ those with the longest viewing distances). Ms Young's affidavit evidence at paragraph 24 was that there was an "intention to revisit additional signs at a future date". 3. Sydney Externals Plans 3 contemplated almost $17 million in capital expenditure (Exhibit C at Tab A2, folio 84). In cross-examination relating to Sydney Externals Plan 3, Ms Young was questioned on capital expenditure, in particular, on the nature of proposed works on static signs (Transcript 6 May 2022, page 67, line 29 to page 68, line 16). HUTLEY: …. Part of the strategy was a major, as it were, upgrade of the quality of the statics, which were facing, were they not, serious need of major expenditure? A. They required some tidying up. Q. It's a little bit more than that, is it not, because didn't you advert to the fact that - and I'll come to it - weren't you conscious that because of their deteriorating state, oOh!media was facing potentially a relatively large expenditure by way of restoration and maintenance because they were deteriorating significantly? A. We had an ongoing maintenance plan to prevent deterioration and this was more an overhaul to update the lighting and, yes, tidy them up so they looked better. Q. So, part of the strategy was a significant upgrade of the static billboards along Qantas Drive, was it not? A. Upon Qantas Drive, the whole area. Q. And the strategy that you were going forward was, was digitisation of the numbers of signs you there identify, together with a major upgrade in the quality of the static signs? Correct? A. It was the plan at the time but not - wasn't the best way. Q. I'll come to that in due course. But what you were contemplating was, can I suggest to you, was proposing as when one was seeking approval from the relevant bodies to these developments, a significant upgrade of the landscaping in the area. Correct? A. Yes. Q. A significant upgrading and quality of the static signs. Correct? A. Yes. 1. On 15 October 2015, some four months after Sydney Externals Plan 3 was circulated, Ms Young prepared and presented a document to the Company's Executive Leadership Team (Sydney Externals Presentation - Affidavit Annexure D). This was to obtain budgetary sign off for the capital expenditure canvassed in Sydney External Plan 3. Ms Young was cross-examined on the Sydney Externals Plan Presentation (Transcript 6 May 2022, page 68, line 28 to page 69, line 10): HUTLEY: And this was, as it were, would you agree with me, a significant step along the way towards putting in place, if what was proposed was adopted, those strategies for the Sydney external precinct, what you call reinvention, and you take that word from the document at page 85, which I think was the presentation? Correct? A. It was absolutely the support to - yes, for this part of our strategy. But certainly not the be all and end all. Q. What you've done before is developed two earlier proposals which you had not taken to the executive team? That's correct, isn't it? A.I may have taken them to Mr Dery. I can't recall. He would be across the proposals. But no, I did not prepare a document to what - to similar to the executive team. That's correct. … Q. This was a considered presentation by you, in consultation with your team, to the executive leadership team of the oOh!media Group, as to the strategy to be adopted in relation to the Sydney external precinct. That's correct, isn't it? A. Yes. 1. Ms Young suggested that Sydney Externals Plan 3 and the subsequent Sydney Externals Presentation did not represent plans for development for the foreseeable future, but merely represented part of an approximately ten year plan to digitalise signs (Transcript 6 May 2022, page 71, line 30 to page 72, line 24): HUTLEY: You see here it says, "Aggressive competitor activity in area from SACL APN, particularly with regard to large format digital signage." You see that? A. Yes, I do. Q. What you'd designed, is a plan which you thought responded adequately to the aggressive competitor activity in relation to large digital signage. That's correct, isn't it? A. It was the start of the plan to respond to aggressive competitor activity. Q. Where does it say this is the start of the plan to respond to aggressive competitor activity? A. It was one year of a very long-term - I would say ten - we're in our tenth year now of strategy to convert as much of our plan for digital as possible. Q. Who was the leadership team you were addressing? A. The leadership team? Q. Yes. A. The executive leadership team would be Robbie - Mr Dery, the CEO, the CFO and possibly - no, that would be predominantly it I think, from memory. Q. You would have been astute to tell them, accurately and completely, the plans and response to aggressive competitor activity you had in contemplation, wouldn't you? A. I didn't need to tell them, because it was - digitisation was a driving force of growth in our industry. It was a Company strategy to drive our industry to be digitised. I didn't need to tell them. They would know that this was not a mere - this was it. Not the end of our proposal. It was merely the start of how we were going to address aggressive activity, our pending undersupply in Sydney, and how we were going to maximise the digital market that was starting to fly then. I didn't need to tell them it was a be all and end all-- Q. Where in this document does it say it's a first step? A. It doesn't, but I don't see why that..(not transcribable)... Q. What I want to suggest to you, is you were putting forward the best plan you could then develop for the foreseeable future. That's correct, isn't it? A. It's not, and Joyce Drive is a good example of that. We have 60 days for that site. You find 60 days in these plans for Joyce Drive. I have another two on my desk ready to submit. That would be eight DAs for Joyce Drive. It's an open-ended intention to digitise as much of our plans as possible. The - the market - digital competitive market is continuing to take a bigger and bigger lion share every year, and if we don't have the plan to give around, we cannot capture that revenue..(not transcribable).. here, it would be understood by our exec team. 1. On 27 October 2015, 12 days after the Sydney Externals Presentation, Ms Young received an email confirming budgetary sign-off for $300,000 to commence "the DA approval preparation and engage the appropriate planners for the digital upgrades" (Affidavit Annexure E). 2. Ms Young's affidavit proceeded to set out, at paragraphs 29 to 32, various subsequent steps she and other Company representatives took around December 2015 to April 2016 to begin the process for seeking development consent for the adopted digitisation strategy in Sydney Externals Plan 3 (excluding RN-I). This included a meeting with a consultant town planner (Belinda Barnett), a pre-lodgement meeting with the Council, a meeting with consultants engaged by the Company to prepare DAs, and a meeting with an ARTC representative to discuss obtaining owner's consent for the proposed DAs. 3. Ms Young gave evidence at paragraph 33 of her affidavit that on 4 May 2016, she and Ms Barnett met with Mr Joseph Chan of Sydney Airport Corporation Limited. On her evidence, this would become first indication of the public purpose to the Company: 33. On 4 May 2016, Belinda Barnett and I met with Joseph Chan of Sydney Airport Corporation Limited to present the Company's digitisation plans as part of a pre-lodgement stakeholder consultation strategy. I recall that in the course of that meeting Joseph said words to the following effect: Joseph: I'm just going to write something on the whiteboard that I think you need to know about. It will deeply impact your plans. Joseph then wrote the word 'West Connex' on the whiteboard on the wall of the conference room we were in. He then scrubbed the word out. At some time after this occurred but still during this meeting, I recall being handed a business card for Colin Rudd at Roads and Maritime Services (RMS) by Joseph and told to call Mr Rudd. 1. Ms Young's affidavit attached (at Annexures K and L) subsequent communications to Mr Rudd of RMS (RMS being the predecessor, relevantly, of TfNSW) about the Sydney Gateway Project on 5 May 2016. 2. Following a further meeting with Mr Doug Parris of RMS on 9 May 2016, Ms Young sent an email to the consultants who had been engaged by the Company to prepare DAs in accordance with its Sydney Externals Plan 3 strategy (Affidavit at paragraph 37). The body of this email included (Affidavit at Annexure N): Please halt all work as of today related to the airport signage project. We are currently looking into the WestConnex activity to see how we can manage our project in alignment with it. We'll come back to you with any rebrief required once our assessment has been completed. We anticipate a 4-6 week assessment period. 1. In relation to this email, Ms Young said in cross-examination (Transcript 6 May 2022, page 78, line 40 to page 79, line 1): HUTLEY: If you go to page 142, that's an email from yourself of 9 May-- A. Yes. Q. --instructing various advisors to hold all work as of today? A. Yes. Q. Relating to the Airport signage? A. Yes. Q. That's because that followed from your becoming aware of the Westconnex proposal? Correct? A. Yes. 1. Three days later, on 12 May 2016, Ms Young prepared a "West Connex Gateway Response Plan" (Affidavit at Annexure O), which said, amongst other things: Compensation/Valuation approach strategy Optimal outcome: Want to keep as many sites as possible and have as many as possible digital. Meeting with Property valuation person, Thompson Geer, and Internal team to align approach on strategy and approach for compensation (Just Terms Act). 1. This was addressed in cross-examination of Ms Young as follows (Transcript 6 May 2022, page 79, line 30 to page 80, line 7): HUTLEY: When you say as many as possible digital, what did you mean? A. So, we engaged with RMS to try and get as many sites possible for the - that road - Q. I'm sorry, could you say that again? What did you do? A. So, we - RMS engaged us. Transport NSW, the RMS as it was, engaged with us to discuss the potential of replacing as many of our - the sites with planning to digitise if possible, and we were talking about ten/12 sites we potentially looked to digitise on that road system. Q. Now, you said, "Meeting with property valuation person— A. Yes. Q. "--to align approach on strategy and approach to compensation." You see that? A. Yes. Q. So, you had developed a strategy to maximum compensation? Is that correct? A. Well, that's - yes, yes. Q. And you have set out since that date, to pursue a strategy to maximise compensation. That's correct, isn't it? A. We - we halted work on the road, so I can't demonstrate the intention of a continuing strategy for digitisation. But I can demonstrate to - what - what we're trying to do on Joyce Drive and across our entire business. But I certainly can't show you any additional documents that suggest more than few sites I briefed on because I've told you everything. 1. Subsequent to her description of these events, Ms Young summarised the Company's position as to digitisation to the date of her affidavit: Digitisation to Date 40 Development consent was granted for the digitisation of: (a) BEP-I pursuant to Development Consent No. DA2017/1140 on 29 March 2019 which was subsequently modified by modification application No. DA2017/1140/A on 30 June 2020; (b) BEP-O pursuant to Development Consent No. DA2017/1141 on 29 March 2019; (c) JDV-I and JDV-O pursuant to Development Consent No. 2017/1142 on 29 March 2019; (d) GN-O pursuant to Development Consent No. DA2018/1135 (which modified Development Consent No. DA96/487) on 11 June 2019; (e) RN-I pursuant to Development Consent No. DA2018/1183 (which modified Development Consent No. DA93/3067) on 11 June 2019. Copies of the notices of determination for these development consents are annexed hereto and marked 'Q'. 41 Signs BEP-I and BEP-O were digitised by August and September 2020 respectively and JDV-I and JDV-O were digitised by July 2019. Signs RN-I and GN­O will be digitised when the Sydney Gateway Project is complete as the major roadworks make the signs difficult to access and unattractive to advertisers. 42 oOh!Fly has prepared development applications to digitise Signs NS-1 and JDW-1, which will be lodged shortly. 43 Based on my experience with the digitisation projects in Melbourne and Brisbane, I have observed that the plans for digitisation can be dynamic, depending on particular demands by advertisers. In other words, if a sign is considered a good candidate and a business case can be made for it, it will be pursued. It is not necessarily the case that oOh!Fly will slavishly follow planning documents such as Sydney Externals 1, 2 or 3. For example, in the end, the very first signs to be digitised in the Sydney Airport precinct (either Qantas Drive or Joyce Drive) were JDV-I and JDV-O, which did not appear in any of the 3 original plans. Our development plans cannot be rigid needing instead to be dynamic, right up until we give the go ahead to procure materials, to be able to respond to market conditions, competitor activity, any planning Issues that come up, availability of capital at oOh!, prices of materials and any other external factors such as road changes. As a further example the signs noted in [42] above for which we have prepared development applications to digitise, were also not on the 3 original plans. 1. At paragraphs 44 to 49 of her affidavit, Ms Young explained how many billboards would have been digitised at Qantas Drive but for the acquisition: 44 If the Company had not been advised that the Acquired Signs would be compulsorily acquired in 2016, the digital strategy for the Sydney Airport precinct would have included the digitisation of: (a) QDW1I (Acquired Sign 1) and QDW8O (Acquired Sign 8) (which were identified in Sydney External Plans 3); (b) QDW4O (Acquired Sign 4) and QDW6I (Acquired Sign 6) which were identified in Sydney Externals 2; (c) QDV-1 (Acquired Sign 17) and QDV-O (Acquired Sign 18), which were also identified in previous discussions as potential candidates for digitisation as they had good merits in terms of location (angled to traffic) to be digitised. 45 Based on the timelines achieved in relation to Signs BE-1, BEP-O, JDV-I and JDV-O discussed at [41] above, I expect that each of these signs identified in the previous paragraph would have also been converted to digital by 1 January 2020. 46 Achieving 6 digital billboards in the Qantas Drive precinct is consistent with the development oOh!Fly has undertaken on Joyce Drive (4 active digitals, 2 additional development consents and 2 further DAs to be lodged) totalling 8 digital billboards. It is also consistent with the investment oOh!Fly has continued to make (and is continuing to make ‑ with active plans for 2022/23) at Melbourne and Brisbane Airports. 47 oOh!Fly currently has 6 digital billboards (all developed before 1 January 2020) in the Melbourne Airport precinct with a further 4 digital billboards to be added in 2022/23, totalling 10 digital billboards at Melbourne Airport. 48 oOh!Fly current has 4 digital billboards (all developed before 1 January 2020) at the Brisbane Airport Precinct including the largest digital billboard in the southern hemisphere. 49 Accordingly, 6 digital billboards on Qantas Drive remained very much a target prior to 1 January 2020. But for the acquisition, I expect QDW1I (Acquired Sign 1) and QDW8O (Acquired Sign 8) would have been developed at the same time (if not prior to) JDV-I and JDV-O, being July 2019. QDW4O (Acquired Sign 4) and QDW6I (Acquired Sign 6) would have been completed shortly thereafter and finally QDV-I and QDV-O (Acquired Signs 17 and 18) would have been developed in the final quarter of 2019. 1. Ms Young was cross-examined by Mr Hutley on this point (Transcript 6 May 2022, page 80, lines 9-33): Q. But you've come forward and sworn that you would proceed with six sites? A. Yes. Correct. Q. And there's not one thread of evidence prior to your affidavit, I want to suggest to you, that oOh! ever had any intention to digitise six sites along Qantas Drive prior to late 2020. That's correct, isn't it? A. No. It's incorrect. Our absolute intention was to maximum as many sites as possible, which when it comes to that particular road, would have been set based on the planning restraint that we had. But that-- Q. I asked you a question. Can you point his Honour to any document which reflects that intention? A. I had to halt the project and I did not create any further documents to continue with investment on Qantas Drive because of this acquisition, so I cannot-- Q. Is this the fact? You cannot point to a business record of oOh! which intimates that your oOh! was proposing to digitise or considering to digitise up to six sites on Qantas Drive. That's the fact, isn't? A. I cannot point your Honour to a specific document. I can point your Honour to Company's intent. Broadly, I can point your Honour to activity on Joyce Drive. I have another two DAs in the area, which would be eight DAs for Joyce Drive. I can't do anything specific beyond two sites on Qantas Drive because I halted the project. 1. During cross-examination, Ms Young accepted that the signs JDV-1 and JDV-O were not digitised due to the Company being "dynamic", but were digitised in response to the public purpose. What she said in this regard is set out in the following exchange (Transcript 6 May 2022, page 87, line 29 to page 88, line 18): HUTLEY: Can I just go back to your affidavit shortly, if I could. At paragraph 43, which is at page 58 in the evidence book-- A. Yes. Q. --you refer to the fact that it's not necessarily the case that oOh! Fly will slavishly follow planning documents. Correct? A. Yes. Q. For example, in the end, the very first signs to be digitised, were those. Do you see that? A. Yes. Q. That had nothing to do with being dynamic. It was the result of the awareness, on your part, that because of Westconnex, you had to completely restructure your digitisation plan. That's correct, isn't it? A. At the time, but it's still part of a long term vision to digitise as many sites as possible. Q. Do you agree with what I put to you? A. At the time, absolutely, yes. Q. What I want to suggest to you is what you set out in paragraphs 44 and following about the six digital billboards is, with respect, wrong; that's correct, isn't it? A. No, that's incorrect. The-- Q. And it's - I'm sorry; I do apologise. You finish your question. A. I was saying it is wrong because the plan to digitise is part of the long term plan to maximise the, you know, the opportunity of that precinct - very valuable precinct - opposite the largest airport in Australia. We were significantly down on supply in our Sydney market; we'd lost T2; we were going to lose T3. It's the biggest market in advertising in this country, and the market for digitisation is growing persistently. That's our aim for the sites that are in there. Q. I want to suggest to you that your assessment has been distorted by your role to maximise the return of oOh!media in its compensation claim; that's correct, isn't it? A. No. My role was as the product development director, so my role was to develop product, not manipulate plans. 1. Ms Young was also cross-examined by Mr Hutley about changes to the Sydney Externals Plan 3 strategy regarding digitisation of Joyce Drive signs after it was presented to the Company's leadership. Exhibit P to Ms Young's Affidavit was an email dated 29 September 2016 in which Ms Young wrote to various consultants retained by the Company instructing them to proceed with DA preparation for only for BEP-I, BEP-O, JDV-I and JDV-O (signs unaffected by the proposed acquisition).

The evidence on "digital readiness" 1. One additional line of questioning which arose during the course of Ms Young's oral evidence was whether certain capital expenditure earmarked in the Company's internal briefing documents as being for refurbishment and remedial works to static signs were directed to making those signs more amenable to future digital conversion (i.e., making the signs "digital ready"). 2. Ms Young was taken in cross-examination to an extract of the Sydney Externals Presentation which noted immediate requirements of $500,000 in capital expenditure. A proportion of this capital expenditure was identified in the presentation as being required for the following purpose: Our overall development plan includes the digitising of 6 sites in the precinct along with the refurbishing of all other sites (back lighting, paint work etc) (Annexure D, page 86 of Ms Young's affidavit). 1. In light of the above, Ms Young accepted that the overall plan, as presented, included not just expenditure on digitising six sites, but also significant capital expenditure on improving and restoring the remaining static signs (Transcript 6 May 2022, page 69, lines 23 to 39). Ms Young also accepted that this expenditure was partly motivated by aging plant necessitating ongoing investment for remedial maintenance. 2. At this juncture, Ms Young raised in oral evidence the proposition that these refurbishment works on static signs were also done to make the static sites "digital ready". This led to lengthy cross-examination on the matter, including the following extract (Transcript 6 May 2022, page 71, lines 1 to 28): HUTLEY: If you thought that the plan was flexible, that you could change at any moment, likely to increase the number of digital sites along Qantas Drive— A. Yes. Q. --you'd be absolutely astute to have told the executive team, in this document, that this was liable to change at any time, because you were uncertain as to the number of digital developments. That's correct, isn't it? A. It is actually incorrect, because when we did do investments and remedial maintenance and structural work, on static sites you would make them what's called digital ready, which future-proofed them for the eventuality of converting them to digital. Q. Oh I see. A. Yes. Q. Where is that referred to in this document? A. It is not referred to in this document. Q. Where is the costing of that referred to in any document? A. There's no additional costing. It's just the technology will need - the structural build you do, you do - you future-proof static signs to be digital ready. That's a common practice..(not transcribable)... Q. But when you put in a digital sign, you take down the static sign and build a new one, don't you? A. Not in its entirety. Where we've built the Roby Street site on the bridge at Roby Street, we've rebuilt it as a static that was digital ready; ready to convert to digital when we got the DA. So you can use the same structure. 1. Mr Hutley's cross-examination of Ms Young on the concept of "digital-ready" continued as follows (Transcript 6 May 2022, page 73, line 2 to page 74, line 35): HUTLEY: Then it says, "Upgrading remaining static signage consistent with high-quality backlighting". You see? A. Yes. Q. How much was the upgrading going to cost? A. It would be the prices - or similar - these were not - these were my planning costs, so not exact costs, but it would be in reference to that table, but again, any updates you do to static, you make them digital-ready so you don't have to rebuild them again..(not transcribable).. Q. But you didn't put that in your document, did you? A. It's common practice when you build static signage now. You would never build it just as static. Q. But you weren't building statics, you were upgrading them, weren't you? A. Well, upgrade can mean quite a lot of things. If a site has rusted out quite a lot of its components, then an upgrade would - we would put a new frame on which would be digital ready-- Q. Do you say that, in effect, with respect to Qantas sites, you had to, in effect, rebuild them? A. Not necessarily. I can't recall the specific condition of any particular sites. Q. If you go back, if you would, to page 84-- A. Yes, 84, yep. Q. --you'll see that there's a reference to some Qantas sites - money being spent on them. A. Yes, correct. Q. 335,000 on QDV1. A. Yes. Q. Convert to lead [LED] backlit and pain[t] structure, see that? A. Yes. Q. No reference to making it digital ready, is there? A. No, there isn't specifically in that. Q. If your intention was to expending money on making them digital ready, you would have been astute to have that costed and refer to it in that document; that's correct, isn't it? A. They converted LED backlit; couldn't assume digital readiness. Q. Backlit doesn't entail digital readiness, does it? A. It can do; depends on the site. Q. But it would cost more than just backlighting to make it digital ready; that's true, isn't it? A. No, converting to LED means changing the structure to enable a different technology to LED rather than front lit, and that would be made digital ready. Q. So in effect, are you telling his Honour that the moment you prepare it for LED backlight you've made it digital ready; is that your evidence? A. Yes. Q. That, I must put to you, is just wrong, isn't it? A. No, no, it's not wrong, no. Whenever I've been involved in builds where we convert it to an LED backlit, we've made the signs digital ready. Q. When you go back to the strategic intent at 89 A. Yep. Q. --why didn't you put it in the strategic intent, when it said "high quality LED with longevity, et cetera" A. Yes. Q. --to the fact that you were making other signs digital ready? A. It's not something I would specifically call out because no operator would build a new sign without it being - or do any structural work to a sign without making it digital ready if there was ever an intention to digitise your plant and your imaging, which was our absolute long term intent. There was many signs we could, especially in this type of location. I would never have called it out specifically. Q. There's not one word in the strategic intent about making these signs digital ready; that's correct, isn't it? A. It's an inherent understanding if you do work to a site. Q. You say every time you do work on a site you make it digital ready, do you? A. If you're converting it to an LED backlit, we would make it digital ready, yes. I believe that's the case for this. Q. Can we go on: could you go to page 91, if you would? A. Yes. Q. It says "development scenarios considered"? A. Yes. Q. "Do nothing"? A. Yep. Q. It says, "standing upgrade: upgrade all sites with backlighting plus remedial work on basis that digital signing will not be permitted by council"? A. Yep. Q. Backlighting there is not making it digital ready, correct? A. If we did LED backlighting, I think we would have done some structural work to make it digital ready, but I can't recall specifically on that comment. Q. Right. "Digital upgrade: digitise six carefully selected landmark sites" A. Yes. Q. --"locations and upgrade remaining sites with backlighting plus remedial work"; you see that? A. Yes. Q. Not one reference to making them digital ready, correct? A. No, not specifically. 1. This topic of "digital ready" was revisited at the end of Mr Hutley's cross-examination of Ms Young (Transcript 6 May 2022, page 88, lines 24 to 36): Q. Could you tell his Honour what that involves; what you were intending to refer to when you said that the proposals to upgrade the static signs would involve "making the billboards digital ready"? A. So if you refer to my affidavit, your Honour, at point 28 I talk about making one of our other sites digital ready. It simply means that if we do any significant work on a site nowadays - structural work - we won't invest in it to recreate it as a static. We would always look to invest in it as such that it could be what's called digital ready, meaning the frames that we fix or we place would take a static skin but then they would take a digital screen in the future, so that you're not going back over, you know, an investment unnecessarily. So I mention it in my affidavit in point 28 because we did exactly that for one of our other sides on Robey Street, and that's simply what I'm referring to, which is why it's so, you know, expensive. 1. Some further questions arose relating to the Robey Street sign (RNI) mentioned at paragraph 28 of Ms Young's affidavit as having been proposed to have been built with a new, static lightbox that would be "digital ready" This evidence addressed the issue of why the capital expenditure on this sign was for the purpose of converting it to a digital one and that the nature of that expenditure had been disclosed in the capital expenditure proposal. The questioning addressed why she had advanced this but making other signs digital ready had not been so disclosed. Ms Young explained that the reason for this was that that sign (RNI) was to be digitised (not made digital‑ready) and that there was a need for capital expenditure on that sign because its structure had been deemed to be unsafe (Transcript 6 May 2022, page 88, line 47 to page 90, line 30).

The evidence on Ms Young's position and powers within the Company 1. Ms Young was also cross-examined on her position and powers within the Company's structure (Transcript 6 May 2022, page 59, lines 1 to 20): HUTLEY: Can his Honour take it from that, that you had no authority to commit oOh!media to capital expenditure; that was done by someone above you? A. I had authority to spend a certain amount of capital expenditure, so for example, I could prepare and organise DAs because that was within my ability, but if it was significant expenditure, it would go upwards to Robbie Dery who had higher authority, or beyond. … Q. I'm sorry, I see. You had an authority, and up to what amount did you have an authority in 2015? A. I'd have to double-check on 2015. At the minute it's 50,000, but I couldn't - I would have to go back. Q. Between 2015 and today's date, your authority to commit the Company to capital expenditure would be no more than $50,000, correct? A. That would be the highest, correct. 1. With respect to approval for expenditure within the Company, Ms Young explained that any expenditure under $7 million did not require board approval, but would have been approved by the CEO and CFO together (Transcript 6 May 2022, page 66, lines 24 to 37). 2. The topic of Ms Young's powers was revisited later in the cross-examination, during which Ms Young gave evidence that she would have presented and prepared DAs for further development on Qantas Drive, for the chief executive officer to sign off on necessary capital expenditure. She accepted that decisions would have been influenced by factors including capital requirements, and said that she would have been privy to the Company's capital requirements, though not those of the wider oOh!media group (Transcript 6 May 2022, page 80, line 35 to page 81, line 20): HUTLEY: And the person for responsible for determining whether there would or would not be further development on Qantas Drive, was not you, was it? A. I would have been the person that would have presented the DA and go the DAs ready, but I would not have been the person that would have signed off the capital. Q. The person who had to make that decision was the chief executive officer-- A. Yes. Q. --in consultation with the chief financial officer. That's correct, isn't it? A. That is correct, yes. Q. And he or she or they would have to make decisions based upon matters such as the capital requirements of oOh! from time to time? Correct? A. Correct. Q. Something to which you are not privy? Correct? A. I am actually privy. I am - I'm privy now. Q. You're privy now, but you weren't privy at the relevant time, were you? A. I was certainly privy to the capital requirements for Fly, I was. Q. Across the whole of oOh!media Group? A. Fly. Q. oOH!media, you've agreed with me, operated as an integrated group where oOh!Fly was but a division. Correct? A. Yes, correct. I now have overall visibility of the group but then I would have only had Fly. Q. What I want to suggest to you, is you simply are incapable of expressing any opinion as to what oOh! would have done about these sites because the decision was not one for you to take. That's correct, isn't it? A. I don't agree with that because my role as a product development director, I would be given that role in my role which was to recommend product development to my Company.

The submissions

The submissions for the Company 1. The closing written submissions for the Company on this point were in the following terms (footnotes omitted): Digitisation generally 6. There can be no doubt that from about 2013/2014 the outdoor advertising market started to pursue the digitisation of its outdoor billboards. oOh! had been investing in large format digital signs at the airports since 2016 when the first large format digital sign was built at Melbourne Airport. 7. As is noted by the outdoor advertising experts in their Joint Report: ● "Initially, only the highest quality (prominent, high audience reach) billboards were converted due to the returns being more attractive for the capital investment. ● All billboard business are now focused on digital conversions and supply has grown considerably." 8. Similarly, there can be no doubt that the airport precinct within which the Qantas Drive signs sit can be described as high quality, prominent and with high audience reach. Indeed, the outdoor advertising experts also agree that "signage opportunities in the Sydney Airport precinct are highly valued assets for one of the larger National billboards outdoor business – notably JCD and QMS." oOh! Media's digitisation strategy 9. Consistent with the approach to digitisation generally, and specifically in relation to the highly valuable airport precinct, oOh! Media did in fact embark upon a strategy of digitisation of its static signs. oOh! Media's FY19 results indicate that digitisation generally was a "significant tailwind to drive continued Out of Home growth" and it was working on further digitisation opportunities. 10. Sarah Young was the Product Development Director at oOh! since 2012. In that role Ms Young was responsible for the preparation of the digitisation strategy and also the preparation of development applications necessary to carry out the digital conversions. 11. As noted in Ms Young's affidavit the approach to digitisation was an iterative process and one that was of necessity flexible so that it could respond to changing circumstances. Those possible changing circumstances included: road changes, compulsory acquisitions, responding to competitors. 12. During the early parts of 2015, Ms Young prepared strategy documents, including for the digitisation of signs, referred to as Sydney Externals Plan 1, 2 and 3. 13. Each of those plans showed different numbers of digital signs in both Joyce Drive and Qantas Drive. 14. The preparation of those plans then led to the commencement of oOh!'s digitisation strategy in the airport precinct. As Ms Young stated this was the beginning of oOh!'s digitisation strategy. 15. An early stage of that strategy required engagement with stakeholders (for the purposes of SEPP 64). To that end Ms Young attended a conference with Sydney Airport Corporation Limited (SACL) on 4 May 2016. It was at that meeting that Joseph Chan of SACL first informed Ms Young (and Ms Barnett) about the impending impacts of WestConnex. 16. It is from that moment forward – that is from 4 May 2006 – that oOh!'s digital conversion plans changed as a consequence of the proposal to carry out the public purpose. 17. That change was manifested in a number of different ways. 18. Firstly, and as suggested in cross examination, JDVI and JDVO became the first two signs digitised. They were the first two signs digitised as a direct consequence of the proposal to carry out the public purpose. 19. Of course, consideration of oOh!'s internal materials from 4 May 2016 onwards no longer disclose any intention to digitise any of the Qantas Drive signs. They were to be compulsorily acquired. It appeared from some of the cross examination by the Respondent that the absence of strategy documents post May 2016 referring to the digitisation of the Qantas Drive signs might be suggested to tell against any plan by oOh! to carry out that digitisation. That submission, if made, would be rejected. It would be inconsistent with the statutory disregard. 20. Not only is it demonstrable of common sense that there are no further plans for digitisation of the Qantas Drive signs after 4 May 2016, it is also reflected in oOh!'s documents and Ms Young's evidence. 21. The email at Annexure N to Ms Young's affidavit requested that all work halt on the airport signage process while oOh! looked into the consequences of WestConnex. That email was sent on 9 May 2016. It was followed up by the preparation of a "Westconnex Gateway Response Plan" dated 12 May 2016, which included plans to investigate relocation options, including on the Westconnex land. On 29 September 2016, following meetings with RMS, consultants were briefed for the digitisation of three signs on Joyce Drive. Ultimately four digital signs (JDVO, JDVI, BE-I, BEP-O) were approved by the Land and Environment Court in March 2019 and two further signs (GN-O and RN-I) approved in June 2019. 22. To similar affect, when cross examined on the point, Ms Young confirmed that she halted the project: "Q. Is this the fact? You cannot point to a business record of oOh! which intimates that your oOh! was proposing to digitise or considering to digitise up to six sites on Qantas Drive. That's the fact, isn't? A. I cannot point your Honour to a specific document. I can point your Honour to company's intent. Broadly, I can point your Honour to activity on Joyce Drive. I have another ..(not transcribable).. in the area, which would be eight BAs for Joyce Drive. I can't do anything specific beyond two sites on Qantas Drive because I halted the project." 23. Next, in relation to oOh! Media's digitisation strategy - but for the proposal to carry out the public purpose - Ms Young states at paragraph [49]: "But for the acquisition, I expect that QDW1I (acquired sign 1) and QDW8O (acquired sign 8) would have been developed at the same time as (if not prior to) JDV-I and JDV-O being July 2019. QDW4O (acquired sign 4) and QDW6I (acquired sign 6) would have been completed shortly thereafter and finally QDV-I and QDV-O (acquired sign 17 and 18) would have been developed in the final quarter of 2019." 24. Ms Young was not cross examined on this conclusion. The Court would accept that unchallenged evidence. 25. It is again apparent from the cross examination that it might be suggested that as Ms Young was not the person who would ultimately sign off on the actual digitisation conversion plan, her opinion is – presumably – to be disregarded. That submission, if made, should be rejected for at least two reasons. 26. Firstly, it should be rejected because of Ms Young's again unchallenged evidence, at paragraph [7] where she states: "I am authorised by the Directors of oOh! Media and oOh! Fly to give evidence and expressed the opinions set out in this affidavit on behalf of oOh! Media and oOh! Fly" 27. That is, on the facts, the Court will be satisfied about oOh! Media's intentions but for the proposal to carry out the public purpose. 28. Secondly, as a correct approach to the application of the statutory disregard, there is simply no requirement for someone other than the Product Development Director, authorised to speak on behalf of the Company, to provide that evidence. To the extent it may be the CEO and/or the CFO that would make the ultimate investment decisions about digitisation, common sense suggests that those officers of the company would involve themselves in actual decisions. That is, in the actual decisions to digitise. There is no requirement of the Just Terms Act, nor specifically for the statutory disregard, that there be contemporaneous evidence from officers of the Applicant to the effect that but for the proposal to carry out the public purpose, they would have followed a different course. 29. There simply is no warrant for evidence of that nature. Rather, (1) the awareness of the market generally, (2) the specifics of the Sydney Airport location, (3) the actual commencement of digitisation by oOh!, (4) the obvious intervention of the proposal to carry out the public purpose and (5) the unchallenged (and authorised) opinion of Ms Young leads the Court comfortably to the conclusion on the balance of probabilities that but for the proposal to carry out the public purpose the six signs would have been digitised. 30. It may be, in some circumstances, that positive evidence is actually required to demonstrate causal connection for different provisions in the Just Terms Act. For example: ● For s 59(a) cost it is necessary to prove that the costs were incurred in connection with the compulsory acquisition of the land, and not some earlier or different legal advice. ● For the purposes of s 59(c) issues sometimes arise as to whether the relocation was a consequence of the acquisition or something that would have occurred in any event. 31. That is not the requirement for the statutory disregard. Consideration of an example may assist. The most common application of the statutory disregard is to determine the underlying zoning of land. It is not a requirement in those cases to lead evidence from the Council that, but for the proposal to carry out the public purpose, it would have rezoned the land to the different zoning. Nor is it necessary to lead evidence from the Department of Planning (or indeed the Minister) that had an application been made to rezone the land it would have been, but for the proposal to carry out the public purpose, been rezoned. 32. Rather, in that circumstance – like in these – the Court informs itself, having regard to all of the available material, what the outcome would have been but for the proposal to carry out the public purpose. 33. That the Court can be satisfied that oOh! – but for the public purpose – would have digitised 6 of the signs is also entirely consistent with the expert evidence of the outdoor advertising experts. 34. Their view is that depending on planning constraints, an optimal number of 4 to 6 signs could be converted to digital. 35. Properly understanding that evidence, the difference between the 4 and 6 signs turned on two matters: 1) planning and traffic considerations; and 2) the optimum digitisation number. 36. The planning and traffic considerations are dealt with below. In dealing with the optimum number of digital signs the principal issue was one on cannibalisation. 37. Mr Herring's evidence, in relation to this matter – and, with respect, generally – is entirely unsatisfactory. 38. Mr Herring retired in 2017; that is in the infancy of the digitisation process in the industry. He retired two years before the oOh! Media signs would have received approval for digitisation, three years before they would have been installed and almost four years before the acquisition date. 39. In cross examination Mr Herring conceded that any cannibalisation from the digitisation of the 6 signs would be "less significant". It was also not a matter about which he was concerned at that level of digitisation. 40. In particular, it can be noted at paragraph [90] of his Statement of Evidence that his base – or floor – multiple was three to four. At paragraph [90] he expressed the view "that on the basis of six signs being converted … my opinion is that the average multiple to be applied over the life of the acquired lease for any acquired sign conversions would be between three and four times." 41. Although the Applicant says the multiple should be greater (and those submissions are set out below), in the Applicant's submission this conclusion demonstrates that the six signs could be digitised without cannibalisation. In cross examination, Mr Herring conceded that cannibalisation was not a matter about which he was concerned at that level of digitisation, which is why he did not advert to it in his report. 1. Mr Hemmings submitted, in the Company's oral closing submissions, that I should accept Ms Young's evidence concerning, relevantly, the Company's long-term digitisation process and that, based on the detail of her evidence, the Company would have digitised the six signs identified in Qantas Drive. This would have happened by January 2020, but for the public purpose becoming known to the Company. 2. He also submitted that, because Ms Young was specifically authorised to speak on behalf of the Company on these matters, it was unnecessary for any other evidence to be led on this aspect of the Company's plans. In doing so, he referred to the fact that her responsibilities encompassed driving the digitisation process and noted that, in the Company's submission, she was not challenged on relevant elements of her evidence in this regard, as earlier set out (Transcript 16 May 2022, page 329 line 37 to page 330 line 28). 3. Mr Hemmings also submitted that the proposition that the Company would have digitised six of the Qantas Drive signs was also consistent with the approach adopted by the outdoor advertising experts. Although Mr Hemmings accepted that there was a dispute in this evidence as to whether it would be four signs to be digitised or six (these being the positions of Mr Herring and Mr Whitford), he submitted that Mr Whitford's current, continuing involvement in the outdoor advertising industry compared to the position of Mr Herring, who had not participated in the industry since 2017 ‑ at the very beginnings of digitisation processes in outdoor advertising ‑ provided a proper basis upon which I should prefer Mr Whitford's evidence on this point (Transcript 16 May 2022, page 331 line 44 to page 332 line 17). 4. He also submitted that there were no relevant planning obstacles to obtaining consent for the digitisation of six signs and that there were no traffic issues which would stand as a barrier to the granting of consent for that number of signs. He analysed the planning evidence as to the timeframe which would scope the period during which development consent applications would have been prepared, granted and the necessary installation work undertaken leading to a conclusion that the six signs would have been approved and operational by 1 January 2020. 5. Mr Hemmings referenced other digital sign approvals in the vicinity that Bish C had dealt with by giving effect to a conciliated outcome of proceedings between the Company and the Council (OOh!Media Fly Pty Ltd v Bayside Council [2019] NSWLEC 1149). He submitted that other relevant matters such as clutter and the like were addressed by the Commissioner in her jurisdictional statement by which she explained why she was satisfied that she should grant the proposed approvals ‑ noting that RMS (the predecessor to TfNSW) had given concurrence to the approval of those signs. 6. All of this demonstrated, he submitted, that there would have been, but for the intervention of the public purpose, no impediment to the digitisation of the six signs hypothesised as being the January 2020 outcome of the Company's digitisation project.

The submissions for TfNSW 1. The closing written submissions for TfNSW on this point were in the following terms (footnotes omitted): Number of signs the Applicant would have sought to digitise 81. The Applicant claims that absent the public purpose, it would have digitised six of the Acquired Signs on Qantas Drive before 1 January 2020. However, for the reasons outlined below the Applicant has not discharged the onus of proving on the balance of probabilities that it would have sought to digitise six signs. 82. While the Applicant sought to rely in opening submissions on the agreement of the outdoor advertising experts that "an optimal number of four to six signs could be converted to digital…" to support their claim, the only evidence led regarding how many signs the Company would have in fact digitised is the Affidavit of Ms Sarah Young. 83. Ms Young gave evidence that had the signs not been acquired, the Applicant would have digitised Acquired Signs 1 and 8 as identified in Sydney Externals Plan 3, Acquired Signs 4 and 6 as identified in Sydney Externals Plan 2 and Acquired Signs 17 and 18 identified in "previous discussions as potential candidates for digitisation". However, in cross-examination Ms Young conceded that the presentations on which she relied to support the identification of the six signs as candidates for digitisation were part of an "iterative" process and represented an "evolution" of the Applicant's plan to digitise the Sydney airport precinct. 84. It follows that the six signs set out in Ms Young's Affidavit would not all have been digitised before the Date of Acquisition, but rather were identified and de-identified as candidates for digitisation as the Applicant's plans evolved. As a matter of fact, the only signs which would have been digitised were Acquired Signs 1 and 8 as set out in in the final iteration of the Sydney Externals Plan 3 and the Sydney Externals Presentation which was ultimately presented to the Applicant's executive team to support the approval of capital expenditure. 85. While Ms Young maintained in cross-examination that it was always the intention of the Applicant to digitise six of the Acquired Signs, she admitted that there are no documents or business records to corroborate that claim. If the Applicant had such an intention, it would be clearly stated in the business records, which it is not. 86. Indeed, the documents annexed to Ms Young's Affidavit demonstrate that the plan set out in the Sydney Externals Presentation, to digitise just two signs on Qantas Drive, represented the entirety of the Applicant's digital strategy for Qantas Drive and Joyce Drive. The plan was the "Overall Development Plan" which would have been put forward as a "holistic strategy" for the purposes of development applications. The only evidence that the Applicant would have digitised more than two signs on Qantas Drive emerges from the Affidavit of Ms Young, well after the Applicant became aware of the public purpose in early May 2016. 87. By 12 May 2016, Ms Young was responsible for preparing a West Connex Gateway Response Plan that contemplated developing a strategy for compensation and valuation under the Just Terms Act whereby the "optimal outcome" would be to have as many signs as possible digital.41 In relation to the West Connex Response Plan, Ms Young agreed under cross- examination that she had developed a strategy to maximise compensation. The Sydney Externals Plan 3 at Annexure C to the Affidavit of Sarah Young and Sydney Externals Presentation at Annexure D were prepared prior to any awareness of the public purpose or acquisition and thus represent the true position of the Applicant's plans for the Acquired Signs absent the acquisition. 88. To the extent that the Applicant relies on Applicant's Voluntary Planning Instrument dated 20 March 2019 to support its position that it would have applied to digitise six signs, that document identifies six of the Acquired Signs as Future Applications only and was prepared with knowledge of the public purpose. 89. Ms Young sought to point the Court to the Applicant's digitisation activity on Joyce Drive and works to make the non-digitised signs "digital ready" as evidence of the Applicant's intent to digitise more than two signs on Qantas Drive. However, neither of those suppositions support Ms Young's assertions regarding the Applicant's intent. 90. First, to the extent the Applicant seeks to rely on the digitisation activity on Joyce Drive to support a claim that the Applicant's plans were apt to continue to change, the Applicant's activity on Joyce Drive was a result of its awareness of the public purpose and proposed acquisition of the sites on Qantas Drive, which required it to change its digitisation strategy. 91. Second, the evidence of Ms Young given during cross-examination that the remaining signs would be made "digital ready" and therefore capable of digitisation at any time in the future misrepresents the capital expenditure and extent of work required to digitise a static sign. The works planned for the remaining static signs were "back lighting plus remedial work & painting" and were estimated to require significantly less expenditure than the signs which were designated for digitisation. There is no reference in the documents or plans to making signs "digital ready" as a precursor to digitisation nor any evidence that painting and backlighting the remaining static signs was to be carried out for any reason other than standard remediation and repair to static signs. 92. Given the extent of the concessions made by Ms Young during cross-examination it would be unsound for the Court to proceed to the ultimate finding urged by the Applicant that six signs on Qantas Drive would have been digitised by 1 January 2020 but for the acquisition and ignoring the public purpose. No Authority to Approve Significant CAPEX 93. Ms Young's evidence that but for the acquisition the Applicant would have digitised a total of six signs on Qantas Drive by 1 January 2020 should also be rejected on the basis that Ms Young cannot say what the Applicant would have done because she was not in a position to make any decisions on the further development of Qantas Drive or approve the requisite capital expenditure for the Applicant. 94. Under cross-examination Ms Young stated that she while she would have been responsible for preparing and presenting the development applications, only the chief executive officer and chief financial officer had the authority to sign off on significant capital expenditure. At all relevant times, Ms Young's authority to approve capital expenditure was capped at $50,000, significantly below the estimated costs of digitisation provided by Mr Huang (even accounting for a 10% reduction due to the timing of the hypothetical works). 95. Further, Ms Young agreed that any decisions regarding further development on Qantas Drive would necessarily take into consideration the capital requirements of the Applicant, a matter which, at the time, she was not privy to. 96. In the absence of any documentary evidence to the contrary, Ms Young's evidence that the Applicant would have digitised six signs (being an additional four signs) must be rejected because Ms Young could not have made such a decision regarding the further development or approve the required capital expenditure. 97. It was well within the power of the Applicant to call a witness who, unlike Ms Young, had the requisite authority or explain its failure to do so (beyond stating the CEO left the company in 2021). The Applicant has done neither. It follows from these omissions in the Applicant's evidence that the Court should apply the long-accepted principles in Jones v Dunkel and more readily draw the inference contented for by the Respondent that the Applicant never planned to digitise more than two signs on Qantas Drive. 1. Mr Hutley submitted that the documentation about which Ms Young gave evidence and which was annexed to her affidavit did not demonstrate any concrete proposals to digitise any of the Qantas Drive signs, by seeking specific approval for them from the senior management group of the Parent Company. Such proposals as were advanced by Ms Young, he submitted, were ones involving what amounted to routine maintenance work on those signs with none of that identifying, specifically, expenditure for the purposes of making any of the Qantas Drive signs "digital ready" or for specifying signs to be digitised in some future capital expenditure program for the Company. 2. Mr Hutley also addressed (Transcript 17 May 2022, page 379, lines 7 to 30), the proposition advanced in (97) of TfNSW's written closing submissions that I should draw a Jones v Dunkel (Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8) inference concerning the failure of the Company to call a sufficiently senior executive to give evidence concerning the Company's digitisation proposals for the Qantas Drive signs. Mr Hutley proposed that I should draw what he described as a "huge inference" that such evidence would not have supported the position advanced by Ms Young in her written and oral evidence. 3. Mr Hutley also turned to address the traffic and planning evidence advanced for TfNSW as to why I ought not be satisfied that the Council would approve the digitisation of six of the Qantas Drive signs – he submitting that I could not be satisfied, to the relevant standard of proof, that the Company had, given that the evidence of all of the experts on both sides on these technical topics, discharged that onus of proof to my satisfaction.

ARTC Owner's Consent 1. During the hearing, I raised a further discrete issue with the Company regarding whether ARTC, as proprietor of the Acquired Land, would have granted owner's consent for the digitisation of signs on the Acquired Land, as required under cl 4.5 of the MFN Lease. After the hearing, the Company provided further written submissions dated 30 May 2022 addressing this question. 2. The Company's written submissions addressed the issue as follows: 2. As stated at paragraph [32] in Ms Young's affidavit, she attended a meeting with Derek Rodgers of ARTC to discuss obtaining owner's consent for proposed development applications on 7 April 2016. 3. Ms Young does not and cannot depose as to whether ARTC would have granted owner's consent because an actual request for owner's consent was not made because of the proposal to carry out the public purpose. 4. In support of the proposition that ARTC would have granted owner's consent, the Company relies on: (a) the grant of owner's consent by ARTC in relation to the sign described as RN-I; and (b) the fact of the Turnover Rent provision in the Acquired Lease and agreement between the outdoor advertising experts that digitisation will lead to increased revenue. 5. Development Consent was granted for the digitisation of sign RN-I (Robey Street Bridge ‑ Inbound) pursuant to Development Consent No. DA2018/1183 (which modified Development Consent No. DA93/3067) on 11 June 2019 (RN-I Consent). 6. Sign RN-I is located on the Railway Bridge above Robey Street, Mascot (at the intersection with Ninth Street) which is otherwise described as Lot 57 in Deposited Plan 6488728 (RN-I Land). 7. A title search for the RN-I Land and the Owner's Consent letter provided by ARTC (dated 26 September 2018) were emailed to his Honour's Associate on Tuesday, 17 May 2022 at 9:59AM (Email Documentation). 8. The registered proprietor of the RN-I Land is the Transport Asset Holding Entity of New South Wales (TAHE). The respondent has confirmed that RN-I Land is covered by the terms of the Metropolitan Freight Network Lease. Therefore ARTC was the appropriate body to provide owner's consent to the RN-I Consent. 9. It is submitted that it may be inferred from the Owner's Consent given to the RN-I development application that a similar consent would have been given by ARTC to an application made for the digitisation of the 6 signs contended by the Company. No expert (or the Respondent) raised the prospect of Owner's Consent not being given by ARTC and this is in the context where the prospect of the grant of development consent for the 6 signs was a contested issue in the proceedings. 1. TfNSW provided further submissions on 31 May 2022. However, no reply submissions were made contesting the Company's submissions on this point. 2. On the basis of the Company's further uncontested submissions as to the likelihood of owner's consent being granted by the ARTC for digitisation of sign RN-1, I am satisfied that the owner's consent would not have been withheld for digitisation of at least six signs on the Acquired Land.

Consideration 1. I have reviewed and considered the written and oral evidence of Ms Young, which was the only direct evidence before me as to the Company's actual digitisation strategy prior to and around the time it became aware of the public purpose. As I have concluded that, for reasons set out in the following analysis of Ms Young's evidence, the correct hypothetical position is that the Company would not have digitised more than two signs on Qantas Drive, is not necessary to address the question of whether or not a Jones v Dunkel inference should be drawn as a consequence of the Company not relying on any evidence other than that of Ms Young. 2. In the absence of any documentary evidence indicating that the Company's plan immediately prior to early May 2016 was to digitise more than two signs on Qantas Drive, I am not satisfied on the balance of probabilities that it would have done so. My reasons for so concluding follow. 3. On my reading of the evidence before me regarding the Company's strategy prior to learning of the proposal to carry out the public purpose, the Company had planned to digitise two signs on Qantas Drive, being QDW1I and QDW8O. This was evinced in Sydney Externals Plan 3 and the Sydney Externals Presentation. An email included as Annexure N to Ms Young's affidavit indicated that, on or around 27 October 2015, the Company's CEO, Mr Brendon Cook, had approved the commencement of DA approval preparations and the engagement of planners only to implement the Sydney Externals Plan 3 digitisation strategy. 4. Ms Young also annexed to her affidavit various other materials reflecting steps taken by the Company in late 2015 and early 2016 to implement this strategy. Furthermore, a "Concept Presentation" by Group GSA (Annexure M to the Affidavit of Ms Young), the Company's consultant landscape architect, was dated 5 May 2016 and had also been prepared on the basis of two signs being digitised on the Acquired Land. I am satisfied that the totality of these materials indicates that the Company's intent prior to early May 2016 was to digitise two signs on the Acquired Land. 5. On the documentary material available before me, the Company only evinced an intention to reconsider the Sydney Externals Plan 3 digitisation strategy after learning of the public purpose from Mr Joseph Chan of Sydney Airport Corporation Limited on 4 May 2016 and holding discussions about it with Mr Colin Rudd of Roads and Maritime Services on 5 May 2016. This can be inferred from the email sent by Ms Young shortly thereafter on 9 May 2016 to the consultants who had been engaged by the Company to prepare development applications in accordance with its Sydney Externals Plan 3 strategy, asking them to halt work given the Company's need to assess the West Connex project. As earlier set out earlier, this was confirmed by Ms Young in cross-examination. 6. On the basis of Ms Young's "West Connex Gateway Response Plan" at Annexure O to her affidavit and her answers in cross-examination regarding the Company's strategy after learning of the public purpose, I am not satisfied that evidence post-dating early May 2016 of the Company's intent to digitise more than two signs was not affected by its knowledge of the proposed acquisition and the development of a new digitisation strategy with an eye to maximising potential compensation. 7. In this context, it is also to be noted that Mr Whitford also expressed doubt as to the ability, effectively simultaneously, to digitise multiple signs at a single location (Transcript 10 May 2022, page 227, line 30 to page 228, line 3). HUTLEY: Did you form a view as to what was the optimal digitisation of this lease? Of these signs? WITNESS WHITFORD: My view over the long term that all should be digitised in the future. My view initially is somewhere between four and six based on the advice that was provided. HUTLEY: When you say, "initially", what period were you considering that digitisation would take over? WITNESS WHITFORD: At the time of acquisition. HUTLEY: So four to six digitisations by that time or shortly thereafter? WITNESS WHITFORD: I don't think I spent too much time thinking about what time it was, whether it was on the acquisition date or before or after. I can't imagine practically how you can roll out four in one go but if they can, fantastic. All six in one go. They do take time each one, so I imagine there'd be a staggered start for all of them. HUTLEY: Were you assuming that the digitisation of these four to six would straddle the acquisition date? Some before, some after? WITNESS WHITFORD: I didn't really have an opinion on that. 1. There is no evidence from Ms Young that would explain how the Company would achieve digitisation of more than the two signs nominated in Sydney Externals Plan 3. This reservation expressed by Mr Whitford reinforces my conclusion that I should accept that (if it was to become relevant) a maximum of two signs would have been digitised by the date of acquisition. 2. I accept, as Ms Young suggested, that the Company does not necessarily always "slavishly follow planning documents such as Sydney Externals 1, 2 or 3" and that a dynamic approach that is responsive to factors such as market conditions might be taken when determining a digitisation strategy. I also accept that JDV-I and JDV-O on Joyce Drive were digitised by July 2019, despite not appearing as being planned to be digitised in Sydney Externals Plan 1, 2 or 3. However, in the absence of any direct evidence as to plans to digitise four or more signs on the Acquired Land, I cannot be satisfied on that balance of probabilities that the Company would have done so. Such a conclusion would be contrary to the evidence discussed above. 3. Furthermore, to the extent that the Company advanced that the digitisation of signs at Joyce Drive was indicative of what the Company would have done by way of digitisation at Qantas Drive, I am not satisfied that any such activity at Joyce Drive after early May 2016 was not infected by the Company's knowledge of the public purpose. For example, in the oral evidence set out earlier, Ms Young accepted that signs JDV-O and JDV-I on Joyce Drive were digitised in light of a restructuring of the Company's digitisation plan: HUTLEY: For example, in the end, the very first signs to be digitised, were those. Do you see that? A. Yes. Q. That had nothing to do with being dynamic. It was the result of the awareness, on your part, that because of Westconnex, you had to completely restructure your digitisation plan. That's correct, isn't it? A. At the time, but it's still part of a long term vision to digitise as many sites as possible. Q. Do you agree with what I put to you? A. At the time, absolutely, yes. 1. There was also evidence given by Ms Young during cross-examination on the actions which the Company allegedly took to make static signs "digital ready". I do not place significant weight on this evidence as it was raised by Ms Young given in oral evidence, without any supporting documentary evidence showing that signs were made "digital ready" in order to prepare them for future digitisation. Indeed, there was no evidence provided beyond Ms Young's oral evidence that the works were to be carried out for anything beyond typical remediation and maintenance. This is to be contrasted with the position concerning RN-I where there was evidence that the intention to digitise/render digital was disclosed as part of the capital expenditure program. 2. Consequently, I am not satisfied that I can conclude that the capital expenditure indicated for backlighting, remedial, and other works to static signs were a part of a broader "digital readiness" approach preceding the digitisation of more than two signs on the Acquired Land. 3. In light of my rejection of Ms Young's position on this issue, it is not necessary for me to determine whether Ms Young was in a position of authority to be capable of approving the relevant capital expenditure within the Company and therefore whether she was capable of giving evidence on the issue of what would have been the costs of digitising signs QDW1-I and QDW8-O. 4. Furthermore, TfNSW has agreed in its closing submissions that had a development application for two signs been made, it would likely have been approved. It is therefore also not necessary for me to consider and resolve any differences in the evidence of the traffic and town planning experts about whether development consent would have been obtained for four or six signs and whether any conditions of consent would have been imposed, if any.

Quantum of Deduction for Cost of Digitisation in the Market Value Assessment

Introduction 1. The parties agreed that counterfactually-incurred pre-acquisition digitisation costs would be accounted for as a deduction from the value of the Acquired Land (Company's written closing submissions at paragraphs 75 to 76; TfNSW's written closing submissions at paragraphs 104 to 107). Aspects of these costs in dispute between the parties were identified as the costs of capital expenditure to digitise the signs, as well as development application costs for digitisation.

Quantum of deduction for digitisation: capital expenditure

Introduction 1. Mr Szu-Hsuan Huang, who has been the Program Director of the Parent Company since March 2019, gave evidence quantifying such counterfactually-incurred capital expenditure for the digitisation of the six signs identified by Ms Young as the ones which would have been digitised but for the acquisition. Although the material set out immediately below that has been extracted from Mr Huang's affidavit addresses all six signs identified as being subject to the hypothetical digitisation by the date of acquisition, it is to be noted that my finding in the immediately preceding section of this judgment renders only the estimated costs with respect to signs 1 and 8 relevant. 2. In his affidavit dated 24 December 2021, Mr Huang said, at paragraph 25: 25 Based on my experience, I estimate that the digitisation of Acquired Signs 1, 4, 6, 8, 17 and 18 would incur the following time and cost: Sign Number Sign Name Size (sqm) Estimated time to digitise Estimated cost 1 Qantas Drive West 1 ‑ Inbound 95 6 weeks $922,702.00 4 Qantas Drive West 4 ‑ Outbound 42.411 5 weeks $428,904.50 6 Qantas Drive West 6 ‑ Inbound 42.411 5 weeks $428,904.50 8 Qantas Drive West 8 - Outbound 42.411 5 weeks $428,904.50 17 Qantas Drive V-Sign ‑ Inbound 99 6 weeks $948,077.00 18 Qantas Drive V-Sign ‑ Outbound 98.64 6 weeks $943,509.50

1. In his oral evidence, Mr Huang confirmed that he had prepared this estimate based on 26 November 2021 dollars (Transcript 6 May 2022, page 55, lines 5 to 8). Both Mr Halligan and Dr Ferrier adopted Mr Huang's estimates. However, there was disagreement about whether Mr Huang's estimated capital expenditure costs should be adjusted downwards to account for inflation between 26 November 2021 (the date of Mr Huang's cost estimate) and 20 November 2019 (a date allowing for the hypothetical time required to digitise the signs by 1 January 2020). The Company contended that the adjustment should be applied, whereas TfNSW contended that they should remain the same as the table at paragraph 25 of Mr Huang's affidavit.

Further evidence 1. Beyond Mr Huang's affidavit evidence, there was further background information which informs this present dispute between the parties. Appendix 1 to the Joint Expert Report of the Forensic Accountants (Exhibit C at Tab D3, folio 1242.40) contained a joint email to the parties from Mr Halligan and Dr Ferrier dated 20 April 2022 requesting further information regarding the date at which Mr Huang's estimated capital expenditure costs for digitisation applied. Also in Appendix 1 was the reply email dated 22 April 2022, in which the Company's legal representatives notified both experts that: "Mr Huang advises that the amounts are expressed in November 2021 prices and believes that the amounts would be slightly cheaper if the costs were incurred in 2019." 2. On the basis of this information, especially Mr Huang's advice that the amounts would be "slightly cheaper", Mr Halligan deflated Mr Huang's estimated capital expenditure costs by 2.5% per annum between November 2019 and November 2021 (Exhibit C at Tab D1, Appendix 5, folio 875). 3. The outdoor advertising experts (Mr Whitford and Mr Herring) also provided their opinion about whether Mr Huang's estimated costs could be adjusted for inflation at 2.5% per annum in their supplementary joint expert report. They concluded that no deflation should be applied to the 26 November 2021 figures (Exhibit C at Tab C4, folio 788): 2. Capital cost ‑ adjustment for time. The capital cost of installing a digital screen between January 2020 and the 26th of November, 2021 would remain the same Our assumptions Digital screen prices were declining from 2014 to 2018 as competition in production increased but from 2019 to 2021, prices have remained reasonably constant Approximately 50% of the cost of digitising can be attributed to the digital screen. The balance of costs including such items as labour, materials and software have slightly increased over this period. We agree that the total cost of digitising between January 2020 and the 26th of November 2021 would have remained the same. 1. The forensic accountants subsequently noted what they perceived to be an incongruity in the advertising experts' opinion in their joint expert report (Exhibit C at Tab D3, folio 1242.22): The opinion of Messrs Whitford and Herring appears to be a non sequitur in that they state that 50% of the total cost (being the screen cost) was unchanged over the period but the other 50% of the total cost (being labour, materials and software) increased "slightly" over that period. Logically, this must mean that the total cost increased over the period, but Messrs Whitford and Herring conclude that the total cost was unchanged. 1. Nonetheless, Dr Ferrier did not deflate the capital expenditure costs, and in both his expert report and the joint expert report, cited the express opinion of the outdoor advertising experts as part of his justification for not doing so (Exhibit C at Tab D3, folio 1242.23): 70 In Dr Ferrier's opinion, the capital cost amounts expressed in Mr Huang's affidavit should not be adjusted for inflation between November 2019 and November 2021, because the industry experts (Messrs Herring and Whitford) have explicitly agreed that "The capital cost of installing a digital screen between January 2020 and the 26th of November, 2021 would remain the same". 1. Dr Ferrier also criticised Mr Huang's advice that November 2019 costs would have been "slightly cheaper" than November 2021 costs for being "insufficiently precise" (Exhibit C at Tab D3, folio 1242.23): 72 In Dr Ferrier's opinion, the clarification by Mr Huang that the cost in November 2019 would have been "slightly cheaper" than the amounts shown in his affidavit is insufficiently precise to enable any adjustment to the amounts shown in Mr Huang's affidavit, especially in the light of the agreement between Messrs Herring and Whitford. 1. During the hearing, Mr Huang was questioned by Mr Hemmings about what the reference to "slightly cheaper" meant and why he thought there was a difference between November 2021 and November 2019 costs (Transcript 6 May 2022, page 55, lines 27 to 39): HEMMINGS: Are you able to estimate, so give a quantity of the slightly cheaper that forensic accounts might be able to use, are you able to estimate the extent that it would be slightly cheaper? A. In my opinion, I think the - it will be a deduction of about 10% on the 2021 estimate. Q. What is it that leads you to conclude that in late 2018/early 2019, the prices would be cheaper than in November 2021? A. The 2021 estimate has taken into consideration of the market considerations, high fuel cost, COVID disruption to supply market considerations, the increase in the supply costs and translating to the inflated figure and that's the - that's the basis of the 2021 estimate. But we didn't have that back in 2019. 1. Dr Ferrier subsequently agreed that this estimate was sufficiently precise for him to make a deduction based upon it (Transcript 10 May 2022, page 268, lines 21 to 30): HEMMINGS: Did you hear him say if he was estimating it in late 2018, early 2019, he said it would be a deduction of about 10% on the 20-21 estimate? WITNESS FERRIER: Yes, I heard that, yes. HEMMINGS: Is that now sufficiently precise for you to make a deduction by reference to the 10% as opposed to merely the description as slightly cheaper? WITNESS FERRIER: Yes, it is.

Submissions 1. In his closing written and oral submissions, Mr Hemmings submitted that the forensic accountants had agreed that Mr Huang's 2021 estimate required to be deflated by 10%, relying principally on Dr Ferrier's acceptance in cross-examination that Mr Huang's 10% figure was "sufficiently precise" for him to make a deduction (Company's Closing Submissions at paragraph 85; Transcript 16 May 2022, page 337, lines 2 to 5). 2. In his written closing submissions at paragraphs 104 to 107, Mr Hutley submitted that Mr Halligan's deflation of costs by 2.5% per annum based on Mr Huang's advice that the costs would have been "slightly cheaper" in 2019 appeared to be "a very substantial reduction based on the vague but minimal description "slightly"". He submitted that, by contrast, Dr Ferrier "relies on the actual joint opinion of the Advertising Experts that the costs would have remained the same, which aligns with the actual expenses incurred for the Joyce Drive Signs at 30 April 2019."

Consideration 1. I am unconvinced by the general contention of the outdoor advertising experts, adopted by Dr Ferrier, that there would have been no difference in cost of capital expenditure for digitisation in the period covering November 2019 to November 2021. I note the forensic accountants' joint opinion that the advertising experts' conclusion as to no inflation of costs from January 2020 to November 2021 appeared incongruous with their observation that digital screen prices would have remained relatively constant, but labour, materials, software and other costs would have increased slightly over that same period. Rather, I am satisfied by Mr Huang's brief, though unchallenged, oral evidence that there were market factors which would explain a rise in costs of digitisation. 2. In the next section of this decision, I address the issue of costs of replacement of the digital screens at the end of their useful life. I set out the evidence given by Dr Ferrier in cross-examination concerning how future adjustments to account for inflation would be undertaken. The transcript extract reproduced shows Dr Ferrier addressing this proposition on the basis that the reduction in costs addressed by Mr Huang to go back to November 2019 would have been 10%. His evidence concerning future replacement costs was predicated on adoption of a 10% cost reduction to reflect November 2019. 3. At no point does Dr Ferrier question the 10% identified by Mr Huang in his oral evidence. 4. Whilst Dr Ferrier appears to adhere to his proposition that there would be no cost differences between the two relevant dates, I am satisfied that the absence of any explanation from Dr Ferrier as to why he adhered to that position, in light of the cumulative evidence from Mr Huang, results in Dr Ferrier's position being unable to be accepted. Under these circumstances, I am satisfied that it is appropriate to adopt the 10% advanced by Mr Huang and accepted by Mr Halligan as an appropriate basis for future calculations.

Additional Issue 1. One flow-on issue that was raised by the Company, but which was not addressed in reply by TfNSW, pertained to further capital expenditure cost which would be incurred after 10 years (in 2029), when the screens of the digitised signs reach the end of their useful life and are required to be replaced. The forensic accounting experts agreed that this further capital expenditure would have cost 40% of the original capital expenditure for digitisation. 2. However, there was some disagreement as to how this further figure for capital expenditure would be calculated when accounting for inflation. In oral evidence, Dr Ferrier suggested he would have deflated capital expenditure costs by 10% to the November 2019 cost, then inflated it to Mr Huang's estimated cost, then further inflated it at 2.5% per annum thereafter. 3. Mr Halligan's approach would have been to deflate capital expenditure costs 10% to the November 2019 cost, then inflate at a constant 2.5% per year for 10 years thereafter (Transcript 10 May 2022, page 269, lines 21 to 40): HEMMINGS: So, would the way in which the model works for the digitisation costs be to reduce it by 10% and then to inflate it at the agreed 2 and a half percent moving forward? WITNESS FERRIER: Well, I'd be inclined to inflate it so that it got to Mr Huang's opinion as at September 2020 and then through inflation thereon. HEMMINGS: Although a person, at the acquisition date, wouldn't know that it was inflating at that rate, would they? WITNESS FERRIER: I seem to recall Mr Huang was saying the reason for the rate change was COVID, was it? That there were some difficulties in-- HEMMINGS: My recollection is he said there were fuel costs, supply costs and COVID general problems. WITNESS FERRIER: So the point at which we are forecasting ahead is in September 2020? HEMMINGS: The estimate that he was preparing that was being relied upon, according to line 37 of the transcript on 6 May, late 2018 early 2019. WITNESS FERRIER: Yes, so form the point that there was a hypothetical purchaser we've got information that the costs would have been 10% lower back in November 2019. Hypothetically we're now in September 2020 so presumably we know about the effects of COVID and we know about some of the effects on the cost of capitalization. So we've had new information about what those costs might have inflated by up to that point in time. So we're forecasting forward form that point in time. HEMMINGS: Remember the way in which a model works, this is an assumption that these works are being carried out in 2019. These are the hypotheticals. That works are being carried out in 2019 so the signs were operational by 1 January 2020. WITNESS FERRIER: That's correct. Yes. WITNESS FERRIER: Yes, that's true. We have a further capital cost in ten years' time. The question is how we go about predicting that cost, or how someone would have gone about predicting that cost as at September 2020. The way in which the model works at the moment is we have two different approaches. That is the way I've done it. I've said there should be no change. In other words, the price will not have changed between 2019 and when Mr Huang's affidavit was prepared. The variables that are in the model from my point of view include no price change after 2020 and from that point inflation at 2.5% until 2030 is reached. Mr Halligan's got a different approach. He deflates by inflation back to 2019 and then applied growth from that paid inflation. HEMMINGS: Mr Halligan, how you use for your model the evidence from Mr Wang that the prices for 2019 would have been 10% less? WITNESS HALLIGAN: I would reduce his 2021 number by 10%. That would give me a price in 2019 and thereafter going forward I would use the rate of inflation. Sorry to interrupt, I would do that because nobody at the valuation date - these costs have occurred back in 19 and as you mentioned a moment ago, the 2021 information is simply not available at 19. 1. In the Company's closing written submissions, it was submitted: 90. For the same reason as the counterfactual pre-acquisition costs, Dr Ferrier's approach is to be rejected. 91. As at the acquisition date, and relevantly before anyone like Mr Huang could estimate costs in November 2021, the hypothetical parties are projecting their income stream. 92. Unless the 2021 information can be used for the confirmation of foresight ‑ and there is none ‑ the approach adopted by Dr Ferrier must be rejected and the Court would accept Mr Halligan's approach. 1. In closing address, Mr Hemmings submitted (Transcript 16 May 2022, page 337, lines 17 to 23): With the greatest respect to Dr Ferrier, it's a flawed approach, because the only way he can know that in November 2021, the prices are at November 2021 prices, is if he's getting information from November 2021, and that's after the acquisition date, and so he couldn't possibly have that information. So, the task would be that which is done by Mr Halligan to take the price, deflate it by 10%, and then add the 2½%, indexing year on year. We've dealt with that in paragraphs going through to 92. 1. Further paragraphs from the Company's written closing submissions relevant to this point were: 89. Dr Ferrier would deflate the digitisation cost by 10% for the 2019 amount and then inflate it to the November 2021 estimate by Mr Huang and then increase that at the agreed rate of 2.5% per year. Mr Halligan, on the other hand, would deflate it by 10% and then increase it at the agreed amount of 2.5% year on year until year 10. 90. For the same reason as the counterfactual pre-acquisition costs, Dr Ferrier's approach is to be rejected. 91. As at the acquisition date, and relevantly before anyone like Mr Huang could estimate costs in November 2021, the hypothetical parties are projecting their income stream. 92. Unless the 2021 information can be used for the confirmation of foresight – and there is none – the approach adopted by Dr Ferrier must be rejected and the Court would accept Mr Halligan's approach. 1. Mr Hemmings also submitted (Transcript 16 May 2022, page 343, line 31 to page 344, line 15): HIS HONOUR: Sorry, you say to me, I'm assuming in this, just to get it ticked off on the transcript, that Mr Huang's costs that get discounted back, shouldn't be regarded as a foresight in any Falconer sense? HEMMINGS: No, because no one had done the estimate, so part of the preparation of the evidence is the attempt to do the estimate as at the 2019 dollars. It was erroneous in an estimate in 2021 dollars. So, once you've actually got an estimate in 2019 dollars, what you then can't do in 2020 is apply some foresight to say, "But they would have been up 10%." Two reasons. One, they've already been incurred. So, you don't need to inflate them 2021 dollars because they've already been incurred, and so they're above the line and have already been incurred. There is no warrant at all to increase them. If they're then being increased because they're going to have some work to do in 10 years' time - I should have made this clear, I'm sorry. It's in the written submissions, but I didn't address it orally. So, let me do that again, I apologise. The digitisation costs have a role to play in two places. One, in the preacquisition costs, and two, at the year 10. In relation to both the preacquisition and the year 10, of course we are talking about the numbers being considered at a preacquisition date. So, in relation to the use of both of those numbers, they can't be inflated by reference to knowledge that would not have been available until after the acquisition date. So, Dr Ferrier doing that is wrong. Even if that's not accepted, and somehow there can be an increase that can only occur for the year 10 costs, it can't occur for the preacquisition costs, because it's just that. They've already been incurred. There is no need to - there is plainly no warrant to separately inflate those costs for something that then happens after the costs have actually been incurred. So, the model at the moment treats both sets of costs in the one way. So, if the Court would prefer Dr Ferrier's, there needs to be a change to the model, firstly for that, and secondly, the model inflates the costs otherwise as agreed at two and a half percent, and if the Court accepts Dr Ferrier's approaches, there will need to be a change, not to..(not transcribable)..but to the model for that. 1. Mr Hutley did not address this specific issue in closing written or oral submissions. 2. It is unnecessary to explain at any length how this item is to be treated. That is because I have accepted, as earlier explained, the basis upon which the costs advanced by Mr Huang should be adjusted to reflect costs as at the relevant 2019 date. Having resolved that matter, the basis upon which future inflation adjustments should be made to reflect the necessity for screen replacement at the end of their functional life uses the adjusted 2019 cost figures and adjusts them for inflation over the life of the screens. There was no dispute between Dr Ferrier and Mr Halligan about the adoption of a 2.5% inflation figure for this second step. Therefore doing so, from the 2019 costs I have determined are appropriate, reflects the position advanced on behalf of the Company.

Quantum of deduction for digitisation: development application costs 1. There was some initial disagreement between the parties as to the development application costs associated with digitisation which were deductable from the value of the Acquired Land. This was due to a difference in the costs estimated by Mr Halligan and Dr Ferrier. 2. However, in closing written submissions, the TfNSW agreed to adopt the midpoint between Mr Halligan and Dr Ferrier's estimated development application costs (TfNSW's Closing Submissions, page 20, paragraph 108 to 110): 108 The costs of digitisation would include the costs of obtaining development consent. These are costs that would have been incurred prior to the hypothetical digitisation in 2019. 109 The business valuers, doing the best they can on the limited information available, have estimated those costs to be: (a) Mr Halligan: $88,000 for four signs and $130,000 for six signs, which amounts to approximately $22,000 per sign. (b) Dr Ferrier: $30,000 per sign. 110 The Respondent accepts the Company's compromise to adopt the mid-point of $26,000 per sign for the cost of obtaining development consent. 1. In closing oral submissions, the Company similarly accepted that the parties had agreed that I should split the difference between the competing experts' positions regarding development application costs (Transcript 16 May 2022, page 346, lines 33 to 38). 2. In light of this agreement, I accept that the quantum of deduction to be applied for development application costs associated with digitisation is $26,000 for the two signs I have concluded would have been subject to such DA applications to the Council.

The appropriate methodology for quantifying market value

Introduction 1. To address the various issues in dispute regarding the application of the statutory disregard, I first turn to how quantification of the market value of the Acquired Lease is to be ascertained. There is a dispute between the parties as to the appropriate methodology to be used for calculating the market value of the Acquired Lease, as well as disputes regarding a number of inputs to be used in calculating market value (depending on the methodology I determine it is appropriate to adopt).

Allowance for specific risk when determining market value 1. The parties agreed that there would not be a requirement for any allowance for specific risk when determining market value of the Acquired Lease.

The alternative valuation methodologies

Introduction 1. In this proceeding, two alternative methodologies for quantifying the market value of the Acquired Lease were advanced: the discounted cashflow (DCF) method and the profit rent method. The parties differed as to how these methodologies should be approached. 2. The Company submitted that the methodology to be applied should be whichever produced the higher value (Company's Written Closing Submissions at paragraphs 124 and 126): 124. As already submitted, two alternative approaches are available to the valuation task. The Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that is not unreasonable. … 126. In the hypothetically competitive marketplace, the vendor will sell its interest for the highest economic return. That highest economic return, where two alternative bases of valuation are available, can only be determined once the Court has resolved each of the inputs to both valuation tasks and the relevant experts have produced these results. 1. Mr Hemmings reiterated this point in his closing oral submissions (Transcript 16 May 2022, page 343, lines 3 to 9): We then, having been through that process, turn to a consideration of the determination of market value, and there are two approaches, DCF and the profit read, and it will be necessary for the Court to determine the inputs for both in order to determine which yields the highest economic return, because the highest economic return being the reflection of the highest and best use of the land, and so being the market value that the market would pay, or derive for the acquisition of the lease. 1. In response, Mr Hutley submitted (Transcript 17 May 2022, page 386, lines 15 to 36): Can I turn to the discount rate of the profit rent approach. The experts have agreed that if the market trades these signs on a basis other than profit rents, i.e. by reference to discounted cashflows, then that's the appropriate valuation methodology. The experts have agreed, that is the experts to do with the signage, have agreed that that's the approach in the market. It's telling that there's no suggestion from our learned friend's expert, Mr Whitford, that there's concept of some property trader coming in and buying up precincts, and seeking to market them, so this theory of the property developer seems one which nobody in the industry has ever heard of, and there's no certainly no evidence that they've ever heard of it, and they say that that's how these signs trade, and, in our respectful submission, having regard to what was found in Eureka and supported by the Court of Appeal, that should be the basis of evaluation, in this case. That's what the market would pay for it, not what it imagined investigation [sic] would pay for it. So, we say that should be the end of it. Our learned friend seem to have advanced the case in that they get the better of the two analyses, and, in our respectful submission, this is not a game show, this is your Honour determining what the market value is, and there will be a market value, and that's it, and if the market value's in a particular way, in our respectful submission, that's the end of it. Against the possibility that one needs to deal with that. 1. In support of its submission, the Company cited Bronzel v State Planning Authority (1979) 44 LGRA 34 (a decision of the Supreme Court of South Australia), where Wells J said, at page 38: Upon a review of the evidence, and a consideration of the reasoning of the valuers and the arguments of counsel, I am not disposed to reject any method of valuation adopted by either valuer on the ground that it is not worth considering; it seems to me that if Spencer's case (Spencer v. The Commonwealth (1907) 5 CLR 418) is to keep its practical worth in this jurisdiction, this Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable. The limitations of every method must, of course, always be kept clearly in mind. I am of the opinion that the approach likely to result in the most direct and reliable resolution of the outstanding differences between the valuations is to consider the particular features of each valuation that are capable of yielding to adverse criticism.

Determination of the appropriate methodology 1. Although what is being addressed in these proceedings involves assessments of the counter‑factual, the counter‑factuals must be based on real‑world propositions known to have some potential operative basis potentially engaged. It is in this broad context that the above cited consideration by Wells J is to be approached. 2. First, it is to be observed that the DCF methodology is an entirely conventional, and frequently applied, valuation approach (whether as a primary valuation methodology, or as a check method being irrelevant). 3. However, what is here hypothesised on behalf of the Company as a valuation methodology to be applied and, if resulting in a result more favourable for the Company than the application of the DCF methodology, one to be adopted to derive an outcome in these proceedings, is, I am satisfied, one not available. Why I have reached this conclusion is set out below. 4. The evidence of Mr Whitford and Mr Herring is that there is a small number of major players in the outdoor advertising market ‑ a market which is a highly competitive one and one where, if potential availability of sites arise (whether as a consequence of tendering at expiry of existing site contracts or as a result of availability of new sites as a consequence of construction of major projects), access to such sites will be vigorously contested by these major players. 5. The second methodology proposed on behalf of the Company assumes that, in the real‑world position described above, there would also co-exist a form of secondary market, one peopled by investors not involved in the outdoor advertising industry seeking to acquire such sites and impose themselves between an outdoor advertising entity operating the sites and the owner of the land (the landlord of the operator) upon which the sites are located. This postulated model envisages that such an investor could, through some process of arbitrage, make an additional profit from a group of sites acquired for such purpose. 6. Although the Company postulates a profit rent situation whereby an external non-outdoor advertising investor might acquire an interest in the site in a fashion which would enable it to extract a profit rent giving rise to a potentially higher valuation than that which would be derived from a discounted cashflow value based on the Company's actual operation pursuant to the lease which existed at the time of the compulsory acquisition, there is, I am satisfied, an insurmountable obstacle in the path of embarking on such an analysis. 7. Although s 56(1) mandates consideration of the hypothetical transaction in the terms there set out, such a transaction must be hypothesised as taking place in a market which is known to exist. Just as it would be inappropriate, in a hypothetical real estate transaction to seek to use analysis of the sale of a residential property in suburban Sydney for the purposes of deriving a value to be adopted for a CBD office tower, because such a process would not be one in a s 56(1) real-world, that is also the position which arises with respect to the Company's proposed hypothetical profit rent analysis. There simply is no evidence that supports the proposition that there is or has been any market for outdoor advertising billboard sites involving transactions where the hypothetical purchaser was an investor who was not an existing player in the outdoor advertising market. 8. In these proceedings, the evidence is that there is fierce competition between the major players in the limited pool of active participants in the outdoor advertising industry. There is, however, no evidence of any transaction of the type here hypothesised by the Company. In the absence of evidence demonstrating that such a market exists, and is not merely a concept advanced in the absence of real-world existence of such a market, there is no possible basis to entertain consideration of the claim advanced on this methodology. 9. Mr Whitford was questioned as to how precincts of signs might operate. In the exchange, the issue of transactions involving the purchase of a precinct of signs arose. The terms of the exchange were (Transcript 10 May 2022, page 229, line 48 to page 231, line 10): HUTLEY: Have you ever bought a precinct of signs, including digital signs? WITNESS WHITFORD: Have I ever bought a precinct? Yes, I have. HUTLEY: In that time, your approach to valuation involved an analysis of multiples due to digitisation involving this precinct analysis? WITNESS WHITFORD: I think it's a reasonably simplified version of it. When you buy a collective group of signs, being them in a precinct or a group of assets, you look at collectively what they generate. If you have the information of what they generate now, fantastic, but if you don't, you forecast the revenue you can generate from that site and you use tools, be it discounted cashflow, return on investment, to forecast out what that will generate for you in the future. 1. Shortly after this questioning of Mr Whitford, Mr Hemmings asked Mr Herring questions on the same topic. The exchange was in the following terms (transcript 10 May 2022, page 232, line 22 to page 233, line 3): HEMMINGS: …. Mr Herring, when was the last time you were involved in the acquisition of a precinct of signs? WITNESS HERRING: Sorry, a precinct sorry, repeat that? HEMMINGS: When was the last time you were involved in the acquisition, to use Mr Hutley's language, a precinct of signs? WITNESS HERRING: Can I broaden that to say a renewal of a contract that involves a precinct of signs? HEMMINGS: Just deal with mine, firstly. When was the last time you were involved in the purchase of a precinct of signs? WITNESS HERRING: The acquisition, I can't recall a precinct of signs that we acquired. HEMMINGS: When was the last time you were involved in the purpose of a package of, say, 18 signs in one general geographical location? WITNESS HERRING: You refer to it as a precinct? HEMMINGS: I just want to make sure we're not having trouble by use of the word. When was the last time you were involved in the acquisition of, say, 18 signs, that were not disparate signs, but were geographically located? WITNESS HERRING: I would say not for a number of years. I can't recall. HEMMINGS: Ever? WITNESS HERRING: I can't recall. 1. As can be seen from the above transcript extracts (these being the only ones addressing sale transactions of precincts of signs in the evidence of the outdoor advertising experts), there is no suggestion from either witness that such hypothetical investor purchases of a precinct of signs had ever arisen. 2. This evidence provides no basis upon which I could conclude that there would be the existence of any such viable market of this type into which a hypothetical transaction for the Qantas Drive precinct of the signs could be analysed for the purposes of this alternative transaction model advanced on behalf of the Company. 3. As consequence of the absence of any (let alone any adequate) evidence demonstrating of the existence of such a market, I am unable to accept that such a model can provide any valid utility for the purposes of deriving a valuation of the Qantas Drive signs in these proceedings. The result of this is that the DCF methodology (subject to resolution of differences of expert opinion concerning variables to which such an analysis is to be applied) is that to which recourse is required in these proceedings. 4. It is also to be noted that, in the Company's written opening submissions at (50) to (59) – when dealing with the issue of what allowance (if any), should be made for indirect costs as part of a s 56(1) hypothetical transaction – the question of what was the likely profile of a purchaser of the Company's leasehold interest was addressed. The relevant paragraphs of these submissions were in the following terms: 50. Mr Halligan assumes that the purchaser of the lease, where that lease will then give the purchaser the opportunity to place advertising on 18 billboards, would be someone like oOh!. That is a purchaser like JC Decaux and QMS. 51. Those operators, like oOh!, would merely be adding the opportunity to advertise on the 18 signs the subject of the lease to their existing business. In those circumstances, as Mr Halligan describes it, the addition of the 18 signs the subject of the acquired lease would merely be a "bolt-on" to the hypothetical purchaser's business with the result that the only relevant indirect costs would be those that are incremental costs (if any). 52. Dr Ferrier's approach is different and, with respect, wrong. 53. He seems to focus upon an approach which is described as the acquisition of "the billboards business". 54. That is the wrong approach. The task involved is not properly described as one being the valuation of a business. Rather, the outdoor advertising experts have agreed that a lease for this class of asset would be purchased by reference to the discounted cashflow. 55. The relevant distinction arises when the language of acquisition of a business incorrectly influences the valuation task. 56. For example, in any acquisition, the class of purchaser needs to be identified. In the Applicant's submission, as already stated above, the class of purchaser is a large scale out of home advertiser. That sort of large scale out of home advertiser will either have no indirect costs that need to be accounted for (for the addition of a mere 18 signs) or an incremental cost only. 57. However, if the premise of the valuation task is that it is a purchase of a stand- alone business, where that business is to be operated as a business solely in relation to the 18 signs, then that is a very different class of purchaser. It is a small – indeed presumably a new – business. Plainly, that small business would necessarily incur, for the first time, all of the indirect costs. As a result, if that were the class of purchaser, it may be accepted that an allowance should be made for all of the indirect costs. 58. The problem is, however, once those indirect costs are taken into account by the small operator, that significantly affects the amount they could offer to purchase the lease by application of the discounted cashflow. Inevitably, upon the assumption of a competitive market that includes the large scale out of home advertiser, where that large scale out of home advertiser does not need to take into account those costs (or at least possibly some incremental costs only) the successful purchaser simply would not be the small-scale operator. 1. These submissions are consistent with, and support my conclusion that, the class of potential purchasers of the Company's leasehold interest was confined to those who are already significant, large players in the outdoor advertising market. 2. Although the additional discussion of whether a potential non-current market player might seek to acquire the lease was confined to the possibility of a small investor, I am satisfied that, for the reasons earlier outlined, the above element from Company's opening submissions accurately sets out the limited range of potential existing market players who would be interested in trying to acquire that the Company's lease. 3. Approaching the matter in this fashion avoids the necessity to undertake any detailed analysis of the conditions of the lease between the Company and its former landlord for the acquired sites on Qantas Drive. This means that the question of whether or not that lease would have created any impediments requiring to be (or unable to be) resolved for such a hypothetical investor being placed between the Company and the landlord do not need to be considered and resolved.

Inputs for the Discounted Cashflow methodology

Introduction 1. In order to determine the market value of the Acquired Lease according to the DCF method, it is necessary for me to determine a number of disputed inputs in relation to the projected cashflows. It is to be noted that I have already determined that no signs are appropriate to be considered as having been digitised prior to the date of acquisition. As a consequence, the first and second of the matters set out in the list below are also only addressed on the same contingent basis that I have adopted for considering the earlier addressed matters (in order to provide the parties with my conclusions on those matters in the event that it might be held that I am wrong in my foundational conclusion that none of the acquired signs would have been digitised by the date of acquisition). 2. The following inputs require consideration: 1. the digitisation multiple applicable to signs assumed to be digitised by 1 January 2020; 2. the base revenue to which the digitisation multiple is to be applied; 3. the applicable operating expenditure, including: 1. whether the expenditure would be fixed or variable; and 2. whether indirect costs require to be accounted for, and if yes, what would be the quantum of those indirect costs; 1. the impact of COVID 19 upon revenues until the acquisition date; and 2. the length of time required for revenues to recover from the impacts of COVID 19 and the rate of such recovery. 1. I will address each disputed input in turn.

The digitisation multiple

Introduction 1. As was agreed between the parties, a static sign that is converted to a digital sign will generate more revenue. The "digitisation multiple" is the multiple to be applied to the income of static signs to calculate their notional increased income as digital signs. The Company's position was that the digitisation multiple would be 8x (and potentially up to 12.4x) as an average over the remaining lease term, applied to 6 notionally digitised signs. TfNSW's position was that the digitisation multiple would be 3-4x as an average over the remaining lease term, applied only to the 2 to 6 individual signs that would have been digitised.

The evidence on the digitisation multiple 1. Evidence on this issue was principally given by the outdoor advertising experts, Mr Whitford (for the Company) and Mr Herring (for TfNSW).

The Company's evidence 1. In his individual expert report, Mr Whitford opined that there was "no generic multiple that can be applied across the industry as a rule of thumb", and that the revenue uplift for any particular sign would "depend on the performance and existing characteristics (i.e., location, size, exposure) of the sign that is digitised" (Exhibit C at Tab C1, folio 608, paragraph 26). He reiterated this point in his contribution to the joint expert report (Exhibit C at Tab C3, folio 783). Mr Whitford's evidence was also that a "hypothetical purchaser would typically seek to compare a 'like' digitised sign within their own portfolio to predict the revenue uplift that they could achieve" (Exhibit C at Tab C1, folio 608, paragraph 26). 2. Mr Whitford also made some general observations as to the digitisation multiple for the Acquired Signs. He noted that "[v]ery high multiples have been achieved on comparative sites, including others in the precinct, and it is possible that the signs in the Acquired Lease if digitised may achieve high conversion multiples". He also noted that "[t]he initial stages of the application of programmatic (digital adspend bought through digital exchanges) revenue to digital out of home signs, such as proposed for the acquired Lease, has seen extraordinary revenue multiples. The industry is working on improving yield management through technology that has the ability to improve revenues or existing assets." (Exhibit C at Tab C3, pages 783 to 784) 3. Based on his "experience of digitising existing static billboards in other locations" (Exhibit C at Tab C1, folio 608, paragraph 28), Mr Whitford provided estimates for the digitisation multiple that a hypothetical purchaser would have reasonably expected to be applicable to the Acquired Signs: 1. Digitisation of signs on a "precinct basis": under this approach, the 18 Acquired Signs are considered together as a "precinct" and the digitisation multiple is estimated by reference to the uplift to the total revenue of the precinct assuming it is optimally digitised. In his individual expert report, Mr Whitford opined that a 4-6x digitisation multiple could be achieved "as that would be the typical range of market expectations that could be achieved through the digitisation of the signs on a 'precinct basis'" (Exhibit C at Tab C1, folio 608, paragraph 26). In his contribution to the joint expert report, Mr Whitford appeared to provide a lower estimate, saying: "If pressed for a number, the multiplier of existing income to post improvement income is in the range of 3 to 4x the 2019 generated revenue (across all sites) as a general industry experience. Based on a 3.5 times multiple, gross revenues may increase from around $1.6m (pre COVID) to approximately $5.7m" (Exhibit C at Tab C3, folio 784). 2. Digitisation of signs on an "standalone basis": this approach considers the uplift to revenue due to digitisation on an individual sign basis. In his expert report, Mr Whitford estimated that a digitisation multiple of 6-8x was applicable (Exhibit C at Tab C1, folio 608, paragraph 27). 1. In examination-in-chief, Mr Whitford agreed with Mr Herring that in the period immediately after digitisation, signs would experience an uplift in revenue. Mr Whitford declined to define a specified length of time that this initial revenue uplift would last for a sign digitised in 2019-20, rather, he considered that this depended upon a range of factors including the "the broader context of the market" and "how many signs are available of similar audience" (Transcript 10 May 2022, page 219, lines 35 to 49). 2. In cross-examination, Mr Whitford accepted that signs can have differing revenue from year to year due to a range of external matters which can depreciate their value as a revenue earning prospect (Transcript 10 May 2022, page 222, lines 15 to 24). Mr Hutley took Mr Whitford to the Company's monthly gross revenue data at Annexure C3 to Mr Herring's expert report (Exhibit C at Tab C2, folio 676 to 679), and noted that revenues from August 2017 to March 2018 were much higher than the revenues from August 2018 to March 2019. Mr Whitford agreed that this tended to suggest that there were economic differences between the periods such that something was either boosting incomes in the relevant period in 2017-18 or depressing income in the equivalent period in 2018-19. Mr Whitford acknowledged that this "highlights one of the inherent difficulties with determining what future income is of an alteration to a sign" (Transcript 10 May 2022, page 222, line 44 to page 223, line 15). He agreed that this was why he expressed his opinion that no generic digitisation multiple could be applied across signs, and why he only expressed a general industry multiple when "pressed for a number" in the joint expert report. 3. Mr Whitford was also cross-examined regarding his digitisation multiple as derived on a "precinct basis" (Transcript 10 May 2022, page 224, line 6 to page 228, line 25). He clarified that the 4-6x digitisation multiple would be achieved where an "optimal level" of digitisation was attained at the 18 signs on the Qantas Drive site. When questioned as to whether that digitisation multiple would remain the same if only one or two signs were digitised on the site, Mr Whitford initially appeared to suggest that this was a possibility (Transcript 10 May 2022, page 224, lines 27 to 36): HUTLEY: Sorry? If two had been digitised, what would be the multiple on a precinct basis? WITNESS WHITFORD: Well, counter to logic, it may be a very similar number. HUTLEY: If one was digitised, would your answer be the same? WITNESS WHITFORD:Potentially, depending on how that digital sign performed. 1. When further pressed on this question, Mr Whitford provided the following response (Transcript 10 March 2022, page 225, lines 21 to 46): HUTLEY: I'm asking you to assume two signs were digitised. Is it your view that the owner of the signs could in respect of this precinct on Qantas Drive with 18 signs in those circumstances anticipate an uplift in revenue of four to six times? WITNESS WHITFORD: No, it would be illogical for two signs - the actual number of signs to determine - must determine in some way the future uplift of the signs. But that not the question I'm answering or putting forward in that opinion. I'm putting forward-- HUTLEY: I just don't understand it. You say with how many signs will you get a four to six uplift on a precinct basis? WITNESS WHITFORD: At optimal level of digitisation on the precinct. HUTLEY: What in your view was an optimal level of precinct digitisation? Of digitisation on the precinct. WITNESS WHITFORD: That will depend on the period of time. HUTLEY: Sorry. Do you have a view of what was the optimal digitisation of the precinct? WITNESS WHITFORD: The optimal digitisation of the precinct would be to digitise all of them over the length of the lease that's left. That would be the optimization. 1. Some further cross-examination occurred seeking to clarify how Mr Whitford reached his conclusion as to the digitisation multiple on a precinct basis, including his view as to what "optimal digitisation" meant (Transcript 10 May 2022, page 227, line 30 to page 228, line 3): HUTLEY: Did you form a view as to what was the optimal digitisation of this lease? Of these signs? WITNESS WHITFORD: My view over the long term that all should be digitised in the future. My view initially is somewhere between four and six based on the advice that was provided. HUTLEY: When you say, "initially", what period were you considering that digitisation would take over? WITNESS WHITFORD: At the time of acquisition. HUTLEY: So four to six digitisations by that time or shortly thereafter? WITNESS WHITFORD: I don't think I spent too much time thinking about what time it was, whether it was on the acquisition date or before or after. I can't imagine practically how you can roll out four in one go but if they can, fantastic. All six in one go. They do take time each one, so I imagine there'd be a staggered start for all of them. HUTLEY: Were you assuming that the digitisation of these four to six would straddle the acquisition date? Some before, some after? WITNESS WHITFORD: I didn't really have an opinion on that. 1. Later in cross-examination, Mr Whitford conceded that there was no support to be found in the literature for the precinct basis of determining digitisation multiples as opposed to the individual sign basis (Transcript 10 May 2022, page 230, lines 28 to 46). Mr Whitford gave evidence, however, that he had previously bought a precinct and applied a "reasonably simplified version" of the precinct analysis to determine digitisation multiples (Transcript 10 May 2022, page 230, line 48 to page 231, line 10). 2. It is also unnecessary to consider and resolve whether or not matters of cannibalisation (as addressed by Mr Herring in his evidence) ‑ if there were more than two signs to be taken as digitised ‑ as I have decided that no more than two would have been digitised (if this hypothetical position required consideration). 3. Finally, when questioned on whether the Joyce Drive and Qantas Drive sites were comparable for the purposes of translating a digitisation multiple between them, Mr Whitford opined (Transcript 10 May 2022, page 231, lines 39 to 46): WITNESS WHITFORD: This goes back to a question of multiples. What is the base and what is the end result? Qantas Drive and Joyce Drive are substantially different propositions. Does it really matter, because the multiple is at the base income, to some extent and it goes up. So, if Qantas Drive if Joyce Drive was doing well, as a static and was digitised, it may also do well, but the multiple shouldn't change too much. In my experience, there is not a broad range of multiple changes across the location of the asset because it comes back to where it starts from. HUTLEY: That's why it's very important that you identify accurately appropriate base to assess your multiple; correct? WITNESS WHITFORD: Correct. That's a broad base, yes.

TfNSW's evidence 1. Mr Herring opined that the applicable digitisation multiple was 3-4x for the life of the lease (Transcript 10 May 2022, page 210, lines 46 to 48). Put generally, his evidence was that by 2019, digitised billboards could no longer provide revenue uplifts as high as when they were initially introduced since competition and supply had increased relative to demand, resulting in lower returns. 2. Mr Herring gave evidence that the initial conversion of static billboards into digital billboards began in the Australian market around 2013, with locations capable of generating the highest revenues targeted first. According to Mr Herring, this was a period of low supply and as such "it was not uncommon to see initial conversion revenue multiples of 5 ‑ 8 times, mainly for high profile stand-alone landmark billboard locations and initially 3 ‑ 5 times for lower quality signs" (Exhibit C at Tab C2, folio 629, paragraph 76). 3. However, he suggested that "[a]s digital billboard scale and supply increased over the years, multiples became more modest, such that by 2020 the multiple achieved would on average be between 3 and 4 times" (Exhibit C at Tab C2, folio 629, paragraph 78). In the joint expert report, Mr Herring elaborated, saying "[f]rom 2014 to 2019 all Outdoor Businesses invested considerably in Digital conversions increasing supply to a point where demand more closely equated to supply" and suggesting there was "a considerable slowdown in demand in 2019" (Exhibit C at Tab C3, folio 782). In support of his opinion about slowing demand relative to supply, Mr Herring referred to revenue data reported by Outdoor Media Association (OMA) from 2018-2020, as well as industry digital revenue data covering 2017-2020 sourced from Annexure C to Mr Dery's affidavit (itself sourced from OMA's website) (Exhibit C at Tab C2, folio 629, paragraph 79 to folio 630, paragraph 80). 4. Mr Herring's evidence was that digital conversions tended initially to experience higher returns because they are promoted to the market and to sales teams and thus benefit from increased attention and revenue. (Exhibit C at Tab C2, folio 630, paragraph 81). However, Mr Herring noted that "[c]ompetitive market dynamics will prevail to normalise returns over the mid and long term" (Exhibit C at Tab C3, folio 783). He estimated that around 2019-20, returns would have normalised within three to six months of digital conversion (Transcript 10 May 2022, page 213, line 16), although on this last point, Mr Hemmings in cross-examination pointed out that a 12.4x uplift was recorded for an 8 month period from August 2019 to March 2020 at the Joyce Drive V-Signs, halted only by COVID 19, a proposition that Mr Herring said did not change his general estimate of three to six months for normalisation due to variability between signs (Transcript 10 May 2022, page 213, line 24 to page 215, line 37). 5. It is worth noting that in cross-examination, Mr Herring acknowledged that, apart from the OMA public information, these opinions were based on his personal experience. However, given his retirement in 2017, he also accepted that none of this experience related to signs installed in 2019, 2020 or beyond (Transcript 10 May 2022, page 218, line 3 to page 219, line 11). 6. Mr Herring also gave other evidence as to the way in which digitisation multiples might vary with time. He identified the following variables which might affect the assessment of future digital multiples (Exhibit C at Tab C2, folios 630 to 631, paragraph 84): a. Life cycle ‑ the average multiple over the life of the product given changing competitive supply and demand. b. Comparison point ‑ Billboards are predominantly inconsistently sold to multiple Advertisers over a year. Annual and monthly revenues on individual billboards can vary significantly due to higher or lower Advertiser bookings and the comparison point should reflect average revenues over a number of years to improve accuracy. An isolated example of this can be seen in 'Q2(b)&(d) Gross revenue by month'. c. Equivalent sign history of previously converted signs to digital. This can be achieved by identifying recent digital conversions with similar quality, size and location. 1. Furthermore, Mr Herring disagreed with Mr Whitford's "precinct" analysis for determining the digitisation multiple (Transcript 10 May 2022, page 232, lines 3 to 14): WITNESS HERRING: I probably don't really understand it and my view is that this is about individual signs and that - the multiple applied to those individual signs and the impact on the potential digitisation of all of the signs going forward is not what I would have taken into account. 1. Again, in response to this opinion, Mr Herring was cross-examined by Mr Hemmings on whether he had ever been involved in the acquisition of a precinct of signs (e.g., 18 signs), to which he replied he could not recall (Transcript 10 May 2022, page 232, line 22 to page 233, line 3).

The Whitford/Herring joint report 1. In their joint report, it is worth noting that the outdoor advertising experts agreed that during the initial phase of introducing digital billboards into the Australian market around 2014: "Due to regulatory constraints, the supply growth was limited and slow. Initially demand exceeded the supply and the multiples derived were often 5-8x, sometimes exceeding this" (Exhibit C at Tab C3, folio 780).

The Company's submissions 1. The Company's written closing submissions addressed this topic as follows: 95. One thing to be noted from Mr Herring's evidence is that the digitised static sign will always produce more revenue – a multiple – than a static sign. That is for the life of the digital sign. 96. Mr Herring has expressed the opinion that the multiple would be 3-4 x for 4 - 6 signs. In the Applicant's submission, that is a significant underestimate of the multiple. 97. Firstly, it is to be noted that Mr Herring and Mr Whitford agree that the 3-4 x multiple is an industry average. That is, it is the average multiple that you might expect from the digitisation of a static sign at any location. 98. In those circumstances, the 3-4 x multiple may be seen as a "floor". There can be little doubt, it is submitted, that the potential revenue to be generated from the highly valued Qantas Drive sites would be greater than the industry average. 99. The Court's conclusion on digitisation is informed, in the Applicant's submission, by two things. The first is the expert evidence and the second is the actual experience of the Joyce Drive signs. 100. Dealing with the expert evidence first. To the extent there is a disagreement between Mr Herring and Mr Whitford, in the Applicant's submission the Court would prefer the evidence of Mr Whitford. As already submitted, Mr Herring retired in 2017 and has been out of the industry since then. Although on occasion in his evidence he appeared to be suggesting that he was still involved in the industry in some way, he ultimately accepted, in cross examination, that he was not still giving any relevant advice. In answer to some questions from Mr Hutley, it appeared that he may have been giving advice in relation to Covid impacts. As it transpired he was giving no such advice. 101. Further, to the extent the experts agree that the market would use the DCF to value the leasehold interest, not only has Mr Herring been out of the business for some years he conceded that he had never advised on the purchase of a "precinct of signs" nor had he ever advised on the purchase of a group of co-located signs. 102. That is to be contrasted with the expertise of Mr Whitford. He is still actively involved in the industry. He was actively involved in the industry around the acquisition date. He participates in the market place in relation to the acquisition of leasehold and licence interests for land to be used for signs66 and has experience buying a precinct of signs. 103. Having regard to Mr Whitford's experience, and evidence, then the Court would find a hypothetical purchaser could reasonably expect to achieve a multiple of 4 x the 2019 generated revenue across all sites which is an implied digital multiple of 8x when applied to the 6 signs that would have been digitised prior to acquisition. 104. Next, turning to the documents that support a digitisation multiple. 105. In the Applicant's submission, the best evidence to demonstrate that the digitisation multiple in the very valuable airport precinct is greater than the floor 3-4 multiple, are the actual results from the digitised Joyce Drive signs. 106. The experts agree that there was an impact on revenue from the advertising signs (both static and digital) from Covid. As a result, and in order to attempt to remove the impacts from Covid, a comparison was done for the eight months of digitised revenue from JDVI and JDVO. 107. A comparison for that eight months of revenue to the equivalent eight months from the previous calendar year (in an attempt to ensure that the revenue reflects any potential cyclical changes in revenue) shows a multiple of 12.4x. 108. That 12.4x multiple, derived from actual revenue of the digitisation of a static sign in the airport precinct, is the best evidence of the multiple. 109. According to Mr Herring the Joyce Drive sites were superior. Mr Whitford71 agrees that Qantas Drive and Joyce Drive are substantially different propositions but says that the multiple should not change too much as there is not a broad range of multiple changes across the location of the asset because it comes back to where it starts from. 110. To the extent Mr Herring differentiates between the Joyce Drive sites and the Qantas Drive sites, that evidence is unpersuasive. 111. One of the reasons apparently raised by Mr Herring as to why the JDVI and JDVO signs would be better than the Qantas Drive signs was because they were the first signs to be digitised in the precinct and were marketed 'quite heavily'. 112. Of course, when regard is had to the unchallenged evidence of Ms Young at paragraph [49], Qantas Drive signs "would have been developed at the same time as (if not prior to) JDV-I and JDV-O, being July 2019". 113. As a result, but for the proposal to carry out the public purpose, at least two of the Qantas Drive signs would have had the same benefit – resulting in the 12.4 uplift – that Mr Herring applies to the JDVI and JDVO signs. 114. Mr Herring was critical of the comparison to the previous year's eight months. That criticism is misplaced as the most appropriate comparison is to the previous year's eight months. 115. Nevertheless, he does do a comparison to two other time periods which show multiples of: (a) 7.3x comparing the average monthly revenue of January– December 2017 against the average monthly revenue from August to March 2020; and (b) 6.26 x comparing the average monthly revenue of July 2017 to June 2018 against the average monthly revenue from August to March 202074. 116. Two things are to be said about those multiples. Firstly, if the Court is to prefer those multiples, plainly they are evidence for a multiple significantly higher than the floor 4x multiple. 117. Secondly, it is an approach which might require a further amendment to the spreadsheet agreed by Mr Halligan and Dr Ferrier. That is because if the multiple changes because it is derived by reference to a different revenue period, then of course the multiple needs to be applied against that different revenue period. Otherwise, there is no longer a comparison of apples with apples. 118. In the circumstances of the projected revenue for the DCF, , that may require a use of the lower (blended) multiple over a blended revenue stream. 1. In his closing oral submissions, Mr Hemmings submitted that the three to four average multiple was to be regarded as a floor, saying (Transcript 16 May 2022, page 339, lines 10 to 13): … a floor, it is the lowest number that the Court could comfortably conclude would be a digitisation model, and that's because it's the number that is derived, agreed, by Mr Herring and Mr Whitford, to apply to any sign, in any location … 1. He submitted that merely adopting the floor multiple would significantly underestimate the appropriate value demonstrated for the hypothetically digitised Qantas Drive signs. He submitted that there were two reasons why I should reach that conclusion. The first was founded on the expert evidence ‑ his submission being that I should prefer that of Mr Whitford over Mr Herring with the second being what was to be taken from the actual revenue derived from the digitised signs on Joyce Drive over the relevant comparable period. 2. With respect to the first proposition, Mr Hemmings criticised Mr Herring's evidence because of what Mr Hemmings submitted was Mr Herring's limited experience with such signs and the fact that Mr Herring had not ever been involved in transactions involving a group of co-located signs as was here the position with respect to the acquired signs. 3. Mr Hemmings drew attention to the fact that Mr Whitford, although accepting a multiple of three to four might be an industry average, a different position arose because of the special position and location of the hypothetically digitised signs on Qantas Drive, noting that Mr Whitford had said that, as a consequence of this, a higher multiple (of eight times) would be appropriate. Mr Hemmings then do attention to the matters set out in paragraphs 106 to 111 of the earlier set out written closing submissions for the company as to how the actual revenue demonstrated from the digitised signs in Joyce Drive should be applied to analysing what should be applied to the hypothetically digitised signs in Qantas Drive ‑ this justifying a derived multiple for such hypothetically digitised Qantas Drive signs of 12.4. 4. I then had an exchange with Mr Hemmings concerning the basis upon which I might validly compare the Joyce Drive signs dimensional and other attributes with those of the Qantas Drive signs. It is not, for present purposes, necessary to set out details of that exchange. 5. Mr Hemmings next addressed the proposition that I would accept Ms Young's evidence that two of the Qantas Drive signs would have been developed at the same time as (if not earlier than) digitisation of the inbound and outbound signs on Joyce Drive. 6. Mr Hemmings next turned to Mr Herring's criticisms of multiples derived from revenue comparisons in a series of differing analyses of time periods for revenue of the two Joyce Drive signs. The detail of these criticisms was set out earlier in the Company's written submissions at paragraphs 113 to 115 although Mr Hemmings also addressed these elements in his oral submissions (Transcript 16 May 2022, page 342 lines 12 to 36). He proposed that what was set out in the noted paragraphs of the Company's written closing submissions demonstrated the flaw in Mr Herring's various attempts to provide justification for his adoption of a three times to four times multiple range.

TfNSW's submissions 1. The written closing submissions on behalf of TfNSW concerning this point were set out at paragraphs 133 to 147. It is appropriate to reproduce these in full: Issue 7 ‑ Digitisation Multiple effect on revenue 133. There is a dispute as to the digitisation multiple that could be achieved through digitising up to 6 of the Acquired Signs, and if so, how that multiple should be applied to the DCF calculation. 134. It is not entirely clear precisely what the Applicant claims. 135. One possibility seems to be that it contends a digitisation multiple of 12.4x should be applied to the income of individual static signs to derive their potential income as digital signs. 136. The only evidence to support this proposition is based on the multiple achieved, for an 8 month period, from signs JDV-O and JDV-1 located on Joyce Drive.99 The comparison was made of the income post digitisation (August 2019 ‑ March 2020) with the period August 2018 ‑ March 2019. 137. To rely on this would be unsafe for a number of reasons. 138. First, there is no evidence at all that the experience at these signs would have been replicated with any digitisation of any of the Acquired Signs. Mr Herring, the Respondent's Advertising Expert, is of the view that the signs are not comparable, and it would be otherwise unsafe to apply that multiple for the additional reasons that he described in oral evidence.100 Whitford agreed in that context that "Qantas Drive and Joyce Drive are substantially different propositions". 139. Second, use of an 8-month comparison period is unreliable as: (a) it is very short where Mr Whitford agreed there should be a broad base of income to which any multiple should be applied, and (b) it shows uncharacteristically low income for that particular 8 month period compared to, for example, the 8 month period in the year before.102 As Mr Whitford agreed there appeared to be some factor depressing income for that period (or increasing the income for the previous year).103 140. Third, Mr Herring is of the opinion that a realistic multiple borne out by actual multiples in the market is between 3x and 4x per sign and the 12.4x is wildly outside that range. 141. Fourth, it is inconsistent with the Applicant's own business planning material assumes a multiple of 3x. 142. Fifth, and this applies to any multiple, it would be unsound to apply it to the entirety of the income to 2040, or even 2030. There is an initial significant multiple once a sign is digitised which reduces after that initial period of only 3-6 months. 143. A second possibility is that the Applicant may claim, based on Mr Whitford's evidence two further alternate bases for the digitisation multiple: (a) on a precinct basis: in his individual report he advised this was between 4 and 6x, which was revised in joint conferencing to between 3 and 4x; and (b) on an individual sign basis: between 6 and 8x. 144. The precinct approach specifically is inconsistent with all the other evidence, including the Applicant's own digitisation plans, which is all to the effect that the digitisation multiple relates only to the individual sign that is converted to digital format. 145. The precinct approach should be rejected as unsound because: (a) the meaning of "precinct" is unclear; (b) it is inconsistent with the way the Applicant's own lay affidavit evidence and business case documents apply the digitisation multiple; (c) it results in the anomalous result that the number of signs digitised in the precinct does not impact revenue; and (d) it ignores the fact that it is probable that a condition of approval on any development consent to digitise certain of the Acquired Signs could require the removal of a number of static signs. 146. The Court should accept Mr Herring's suggested multiple of 3 to 4x (on an individual sign basis) as the multiple the market would have applied to any digitised sign only amongst the Acquired Signs at the Date of Acquisition because: (a) there is no reasoned basis for Mr Whitford's 6 to 8x multiple per individual sign at all; (b) all of the factual evidence supports a digitisation multiple of 3 to 4x (on an individual basis) and not the higher multiples contended for by the Applicant, including the Applicant's own business case documents. 147. Mr Whitford's evidence on the multiple, and indeed the uplift generally, will not relevantly assist the Court for reasons including: (a) His preferred position was that no generic multiple could be applied to static signs to estimate the uplift when they were digitised. He only expressed any view on any multiple because he was "pressed". (b) His multiple of 3-4x on a precinct basis was clearly only for an initial period following digitisation and he said that after that period it would be then "forecast out from there on some form of cashflow analysis that you would do ". This does not assist the Court which is required to estimate the cashflows for the long term now. (c) His estimates were all based on the "optimal" number of signs being digitised but he had no real idea what this number was. At some stages of his evidence, he said this could be between 4 and 6, but shortly after this he suggested that the optimal number would be all the signs over the term of the lease. This evidence does not assist the Court as none of the other witnesses addressed this possibility, and especially no account has been taken of the large capital cost of digitising all 18 signs. (d) In the end all the Court can take from Mr Whitford is that there would be some uplift in gross revenue from digitisation, but his evidence is of no assistance in actually quantifying this. 1. In his closing oral submissions, Mr Hutley commenced by responding to Mr Hemmings criticism of Mr Herring's evidence that Mr Herring's, evidence was not reliable because he had retired from the industry several years prior to his giving evidence. Mr Hutley submitted that there was no evidence that the relevant market had changed significantly over the period since Mr Herring had been actively involved in it ‑ pointing to the fact that the digital outdoor advertising market had commenced some 10 or more years earlier rather than "being in its infancy" as Mr Hemmings had proposed. Mr Hutley pointed to the fact that Mr Herring had had significant managerial status in this aspect of the market during the period of his career as a senior manager with one of the central competitors to the Parent Company (Transcript 17 May 2022, page 383 lines 12 to 27). 2. Mr Hutley next turned to address the matters set out in paragraphs 143 to 147 of TfNSW's written closing submissions as providing a basis upon which I should reject the aspects of Mr Whitford's evidence addressed in those paragraphs. It is unnecessary to repeat what he said in this regard. 3. Mr Hutley next submitted that that Mr Herring's opinion that the multiple would be in the range of 3 to 4 times as a consequence of digitisation of signs on Qantas Drive was consistent with the internal analysis of the Company ‑ an analysis reflected in the presentation by Ms Young to senior management of the Company (analysis noted in the written closing submissions as being set out in paragraph 25 of Ms Young's affidavit). He described what should be taken from that element of Ms Young's affidavit as being (Transcript 17 May 2022, page 384, lines 16 to 25): Therefore, one which one could anticipate was a considered view of the realistic returns from such signage. In other words, no hindsight bias. Ooh! Media was planning for its signs on multiples consistent with Mr Herring, on a per sign basis. That is extremely powerful evidence as to what a real player in the marketplace would think about these signs at the time. True it is, that was at a planning stage, which was 2015, 2016, but there was no evidence suggesting that that multiple was likely to have changed up to what we're making the assumed conversion dates at 2018, 2019, 2020. But your Honour, it's a pretty powerful piece of evidence, in our respectful submission, confirmatory of the opinion of Mr Herring. 1. Mr Hutley next turned to criticise the Company's reliance on a 12.4 earnings multiple derived from analysis of the operation of digitised signs in Joyce Drive. He noted that Mr Whitford had expressed the view that those locations were superior to those of the signs at the acquired site. He also referenced Mr Whitford's evidence as to the unreliability of drawing conclusions derived from short operating periods of such signs. 2. He submitted that the evidence of Mr Herring concerning changes in the Joyce Drive earnings in various periods between 2017 and 2019 (on both the inwards and outwards facing signs on Joyce Drive) had demonstrated significant drops in earnings in the August to March period in various of those years. This, when coupled with differences between the Joyce Drive locations and those of the signs on Qantas Drive (the former being superior to those of the latter) led to the conclusion, Mr Hutley proposed, that it was not appropriate to accept such a multiple as being applicable to the Qantas Drive signs. For these reasons, he proposed that I should accept Mr Herring's evidence that a 3 to 4 times multiple was correct.

Consideration 1. To begin, it is appropriate first to address the question of the weight to be attributed to Mr Herring's evidence regarding the digitisation multiple, given his retirement in 2017. Whilst it is true that Mr Herring has not had personal experience in the digital signage market since that year, I have concluded that I should accept TfNSW's submission that Mr Herring's evidence is still capable of being accepted on the basis that there is no evidence before me that the market or the revenue behaviour of digitised signs has changed significantly in the approximately two or three years after 2017. 2. I reject Mr Whitford's 'precinct basis' as an appropriate foundation for determining what is the appropriate digitisation multiple. I do this because I am satisfied that I should accept TfNSW's submissions that: 1. "precinct" is a poorly defined and unclear concept in this context ‑ one not convincing explained by Mr Whitford; 2. Mr Whitford's approach is inconsistent with the application of the digitisation multiple in the Company's lay affidavit evidence and business case documents; and 3. results in the counter-intuitive conclusion that digitisation multiple is the same regardless of the number of signs digitised. 1. Dealing now with what Mr Whitford characterises as the "standalone basis", I am not prepared to accept a 6-8x digitisation multiple solely on the basis of Mr Whitford's evidence. Nothing further was provided in his evidence substantiating these figures, nor, as TfNSW submitted, was there any reasoned basis given for these figures beyond the fact that they were simply derived from his opinion based on prior "general experience". 2. In my view, Mr Herring's evidence provided a better substantiated assessment of the appropriate digitisation multiple to be applied, with a clearer consideration of the effects of supply and demand for digital billboards over time (including the tapering off of any digital multiple as more digitised signs became available in the marketplace), and, particularly, how the digitisation multiple may evolve over the entire life of the digital sign. 3. However, Mr Herring's suggested digitisation multiple of 3-4x was an estimate on the basis of four or six of the Acquired Signs being digitised (Exhibit C at Tab C2, folio 632, paragraphs 90 to 91). I have earlier found that only two of the Acquired Signs would have been digitised (if the Company's approach was found to be applicable). Where Mr Herring also gave evidence that converting 4-6 signs would have dampened revenue expectations due to increased supply (Exhibit C at Tab C2, folio 632, paragraph 89), the 3-4x multiple should be adjusted upwards where only two signs are digitised. 4. As noted by TfNSW in its closing submissions at (141) on this topic, the position concerning the multiplier increase that would accrue to the Company as a consequence of digitising the two signs on Qantas Drive that were identified for this purpose in the Company's own material. Ms Young said, in (28) of her affidavit – referencing her presentation to the management team of the Company in support of her Sydney Externals Plan 3, that the various proposed digitisations would give rise to a digital multiple of 3.3x. 5. Although I have accepted that the digitisation multiple should be, as TfNSW proposed, within the range of three to four times, I have no basis upon which I could strike a point within that range with precision. As a consequence, I am satisfied that this point is to be resolved in favour of the Company - it being the holder of the interest which has been compulsorily acquired. Therefore, the digitisation multiple (if it is to be applied) is to be at the rate of four times. 6. I am therefore satisfied that 4x, being the higher end of Mr Herring's suggested range of 3-4x, is the appropriate digitisation multiple which would have reasonably been expected by a hypothetical purchaser to be achieved (having regard to the smaller number of signs I have determined should be assumed).

The base revenue to apply the digitisation multiple 1. The competing position between the parties as to what should be the base revenue to which to apply the digitisation multiple is simple. As set out in the decision matrix in the preamble to this judgement, the Company contends that it should be based on the 2020 revenue for the signs as extrapolated for a full year by Mr Halligan. The position advanced for TfNSW was that the appropriate approach was to take the 2019 actual revenue for such signs as are to be assumed to be digitised (on the assumption that there are such signs) and applying the digital multiple earlier determined to that actual 2019 revenue for those signs (adjusting for a non-Covid initial decline in revenue in 2020). The proposed steps advanced for TfNSW were set out in (114) of its written closing submissions in the following terms (internal cross-referencing and footnotes omitted): 114. Deriving the correct base revenue for the Applicant's notional digitisation involves the following steps: a) take the CY2019 static revenue of the Acquired Signs; b) determine which of the Acquired Signs the Applicant would have digitised by 1 January 2020; c) apply the digital multiple to the 2019 static revenue for those signs only; and d) adjust the revenue for the impact of COVID differentially for static and digital signs. 1. At (111) of those submissions, TfNSW submitted that the hypothetical operative date for digitisation (if that was to be accounted for counterfactually) would have occurred by 1 January 2020. As a consequence, the revenue to which any digitisation multiple is to be applied must be revenue derived by the relevant signs prior to that date. 2. Annexure C.3 to Mr Herring's statement of evidence set out the 2019 revenue for the two signs which I have held would have been those digitised - should such digitisation be assumed, contrary to my earlier finding (QDW1-I and QDW8-O). The 2019 revenue for the first of those signs was $182,401.77 whilst that for the second of those signs was $42,646.48. It is to those revenues that the digitisation multiple of 4X is to be applied in Ms Lau's spreadsheet (adjusting for any non-Covid initial decline in revenue in the early months of 2020 – said to be 9.5%) if I am wrong in my primary conclusion that there should be no accounting for such digitisation.

The applicable operating expenditure

Fixed or variable operating expenditure

Introduction 1. As can be seen from the list of topics requiring determination set out at the commencement of this judgement, item 6(c)(i) recorded that there is a dispute between the parties as to what would be the fixed direct operating expenditure for each of the static signs on Qantas Drive (there being agreement as to the fixed costs for any of those signs which were hypothetically to be treated as digitised by the date of acquisition). The item also noted that there was agreement that the fixed operating costs for digital signs would be $41,000. 2. The position advanced for the Company is that the fixed operating cost for each of the static signs would be $6,750 whilst TfNSW's position is that it would be a little under double that, being $13,000 per sign.

The evidence

The relevant lay evidence 1. Ms Young's affidavit included, at Annexures C and D, documents concerning Sydney Externals Plan 3 and a presentation made to the Company's executive leadership team concerning this plan. 2. Annexure C was a spreadsheet setting out, amongst other things, the capital expenditure costs required for digitisation of six signs nominated in that spreadsheet (including two signs from amongst the acquired signs on Qantas Drive (QDW8O and QDW1I). Critically, for present purposes, her affidavit said, in the first sentence of (28): 28. The Sydney external's presentation [Annexure D] includes business case numbers which show a projected incremental revenue of $4.3 million for the digital upgrades, which represented a blended x3.3 digital multiple across six sites. 1. This presentation at that digital multiple, was accepted by the executive leadership team - leading to a decision to commit a budget amount of $300,000 to commence the planning processes for implementation of Sydney Externals Plan 3. 2. Ms Lau's affidavit described, at (14), the contents of Annexure B to her affidavit in the following terms: 14. An Excel spreadsheet containing the cost of sales extracted from oOh!media's general ledger system is annexed hereto and marked "B". … 1. The figures set out in (34) and (35) of the forensic accounting joint expert report later reproduced by Mr Halligan are extracted from pages 13 and 14 of the comprehensive spreadsheets in Annexure B to Ms Lau's affidavit (Exhibit A, folios 224 and 25).

The advertising expert evidence 1. As can be seen from the summary position set out in the preamble of issues requiring determination, the parties have agreed that the fixed operating costs for each hypothetical digital sign would be $41,000 per sign per annum. It is, therefore, necessary only to determine the fixed operating cost for each of the static signs. 2. Mr Whitford did not address this issue in his expert report. Neither he or Mr Herring touched on this topic in either their joint expert report or their supplementary expert report. 3. I now turn to Mr Herring's evidence on this topic. Mr Herring addressed operating costs in (108) of his statement of evidence – doing so concerning both static and digital sign costs. Is only necessary to set out what he wrote concerning annual direct operating costs of static signs. This was set out in (108)(a) in the following terms: Operating costs 108. In my experience: a) The repair and maintenance costs (R & M) for a static sign is an average of $3,000 pa with electricity at an average of $2,500 pa. Installation costs are an average of $4,000 and council rates and land tax an average of $3,500. Total annual costs per static sign are therefore estimated at $13,000. 1. Mr Hemmings questioned Mr Herring at some length on this topic (Transcript 10 May 2022, page 198, line 12 to page 203, line 44). It is unnecessary to set out all of the relevant portions of the transcript. 2. Mr Hemmings commenced his questioning by asking Mr Herring about his experience – his evidence being derived from that as can be seen from the chapeau to (108) of Mr Herring's, written evidence. Mr Hemmings next questioned Mr Herring to obtain responses confirming that: * each of the factors that he had identified and to which he had ascribed a value in (108) were average amounts (based on NSW-wide estimates); * depending on the circumstances relating to the location of any individual sign, his estimates were likely to vary; * matters relating to repairs and maintenance would also potentially vary depending on the size of sign and the materials with which it was constructed; and * cost of installation of the artwork on any sign also potentially varied from sign to sign depending on its size. 1. Mr Hemmings rolled up these matters as can be seen in the following exchange (Transcript 10 May 2022, page 202, lines 18 to 32): HEMMINGS: Looking at these numbers it's easy to pick up a variety of potential differences which could make significant differences, I want to suggest to you, to the estimates that you have used? WITNESS HERRING: Again, I think from some of those examples of different inputs, there are an average. So I have taken those things into account. They would have been taken into account in a general sense. HEMMINGS: So do you agree with me that depending upon the particular signs and the particular location the average estimates that you have come up with could be significantly different? WITNESS HERRING: Significantly? They would be different. I think significantly may be too harsh a word. But yes, certainly different, and that's why they're an average and they're an estimate. I've indicated that. 1. Mr Hemmings then turned to question Mr Herring concerning Mr Halligan's analysis – an analysis based on four years of actual operating costs relating to the acquired signs in Qantas Drive, Mr Hemmings initial questioning on this element of this topic merely led to Mr Herring confirming that the numbers he set out in (108)(a) arrived at an average total based on his estimates. Mr Hemmings concluded his questioning of Mr Herring on this topic with the following questions and answers (Transcript 10 May 2022, page 203, lines 24 to 44): HEMMINGS: Would you accept that it would be preferable if one was trying to work out what the operating costs were and you had access to historical data for the 18 signs, it would be preferable to apply the actual data rather than your averaging exercise that you'd carried out in para 108? WITNESS HERRING: I think that it is clearly preferable. I would also only use it as indication. These - some of these - in fact, probably - you know, certainly, the R and M, I would describe as being lumpy. It depends on what repairs and maintenance are required at any point in time and they can vary significantly from, I'll call it zero from some years up to, you know, a sizable number, if a lot of repairs and maintenance are required. Electricity prices move as well. So, yeah, I think that they are very lumpy. So, using the four-year average, if that's what it is, would be the indicator. HEMMINGS: Without repeating the questions if relation to paragraph 108B, which is the digital signs, the same matters apply, do they? These are estimates that you have - these are average estimates that you've done the best you can to try and derive by reference to your historical connection with the industry? WITNESS HERRING: Correct. 1. Mr Hutley cross-examined Mr Whitford at some length, with only a limited element of his questions addressing this topic. This cross-examination was comparatively concise and is appropriate to be set out in full (Transcript 10 May 2022, page 206, line 28 to page 208, line 13): HUTLEY: A knowing purchaser who was coming to purchase signs who was informed of that position, would they not, would be most sceptical about having regard to the preceding four years, experience about the costs of maintenance and operation of those signs as a basis for estimating what the likely future maintenance costs of those signs were over the remaining life of the signs; that's correct, isn't it? WITNESS WHITFORD: That's correct. HUTLEY: In other words, you would consider that a well-informed purchaser would ignore the preceding four years' experience and seek to apply what might be called informed industry average as to the likely operating costs, would he, she or it? WITNESS WHITFORD: I believed an informed purchaser would view the assets and make their own assessment as to future costs may be on those sites and probably wouldn't have access to the historical data, but if they did have access to the historical data, they would use that as a benchmark and put a factor of what they feel going forward would be relevant on those sites, depending on their plan for those sites. HUTLEY: You are setting aside in that analysis, Mr Whitford, aren't you, that that informed purchaser knows that the vendor is expecting hefty increased costs because of the, in effect, aging state of the plant; correct? WITNESS WHITFORD: Assuming that the - sorry, could you ask the question again? HUTLEY: The purchaser is told by the vendor that the plant is facing hefty increased expenditure because of its age? WITNESS WHITFORD: I'm assuming that they do know that-- HUTLEY: Yes. Yes. WITNESS WHITFORD: --I assume, then, the vendor would take into account that and still view the structures and make their assessment going forward. HUTLEY: But they'd set aside the past four years' maintenance experience and operating experience, wouldn't they, in making that assessment? WITNESS WHITFORD: I think they would look at what has been done and make an assessment from there. HUTLEY: They would also, I want to suggest to you, have regard to what might be called informed, an informed view as to the average costs that external signs are exposed to; that's correct, isn't it? WITNESS WHITFORD: Yes, correct. In answer to that question, though, it depends what type of maintenance going forward in terms of what the costs would be associated with that. If - and in our industry, many of the remedial improvements that have been needed to make to sites relates to occupational health and safety and access and installation. That becomes a moot point if it becomes a digital sign. HUTLEY: I'm not asking you about the digital signs. I'm asking you to the fixed signs. I'm asking you about what an informed purchaser would do in assessing the likely ongoing operating expenses of these signs. You understand that; correct? WITNESS WHITFORD: Yes, and in answer to that question, in my view, an informed purchaser would look at the historical costs that are available, view the structures and make an assessment of what needs to be done going forward, not make an ..(not transcribable).. assessment. HUTLEY: In other words, to take a pure average of the preceding four years would be apt to materially underestimate the likely cost; do you agree with that? WITNESS WHITFORD: Depends what's happened in the last four years. HUTLEY: It depends upon what you're anticipating to happen in the future with respect to the signs; correct? WITNESS WHITFORD: Correct. HUTLEY: What I want to suggest to you is a prudent purchaser would assume that the signs they were purchasing were likely to experience operating expenditures of an ordinary with industry averages; that's correct, isn't it? WITNESS HERRING [obviously should be WHITFORD]: No, I don't think that is correct. HUTLEY: Would you agree that a prudent purchaser would have to make an assessment as to the likely average expenditures in respect of the sign over the long term? WITNESS HERRING [obviously should be WHITFORD]: Yes, correct. 1. Mr Hutley then turned to ask Mr Herring a question, inviting him to respond to what Mr Whitford had said (Transcript 10 May 2022, page 208, lines 21 to 30): HUTLEY: Do you have a view what a prudent purchaser would do if he, she or it was aware that the signs that they were about to purchase were exposed to potentially large future operating expenses of the variety she described in the sense of how much they would attribute to operating expenditures for the purposes of determining value of the acquisition of the lese of those signs? WITNESS HERRING: If they have that knowledge which was in your question, they would certainly take that into account with regards to the purchase price they'd have to incur. It may have been over and above their normal average estimate of those costs going forward. 1. Mr Hemmings followed the immediately above exchange by asking Mr Herring some further questions (Transcript 10 May 2022, page 208, line 36 to page 209, line 26): HEMMINGS: Mr Herring, for the purpose of that answer to Mr Hutley's question, what had you assumed about the signs as at the acquisition date? Were you assuming that they were also static? Were you assuming that they were some static and some digital and so if they were digital works had been done to obviously convert them from static to digital. What assumption do you make? WITNESS HERRING: Was this in regards to the operating costs, Mr Hemmings? HEMMINGS: Yes. WITNESS HERRING: I've identified both the static and digital costs so my assumption was that would apply to whether the sign was static or digital. HEMMINGS: But have you actually made an assumption? As I understand the question that Mr Hutley was asking you, he was trying to work out if the hypothetical purchaser is going to be accounting for what I presume are extraordinary costs for repairs and maintenance. Is that how you understood his question? WITNESS HERRING: Yes, it is, yes. HEMMINGS: Of course, if one of the signs which might have been repairs was a sign that was converted to digital you wouldn't be concerned about an extraordinary cost in relation to that sign would you? WITNESS HERRING: Just because it's been converted to digital doesn't necessarily mean that the R&M on the structure around the digital sign doesn't need some repairs and maintenance. They may have done that at the time of digital conversion but that would be a case of assessment I would think. HEMMINGS: It would be the likely occurrence, would it not, that if you were spending several hundreds up to almost $1 million to digitise some of these very large signs you would ensure that they were being digitised for the long term? WITNESS HERRING: You would think so. These signs, as you know, are constructed on excessive steel pieces of architecture. That necessarily doesn't affect the panel itself but you'd like to think that they'd do more repairs at the same time if it was convenient.

The forensic accounting expert evidence 1. Mr Halligan addressed this topic in his statement of evidence in the following terms: Other cost of goods sold ("COGS") 93. Other COGS include production and installation costs, electricity, cleaning and maintenance costs, council rates, and land tax that are necessary for the operation of the signs. Initial installation costs for static signs are fixed for each sign and is incurred at the start of each advertising campaign, but annual installation cost is dependent on the number of campaigns that appears on the sign and is tied to revenue. Initial installation costs for digital signs are also fixed, albeit at lower costs than for static signs because the installer is not required to physically attend the site. Similarly, annual installation cost for digital signs is dependent on the number of advertising campaigns and therefore is also tied to revenue. 94. Other COGS for static signs are, on average, 13.5% of revenue and for digital signs are, on average, 4% of revenue. I am instructed to assume that both a hypothetical purchaser and oOh!media Fly would have incurred COGS at these rates. The cost differs between the counterfactual and factual scenarios due to differences in the digitisation status of some Acquired Signs. For instruction 6(a) (and the alternative calculations for instruction 7), I am instructed to adopt the average cost of 5.9% of total revenue which is based on the weighted-average variable expenses for instruction 6(b). 1. Dr Ferrier's written evidence addressed this issue in 7 Direct operating costs in his statement of evidence. The relevant elements were in the following terms (footnotes and references to digital billboard costs omitted): 7. Direct operating costs 7.1 I have adopted Mr Herring's opinion that billboard direct operating costs, consisting of cleaning, repairs and maintenance, electricity, installation costs, rates and land tax are fixed in nature and would be, on average: (a) $13,000 per annum per static billboard; and (b) ... 7.2 Mr Halligan has assumed that billboard direct operating costs are variable in natureand would be: (a) 13.5% of revenue per static billboard; and (b) …. 7.3 On the basis of my experience as a chartered accountant and having regard to the specified components of the direct operating costs, it is my opinion that: (a) rates and land tax are almost certainly unrelated to revenue (i.e. are almost certainly fixed costs). I also note that in footnote 97 to his report, Mr Halligan states that "Land tax payments form a large proportion of COGS and remain constant, irrespective of whether a sign is digital or static"; (b) cleaning and repairs and maintenance expense are unlikely to be related to revenue, because such costs are normally incurred as a result of the passage of time, rather than as a result of deriving revenue (i.e. are likely to be fixed costs); (c) in relation to installation costs, Mr Halligan states in paragraph 93 of his report that "annual installation cost is dependent on the number of campaigns that appears on the sign and is tied to revenue". I concur that, if installation costs are charged directly to advertisers, then an increase in installation costs would be reflected as an increase in revenue. However, it is my understanding that installation costs on digital billboards are minimal. 1. Mr Halligan and Dr Ferrier addressed the question of direct operating costs in a more fulsome fashion in Part VI OTHER COST OF GOODS SOLD (AKA DIRECT OPERATING COSTS) of their joint expert report. It is appropriate to reproduce this in full. This extract is reproduced below (footnotes omitted): VI OTHER COST OF GOODS SOLD (AKA DIRECT OPERATING COSTS) 31 The experts state: (a) This disagreement concerns the nature of other cost of goods sold ("other COGS" aka "direct operating costs" in Ferrier's report) that are necessary for the operation of the Acquired Signs. (b) In summary: (i) Halligan is instructed to assume that the other COGS are variable; whereas (ii) Ferrier relies upon the expert opinion of Mr Herring dated 10 February 2022 (paragraph 108) that direct operating costs are fixed costs. HALLIGAN'S OPINION 32 I address this matter in HR 93 and 94. 33 I base my other COGS on the instructed assumptions that the other COGS: (a) include production and installation costs, electricity, cleaning and maintenance costs, council rates, and land tax (see Annexure B of Ms Lau's affidavit); (b) some costs such as land tax and initial installation costs are fixed, but annual installation costs are linked to revenue, i.e. variable; and (c) other COGS for static signs are, on average, 13.5% of revenue and for digital signs are, on average, 4% of revenue. 34 I note that Annexure B of Ms Lau's affidavit shows historical other COGS for the 18 Acquired Signs (being static signs) from CY2016 to August 2020. In the following table, I summarise these other COGS, including an annualised CY2020 figure CY2016 CY2017 CY2018 CY2019 8-mth Annualised CY2020 CY2020 Total COGS (Lau's Ann B) 139,103 112,242 225,713 97,307 81,720 Less: 2020-JDE pack (Ann B) 1,340 31,165 25,360 21,265 6,900 Total for 18 Acquired Signs 137,763 81,077 200,353 76,042 74,820 112,230

35 I observe from the table above that the other COGS do not appear to be fixed from year to year. However, as shown in the table below which calculates the other COGS as a percentage of revenue, I also observe that they are also not entirely variable, which is consistent with some portion being fixed and some being variable: CY2016 CY2017 CY2018 CY2019 8-mth Average CY2020 COGS for Acq Signs (above) 137,763 81,077 200,353 76,042 74,820 Total revenue (Lau's Am A) 1,390,668 1,559,958 1,580,758 967,019 Less: 2020-JDE pack (Lau's Ann A) (3,100) 53,100 43,214 - Total revenue for Acq Signs not avail. 1,393,768 1,506,858 1,537,544 967,019 COGS as % of revenue 5.8% 13.3% 4.9% 7.7% 7.9%

36 For my calculation, I am instructed to assume that the other COGS for static signs would have been 13.5% of revenue, which is significantly higher than the historical average (i.e. 7.9% of revenue). If I had adopted the lower historical average, then the present values would have been higher. My comments on Dr Ferrier's opinion 37 Dr Ferrier addresses this matter in FR 7.1 to 7.3. 38 Dr Ferrier adopts Mr Herring's opinion that other COGS are fixed in nature and would, on average, be $13,000 per annum per static sign and $41,000 per annum per digital sign (FR 7.1). Dr Ferrier also expresses the opinion that most of the types of cost making up the other COGS are fixed in nature (FR 7.3). 39 However, as I observe above, the historical other COGS of the Acquired Signs do not appear to be fixed. 40 Further, I note that if the other COGS were, as Mr Herring and Dr Ferrier say, fixed, the historical average other COGS from CY2016 to CY2020 for the 18 Acquired Signs (being all static) would be $6,750 per sign, which is only 52% of the $13,000 per annum that Dr Ferrier has adopted: CY2016 CY2017 CY2018 CY2019 8-mth Annualised CY2020 CY2020 COGS (above) 137,763 81,077 200,353 76,042 74,820 112,230 Divided by # of signs 18.0 18.0 18.0 18.0 18.0 Avg per static sign 7,654 4,504 11,131 4,225 6,235 $6,750

41 The other COGS that Dr Ferrier adopts per static sign of $13,000 is 1.9 times the historical average other COGS per static sign (assuming that the costs were fixed). I do not have any information on other COGS of digital signs because none of the Acquired Signs had been digitised. Therefore, I cannot tell if the other COGS of $41,000 per digital sign that Dr Ferrier adopts is also overstated, and, if so, by what percentage. Overall reasonableness 42 To put the other COGS amount that Dr Ferrier adopts for the static Acquired Signs in perspective, I note that in his scenario 1 where all the signs would have remained static, the other COGS for the static Acquired Signs in, say, CY2025 would have totalled about $265,000, representing 17% of the revenue before the 30% revenue reduction, or 24% of the revenue after the 30% reduction. Both of these percentages (i.e. 17% and 24%) are more than the historical other COGS percentages shown in the table (which range from the low of 4.4% to a high of 13.3%, and average 7.9%) at page 14 of this JER. 43 As for the other COGS amount that Dr Ferrier adopts for the digitised Acquired Signs in his Scenario 2 (where six Acquired Signs would have been digitised), the other COGS for these six Digitised Signs in his calculations in, say, CY2025 would have totalled about $278,300, representing 21% of revenue from these Digitised Signs before the 30% revenue reduction, or 30% of the revenue from these Digitised Signs after the 30% reduction. These percentages (21% and 30%) would have made the other COGS for the Digitised Signs very substantial. By way of comparison, on Halligan's assumptions of a 12.4x digitisation multiple and 4% variable other COGS for digital signs, the other COGS for the six Digitised Signs in CY2025 in Halligan's calculation total $194,681. 2020-JDEPACK 44 I note that Dr Ferrier refers below to figures for 2020-JDEPACK. I understand that "JD" stands for Joyce Drive and that 2020-JDEPACK is not relevant to the Acquired Signs. For example, in Table 9 in HR 88, I exclude JDE-Pack figures in calculating agency commission rates. FERRIER'S OPINION 45 Dr Ferrier agrees that an analysis of the actual direct operating costs in relation to the acquired signs suggests that those costs are neither fixed nor variable. This is unsurprising because, in practical terms, costs are rarely fixed, even where they are unrelated to revenue. For example, costs can vary due to price changes or timing. In Dr Ferrier's opinion, the most important question is whether there is a significant correlation between movements in revenue and movements in costs. 46 The following table summarises the relevant cost categories for the period: FY20 FY16 FY17 FY18 FY19 Aug $ Revenue from acquired signs 1,393,768 1,506,858 1,537,544 967,018 Production costs -8,506 0 0 0 Installation Costs – Contractors 30,490 50,870 68,160 44,875 48,599 Photography 0 95 0 0 Repairs & Maintenance, cleaning 57,009 26,474 6,635 20,345 27,616 Electricity 39,308 40,956 42,005 29,811 38,020 Other Costs 20,802 -6,153 108,913 2,276 31,460 Total Qantas drive 139,103 112,242 225,713 97,307 145,695 Less 2020-JDEPACK -1,340 -31,165 -25,360 -21,265 -6,900 Total acquired signs 137,763 81,077 200,353 76,042 138,795 Revenue – 2020 – JDEPACK -3,100 53,100 43,214 0

47 Dr Ferrier notes the following: (a) Applying the excel CORREL function to the revenue and the direct operating costs for the acquired signs results in almost zero correlation, indicating that direct operating costs are unrelated to revenue; (b) The "other costs" are negative for FY17 and very high for FY18, suggesting that the changes in costs may be brought about by timing issues, rather than changes in revenues; (c) Revenue increased in FY18 and increased again in FY19. No category of direct operating costs exhibited the same behaviour; (d) In the FY17 year, the revenue of the excluded 2020-JDEPACK was negative, but substantial direct operating costs were incurred. Although 2020-JDEPACK is not an acquired sign, this cost behaviour pattern is consistent with billboard operating costs being unrelated to revenue; (e) In the FY20 year (to August 2020) the revenue of the excluded 2020-JDEPACK was $nil, but direct operating costs were incurred. This is also consistent with billboard operating costs being unrelated to revenue; (f) In the FY18 and FY19 years, direct operating costs for the excluded 2020-JDEPACK were almost 50% of revenue. Dr Ferrier is unaware of the reason for the significant inconsistency between the cost structure of the 2020-JDEPACK and the cost structure of the acquired signs. 48 Mr Halligan's assumption that the direct operating costs of digitised signs would be 4% of revenue is an instructed assumption and is unsupported by any evidence, either historical or expert.

The submissions for the Company 1. The written closing submissions for the Company on this topic were: 131. Each of the experts - Mr Halligan and Dr Ferrier - agree that the operating costs comprise a mixture of some fixed costs and some variable costs. 132. Mr Herring's approach to costs was to deal with them on a fixed basis. Mr Whitford did not deal with costs as Mr Halligan was instructed to deal with cost of goods on a variable basis (13.5% of revenue for static signs and 4% of revenue for digital signs)77. 133. The Applicant accepts that the Court would address the direct costs on the basis that they are fixed. Turning then to the quantum of those fixed costs. 134. Plainly, the quantum was not a matter in relation to which either Dr Ferrier or Mr Halligan had an opinion. Rather, Mr Halligan had relied upon an instructed assumption. Dr Ferrier relied upon Mr Herring's estimate. That estimate is found at paragraph [108] of Mr Herring's Statement of Evidence. 135. Once again, and for the same reasons submitted above, Mr Herring's evidence in relation to these costs is unpersuasive. 136. Firstly, it purports to be based solely upon his experience (see the chapeau to paragraph [108]). Although he accepted that it could have been supported by primary information he neither relied upon any nor annexes any to his Statement of Evidence. 137. Therefore, to the extent he relied upon his experience, that was his recollection of costs from the last time he was actively involved in the industry back in 2017. 138. Notwithstanding it was a recollection of his experience back from 2017, he confirmed that his estimates were in fact as at the date of his Statement of Evidence, that is 10 February 2022. He accepted that they would need to be deflated if they were to be costs in relation to which assumptions were being made as at the acquisition date of September 2020. 139. Finally, to the extent he then provided those estimates, he accepted they were averages. That is, they were averages of his experience in relation to a vast variety of signs in multiple different locations. Plainly, that can lead to significant variations in the actual costs to be incurred in relation to particular signs in particular locations. 140. For the static sign, his estimate ultimately was $13,000 per sign per annum. That can be compared to an analysis of the actual costs incurred in relation to the static signs over the five years from CY 2016 to CY 2020. 141. Starting firstly with that time period. As was accepted by Dr Ferrier where regard is to be had to historical data, five years is a normally accepted time period. 142. Having regard to the actual costs over those five years shows an average of $6,750 per static sign per annum. 143. Any hypothetical purchaser would consider that available data. In the Applicant's submission the Court would prefer the actual data and find that the fixed operating costs (Line 18) for static signs would be $6,750 (for Line 19). 1. Mr Hemmings' closing oral submissions dealt with this topic succinctly (Transcript 16 May 2022, page 344, line 17 to page 345, line 13): The first question is are they variable or fixed, and that's line 18, and the experts agreed that the operating costs comprised a mixture of fixed and a mixture of variable costs. Can we, for the purposes of dealing with this material, we accept that Mr Herring's evidence was the way in which the market would deal with it, was fixed. Mr Halligan was dealing with it based upon instruction. Mr Whitford, therefore, didn't comment upon whether it should be variable of fixed, and can we accept Your Honour would prefer an approach which says the operating cost would be fixed, and we don't press for a conclusion that they would be variable. We do, however, have a debate as to the quantum. It's not significant, but it's multiplied by the number of signs. So, it's more than it appears. But as Your Honour will recall, on a consideration of the actual costs incurred over five years, the cost of the static signs is $6750. Mr Herring has made, with the greatest respect to him, a guesstimate. He accepts it's an estimate only. It's based upon experience only. He accepted he would have been able to provide some supporting materials for the estimate but doesn't. It's an estimate that he prepared in 2022 but would accept that it would need to be deflated to account for the time at which the costs were incurred. It was an opinion expressed from his experience when he's been out of the industry since 2017. There were a large range of difficulties, with the greatest respect, to his estimate, not least of which is then of course it was an average across all signs, different types in different locations, which plainly leads to problems in application to specific signs. In our submission, when the Court has the actual evidence, the actual signs, that actual evidence over a period of time, which was the five years, as we clarified with Dr Ferrier, would be the normal time period the thing's used if he was looking at something like historical costs. The Court would accept that amount. Can we, at this point, then return to the submissions at para 157. … HEMMINGS: At 157, it's suggested that, "The documentary evidence...preceding the acquisition". Hence, the following statement, "As the applicant deferred incurring those costs as a consequence of the public purpose". With the greatest respect, there is simply no evidence for that submission. It wasn't put to Ms Lau. It wasn't put to Ms Young, that the reason the costs were at the level they were was because they were deliberately avoiding incurring repair and maintenance costs, because of the impending public purpose. There is no evidence to support the submission, and with the greatest respect, the Court would reject it. In terms of these direct operating costs, the Court has historical actuals that would be preferred over the guesstimates of Mr Herring, and the Court would apply the $6,750 amount, at para 143. 1. At this point, I had the following exchange with Mr Hemmings (Transcript 16 May 2022, page 345, lines 15 to 48): HIS HONOUR: Can I take you back to 157 of the respondent's submissions. I assume that your submission is addressing the last seven words only of that paragraph? That is the causal element. Is that right? It's my recollection that the evidence was that there are, as footnoted from Ms Young's affidavit, significant ongoing investment for maintenance and work health and safety obligations, that had not been provided for in the past. HEMMINGS: There was a document that she was taken to, which showed a round number estimate for long-term maintenance strategies required for signs. The exhibit-- HIS HONOUR: We can come back to it, if you want to address this later as well, because it seemed to me that the historic data for five years, didn't appear to accommodate that - at least as I understood it - potentially significant future burden, and that that potentially significant necessary future burden had to be accommodated in some way in the anticipated future costs. Whether that's done in the $13,000 per sign per annum, as proposed by Mr Herring, is a different question. But it does, does it not, cast some questions over the adequacy of past performance, given there is an acknowledged significant future incremental cost arising from your client's own evidence. HEMMINGS: The only reason I'm hesitating in answering, your Honour, is because-- HIS HONOUR: You can think about, but if you're still going at 4 o'clock, then you can tell me tomorrow. That's not to be taken as an encouragement to keep going until 4 o'clock, but if it's necessary it will, otherwise I'm sure, if necessary, Mr Hutley, will accommodate you having the opportunity to address at some stage. HUTLEY: He will certainly will, your Honour, and then we can address a reply with respect to that particular matter, for sure. HEMMINGS: I'll deal with it in that way then, your Honour. 1. As can be seen from the above exchange, Mr Hemmings indicated that he proposed to return to address this topic further. However, he did not do so.

The submissions for TfNSW 1. The written closing submissions for the Company on this topic were: Fixed or variable 150. The business valuation experts identify this as a dispute between them as to whether such costs are fixed (Dr Ferrier) or variable (Mr Halligan). Dr Ferrier relies on the evidence or Mr Herring and Mr Halligan is instructed to assume the costs are variable. 151. The detail of Mr Halligan's instructions is set out in his own Report in Chief. 152. However Dr Ferrier has undertaken a correlation exercise that show very low correlation between operating costs and revenue. 153. Mr Halligan does not accept the fixed costs adopted by Dr Ferrier because "he cannot tell" whether they are accurate. With respect, that is not a valid reason that would convince the Court to not accept Dr Ferrier's assessment. 154. In oral evidence, Dr Ferrier explained that the available financial information indicates that direct operating costs have a low to zero correlation with revenue and are therefore most likely to be fixed (or a combination of fixed and variable). It is therefore most likely that most of the direct operating costs are fixed, though some components may also be variable. If one needs to adopt one approach over the other, the preference is to adopt fixed costs as advised by an industry expert. 155. The Court would prefer the reasoned evidence of Dr Ferrier rather than the instructions that Mr Halligan has followed. Significant deferred CAPEX 156. The Applicant's internal briefing document, entitled Sydney Externals Plan 3 dated 21 May 2015 indicates that the Applicant was forecasting significant capital expenditure on the static Acquired Signs, in the amount of $16.95 million. This was a significant long-term investment commitment to 2030, that reflected that the Acquired Signs were "aging plant with hefty ongoing investment for remedial maintenance and WHS compliance." Ms Young explained these forecasted direct operating costs for static signs to be part of a long term investment on static infrastructure to reduce maintenance costs over the long term. This is clearly more than "tidying up" referred to by Ms Young earlier in her oral evidence. Actual costs infected by the public purpose 157. It is common practice for a business valuer to look at financial records over a 5 year period. However, in this instance, the documentary evidence establishes that the Applicant was facing significant capital expenditure to repair and restore aging plant, in addition to routine maintenance costs. These "lumpy" costs cannot be observed in the actual financial information for the Acquired Signs for the four years preceding the Acquisition, as the Applicant deferred incurring those costs as a consequence of the public purpose. 158. A well-informed purchaser, having carried out routine due diligence, would have requested financial information for the Acquired Signs. However, the Court must adjust the actual information in this case to ensure that it is not influenced by the public purpose and properly reflects the nature of the likely future operating direct costs. Hypothetical purchaser's assessment of costs 159. Properly applying the section 56(1)(a) statutory disregard to the actual financial information for the Acquired Signs during the period between 2016 and 2020 to account for the Applicant's deferred CAPEX for repair and maintenance as a result of the public purpose, would result in higher direct operating costs for the Acquired Signs. While a hypothetical purchaser would use the actual data as an indicator, facing hefty future restoration costs, they would have been sceptical about the preceding four years as a basis for estimating future maintenance costs. In assessing the costs going forward, a hypothetical purchaser would have regard to informed industry averages to gauge likely expected costs over the long-term lease period. 160. Mr Halligan did not adjust the actual costing information provided to him to account for future capital expenditure because firstly, he was instructed to adopt the actual costs provided, secondly, he has assumed they were representative of the likely future costs of the hypothetical purchaser, and lastly, he was not aware of the deferred restoration costs. 161. In the circumstances of the present case, the industry averages represent a sound basis of estimating indirect costs over the lease term, when the timing of incurring any significant capital expenditure is likely unknown. This approach should be preferred to the Applicant's reliance on actual data that is infected by the public purpose. 1. Mr Hutley's closing oral submissions also dealt with this topic succinctly (Transcript 17 May 2022, page 385, lines 10 to 33): Can I now turn to operating costs. Our learned friend has not yet dealt with the problem which para 156 raises, and particularly the evidence of Ms Young at transcript 70, at about line 25 and below, as we point out, the planning for expenditure in what she took to her CEO and CFO was for some 16 million dollars worth of expenditure. That, again, shows that reliance on actuals over this period, where it's quite apparent that the commercial decisions of oOh! are being influenced by the public purpose, as the evidence of Ms Young makes clear, is quite problematic, because what one really is asking, is what would, but for the public purpose, on the assumption that our learned friends position is right, an incoming purchaser have seen in the five years of management accounts, which Mr Harrigan said a market participant would've sought. That's why, again, because of that, what you might call corruption, and I don't mean that as an offensive thing, does corruption by the change of circumstances of the accounts as a reliable source, your Honour would, in our respectful submission, be satisfied that the approach of Mr Herring to look to, what you might call a market norm, or a usual market position, would be the safest. If a market participant did not have access to the actual accounts, they would be apt to do exactly what Mr Herring suggests is the case, and because of the circumstances averted to in 156, there's no basis for concluding that these signs would perform better than the market average. That's why we say it's now accepted it should be a fixed cost, and that's what we say with respect to the 13,000 …

Consideration 1. Before turning to any analysis of the merits of the competing evidentiary positions, it is appropriate to make two general observations. First, Mr Herring identified the four factors as making up the elements contributing to the total direct annual operating costs for a static billboard. The identification of these factors (as opposed to the quantum to be accorded to them) was not, as I understood the outdoor advertising and forensic accounting evidence, in contest as a broad base for understanding the foundation for such costs. 2. Mr Herring's factors were: 1. repair and maintenance costs; 2. electricity; 3. installation costs (of artwork); and 4. council rates and land tax. 1. These added together gave the total direct annual operating cost for a sign. 2. Second, on the first day of the hearing, I raised with the advocates the question of whether or not it was desirable that there be an inspection of the locations and structures in Qantas Drive where the signs had operated prior to their acquisition. The exchange is recorded in the transcript of 5 May 2022 at page 5, lines 19 to 50. 3. As a consequence, there was no inspection and there are, therefore, no detailed notes in evidence concerning what might have been observed during such an inspection. However, as I indicated, I had driven past the location on Qantas Drive of the acquired signs (and did so again subsequently during the hearing) – observing the signs pre-acquisition and observing the residual structures post-acquisition. There are, I am satisfied, only two pertinent matters to be observed for these purposes arising out of my driving past the structures. The first is that the surface area of the display available on each of the structures was large and that the physical structures themselves – being of a white tubular nature – appeared to be substantial. 4. It was Dr Ferrier's evidence that there was no demonstrated correlation between the revenue derived from and the expenditure incurred for the acquired signs. To the untutored eye (as I readily acknowledge mine is), the figures set out in Annexure C would appear to confirm that this aspect of Dr Ferrier's evidence is correct and that the assumption, which Mr Halligan was instructed to adopt, does not have a proper evidentiary foundation demonstrated in the information available to me. 5. However, this lack of correlation and the apparent lack of basis for Mr Halligan's instructed assumptions does not require detailed consideration because, as discussed below, I am satisfied that the Company's own figures (in Annexure C and the spreadsheet for the anticipated costs of implementation of Ms Young's Sydney Externals Plan 3) do provide a basis to derive sufficient financial conclusions. 6. I have earlier set out the written closing submissions on behalf of TfNSW concerning these direct annual operating costs for static signs. At (156) of those extracted submissions, the first sentence was in the following terms: 156. The Applicant's internal briefing document, entitled Sydney Externals Plan 3 dated 21 May 2015 indicates that the Applicant was forecasting significant capital expenditure on the static Acquired Signs, in the amount of $16.995 million. 1. The footnote to this sentence referenced Annexure C to the affidavit of Ms Young. This annexure to Ms Young's affidavit (folio 84 of Exhibit A) was a spreadsheet entitled "Revenues & Capex". It listed proposed future capital expenditure (Capex) for seven existing static signs that were proposed for future digitisation. Two of those seven signs were QDW8O and QDW1I. For present purposes, nothing arises from the material set out concerning capital expenditure (or anticipated future revenues) from that digitisation. 2. The next listed signs were under the heading "Remaining static". This listed 24 signs that were proposed to have capital expenditure incurred during 2015 and subsequent years. 3. Only five of those signs were ones on Qantas Drive, these being QDV-I; QDV-O; QDW2O; QDW3I and QDW6I. Relevant for present purposes, it is appropriate to record that the total cost for works to these five signs was to be $1,510,000 not $16,995,00 as proposed by TfNSW as set out at [260]. 4. The remaining element of this spreadsheet was headed "Other costs" with these costs being split between the provision of additional electricity substations and the cost of a range of external consultants who would be involved in preparation of development applications for the proposed works. 5. It is to be noted that the grand total of the expenditure under all three of these headings was $16,995,000. As can be seen, the projected expenditure over the total length of this project for the five Qantas Drive signs nominated on the spreadsheet was slightly less than 8.9% of the total budgeted expenditure. 6. In this context, it is to be noted that Ms Young's affidavit included, at Annexures C and D, documents concerning Sydney Externals Plan 3 and a presentation made to the Company's executive leadership team concerning this plan. 7. Annexure C was a spreadsheet setting out, amongst other things, the capital expenditure costs required for digitisation of six signs nominated in that spreadsheet (including two signs from amongst the acquired signs on Qantas Drive (QDW8O and QDW1I)). 8. The document annexed to Ms Young's affidavit that followed this spreadsheet (Annexure D to her affidavit) comprised copies of a PowerPoint presentation entitled Sydney Externals Precinct Renovation. 9. Ms Young's affidavit describes, at (27), this document as being a presentation to the Company's Executive Leadership Team on 15 October 2015 to receive budgetary sign off for the capital expenditure set out in Sydney Externals Plan 3. This presentation set out, under the heading overall development plan, a number of points, two of which are relevant for the purposes of understanding the expenditure on the static signs. These observations (Exhibit A, folio 89) were in the following terms: • Ageing plant with hefty ongoing investment for remedial maintenance and WHS compliance. • Upgrade remaining static signage with consistent, high-quality, back lighting plus remedial work & painting. 1. I observe that Mr Herring accepted, during questioning by Mr Hemmings, that the direct costs for static sites were "lumpy". The figures that are set out, in Annexure C to this judgement, for the Qantas Drive signs, demonstrate this having regard to the annual totals over 2016 to 2019 and the extrapolated figures for 2020. 2. Looking at individual items within that table, it can be seen that a number fluctuate quite wildly and that, for those fluctuating categories, "lumpy" is, perhaps, an understating descriptor. 3. However, perhaps of greater utility, is the table in Ms Lau's Annexure B at the top of page 13 (Exhibit A, folio 224), which breaks down the costs associated with the Qantas Drive signs between 2016 and the annualised total for 2020. A copy of that table is reproduced as Annexure C to this judgement. 4. As can be seen from the items that are recurring costs throughout those years, the costs are generally reflective of those identified by Mr Herring in (108) of his statement of evidence – making the assumption that council rates and land tax, as identified by Mr Herring, fall within the context of "site other costs" in Annexure C. 5. As can be seen from Annexure C, "installation costs – contractors" and "site electricity" are the two items which have generally consistent high level of costs throughout each of the five years shown in the table. 6. The following observations can be made on a per sign basis for each of the 18 acquired signs in Qantas Drive. The average cost of electricity across the five years set out in Annexure C is a little over $2,000 whilst the midpoint between the highest and lowest of those costs over that period was approximately $1,970. 7. For installation costs, the average cost over those five years was $2550 whilst the midpoint between the highest and lowest of those costs was $2,740. 8. These figures are also to be considered in the context of the evidence derived from Ms Young's affidavit and the costings demonstrated for the remaining static signs on Qantas Drive where expenditure was set out, for five of them (as earlier described), totalled $1,510,000 for these signs spread across 30 years. If that amount is to be averaged across the remaining 16 Qantas Drive static signs (this number excluding QDW8O and QDW1I noted as being digitised in Sydney Externals Plan 3), the maintenance cost is $3,145 per sign per year. 9. If confined to the five signs nominated in the Sydney Externals Plan 3 spreadsheet, the repair and maintenance cost is $10,067 per sign per year if the expenditure is averaged across 30 years. For this, the necessary assumption would need to be that there are no other future repair and maintenance costs for any of the other signs. 10. As a consequence, doing the best I can in my role as judicial valuer, I am satisfied that, taking the midpoint amounts over these years for two of the major expenditure items (installation costs and electricity) provides a degree of future predictability for what might be expected for these cost elements. I also have regard to the fact that repairs and maintenance as shown from the costings in Ms Young's Sydney Externals Plan 3 show that, for the five static Qantas Drive signs there nominated to remain static that the total repair and maintenance cost for these signs – spreading those costs across the entirety of the hypothesised remaining static signs dealt with in this plan would be $3,145 (an amount I accept is founded on the inherently improbable proposition that there will be no repair and maintenance expenses for the next 30 years for any of the other hypothetically remaining static Qantas Drive signs). 11. Doing so, taking the most advantageous assumption for the Company on such expenses, the combination of these three numbers leads to a total annual predictable future expenditure for these three headings of ~ $7,650. 12. This amount represents, I am satisfied, an acceptable foundation for considering what would be the appropriate future expectations for the hypothetical purchaser for these direct costs on an annual basis for the future – figures derived from the Company's own information. 13. To this total needs to be added an amount for the additional costs of land tax and council rates. There is no express evidence which I have been able to find (having spent some considerable time endeavouring to understand the details for Qantas Drive signs provided in the various sources of accounting data), to tell me whether these costs are incorporated in the line in Annexure C for "other costs" (the gyrations in the "other costs" numbers seem to be sufficiently great to cause me to question whether this might be the case given that taxes and council costs would reasonably be expected to be comparatively constant - even likely to show, over time, a minor upward trend). 14. Faced with the choice between adopting the averaging done by Mr Halligan over the period 2016 to 2020 (the latter being an annualised number) and Mr Herring's experience based estimates across the full gamut of outdoor advertising signs in NSW, the necessary conclusion is to adopt Mr Herring's estimates and accept that the appropriate direct cost allowance per annum for static signs to be included in my table of responses at [2] is $13,000. 15. Doing so adopts Mr Herring's taxes and rates estimate and makes some allowance for the probability that repairs and maintenance will be required to the other Qantas Drive signs not nominated for such expenditure by Ms Young but are nominated by her to remain static. 16. In reaching this conclusion, I readily acknowledge that it is one based on imperfect data, but only imperfect data is available to me and provides, as I have explained, the only available rational basis upon which to reach a conclusion on this cost item.

Accounting for indirect costs

Introduction 1. There remains a dispute between the parties as to whether or not any account needs to be taken, for the purposes of the hypothetical sale transaction of the signs by the hypothetical purchaser making an allowance (and thus reducing the hypothetical offer) to reflect the indirect operating costs that would be associated with the ongoing activities necessary to support the operation of the acquired Qantas Drive signs.

The competing evidence 1. Mr Halligan and Dr Ferrier set out, in (49)(b) of their joint report the nature of the costs that fall to be considered on this issue. They provided a non-exhaustive list in the following terms: … examples might include costs associated with salaries, administration, finance, marketing, IT, and depreciation on assets indirectly associated with the acquired signs including, for example, computer systems and office furniture and equipment. 1. They then set out, in (49)(c) the nature of their disagreement – it being Mr Halligan's opinion that only incremental overheads should be accounted for under such a heading (he observing that there was no evidence of any such overheads) with Dr Ferrier's position being summarised as: … overheads should be included to the extent that they would reasonably be incurred by a willing but not anxious purchaser of the billboards business in order to derive the forecast gross profit. 1. Mr Halligan addressed this topic in the joint report with Dr Ferrier by, first, setting out the basis upon which he reached his conclusion that there was no evidence supporting an allowance for such overheads setting out his reasoning in support of this proposition, and then critiquing the position adopted by Dr Ferrier in support of the proposition that some allowance needed to be made. 2. Mr Halligan's reasoning can be seen from (53) of the joint report, where he said: 53. On the other hand, there is no evidence to suggest that a hypothetical purchaser or the applicant would incur any incremental overheads (i.e. indirect operating costs) of a material amount from having the Acquired Signs, or that they saved overheads from not having the Acquired Signs. The applicant carries on a business that generated revenue of $65.9 million in CY2019 from offering advertising spaces across Australia (HR 47). Its business is clearly sizeable. It is most likely that its overheads would remain the same regardless of whether it had the Acquired Signs or not, given that those signs accounted for around $1.5 million10 (2%) of the total revenue of $65.9 million in CY2019. Indeed, the applicant was able to operate the Acquired Signs before it was dispossessed of them because it already had in place any needed overheads. And the same would apply to the hypothetical purchaser, since I am instructed to assume that the hypothetical purchaser is equivalent to the applicant in terms of the scale of its business and in being a reasonably efficient operator (HR 6(a)(v)). The addition of the Acquired Signs would be a bolt-on to the business of the applicant or the business of the hypothetical purchaser. 1. Mr Halligan explained, at (54) to (57) why he disagreed with the position advanced by Dr Ferrier that it was appropriate to make some allowance for indirect operating costs of the signs. Mr Halligan explained why he considered that that there was significant uncertainty in Dr Ferrier's undertaking of a two-step process of discounted cash flow analyses prepared by the Company to derive what Dr Ferrier regarded as the operational expenses (taken to be the indirect operating costs which might need to be accounted for). 2. However, on a contingent basis, Mr Halligan took the figures upon which Dr Ferrier had relied (as discussed below) setting out the four measures which were capable of application to the revenues and expenses which Dr Ferrier had considered. It is not necessary to set out the detail of all four of those measures. However, it is appropriate to note that, if such a measure was to be applied (a proposition with which Mr Halligan did not agree), Mr Halligan expressed the following opinion at (57)(b): Of these [above options], the median of 7.7% is, in my opinion, the preferred measure given the wide range of percentages and that they are skewed at the lower end of the range. I say this because the median is less affected by outliers and skewed data than the simple average and, as the Australian Bureau of Statistics states is usually the preferred measure of central tendency, when the distribution is not symmetrical. 1. Having expressed this opinion on a contingent basis, Mr Halligan repeated his conclusion that there is no evidence that there would have been incremental overheads of any material amount. 2. Dr Ferrier explained why he concluded that an allowance for such costs needed to be made, saying in (59) of the joint report that this was because: … a hypothetical willing but not anxious purchaser of the billboards business would consider it not to be possible to derive the forecast gross profit without incurring indirect operating costs including, for example, labour costs, costs of management facilities, marketing costs and IT costs. 1. Dr Ferrier next explained why he had not included such costs in his individual report saying that he "now considers that it is necessary to include an explicit allowance for indirect operating costs in the assumed cash flows in order to ensure that all relevant cash flows are included in the assessment of value to a hypothetical purchaser of the acquired signs". 2. Dr Ferrier then set out a table which he had created from information derived from the Company's cash flow analyses prepared for the purposes of renewal of existing leases or seeking to acquire new leases. The table which Dr Ferrier produced contained figures for six airports over periods of time ranging from four to ten years. It is not necessary to set out any of the detail from that table. 3. Dr Ferrier then explained the process by which he had sought to derive from the gross revenue figures what could be regarded as the operating expenses (the indirect operating costs/overheads). He then set out a summary of how the Company's spreadsheets had calculated those operating costs (this being, for five of the airports, being based on a percentage of the mass media revenue for that airport). 4. Dr Ferrier finally set out how he considered it appropriate to approach those various figures and the conclusion he derived from them as to the appropriate allowance to be made for such indirect operating costs. It is appropriate to set out (64) of the joint report as it explains Dr Ferrier's approach and the result which he derived from it: Dr Ferrier considers that, consistent with the practice adopted by oOh! Fly, a hypothetical purchaser of the acquired signs would reasonably include an allowance for operating expenses in the forecast cash flows from the acquired signs. Having regard to oOh! Fly's calculations and taking into account the average rate (9.0%), the weighted average rate (12.0%) and the median rate (7.7%), Dr Ferrier considers that a hypothetical purchaser of the acquired signs would reasonably adopt 7.7% of gross revenue for an initial assessment of indirect operating costs and would consider such costs to be fixed. As the (assumed) gross revenue from the acquired signs in FY20 (before digitisation) was $1,405,076, Dr Ferrier has now included an annual amount of $108,190 for indirect operating expenses and has assumed that those costs would increase at the rate of inflation. 1. Dr Ferrier concluded his contribution of the joint report on this topic by setting out his response to Mr Halligan's opinions, saying, at (65): In response to Mr Halligan's opinions in relation to this matter: a) Dr Ferrier considers that the cash flows which should be taken into account when assessing the market value of a business are the cash flows that could reasonably be expected to be derived from operating that business. That means that the expense cash flows to be included are all cash outflows reasonably considered by a hypothetical willing but not anxious purchaser to be necessary to derive the forecast revenues. In relation to the subject business consisting of the 18 acquired signs, the revenue could not reasonably be expected to be derived without incurring overhead costs such as wages, management facilities, marketing and IT costs; b) In Dr Ferrier's opinion, it is incorrect to exclude any business costs on the basis that a hypothetical purchaser may have sufficient surplus capacity such that some costs might not be incurred by that purchaser. Not only is the assumption that any purchaser has surplus capacity speculative, but the existence of surplus capacity or any other specific circumstances and plans of a purchaser could, in principle, constitute synergies unique to that prospective purchaser. Under those circumstances, that purchaser may be an "anxious" buyer, rather than a "willing but not anxious buyer" as required by s56(1) of the Land Acquisition (Just Terms Compensation) Act 1991. c) As a general principle, the market value of a business does not depend upon the particular circumstances of the purchaser. Rather, it is the attributes of the business which determine market value. It is for this reason that businesses are normally valued on the basis of a measure of EBIT or EBITDA (net profit) and not on the basis of a measure of gross profit, even where a potential purchaser may have surplus capacity such that synergies can be achieved. d) The available evidence suggests that oOh! Fly, assumed to be experienced in the assessment of cash flows to be derived from billboard assets, invariably includes an allowance for operating expenses in its forecast of cash flows expected to be derived from billboard assets.

The submissions for the Company 1. The written closing submissions for the Company commenced, at (145), by referring me back to (49) to (58) of the opening written submissions on behalf the Company. I have already set out the terms of those paragraphs of the Company's opening submissions when explaining why I had concluded that the DCF method was the sole available method to be used for valuing the Company's acquired leasehold interest. It is not necessary to repeat them at this point. 2. The Company's written closing submissions on this topic (after the above described referring back) were brief. They were in the following terms: 146 The real dispute between the forensic accountants is one of perspective. 147 The Court would accept that the cashflows being considered for any potential purchase of the lease are those of a large outdoor advertising operator like oOh!, JCD, QMS or Bishopp. 148 In those circumstances, the cashflows relate to already significant businesses. The addition, or "bolt on", of merely 18 signs is unlikely to result any, or certainly any significant, additional indirect costs. 149 As Mr Halligan says at paragraph [53] of the Joint Report in relation to oOh!'s cashflows the business generates revenue of $65.9 million in CY 2019. In that year the acquired signs accounted for around $1.5 million, or only 2%, of that revenue. True it may be that the revenue increases upon digitisation. However, it remains the same number of signs with, as was discussed with Mr Herring, more advantageous and less time consuming approaches to the installation and implementation of advertising on the digital signs. 150 The Court would accept Mr Halligan's opinion. There is no requirement, in the circumstances of the addition of 18 signs only, to account for any incremental indirect costs. 1. Mr Hemmings' closing oral submissions on the topic of indirect operating costs were also succinct. They were in the following terms (Transcript 16 May 2022, page 346, lines 5 to 30): In relation to the indirect operating costs, again it's a difference of approach between Halligan and Ferrier. As we say in 146, this is a difference of perspective. Mr Halligan's view, and in our submission, the Court would accept it. Yes, these are only 18 signs, and we say, yes they are capable of generating significant revenue, and so, yes they are valuable. But in the scheme of things, of a large actual advertiser or indeed, a large advertiser that has as part of its business, outdoor advertising, the addition of 18 signs is unlikely to result in any, or certainly any significant increased or "incremental" - to use Mr Halligan's word - in direct costs. There's no quantification or identification of, "Well, these 18 signs, you would need the equivalent of one or two, or whatever it might be, additional full-time employees, to try and deal with the additional burden that placing advertisements on these 18 signs". Nothing of that sort has sought to be led by the respondent, and they don't do that, because the way in which Dr Ferrier deals with - and your Honour might recall our criticism in opening - is that Dr Ferrier is talking about the valuation of a business, where the business is the 18 signs. And it can be expected that it it's an entirely reasonable accounting for indirect costs, if the only business of the business is the signs, clearly you're going to have to deal with the indirect costs. It's a very different circumstance, in our submission, if it's the, as Mr Halligan's described bolt on(?), and in a business turning over in the order of 65 million dollars in a calendar year, the revenue of the signs accounting for one and a half million dollars in that year, the Court would accept Mr Halligan's opinion that there is no relevant incremental costs, and there is no need to account for indirect costs in the spreadsheet.

The submissions for TfNSW. 1. The closing written submissions for TfNSW were also succinct. They were set out at (167) to (169) in the following terms (footnotes omitted): 167 As to indirect costs there is agreement between the business valuation experts as to an appropriate rate for overheads (7.7%) if running the Acquired Signs as a standalone business, but no agreement as to whether this should be applied. 168 Mr Halligan's reasoning is based on an assumption that the hypothetical purchaser would have excess capacity and thus would not incur any incremental costs in deriving the income from the Acquired Signs. 169 Dr Ferrier sets out a number of reasons as to why this assumption is unsafe and otherwise why it is appropriate to include an allowance for these costs, which are adopted for the purpose of these submissions. There must be some indirect costs involved in adding to the Acquired Signs to the hypothetical purchaser's business. It would not be nil. 1. Mr Hutley's oral closing submissions on this topic were also admirably succinct. He submitted (Transcript 17 May 2022, page 385, line 33 to page 386, line 10): With respect to indirect costs, your Honour, your Honour has seen the reasoning of the two experts. There's some force in the bolt-on idea, but imagine that one has a business of this size, and the odd thing about this is, our learned friend said it's a bolt on of 1.5 million. On their case, it's a bolt on of significantly more than 1.5 million, because on this page we're dealing with some multiple of the income, bought about by the digital signs, so the bolt on is what your Honour would say would be beyond going return from what your Honour's found to be the digital signs. Mr Halligan said it's such a small proportion, 1.5 million dollars of the business, that on our learned friend's case, if our learned friend gets to six, it's not, it's a very significant sum of money, potentially, or turnover, and that would suggest that one would have to have some indirect costs, some overheads, and the parties agreed that it was about 7% of normal business. It may be something less than that, but your Honour, the reasoning of Mr Halligan, which takes as it's point of departure the relatively small amount of the income, again suffers from not, as it were, addressing the counterfactual analysis, which lies at the heart of my learned friend's case. Therefore, your Honour, in your Honour's position to evaluate a figure, which will be somewhere between 7% and nothing. If your Honour comes to the conclusion that our learned friend's right, or some part of it's right, it will be a business which has a not insignificant turnover, and would have the opportunity to have to support a broader range of advertisers, because of the nature of the digital installation, and, therefore, it would be likely that there would be incremental overheads. My learned friend gave the example, wouldn't need any further staff et cetera. In our respectful submission, that's wholly speculative, and he did that by reference to the then income of 1.5, not the digital imagining.

Consideration 1. Although it has been necessary to set out a deal of material to enable a proper appreciation of the necessity to determine what is, in the overall scheme of things, a comparatively minor matter in dispute, the resulting analysis of what is to be drawn from the evidence and the submissions can be set out comparatively briefly. 2. First, I am not persuaded by Mr Halligan's position that the hypothetical purchaser would inevitably have excess capacity in all the areas potentially encompassed for the incurring of indirect costs as described by these experts that there would be no incremental increase whatsoever in those costs. This is a submission without evidentiary foundation and, at least as I understood the evidence of Mr Whitford and Mr Herring, is not able to be sustained on the basis of anything that came out of their written or oral evidence. Indeed, the evidence of those of the Company's lay witnesses, particularly Ms Young, made it clear that there were costs of an indirect nature that were incorporated in the Company's budgeting process when assessing expenditure necessary to be incurred for the management and administration of its signs – including the signs in Qantas Drive. 3. Having reached that conclusion, I can then, comfortably, accept that Dr Ferrier's proposed adoption of the 7.7% mean expenditure (giving, at the time of acquisition, a relevant indirect cost of $108,190) is appropriate given that Mr Halligan accepted that, if Dr Ferrier's basis for seeking to calculate such costs was adopted, then the approach he used of striking that quantum derived from the median of the Company's provided cash flow analysis figures was appropriate. 4. I therefore conclude that the sum of $108,190 is to be adopted for this purpose as at the date of acquisition.

The impact of COVID 19

Introduction 1. The community impact of COVID 19, and government travel restriction responses to it, commenced in about March 2020, prior to TfNSW's compulsory acquisition of the Company's leasehold interest in its billboard sites on Qantas Drive in September 2020. Relevant for present purposes is consideration of the immediate impact of government COVID 19 response measures on the Company's revenue, and how long it might take, on a reasonable future expectation basis (untainted by hindsight of what has actually occurred since the date of acquisition), as at the date of acquisition. This analysis requires consideration of a range of factors: * relevant differentiating factors between revenue to be derived from static billboards when compared to that which is to be taken to be derived from the number of signs to be regarded as digitised in the counterfactual world requiring consideration; * the period reasonably expected to elapse before recovery would be completely effected; and * the shape of the revenue pattern during recovery.

The impact of COVID 19 on revenue up to the acquisition date

Evidence 1. The lay evidence concerning the impact of COVID 19 on billboard revenue was given by Mr Dery. He was questioned by Mr Hutley on what was disclosed on a spreadsheet prepared by Ms Lau, being tables which set out the revenue and profit figures for the Joyce Drive signs; the Melbourne external signs (excluding COVID triggered rent abatement allowances); the Brisbane external signs (also subject to more limited COVID 19 rent abatement) for the period from January 2018 to December 2020 including annual totals. The spreadsheet also included the figures for the Qantas Drive signs from January 2019 until acquisition in September 2020. 2. It is to be observed that the change in revenue for the Qantas Drive signs was one of a comparatively minor decline between the period of January 2020 to the end of August 2020, the period of time encompassing the impact of COVID 19 - noting that there was a decline of approximately 11% from the March to April 2020 revenues in that year for these signs, with more dramatic reductions in Melbourne and Brisbane. 3. Although Mr Hutley's cross-examination of Mr Dery covered some four and a half pages of transcript - he questioning Mr Dery concerning the shape of the changes in the COVID 19 impacts on revenue of the various signs covered by the Lau spreadsheet - it is unnecessary to set out the entirety of this questioning. 4. First, Mr Hutley questioned Mr Dery concerning the COVID 19 impact on the acquired signs (Transcript 6 May 2022, page 98, line 39 to page 99, line 49): Q. The reason they were able to hold up for so long, I want to suggest to you, is because static contracts tend to be longer duration so the companies seeking to advertise would have entered into long-term contracts which they just had to take the risk of COVID. That's correct, isn't it? A. I think there are probably a couple of issues worth just discussing. I think the first thing here is the difference between Qantas Drive and Joyce Drive to the Melbourne externals and the Brisbane externals is they also have roadside traffic. With the Melbourne externals and Brisbane externals, they are completely airport precinct, so there is some audience on the roadside on both Qantas Drive and Joyce Drive will pick up. Q. Right, but di you agree with me another aspect of why it held up so long on Qantas Drive was that it being static they tended to be longer termed contracts? A. Yes, well certainly on Qantas Drive they were longer term contracts. Q. The longer term contracts are an attribute particularly, I want to suggest to you, of static signs. That's correct, isn't it? A. No. Q. I want to suggest to you they're longer term and static because there's not the same flexibility of taking up and putting down signs. That's correct, isn't it? A. Indeed, that is why digital, particularly for people - that advertisers take long-term pollings, is because they can use digital to change that over a long period of time. I would say that digital for airports, again, in an airport segment, that there are clients that take a long-term position and also buy digital. Q. I see, but that didn't maintain in Melbourne, did it? A. No. Q. It didn't maintain in Brisbane, did it? A. Not that period. Q. That's because the overwhelming bulk of Melbourne and Brisbane are digital. That's correct, isn't it? A. So I would clarify just one thing. So when we're talking about digital, I'm talking about not just the external precinct, but the internal precinct as well, and that advertisers will buy the long-term digital internally was well. Q. In Brisbane and Melbourne that didn't apply, did it? A. Yes, it does apply. There was-- Q. It didn't at the time of COVID, did it? A. There was a COVID impact. Q. There's not just a COVID impact, with respect. Melbourne collapsed in April, didn't it? A. Melbourne - Melbourne, clearly, on the external precinct, has collapsed. Q. And in Brisbane; correct? A. Yes. Q. It didn't happen in Qantas Drive, did it? A. It happened to a lesser effect. Q. Much less; correct? A. A lesser effect. 1. The overall tenor of Mr Dery's oral evidence, and the concluding position to be understood from it, can be seen in the final question and answer where Mr Hutley posed a broad summation question to Mr Dery. That question and its response were in the following terms (Transcript 6 May 2022, page 101, line 48 to page 102, line 4): Q. What I want to suggest to you is what happened in Sydney was a function of the fact that you had long term contracts on static billboards, as is usually the case in the industry, as opposed to Melbourne and Brisbane where, because of the significance of the digital sign, the contracts were short term and the revenue collapsed; that's correct, isn't it? A. Yes, that's correct; agreed. 1. Mr Halligan's evidence concerning the COVID 19 impact on revenue for the static signs was set out in (41) of his expert report on the basis of assumptions he was instructed would be the basis for his consideration. Those instructions – confined to the elements relating to the static signs and setting aside any hypothetical digitisation – were: I am provided with the historical revenue from the Acquired Signs to 17 September 2020, which reflects the effect of the COVID-19 pandemic. I am instructed to assume that the forecasted counterfactual revenue from the Acquired Signs for the remainder of the 2020 calendar year would have been as follows: on a static basis, revenue for the full month of September 2020 would have been $100,000, which approximates the historical revenue for July 2020 ($100,392) and August 2020 ($100,911); total static revenue for the last quarter of CY2020 would have increased by 12.2% from total revenue for the third quarter of CY2020, which is the same as the percentage increase in the last quarter of CY2019 over the third quarter of CY2019; each of the Acquired Signs, on a static basis, would have contributed to the total revenue for the last quarter of CY2020 in the same proportion it did in the last quarter of CY2019; and ... 1. Mr Halligan also said, in (42) of his expert report: I note that the effect of the COVID-19 pandemic on oOh!media Fly's revenue from the Acquired Signs appears not to have been as bad as the analysts predicted for oOh!media Fly and oOh!media as a whole. 1. He then explained why he made this observation – it being unnecessary to set out his reasoning in support of this proposition. 2. As discussed in the next section of this judgement addressing recovery from the impact of COVID 19, the joint evidence of Mr Whitford and Mr Herring and, as a consequence of this, Dr Ferrier (on this topic) was infected by impermissible hindsight material.

Submissions

The Company's position 1. The Company submitted that COVID 19 revenue impacts could be quantified by looking to the actual impacts felt by the Company in relation to the 18 signs subject of the acquisition, as was Mr Halligan's approach. Mr Hemmings proposed that, but for the application of the foresight principle in Housing Commission of NSW v Falconer [1981] 1 NSWLR 547 (Falconer), any prediction about COVID 19 revenue impacts must have been based on information available to the marketplace before the acquisition date of 18 September 2020. 2. Mr Halligan had compared actual pre-COVID 19 revenue data from the calendar year 2019 against post-COVID 19 revenue data comprising actual revenues up to 17 September 2020 plus predicted counterfactual static revenues for the remainder of 2020 based on certain instructed assumptions. The Company submitted that this should be preferred to Dr Ferrier's approach, which had relied on information provided by the outdoor advertising experts where that relied upon post-acquisition ASX announcements, much of which was therefore not to be allowed into evidence (Company's Closing Submissions, page 29, paragraphs 160 to 162). 3. In response to TfNSW's criticisms about Mr Halligan's approach to projecting revenues from the acquisition date to the end of 2020, the Company submitted that Mr Halligan had confirmed in cross-examination that there was nothing in the factual information before him that invalidated the assumptions he had been instructed to make. The Company further submitted that Dr Ferrier had not criticised the veracity or implementation of the instructed assumptions, nor proposed a better approach to measure COVID 19 revenue impacts in the joint expert report (Company's Closing Submissions, page 30, paragraph 169 to page 31, paragraph 170; Transcript 16 May 2022, page 348, lines 8 to 18). The Company submitted that both forensic accountants and both outdoor advertising experts had agreed to use the same calendar year 2020 revenue, which reflected a decline of 8.6% compared to the calendar year 2019 (Company's Closing Submissions, page 30, paragraphs 167 to 168). 4. The Company noted that revenue for its overall business declined 65% in 2020 compared to 2019, much greater than the 8.6% decline in revenue for the acquired signs over the same period. To explain this anomaly, the Company referred to the joint opinion of the outdoor advertising experts, which suggested that the acquired signs were being used to target international travellers, and thus attracted international brand advertisers who were more likely to commit to longer term contracts than the Company's typical domestic customers (who tended to focus on more transactional and short-term contracts), thus protecting 2020 revenues. 5. Therefore, the Company submitted that the acquired signs experienced an anomalous COVID 19 impact that could not be compared against the revenue impacts on oOh!media, oOh!media Fly, or the advertising billboard market more generally (as the TfNSW sought to do) (Transcript 16 May 2022, page 347, lines 19 to 43).

TfNSW's submissions 1. It is to be noted, however, that TfNSW responded on the above final point that the outdoor advertising experts were only directing their attention to static signs, and not the effect upon digital signage revenue (Transcript 17 May 2022, page 381, lines 22 to 33). 2. TfNSW submitted that the impact of COVID 19 would have varied between static signs and notionally digitised signs. It proposed that the appropriate approach to assessing such impacts would have been to "observe the impact of COVID 19 on static and digital revenues between 1 January 2020 and 18 September 2020 from the actual financial information" (TfNSW's Closing Submissions, page 23, paragraph 121). 3. In relation to the 2020 static sign revenues, TfNSW submitted that revenue on some of the acquired signs was maintained up to the acquisition date of 18 September 2020, notwithstanding the COVID 19 pandemic, due to the existence of longer-term contracts for those signs. TfNSW referred to Annexure C.1 of the Statement of Evidence of Mr Herring and the oral evidence of Mr Dery in this regard. 4. However, TfNSW submitted that this data also indicated that the Company was not able to sell advertising spaces on the signs in the months approaching the acquisition once the contracts expired (TfNSW's Closing Submissions, page 23, paragraph 122). TfNSW submitted that, contrary to what was suggested in the oral evidence of Dr Ferrier, the email from Ms Young dated 16 June 2020 did not indicate that actual revenues declined due to the impending acquisition, but rather, the email showed that the signs were available for sale until the acquisition date of 18 September 2020. 5. TfNSW advanced the proposition that, had there been a buyer for the available advertising space, the Company would have sold it (TfNSW's Closing Submissions, page 24, paragraph 123). As such, TfNSW submitted that "[t]he rational explanation for the drop in revenue is the termination of existing contracts and the inability to sell the space to advertisers because of the impact of COVID" (TfNSW's Closing Submissions, page 24, paragraph 124). 6. TfNSW submitted that the COVID 19 revenue impact on the notionally digitised signs would have mirrored the actual impact of COVID 19 on the Company's other digital signs at Sydney Airport and other airport precincts. It was also submitted that in contrast to static signs, the contracts for digital signs were shorter in duration. TfNSW further submitted that according to industry experience, the revenue of actual digital signs immediately declined following the onset of the COVID 19 pandemic. Specifically, TfNSW said that all the evidence indicated that revenue from digital signs collapsed in April to May 2020 (Transcript 17 May 2022, page 381, lines 22 to 33). This evidence comprised actual pre-acquisition revenue data from the Joyce Drive digital signs and other Australian airports at which the Company operated digital signage assets (such as Melbourne external signs). TfNSW submitted that this actual pre-acquisition revenue data was representative of what would have happened if any of the acquired signs had been digitised by 1 January 2020. 7. In response to the Company's submissions, TfNSW submitted that Mr Halligan's assumption that the performance of digital signs would mirror the performance of all static signs was contrary to all the evidence in the case. In support of this, it was proposed, for example, that Mr Halligan's evidence that revenues for the 18 acquired signs from 1 January 2020 to 17 September 2020 (as impacted by COVID 19) only decreased 10.1% compared to pro-rata revenue from 2019 was inapplicable as it accounted for all 18 signs together without separating out notionally digitised signs, which TfNSW submits would have been impacted differently by COVID 19 (Transcript 17 May 2022, page 381, line 45 to page 382, line 8).

Consideration

Introduction 1. Having carefully reviewed the evidence and submissions on this point, I am satisfied that TfNSW's approach to assessing COVID 19 impacts should be preferred, namely that static and any notionally digital signs would have suffered different impacts to their revenues due to the COVID 19 pandemic. 2. In particular, I am satisfied that the sharp fall of actual revenues from digital signs around April to May 2020 is best explained by the fact that contracts for digital signs were of shorter duration compared to static signs This, I am satisfied, is supported by relevant elements of Mr Dery's oral evidence. Accordingly, from the date of notional digitisation on 1 January 2020 until the acquisition date of 18 September 2020, both static and digital signage revenue should be accounted for separately. I am also satisfied that evidence of revenue impacts upon the Company's other digital signs at the Sydney Airport precinct are those relevant in assessing the COVID 19 revenue impact upon the notionally digitised signs.

Digital signs 1. The base revenue from which the impact of COVID-19 would operate on the two counterfactually hypothetically digitised signs is the matter which I address first. 2. That decline is to be discerned, in my assessment, by considering the decline in revenue during 2020 for the digitised signs on Joyce Drive rather than on anything to be derived from the Melbourne or Brisbane external signs revenue in Ms Lau's spreadsheet. 3. I am not satisfied that there is a proper basis to assume that the COVID 19 impacts on digital signs identified as the Melbourne or Brisbane external signs shown in Ms Lau's spreadsheet can be regarded as comparable to those signs in Sydney. Confining the calculation to the Joyce Drive sign impacts, I am satisfied, does give the relevant comparable rate of decline for the hypothetically digitised signs (if they are to be taken as being digitised). 4. Therefore, the decline in the revenue from the two hypothetically digitised signs is to be determined by taking the pre-COVID 19 impacted revenue for the two signs identified for hypothetical digitisation (QDW1-I and QDW8-O); applying the 4x multiple earlier determined as the appropriate digitisation uplift factor; then applying the decline in revenue during 2020 caused by COVID 19 for the digitised signs on Joyce Drive.

The static signs 1. It is to be observed that the revenue for the Qantas Drive signs (amongst other things) was set out in the spreadsheet at Annexure A to Ms Lau's affidavit (Exhibit A, folios 200 19 to 221). This showed that there was a minor decline in the revenue from the Qantas Drive signs during the period up to the end of March 2020 (the relevant time when COVID 19 is assumed to have commenced impacting the Company's business). There were further declines, differing from sign to sign for the Qantas Drive signs, from April 2020 and onward until the date of acquisition. My examination of this spreadsheet data discloses that there is no common position which can be adopted to be applied to all of the acquired signs. 2. This leads me to the conclusion that the base revenue for these signs as a consequence of the impact of COVID 19 should be the actual revenue recorded for each of the acquired signs individually as at the date of acquisition (or all of the acquired signs other than QDW1-I and QDW8-O, if they are to be excluded as notionally digitised). What is then necessary is the derivation of the rate of recovery for each as shown as the position which existed immediately before the impact of COVID 19 in 2020. 3. To derive the revenue base from which the accepted COVID 19 recovery was to be effected by the end of 2023, on the assumption that it is sufficient for compensation purposes to undertake these calculations on an aggregated basis for all of the Qantas Drive signs (excluding those notionally digitised – if relevant), the starting base revenue should be the total actually achieved by the Company for the Qantas Drive signs as at the date of acquisition. How that base revenue is to be adjusted to achieve recovery, notionally, by the end of 2023 is dealt with in the next section of this judgement.

COVID 19 recovery

Introduction 1. A further matter to be resolved is how revenues would have recovered from the impact of COVID 19, both in terms of the duration required for complete recovery, and the profile of revenue during such recovery. 2. As to the first matter, although there initially appeared to be some contest between the parties during submissions as to the time at which revenues for the acquired signs would have recovered to 2019 levels, the common position appears to have been put forward that billboard revenues would recover by the end of 2023. 3. The remaining question is whether revenues would have recovered at a linear compounding rate of 3.05% per annum from 2021-2023 (as contended by the Company), or at a non-linear rate weighted towards the back end of that period (as contended by TfNSW). 4. The dispute between the parties concerning recovery of the relevant outdoor advertising market from the effects of COVID 19, uncontroversially for present purposes, was to a limited extent agreed to be a recovery which would occur by the end of 2023. The remainder of the dispute was as to the shape of the recovery and, therefore, the rate at which it would occur. 5. This involved consideration of limited evidence given by Mr Whitford and Mr Herring that was validly engaged for the purposes of my consideration. This observation is made because portion of their evidence was rejected on the basis that it was founded on hindsight (this hindsight evidence not being founded on confirmation of a foresight in a permissible fashion ‑ Falconer). The areas where the evidence of Mr Whitford and Mr Herring were rejected on this basis are noted in the summary of their evidence reproduced below. 6. As will be seen from the material validly in evidence reproduced below, and the submissions set out addressing that evidence, the competing positions are whether or not the appropriate assumption was that the recovery would be linear (the position advanced by Mr Halligan) or whether it should be on a variable or lumpy basis (as advanced by Dr Ferrier).

The expert outdoor advertising evidence

The written evidence 1. In Mr Whitford's Statement of Evidence, he set out, at paragraphs 43 to 44, his response to a question he was instructed to address: (o) What is the expected rate of recovery from the impact of COVID-19? 43 This is difficult to predict in the circumstances, forecasting by the industry peak body (OMA) and my personal expectations are that 2022 revenues will match 2019 revenues and then continue to improve from there as advertising revenue from other mediums such as television and radio transition across to outdoor advertising. 44 My experience from operating an outdoor advertising business is that some sectors of the outdoor advertising industry have been more affected by the impact of Covid-19 than others. Office tower lift digital advertising, transit and airport advertising and city centre based outdoor advertising assets have all been more severely impacted by Covid-19 than large format roadside billboards on major arterials. This is because the audience of these formats having been more impacted by Covid-19 lockdown and travel restrictions than roadside billboards. 1. In Mr Herring's Statement of Evidence, he addressed the topic of COVID 19 recovery at paragraphs 100 to 103. Paragraphs 100-102 were rejected (Transcript 10 May 2022, page 189, lines 42 to 43). In paragraph 103, he said: 103. Given the global concern with COVID and potential for future variants that existed as at September 2020, and the significant impacts on domestic and International Airport traffic in Australia at that time, it is my opinion that at the date of Acquisition the revenues from the Acquired Signs would have been expected to slightly improve in 2022 and only towards the end of 2023 would they return to 2019 levels. 1. Mr Whitford and Mr Herring were instructed to undertake further joint conferencing on the issue of COVID 19 recovery and to provide a supplementary joint expert report on this. A deal of what was provided in this supplementary joint report (Evidence Book at Tab C 4, folio 787) was rejected because it was based on tainted hindsight material (not admissible in any Falconer sense). The relevant portions of the supplementary joint report which were admitted were in the following terms: Interpolation of COVID Recovery In section 7 of the Joint Report, you opine on the expected timing of the return to pre-COVID revenues. Adopting the actual revenue from the signs of $1.537 million in FY December 2019 and $1.405 million in FY December 2020, and the agreed assumption it would also be $1.537 million in FY December 2024, what would the revenue for each of the years FY December 2021, 2022, and 2023? … ● We have been advised that the actual revenue for the AS (Acquired Signs) in 2020 was $1.405m taking into account cancelled contracts from September to December, 2020. This represents a 9% decrease from 2019 ($1,537m) ● Conversely, the oOh!Fly business declined 65% in 2020 from 2019. (ASX Announcement) ● Our opinion of this anomaly is that the AS, due to their targeting the international traveller, attracts international brand advertisers, who are more likely to commit to longer term contracts than the typical oOh!Fly domestic advertisers who are more transactional and short term. Therefore the 2020 revenues of the AS were relatively protected. [Bullet points 4 and 5 were rejected] ● The AS do reach a small amount of 'through traffic' (non-airport traveller) which would contribute an estimated 30% of the total revenue of the AS in 2019. Therefore 70% would be from an international advertiser base. [Sentence 3 of bullet point 6 was rejected] [Bullet point 7 was rejected] ● We agree to the estimates in the table below [Entire table except for first two lines rejected] 1. As noted above, Mr Whitford and Mr Herring included a table which commenced by setting out the relevant actual revenue pre-acquisition in its first two lines, but thereafter set out material which was tainted in the fashion noted in my introduction to this segment because it was based on impermissible hindsight. The table, with the rejected rows being left blank is, for completeness, set out below. 2019 Revenue $1,537k 2020 Revenue $1,405k 2021

2022

2023

2024

The oral evidence 1. Mr Whitford was cross-examined by Mr Hutley on this topic. Although somewhat lengthy, it is appropriate to set this out in full (Transcript 10 May 2022, page 244, line 3 to page 247, line 3): HUTLEY: Before I do so, you've agreed with Mr Herring that as at September 2020 a potential purchaser would have been expecting revenues from outdoor signage, particularly the signs which you assume or you take the view would have been present along Qantas Drive would return to 2019 levels by the end of 2023 or the beginning of 2024, that's calendar year. Is that correct? WITNESS WHITFORD: Yes, that's correct. … HUTLEY: In projecting forward as at 2020, what do you say the person I'd ask you to assume, the informed member of your industry is contemplating buying it, whether he or she would do, would at that time have thought about the stages of recovery of the income back to the 2019 levels by the end of 2023? How do you think such a person would have considered the recovery would take place? By stages? A straight line recovery? The same recovery between September 2020 and September 2021? Between 21 and 22? And 22 to 23? WITNESS WHITFORD: If you're asking me that with the benefit of hindsight HUTLEY: No hindsight. I want to strip out hindsight. I want you to set aside what you know. I'm asking you to put yourself back in the position you were in as an industry participant when confronted by the position in September 2020. Can I ask you this? You were in the industry in September 2020? WITNESS WHITFORD: Yes, I was. HUTLEY: Was it a matter of some concern to you to look forward at that time and see what and if a recovery would take place? WITNESS WHITFORD: Yes, it was. I saw it as a great opportunity to acquire assets and come out the other side of COVID. HUTLEY: Setting that aside, what are you thinking about, at that time, was the likely recovery of incomes from COVID? WITNESS WHITFORD: At that time, I was thinking that we would recover from COVID revenue challenges very quickly. We had not gone into a second bout of it in September 20 to, we were coming out the other end of it. HUTLEY: You've agreed that you think that you would return to the incomes as at 2019 by the end of 2023; correct? WITNESS WHITFORD: Yes, correct. HUTLEY: What I want you to tell his Honour is how would that recovery take place? How did you consider, in 2020, that recovery would take place? By what stages? WITNESS WHITFORD: I wouldn't have said I contemplated it at that point in terms of what it would recover to and how that would happen in very lumpy bases, I imagine, but you would get certain momentum in the industry and then there would be another jolt of some description for COVID, but I don't think anyone would forecast how quickly or how long it would take to get out of the COVID impact, at that point, accurately. HUTLEY: No one could do it precisely, because nobody with foretell the future; correct? WITNESS WHITFORD: Yes. HUTLEY: Do you think there was an industry view as to how it would occur or do you think there was just so many views, you're unable, as it were, express an opinion as to how you think a purchaser would have viewed that recovery process? WITNESS WHITFORD: The general industry view was that we would recover to 2019 in 2022, 23, that was the general industry because, but that's a broad range of assets. Certain assets recovered a lot quicker. 1. Mr Hutley asked Mr Herring to respond to the above evidence from Mr Whitford. This element of Mr Herring's evidence is set out below (Transcript 10 May 2022, page 247, line 5 to page 248, line 3): HUTLEY: Could I just ask you, Mr Herring, again, looking as at 2020, as at September, were you dealing with people in the industry in relation to the prospects of the industry recovering from COVID? You're on mute. WITNESS HERRING: Sorry. Not formally, no. HUTLEY: When you say not formally, were you doing it informally? WITNESS HERRING: Yes, I would have been doing it informally. HUTLEY: Did you have a view, at that time, as to what the likely, as it were, path to recovery to income levels, pre-COVID would be? WITNESS HERRING: -I had some broad views, and, you know, again, like everyone trying to recall a point in time which I think was pre vaccine approval and various stages of lockdown and, certainly, with respect to these signs, virtually no International travellers at all, and, broadly, you know, as we said, outdoors is observed by an audience, and when there's no outdoor audience being in the cars on roads, in trains, there's probably no advertising. So, at that point was probably a very low point. I think, my view, in that case, could have been that again, no one is an expert - that it would recover. I think the - I do recall my view at the time was that, advertisers in their planning, as we all know, they choose different media when they're having - sorry - culmination for a meeting when they're got a campaign, it's not just outdoor, and they do get into a routine of booking their media, although, you know, it obviously changes. If outdoor is virtually totally out of routine, i.e. they were directing their moneys towards television, which was still a, obviously, with a stay-at-home orders, still an opportunity, and, also, online, being digital advertising, that - my view was that outdoor would - there would be a lag in bringing outdoor back, just in terms of people's - they were used to booking other media. So, that fully answers your question. HUTLEY: Did you have a view as to what that lag would be as at the beginning of the final quarter in 2020, did you have a view as to the likely lag? WITNESS HERRING: My view was that it would return in late 2023. Now, that's not because I had benefit the hindsight or future, that would have been my view. HUTLEY: Did you have a view as to the stages - any stages of recovery? In other words, when it lags, would there be a late recovery or a staged recovery or what, to return to those levels? WITNESS HERRING: I think my view was that 2021 would have, on the back of momentum from 2020, what we knew, 2021 would have been a significant decline and then - there would have been - it's not - I think you mentioned for a straight line recovery. I think it would have been more push towards the back end in 2022, ending 23 before - 21 and early 22 would be relatively sublime in its return. 1. With respect to the above passages, Mr Hemmings cross-examined Mr Herring (Transcript 10 May 2022, page 249, lines 11 to 38): HEMMINGS: I'll start with anyone. Were you providing, in September 2020, in a professional capacity, were you providing advice to anyone in relation to the likely recovery from the impacts of COVID for the outdoor advertising industry? WITNESS HERRING: I was engaged by Transport New South Wales on this case at that point in time. HEMMINGS: Is that the only professional role you had in September of 20? WITNESS HERRING: Yes. HEMMINGS: So, you were neither, other than for this case, you were neither providing formal, nor informal advice to any persons in the marketplace about the likely recovery from the impacts of COVID? WITNESS HERRING: Not advertise, no. HEMMINGS: Is that a distinction you're making? Were you doing something other than providing advice? WITNESS HERRING: I was just answering the question. HEMMINGS: I'm just trying to see if it was a precise answer or an advice..(not transcribable)..Were you providing any advice, services or anything other than sitting around a dinner table over a glass of wine saying to people, "I wonder when we're going to recover from this"? WITNESS HERRING: No. 1. In response to Mr Herring's opinion, Mr Whitford opined (Transcript 10 May 2022, page 248, lines 5 to 28): HUTLEY: Would you agree with that assessment, Mr Whitford, putting yourself back in, as best you can, as at the beginning of the last quarter of 2020? WITNESS WHITFORD: I thought I just answered that, and I said that the - my expectation on recovery was quite bullish at that point, given that we'd come out of the first wave of COVID and the end of 2020 and the first quarter of 2021 weren't actually bad from the trading perspective, and then we went back into a second wave of it. So, I don't think beyond - at that point, I expected the impact to be temporary and recover very quickly and, indeed, what we saw was a bit of a hockey stick approach where people did react quickly and there was an immediate uplift. Over the longer term, forecasting forward, in answer to your question about the lumpiness, I didn't - I wasn't sure about how that would play out in the 2021-22 market, but at the immediate point I was bullish about the recovery. HUTLEY: Differing views - there were a lot of pessimists in the in the market place, were there not, also? WITNESS WHITFORD: There certainly were, based on the range of assets that they had, but in the March format out of home, from an industry perspective, it was seen as something that may recover quicker and, obviously, in gym advertising or in office advertising, which still hasn't recovered.

The Forensic Accounting Evidence 1. Mr Halligan and Dr Ferrier addressed the question of revenue recovery from COVID 19 for the Qantas Drive signs at paragraphs 18 to 29 of their joint expert report. It is convenient to set out this evidence in full as it is comparatively brief and is self-explanatory: IV REVENUE RECOVERY FROM COVID-19 18 The experts state: (a) The disagreement concerns by when, and at what rate, the static revenue will recover from COVID-19 to its pre-COVID 19, CY2019 level. (b) In summary: (i) Halligan's opinion is that: (1) the appropriate forecast rates of change are an increase of 3.05% for each of the years from CY2021 to CY2023, and thereafter an increase at an inflation rate of 2.5% per annum; and (2) the revenue will return to the CY2019 level in CY2023, which is based on the opinions of market analysts; whereas (ii) Ferrier has adopted the jointly agreed opinion of Messrs Whitford and Herring in their second joint report that: (1) the appropriate forecast rates of change are a decline of 53.02% for the CY2021 year, an increase of 59.85% for the CY2022 year, an increase of 29.1% for the CY2023 year and an increase of 12.85% for the CY2024 year; and (2) the revenue will return to the CY2019 level in CY2024; (iii) depending on what finding the Court makes about this question, the experts may need to adjust their calculations accordingly. HALLIGAN'S OPINION 19 I address this matter in HR 38 to 44. 20 Both Dr Ferrier and I agree on the applicant's revenue for CY2020. At BH 42, I note that the effect of COVID-19 pandemic on the applicant 's revenue from the Acquired Signs appears not to have been as bad as the analysts predicted (i.e. its CY2020 revenue declined by about 8.6% from the CY2019 level, compared to the analysts' average forecast decline of 56%). 21 Starting with the applicant's CY2020 revenue, I increase the revenue for each of CY2021 to CY2023 by 3.05% per annum to bring the revenue for the Acquired Signs back to their CY2019 level by CY2023. My approach takes into account the revenue that the applicant has generated in CY2020 which includes the COVID-19 effect, and the analysts' forecasts dated 24 August 2020 (BH Appendix 16) that the revenue of the applicant (where specifically stated) and oOh!media would be back at the CY2019 level by CY2023, as follows: (a) JP Morgan's report at page 1: "The Fly segment faces obvious headwinds as growth will not return until FY23"; (b) MST Marquee's report at page 4: " Our base case is for OML [oOh!media] revenue (ex Fly) back to 2019 levels by mid 2023F. We believe that this is a conservative forecast and hopefully the recovery will be faster"; and at page 5, where the graph shows that revenue for oOh!media Fly would be at CY2019 level by CY2023; and (c) Canaccord Genuity at page 1 which forecasts that oOh!media's CY2022 revenue would be back at 90% of the CY2019 revenue. 22 MST Marquee provides the following graph at page 5 of its report (BH Appendix 16) of historical and its forecast of revenue, which reveals that: (a) in CY2019 the applicant's actual revenue (shown in blue in the graph) was $66 million ($650 million less $584 million); (b) for CY2023 MST Marquee forecasts that the applicant's revenue would be back at $66 million ($670 million less $604 million); and (c) in CY2024 would increase by 4.5% to $69 million (i.e. $702 million less $633 million). (In my calculation, I took a conversative position of keeping the growth rate in CY2024 to 2.5%, instead of 4.5%.) 23 In BH 40, I state that the analysts forecast that revenue would be back at the CY2019 level by CY2023 and I note that Messrs Whitford and Herring in their (then) first joint report were (as I understood it), of the same view. In saying that I was referring to the last paragraph of their report where they agree: Given, the data available and opinion, we would anticipate that revenues on the Acquired Signs would return to that of 2019 levels towards the end of 2023. 24 Since issuing my report, Messrs Whitford and Herring have issued their second joint report. In their response to question 1 in that report, they express the opinion that the revenues would be: …ultimately returning to the 2019 levels in 2024. 25 The opinion in their second joint report appears to be at odds with the opinions of the analysts (and in particular MST Marquee), which were issued shortly before the Acquisition Date, in that Messrs Whitford and Herring believe that the return to the 2019 level of revenue would occur in CY2024 whereas the analysts appear to have believed shortly before that Acquisition Date that it would occur in CY2023. 26 For the purpose of the present value calculations, the appropriate cashflows ‑ including the revenue over CY2020 to CY2024 ‑ are those that would have been expected at the Acquisition Date. In my opinion, the views expressed by the analysts shortly before the Acquisition Date are reasonable evidence of the expectation for revenue at that date. 27 If the Court prefers the evidence of Messrs Whitford and Herring over the analysts, then my calculations would have to change accordingly. FERRIER'S OPINION 28 For the purposes of his financial modelling, Dr Ferrier has adopted the agreed expert opinion of Messrs Herring and Whitford. 29 In response to Mr Halligan's comments in this section of the report, Dr Ferrier notes that: (a) In their first joint report, Messrs Whitford and Herring were not "of the same view" as the analysts that "revenue would be back at the CY2019 level by CY2023" (as stated by Mr Halligan in paragraph 23 above). Rather, Messrs Whitford and Herring agreed that revenue from the acquired signs would return to 2019 levels "towards the end of 2023". An explicit subsequently agreed assumption that the revenue for the whole of 2024 would be the same as the revenue for the whole of 2019 is consistent with their earlier agreement; (b) Mr Halligan is wrong when he states that "CY2020 revenue declined by about 8.6% from the CY2019 level" in paragraph 20 above. The actual decline in revenue for CY2020 is unknown. Although the asserted amount of revenue for the 2020 year has been adopted by both experts, that amount does not represent the actual revenue for that year, because the signs were acquired on 18 September of that year. The revenue which has been adopted by both experts for the period 18 September 2020 to 31 December 2020 is a forecast which has been prepared by Mr Halligan, based on the following assumptions: (i) Had the acquisition not occurred, total revenue in September 2020 would have been $100,000, an assumption which Mr Halligan was instructed to adopt (Dr Ferrier notes actual reported revenue for the period 1-17 September 2020 was $33,215 as reflected in Annexure A to Ms Lau's affidavit dated 24 December 2021); (ii) Total revenue in Q4 FY20 (October 2020 - December 2020) would have been $338,061, because the revenue in Q3 FY20 was $301,304 (including the hypothetical forecast revenue for September 2020) and, in FY19, Q4 revenue was 12.2% greater than Q3 revenue; (iii) Forecast total revenue of $338,061 in Q4 2020 represents a 23.1% decline on total Q4 2019 revenue, and that assumed decline of 23.1% from the corresponding 2019 period would have occurred in each month from October 2020 to December 2020. (c) JP Morgan's statement that "The Fly segment faces obvious headwinds as growth will not return until FY23" is more pessimistic than the forecast agreed by Messrs Whitford and Herring, who have forecast a return to growth in FY22. Mr Halligan has forecast a return to growth in FY21; (d) MST Marquee's forecast of revenue of $38m for Fly in FY21 (table at page 5 of pdf page 215 of HR) was overly optimistic. oOh! Fly reported revenue of $12.2 million in FY21 (see FR page 167).

The submissions

The Company's submissions 1. The Company submitted that the evidence of Mr Halligan, should be accepted when quantifying COVID 19 revenue recovery for the acquired signs. Mr Halligan applied the prediction of MST Marquee (a market analyst) that revenues for the acquired signs would recover from the impacts of COVID 19 by the end of 2023, a prediction that the Company submitted was consistent with the opinion of the outdoor advertising experts in their first Joint Expert Report (Company's Closing Submissions, page 31, paragraph 174; Transcript 16 May 2022, page 348, line 45 to page 349, line 25). 2. The Company submitted that the Court should accept Mr Halligan's approach of increasing revenues in a "straight line" at a rate of 3.05% per annum in 2021, 2022, and 2023 in the absence of any other available evidence (Company's Closing Submissions, page 32, paragraph 175). By contrast, the Company also submitted that the quantification of COVID 19 recovery by TfNSW's forensic accountant, Dr Ferrier, was based entirely on elements of the the opinions of the outdoor advertising experts not allowed into evidence (Company's Closing Submissions, page 31, paragraph 172).

TfNSW's submissions 1. TfNSW submitted that revenues for the acquired signs would recover to 2019 levels by the end of 2023, but that the recovery curve would likely be lumpy and accelerate towards the back end of the 2021‑2023 period (Transcript 17 May 2022, page 383, lines 9 to 11). This submission was based upon the jointly agreed opinion of the advertising experts rather than the industry analysts preferred by Mr Halligan. TfNSW submitted that digital and static signs would have had different contractual profiles, performed differently through the impacts of COVID 19, and had different COVID 19 recovery profiles. TfNSW advanced that the actual performance of digital and static signs in 2020 would have informed a hypothetical purchaser's projection of COVID 19 recovery (TfNSW's Closing Submissions, page 23, paragraph 120). 2. TfNSW further submitted that the outdoor advertising experts had referred in error to post-acquisition information in their Further Supplementary Joint Expert Report, resulting in much of their opinions on this topic not being allowed into evidence. However, TfNSW submitted that the effect of this error should not be that Mr Halligan's "straight line" 3.05% per annum compounding recovery rate be accepted, but rather, that the Court would have to form a judgment as to "how a fully informed hypothetical purchaser would have viewed the likely profile of the revenue recovery as at the Date of Acquisition" based on "the experts' contemporaneous views and the analyst predictions" that were available (TfNSW's Closing Submissions, page 25, paragraph 130). 3. TfNSW said that a range of evidence had been provided on this issue, namely (TfNSW's Closing Submissions, pages 25 to 26, paragraph 131) – internal reference omitted: a) revenues on digital signage only sustained until May 2020, when there was a "precipitous collapse"; b) the static revenue on some of the Acquired Signs was maintained to the Date of Acquisition due to long term contracts; c) where static contracts expired prior to the Date of Acquisition, they had not been renewed; d) there was pessimism in the market; e) some purchasers took advantage of the uncertainty in the market (for instance, Mr Whitford was "bullish at that point"); f) the projected recovery in 2021 and 2022 was uncertain; g) the Date of Acquisition was a low point for revenues, with the International Airport closed and no approved vaccine; and h) the primary market for the Acquired Signs was traffic to and from the International Airport from the east via Joyce Drive and only some commuter traffic. 1. In response to the Company's submissions, TfNSW submitted that Mr Halligan's assumption that the performance of digital signs would mirror the performance of all static signs was erroneous and would have rendered inapplicable his opinion regarding a 3.05% compounding revenue recovery rate until 2023 and rendered baseless his acceptance of instructions regarding the revenue of static signs in the final quarter of 2020 (Transcript 17 May 2022, page 382, lines 10 to 14). 2. TfNSW also submitted that Mr Halligan's derivation of the 3.05% per annum recovery rate was inconsistent with the predictions of the industry analysts upon which he based his 2023 recovery date. It advanced that those industry analysts had, on average, predicted the Company's revenue to decline by 56.3% in 2020, with a staggered recovery thereafter. TfNSW submitted that if six signs were digitised on 1 January 2020 (as on the Company's case), they would not have had the protection of long term contracts as would have been the case for static signs, and would have faced the same immediate revenue drop as the digital signs in Brisbane, Melbourne, and Joyce Drive. TfNSW proposed that this would have been a "much more significant drop" than the 10.1% revenue decline between calendar years 2019 and 2020 identified by Mr Halligan (TfNSW's Closing Submissions, page 25, paragraph 129). 3. Furthermore, in response to the Company's reference to the fact that Sydney was in the process of "opening up" from COVID 19 lockdowns in September 2020, TfNSW advanced that COVID 19 impacts upon the acquired signs did not depend solely on the performance of the Sydney airport market, but would have also depended upon how other related airport markets were impacted (for example, in other States and around the world). TfNSW proposed that there was no evidence provided on this point (Transcript 17 May 2022, page 382, lines 34 to 46). 4. TfNSW also submitted that in 2020, there were many different views about how revenues would recover and that a pessimistic view that recovery would take place by the end of 2023 could not have been described as an irrational one (Transcript 17 May 2022, page 382, line 46 to page 383, line 2).

Consideration 1. Determination of the COVID 19 recovery profile was made significantly more difficult than might otherwise have been the case because the evidence of Mr Herring and that in the outdoor advertising experts' Supplementary Joint Report on interpolation of revenue recovery relied on post-acquisition information and were therefore rejected on the fourth day of the hearing. 2. As can be seen from the admissible portions of the evidence on this topic and the submissions based on it, resolution of the competing positions of the rate at which the hypothesised future revenue from the Qantas Drive signs would recover from the impact of COVID 19 to reach the agreed outcome of full recovery by the end of 2023 is a task where the competing positions appear equally balanced. This balance arises as a consequence of the rejection of portion of the evidence of Mr Whitford and Mr Herring where they opined on matters impermissibly. 3. In Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391, Allsop P said, at [3]-[4]: 3. The general principle that in determining compensation to a dispossessed owner doubts should be resolved in favour of a more liberal estimate is well-known: see generally A Hyam The Law Affecting Valuation of Land in Australia (4th Ed 2009 Federation Press) at 316-318. That does not, however, detract from the need to engage with and evaluate evidence and competing witnesses. If, however, upon engagement and assessment, the judicial valuer finds, for example, as Anderson J did in Cook and Edwards v City of Sterling (1991) 4 WAR, that the reasoning of both valuers was not fallacious, that their respective capitalisation rates were open, that none took into account irrelevant considerations and no errors otherwise appeared, the proper conclusion might be that there are simply two open views on the relevant issue ‑ as there can be in ascribing a value: cf Fenton Nominees Pty Ltd v Valuer-General (1981) 47 LGRA 71 at 76-77. In such circumstances, applying the general principle would be uncontentious. 4. It is not helpful to examine the scope of the general principle in the abstract beyond saying that it is not a licence to accept one expert over another without undertaking the task of assessing the evidence in the usual way. If a judge properly undertakes that task, the evaluation of the evidence may well persuade the judge to accept the evidence favouring the resuming authority. That would be a product of assessing the evidence. That process is not to be abandoned as the statement of the judge at [81] of her reasons would suggest she did. 1. This approach is one now conventionally adopted, as a matter of course, when there is, in an evidentiary weighing process, a choice to be made between rationally available and potentially justified positions and where one of them would lead to a more beneficial outcome for the person whose interest in land was being compulsorily acquired for a public purpose. It is a broad principle and, as is the general framework of the Land Acquisition Act, one which addresses any acquisition of an interest in land (as defined) for a public purpose and the resulting dispossession of the holder of the interest in the land. 2. As a consequence of the earlier explained evidentiary deficiency on this topic and the scope of the remaining evidence, I am satisfied that circumstances of the type described in Caruso here arise. It therefore follows that the position of a linear recovery advanced on behalf of the Company, as the dispossessed owner, should be adopted as the outcome on this point. Doing so results in the adoption of a linear recovery rate from the effects of COVID 19 with full recovery being achieved by the end of 2023. The combination of this conclusion and that set out at [340] requires the calculation and adoption of a uniform rate of recovery for the static signs to achieve this. Whether or not that rate of recovery is 3.05% will be disclosed by undertaking the calculation necessary to derive a linear rate of recovery between the starting and concluding revenue amounts.

Application of Profit Rent Method 1. As I have concluded, for the reasons earlier explained, that the appropriate valuation methodology to be adopted is that of the application of a discounted cashflow process, it is not necessary to undertake any further (and unnecessary) consideration of what might result from application of a profit rent approach. 2. As can be seen from that earlier explanation, the relevant evidence establishes that the hypothetical purchaser of the acquired signs in a transaction undertaken pursuant to s 56(1) of the Land Acquisition Act would be one of the Company's major player competitors in the outdoor advertising market. For the reasons earlier set out, any possibility of there being in intervening investor seeking to sublease the signs and, through that process, seek to arbitrage an additional profit rent (thus engaging the necessity for an alternative valuation process based on such profit rent methodology) is therefore to be rejected as unnecessary and inappropriate to be considered further. 3. In this context, it is also unnecessary to address in any detail the submissions that were advanced for the Company in support of such an arrangement or for TfNSW in explaining why, in the context of the lease between the Company and the ARTC, such an arrangement would not be capable of being effected. 4. It is sufficient to note, for present purposes, that had I been required to do so, I would have explained why I preferred the oral closing submissions of Mr Hutley (Transcript 17 May 2022, page 386, line 21 to page 388, line 43) (over those advanced on behalf of the Company) in support of the unavailability of such an external investor arrangement being effected – particularly the impediments discussed by Mr Hutley as arising from the terms of the lease between the Company and the ARTC as at the date of acquisition.

Tax Gross Up

Introduction 1. As part of its claim in relation to market value, the Company claimed a "tax gross up" to account for DCF calculations being made using a post-tax discount rate (Company's Closing Submissions, page 48 to 49, paragraph 262). Whether it is entitled to such a tax gross up is a matter for determination in these proceedings. The Company sought a "tax gross-up" of $4,180,000 for the tax payable on receipt of the compensation so as to leave it in the same position it would have been in but for the Acquisition. 2. The claim is formulated in the Company's Amended Points of Claim dated 20 October 2021 in the following terms: 32 The Applicant claims compensation for the market value of the Acquired Lease pursuant to s.55(a) of the Just Terms Act determined by reference to the net present value (NPV) (or discounted cashflow (DCF)) of a hypothetical purchaser's future earnings derived from the Acquired Signs as at the Acquisition Date in the amount of $22,181,000 on the following basis: (a) …; (b) …; (c) …; (e) …; (f) inclusive of a tax gross-up; (g) ….

The submissions

The Company's submissions 1. The Company submitted that a tax gross up is necessary to ensure that it is fully compensated for the value of the acquired land. It advanced that if a tax gross up is not awarded, it would in effect be taxed twice ‑ first, by the allowance for tax in the DCF calculations, and second, by the tax paid on the quantum of compensation resulting from such calculations (Company's Closing Submissions, page 48 to 49, paragraph 263). The Company noted that the precise quantification of the tax gross up would depend upon whether I took the DCF or profit rent approach and my final determination of the inputs for calculations (Transcript 17 May 2022, page 368, lines 29 to 32). 2. The Company accepted that there were authorities of this Court which held that income tax, capital gains tax, and land tax were personal liabilities not related to use of land as required for a claim for loss attributable to disturbance under s 59(1)(f) of the Land Acquisition Act or special value under s 55(b) of that Act. The Company noted Burns v Eurobodalla Shire Council (2006) 149 LGERA 227 ('Burns v Eurobodalla Shire Council'), Attard v Transport for NSW (2014) 205 LGERA 396, and Canal Aviv Pty Ltd v Roads and Maritime Services [2018] NSWLEC 52 (Canal Aviv) in this context. 3. The Company submitted, however, that these cases were wrong in this respect. It advanced that the fact that its personal circumstances would have a bearing on the calculation of tax liability did not have the consequence that the future tax liability did not "[relate] to the actual use of the land, as a direct and natural consequence of the acquisition" under s 59(1)(f) or was not "incidental to" its use of the land under s 57. 4. The Company submitted that "any tax liability that arises as a result of the disposal of the land, must arise from the dispossessed landowner's use of it otherwise the change in circumstances occasioned by the acquisition would not cause the liability to arise in the first place" (Company's Closing Submissions, page 50, paragraph 266). The Company focused on the wording of the test for special value in s 57, submitting that it required an advantage "incidental to" the person's use of the land, rather than requiring "actual use of the land, as a direct and natural consequence of the acquisition", as is the case for a disturbance claim under s 59(1)(f). 5. Furthermore, the Company submitted that none of the prior authorities had grappled with what it described as the "primary function" of s 55 of the Act, which was to determine compensation, being restoration of a dispossessed landowner to its previous position. The Company advanced that this underlying rationale must inform the application of s 55, including to avoid "double taxation". It submitted that in circumstances such as this case, a tax gross up was an accepted method of adjustment to compensation by way of damages, citing the Court of Appeal in Sydney Local Health District v Macquarie International Health Clinic Pty Ltd [2020] NSWCA 274 (Sydney Local Health District) (see the Company's Closing Submissions, page 49, paragraph 265 to page 50, paragraph 268).

TfNSW's submissions 1. TfNSW submitted that, given the Company's claim for tax gross up was made in part under market value, the tax being claimed (if any) was that which was payable upon sale of the lease, being capital gains tax (TfNSW's Closing Submissions, page 14, paragraph 74). In relation to the merits of the Company's claim for tax gross up, the TfNSW submitted (TfNSW's Closing Submissions, page 14, paragraphs 75 and 76): 75. This claim must fail for the following reasons: (a) It does not meet the statutory definition of market value or special value: (i) it is not market value as the hypothetical purchaser would not include in the market value of the Acquired Lease a potential tax liability that is personal to the Applicant; (ii) it is not special value, as it is not a financial advantage derived from the Leased Land in addition to the market value. Income tax liability is a personal tax liability to the Applicant, and is not associated with the actual use or value of the Acquired Lease; and (b) It is settled law that such claims are not compensable, based on multiple Court decisions rejecting analogous claims for capital gains tax. 76. Separately, even if the tax gross-up claim is potentially a claimable item under the Just Terms Act (which it is not), the loss which might be incurred is too remote at the date of acquisition to be compensable, as the application of income tax laws is contingent on future personal liability to pay tax on the award of compensation. 1. In relation to paragraph 75(b) above, the TfNSW submitted that the "authorities of this Court speak with one voice" and were "wholly correct" (Transcript 17 May 2022, page 378, lines 10 to 11), citing Burns v Eurobodalla Shire Council at [27], Prince Alfred Park Reserve Trust v State Rail Authority (NSW) (1997) 96 LGERA 75 at 89, Russellan Pty Ltd v Roads and Traffic Authority (NSW) (1992) 75 LGRA 263 at 273, and Chong v Fairfield Municipal Council (1968) 16 LGRA 407 at 411.

Consideration 1. Although only dealt with on a contingent basis and therefore not binding on me had it otherwise been relevant, the decision of the Court of Appeal in Sydney Local Health District is of no assistance to the Company in these proceedings. Although the Court of Appeal explained that, at [465] to [483], why a claim for mesne profits might otherwise have succeeded and result in the ordering of a tax gross up in those circumstances, the circumstances arising in those proceedings were distinctly different from, and unrelated to, the circumstances here arising. 2. The tax gross up circumstances, there addressed arose in the context of the potential availability of a claim for mesne profits. Mesne profits are defined in Oxford Australian Law Dictionary (3rd edition) as: The person with an immediate right to possession of land is entitled to demand mesne profits from a trespasser as damages for trespass: Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; Hampton v BHP Billiton Minerals Pty Ltd [No. 2] [2012] WASC 285. 1. It is clear that a claim for mesne profits arises only in circumstances where there has been an unlawful dispossession of the owner of a relevant interest in land and what is being sought as mesne profits is an element of a claim for damages on a common law trespass claim. 2. In these proceedings (as is the position with all proceedings under the Land Acquisition Act), the compensation here sought is compensation for the lawful dispossession by the acquiring authority where that dispossession is effected within the framework of a codified statutory scheme ‑ that codification being provided by, and confined to that which arises from, that the heads of compensation in the Land Acquisition Act. 3. As was noted in the submissions on behalf the Company, proposition that tax gross ups should be allowed in the context of the statutory codified compensation scheme provided by the Land Acquisition Act have been rejected in the past. One of the cases acknowledged by Mr Hemmings as doing so is Canal Aviv Pty Ltd v Roads and Maritime Services [2018] NSWLEC 52 (Canal Aviv) ‑ a decision of my own. In Canal Aviv, at [257] to [261], I explained why the operation of s 56(1)(a) of the Land Acquisition Act operated for consideration of how the bargain between the hypothetical vendor and the hypothetical purchaser would be struck. It is not necessary to set out the detail of that discussion, it is sufficient to note that I there explained why, in that bargaining process, no tax gross up would have been incorporated as part of the market value bargain to be struck by those hypothetical market participants. 4. Although the circumstances there addressed arose in the context of whether or not compensation for a land tax liability should be allowed, the principles are applicably the same in these proceeding on whatever basis is said by the Company to found the tax gross up basis for this element of its claim. It follows, therefore, that this element of the Company's market value claim must be rejected. 5. As will be seen when I set out below and address the two elements of the Company's claim advanced as maintainable pursuant to s 57 Special value of the Land Acquisition Act, a tax gross up element is included in the formulation of these claims (the "Halo effect" and the "Digital advantage" claims) as set out in the Company's Amended Points of Claim. As I have rejected each of these claims on the basis that the Company has not established either of them on the balance of probabilities on the evidence available to me, it is unnecessary to address in any detail whether a tax gross up would potentially be available. However, I observe that, consistent with that which I have set out above, that reasoning would apply equally to these two special value claims.

The Special Value claims

Introduction 1. The claims for the "Digital advantage" and the "Halo effect" are ones advanced pursuant to ss 55(b) and 57 of the Land Acquisition Act, provisions appropriate here to repeat. They are, relevantly, in the following terms: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)— (a) …, (b) any special value of the land to the person on the date of its acquisition, (c)-(f) …. 57 Special value In this Act— special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 1. These claims are formulated in the Company's Amended Points of Claim dated 20 October 2021 in the following terms: 33 In addition to the claim for compensation for market value under s. 55(a) of the Just Terms Act set out at paragraph 32, the Applicant claims compensation for the financial value of the advantage it derived from the Acquired Signs in addition to the market value of the Acquired Lease as special value under s.55(b) of the Just Terms Act. 34 The Applicant's advantage in addition to market value, which was incidental to its use of the Acquired Land, was: (a) the ability to obtain a higher uplift in revenue from the digitised signs than its competitors in the market (Digital Advantage); and (b) the ability to sell other advertising signs (not located on the Acquired Land but in other airport precincts in Adelaide, Brisbane, Cairns, Darwin, Launceston, Melbourne, Newcastle, Coolangatta and Qantas Clubs and Lounges) (Multiport Signs) as part of a package, which included the Acquired Signs such that the revenue from the Multiport Signs is greater than the revenue that could have been earned from those signs if they were not packaged with the Acquired Signs (Halo Effect). 35 The financial value of the Digital Advantage is $13,933,000, determined as: (a) $9,753,000 being the difference between the present value of the future net cashflows from the Acquired Signs based on the revenue from Sign Nos. 1, 4, 6, 8, 17 and 18 after digitisation being higher than the pre-digitisation revenue by a multiple (digitisation multiple) of: (i) 12.4 times (which produces a present value of $25,280,000), which is the multiple that the Applicant would have achieved and which is based on the multiple that the Applicant did achieve from the digitisation of non-Acquired Signs in the Sydney Airport precinct; and (ii) 8 times (which produces a present value of $15,527,000) which is the multiple that a purchaser of the Acquired Signs could have achieved; (b) plus an amount of $4,180,000 for the tax that will be payable on receipt of the compensation so as to leave the Applicant in the same position that it would have been in but for the Acquisition (tax gross-up). 36 The present values referred to in paragraphs 35(a)(i) and 35(a)(ii) are determined using the DCF method based on the following: (a) the revenue from the Acquired Signs from 1 January 2020 to the end of the lease term on 30 June 2040 based on: (i) for CY2020, revenue from the Acquired Signs based on the following: (1) the historical revenue from the Acquired Signs from 1 January 2020 to 17 September 2020 (which reflected the effect of COVID-19 to that date); (2) forecast revenue from the date of Acquisition of 18 September 2020 to 30 September 2020 based on the average historical revenue for the months of July 2020 and August 2020 less the historical revenue for the first 17 days of September 2020; (3) forecast revenue for the remainder of CY2020 (i.e. the fourth quarter) based on historical quarterly change in revenue in the third and fourth quarters of CY2019; and (4) an allowance for the increase in revenue from the digitisation of Sign Nos. 1, 4, 6, 8, 17 and 18 based on the digitisation multiple of 12.4 times or 8 times, as appropriate; (ii) for CY2021 to CY2023, forecast revenue calculated by taking the total revenue for the Acquired Signs for CY2020 and adjusting it for the effect of COVID-19 based on analysts' predictions that the Applicant's revenue would be back at the CY2019 level by CY2023; (iii) for CY2024 and each year up to the end of the lease term on 30 June 2040, forecast revenue calculated by taking the figure for the previous year and increasing it by an inflation rate of 2.5% per annum; (b) deductions for initial capital expenditure to digitise, and subsequent capital expenditure to maintain, Sign Nos. 1, 4, 6, 8, 17 and 18; (c) in each year deductions for: (i) agency commission of 7% of revenue; (ii) other variable expenses at 13.5% of revenue from static signs and 4% of revenue from digital signs; (iii) rent and associated expenses in accordance with the lease agreement, and agreements with the Sydney Airport authority and Bayside Council; (iv) tax at 30%; and (d) discounting the resulting periodic net cashflows back to a present value at a discount rate of 9.4% per annum. 37 The financial value of the Halo Effect is $15,494,000, which is determined using the DCF method to determine the present value of the future net cashflows from the Multiport Signs in relevant multi-port sales. 38 The financial value set out in paragraph 37 is calculated based on the following: (a) the revenue from Multiport Signs sold in relevant multi-port sales being 30% higher than the revenue would have been if the Multiport Signs had been sold other than in a relevant multi-port sale (Halo Premium); (b) in CY2019, the Halo Premium from Multiport Signs sold in relevant multi-port sales was $2.1 million of revenue; (c) for CY2020 to CY2024, a forecast Halo Premium calculated by taking the figure of $2.1 million for CY2019 and adjusting it for the expected effect of COVID-19 based on analysts' predictions; (d) for CY2025 and each year up to the end of the lease term on 30 June 2040, a forecast Halo Premium calculated by taking the figure for the previous year and increasing it by an inflation rate of 2.5% per annum; (e) in each year amounts, deductions for: (i) variable costs at 30% of revenues; and (ii) tax at 30%; (f) discounting the resulting periodic net cashflows back to a present value at a discount rate of 9.4% per annum; and (g) adding a tax-gross-up.

Digital advantage

Introduction 1. The Company's claim for what it describes as its "digital advantage" is summarised in the Company's closing written submissions at (247) to (251): 246. The Applicant has identified the difference between the actual multiple value achieved at the Joyce Drive site (at 12.4 x). 247. If, in forming its opinion in relation to the digitisation multiple that would be applied by the hypothetical purchaser, the Court rejects the Applicant's actual 12.4 multiple, that gives rise to a claim for special value. 248. Special value is defined to mean: "Special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land." 249. The Applicant is the person entitled to compensation. In the circumstances described above, the Court would have determined market value by reference to a multiple that the hypothetical purchaser might think it could achieve. If that multiple is a multiple less than the 12.4 multiple, and the Court is satisfied that the 12.4 is a multiple that the Applicant (being the person entitled to compensation) could have achieved then that is evidence of an advantage in addition to market value to the Applicant which is incidental to the Applicant's use of the acquired land. 250. The financial value of that advantage is easily able to be quantified by the forensic accountants. That is, it is to apply their agreed discounted cashflow model to the 12.4 multiple that the Court would be satisfied the Applicant could achieve and generate a number. Subtracted from that number is then the multiple generated by the multiple the Court has applied to the hypothetical purchaser. 1. In this context, it is to be noted that I have already rejected the Company's proposition that the digital multiple to be applied to any signs which were hypothetically to have been digitised at the time of the compulsory acquisition was to be a multiple of 12.4x. 2. Mr Hemmings' oral closing submissions addressed the 12.4x digital multiple and the Company's special value "digital advantage' claim in an integrated fashion – doing so as recorded in the Transcript of 16 May 2022 from line 46, page 338 to line 41, page 342. It is not necessary, at this point, to set out any of those submissions in detail. It is, however, appropriate next to set out what was said for TfNSW in its closing written submissions on the special value "digital advantage. In doing so, it is unnecessary for reasons which are obvious from what I addressed in my later set out consideration of this claim, to set out any of Mr Hutley's oral submissions on this point. It is also not necessary to consider any of the lay or expert evidence which might otherwise bear on this topic. 3. The closing written submissions for TfNSW, after setting out the statutory definition of special value, addressed the Company's claim at (186) to (195) in the following terms (footnotes omitted): 186. For any entitlement to special value the Applicant would need to establish that its leasehold interest had a financial value in addition to market value which arose from an advantage which, because of its use of the leasehold interest, it was uniquely positioned to enjoy. 187. While it is accepted that the Applicant is an experienced advertising media operator, its use of the leasehold interest is certainly not unique and does not fall within the concept of "any advantage, in addition to market value" within the terms of s 57. 188. Perhaps even more directly relevant is that, even if there were any such Halo Effect, there is no evidence at all that it has been lost. Indeed, to the extent that this is based on the so-called packaging, the Applicant still controls many signs in the vicinity of the Airport and there was no evidence called to the effect that these signs would be inappropriate to be packaged. 189. Indeed the evidence was that the likely hypothetical purchaser would be a similarly experienced advertising media operator who would base their purchase price on a projection of the Applicant's income from the signs. As the advertising experts agreed: 190. The HP would determine the purchase price for the lease on the basis that they would be able to generate 100% of the forecasted future cashflows150. 191. The purported Halo Effect seems based on the bare assertion that advertising on the Acquired Signs is sold as part of a package together with other sites operated by the Applicant. The claim is that as a result of the acquisition of the Acquired Signs, the Applicant would lose 30% of revenue it earns from those other sites. 192. The purported Digital Advantage is based on the assertion that there would be a difference between the increased cashflows that the Applicant would be able to achieve for the digitised signs for the Relevant Period compared to the increased cashflows that a purchaser would be able to achieve for the digitised signs for the Relevant Period. 193. The special value claims should be rejected on multiple grounds: a. There is no reliable evidence that would support the claim at all; the only "evidence" is bare assertion. Bare assertion is an insufficient or unsafe basis on which the Court would make such a potentially consequential finding, and the absence of cogent evidence would be sufficient to dismiss the claim. b. However here there is in fact cogent evidence against it in that the advertising experts agree that there would be no lost revenue on other signs operated by the Applicant in other Airport markets occasioned by the acquisition of the Acquired Signs. Any purported advantage asserted to arise from the Halo Effect or Digital Advantage is one that could equally be exploited by the hypothetical purchaser. 194. Even if there were any special value in the Acquired Leases it is captured in the DCF model in any event (and therefore captured in market value). That is because the projected revenues are based on the Applicant's actual revenues, so it would already be included in the future projections of cashflows and thus the valuation thereof. On that basis, the DCF calculations already include any "special value" and it would be double-dipping to separately make an additional award of special value compensation. 195. The Applicant has not discharged the evidentiary onus to establish that: a. it does in fact derive a financial advantage over and above that which could be derived from the market value; and b. has in fact lost any financial advantage. 196. Aside from two discrete circumstances where the Court applied an award of special value in circumstances where no such claim was made, there are no cases under the Just Terms Act where an Applicant has successfully made out a claim for special value.

Consideration 1. There is persuasive dicta, of high authority, discussing what might be the extremely limited circumstances within which a claim for special value (here defined in s 57 of the Land Acquisition Act) is capable of being established. In Boland v Yates Property Corporation Pty Ltd and Another (1999) 167 ALR 575, Callinan J described special value, at [292]. He concluded the relevant paragraph by giving an example of the circumstances where such a value might be found to exist and, therefore, give rise to an additional entitlement to compensation for that value. His Honour said: Disturbance and special value to the owner 292. I group these two topics together because although they are separate they are related concepts. The special value of land is its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it. None of the examples given by the Full Federal Court are true examples of special value. There will in practice be few cases in which a property does have a special value for a particular owner. Obviously neither sentiment nor a long attachment to it will suffice. The special quality must be a quality that has an economic significance to the owner. A possible case would be one in which, for example, a blacksmith operates a forge in the vicinity of a racetrack on land zoned for residential purposes as a protected non-conforming use, the right to which might be lost on a transfer of ownership or an interruption of the protected use. Such a property will have a special value for its blacksmith owner, and perhaps another blacksmith who might be able to comply with the relevant requirements to enable him to continue the use but to no one else. 1. The factors that here inform my consideration to enable the drawing of a conclusion as to whether or not the Company's special value "digital advantage" claim has any possible foundation in light of what Callinan J wrote, are that: * the Company relies for the multiplier to calculate this claim as being derived from the digital revenue achieved by signs in Joyce Drive; * development for such purposes on Joyce Drive is permissible with development consent; * the relevant signs in Joyce Drive were digitised after the granting of development consent for this purpose; * development for digitisation purposes of signs on Qantas Drive was also permissible with development consent; * there is no evidence that could lead to a conclusion that the granting of the Joyce Drive consent occurred as a result of any idiosyncratic attributes of the Company as an applicant for such consent; * as earlier discussed, there is a proper basis to conclude that (at least some of) the signs on Qantas Drive would have been capable of achieving development consent for digitisation; * it is the accepted position that the hypothetical purchaser of the acquired signs would be a large-scale outdoor advertising corporation (that is one of the Company's commercial competitors); * there is no suggestion that the hypothetical purchaser of the acquired signs would not have been able to proceed successfully to obtain development consent for the digitisation of at least some of those signs; and * there is nothing to suggest that such a purchaser would have any peculiar attributes that would make it more probable that that company would obtain development consent for digitisation of any of the acquired signs than any other outdoor advertising commercial competitor – that is that there would be no idiosyncratic feature of the signs or of its development proponent that would amount to anything special in the context addressed by Callinan J in the extract earlier set out. 1. As a consequence, there is nothing upon which the circumstances of the Company as a dispossessed owner of the leasehold interest in the acquired signs has any attributes or idiosyncrasies that could conceivably found a basis for a claim for special value pursuant to s 57 of the Land Acquisition Act in the fashion set out by Callinan J. 2. This claim is rejected.

The "Halo effect"

Introduction 1. The Company has claimed compensation pursuant to s 57 of the Land Acquisition Act for the special value which the Company says arises from its ability to package advertising opportunities at multiple Australian airports. 2. This aspect of the Company's claim has been given the descriptor of the "Halo effect". 3. The "Halo effect" is submitted to arise because the Company has contracts which give it the right to advertise not only at a range of other Australian airports but also in the immediate vicinity of these airports. The Company also has contracts with Qantas giving the Company advertising rights in Qantas lounges and to in-flight advertising on Qantas aeroplanes. This range of contracts provides the opportunity, it is the Company's position, to provide advertising services to national or international brands targeted at travellers in an aggregated faction which is greater than the sum of the value of the individual contracts taken separately. 4. Because of the novelty of this claim, it is appropriate to set out the evidence and submissions in greater detail than might have been the position on other more conventional aspects of the Company's claim.

The lay evidence 1. Evidence in support of this aspect of the Company's claim was set out in the affidavit of Mr Dery. The relevant paragraphs of his affidavit explaining the basis for the claim for the "Halo effect" were in the following terms (omitting elements not relied upon by Mr Hemmings after objections were raised by Mr Astill, junior counsel for TfNSW): The Applicant's business and digitisation strategy 10 The Applicant's business strategy is to provide advertisers with a way to target hard to reach, premium audiences at scale via a 'one stop shop'. This means that advertisers can come to one operator (oOh!Fly) and buy access to eastern seaboard or national air travelling audiences with ease (low effort and cost efficient). This approach took airport media from being a fragmented, difficult to plan and buy media option to a consolidated, easy to buy, efficient media opportunity. 11 The Applicant offers advertising spaces across 16 cities, 15 airport terminals and 11 lounges. The advertising spaces at Cairns, Brisbane, Gold Coast, Newcastle, Launceston, Adelaide, Melbourne, Alice Springs and Darwin are operated pursuant to licence agreements with the airports. The advertising spaces at Townsville, Mackay, Mt Isa and the Sunshine Coast are operated through a representative arrangement with local operators. The Applicant's contract with Qantas covers the Qantas Lounges at Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney. A true copy of the Applicant's marketing map demonstrating this coverage is annexed hereto and marked 'A'. 12 Each time the Applicant renews a licence or lease in or around a major airport, it invests in new assets and/or upgrading assets from static signage (the traditional billboard or fixed sign) to digital signage. It does this because this not only allows for additional supply (one sign can display multiple advertisements), but enables oOh!Fly to respond to the market demand to provide a premium product. To attract premium advertisers and associated revenues, in my experience, it is necessary to have high quality signage assets available in the airport space. 13 As far as I am aware, the Applicant's network was the first national digital, out of home (not just airport) network in the world when it first launched in 2012 in the Qantas terminals in Sydney, Melbourne, Brisbane and Adelaide Airports. … Packaging of the Acquired Signs 28 Packaging signs of similar size, similar high value audience profile (those with high disposable income, propensity to spend and business decision makers) and within the same kinds of precincts creates 'off the shelf' solutions for clients. It takes the guess work out of 'line by line' (i.e. sign by sign) large format buying, whereby the client can easily understand the package attributes and buy premium 'like for like' inventory across markets with confidence. The practical benefit of this kind of consistent offering to advertisers is that the same artwork can be produced for multiple markets, saving costs associated with resizing artwork. 29 Packages across either the eastern seaboard or nationally which target high value travellers are easily understood by the media market, as the environment is associated with high affluence, and is contextually relevant (meaning advertisers place premium content in airports when their content is relevant to the type of audiences (i.e. those with high disposable income, propensity to spend and business decision makers) that airports attract)). In the case of airport precincts, they are synonymous with business travel, high wealth individuals and, therefore, command a rate premium from advertisers unwilling to invest in generic large format inventory, but rather want to be associated specifically with the airport precinct. 30 Multi city packaging allows brands to buy with confidence, knowing that audiences will be exposed to the same campaign at various parts of their journey. 31 In 2018, the Applicant won Qantas's inflight entertainment digital media contract. ……………. 32 Because of oOh!Fly's multiple airport assets, it was able to take the same product that was previously sold by Foxtel Media, but package it differently and offer an end-to-end airport journey media proposition. oOh!Fly produced various packages that the previous incumbent was not in a position to do as follows:- (a) Domestic business package across multiple airports along with the Qantas Clubs/Lounges digital assets and digital external sites; (b) Domestic economy packages across multiple airports along with domestic terminal digital assets and digital external sites; (c) International business packages across multiple airports along with digital assets outside international business lounges and digital external sites; and (d) International economy packages across multiple airports along with terminal digital assets and digital external sites. 33 …………………. From June 2018 to May 2019 (being the first 12 months of operation) the inflight media product (Inflight) generated gross media revenue in the sum of $5.1 million. A true copy of the audit report is annexed hereto and marked 'F'. From June 2019 to May 2020, Inflight generated gross media revenue in the sum of $6.1 million. A true copy of the audit report is annexed hereto and marked 'G'. 34 ………………….. [T]he premium varies from package type to package type, based on my knowledge of the business, I estimate that across the Applicant's business, a 30% premium is achieved from being able to package sites into high volume, premium networks. 35 I believe that the 30% premium is attributable to a combination of: (a) being able sell more signs because the Applicant is a 'one stop shop' and advertisers do not need to go to other operators to seek additional advertising sites; and (b) being able to charge a higher price for the same signs because advertisers can buy national coverage in one purchase with one piece of creative (i.e. advertising material). 36 The Applicant started packaging signs over the second half of 2012 (6 different networks were built and then packaged over a 5 month period). A comparison of the impact of packaging on revenues can be gained by comparing the revenues for preceding full year (2011) when the Applicant's annual revenue was $34,643,349 and the following full year (2013) when the Applicant's annual revenue was $37,763,745. The impact of this sales approach was fully realised in 2014 when the Applicant's annual revenue was $44,588,576 and 2015 when the Applicant's annual revenue as $51,638,519. This represents: (a) an uplift of 28.7% comparing 2011 to 2014 annual revenues; (b) an uplift of 49% comparing 2011 to 2015 annual revenues; and (c) an uplift of 27.1% comparing the combined 2010 and 2011 annual revenues ($30,131,181 + $34,643,349 = $64,774,530) against the combined 2013 and 2014 annual revenues ($37,763,745 + $44,588,576 = $82,352,321). A summary of the Applicant's annual revenue by calendar year is annexed hereto and marked 'H'. … Renewal of licences at other airports 40 In my experience dealing with Australian airports, the incumbent is more likely to be awarded an extension or renewal contract for the airport's signage. In my observation this appears to be because of the relationship that is built between the airport operators and the advertising companies. This is evidenced through the Applicant's and JCDecaux's track records at the following airports: Airport Incumbent & first year of first contract Renewal/Extended Years Sydney Airport (Terminal 1 & Sydney External Billboards) APN/JCD - 2005 2015 Melbourne Airport oOh! ‑ 2002 2011, 2015 & 2021 Brisbane Airport oOh! ‑ 2004 2012 & 2019 Adelaide Airport oOh! ‑ 2002 2005 & 2013 Perth Airport JCD ‑ ~ 2010 2018 Qantas (Various Contracts) oOh! ‑ 2002 2009, 2011, 2014, 2018 & 2021

41 As a further example, Brisbane Airport engaged in direct negotiations with the Applicant for the 2019 renewal instead of conducting an open tender. 42 Qantas similarly engaged in direct negotiations with the Applicant in 2012, 2014 and 2021. 1. Mr Dery was not cross-examined by Mr Huntley on the "Halo effect" element of the Company's claim. 2. Ms Lau also dealt with the "Halo effect" in (22) and (23) of her affidavit. It is not necessary to reproduce this material, it is sufficient to note that it addresses what she considered to be the link between portions of the Company's revenue outside Sydney and how it is connected with what she describes as the "Sydney port". However, she does not, in any fashion, express a view concerning the proposition that there is any beneficial, inbuilt loading achieved as a consequence of such connection – let alone advancing the proposition that such loading would be the 30% "Halo effect" advanced by Mr Dery.

The outdoor advertising evidence 1. Mr Whitford did not expressly address this topic in his report. Mr Herring said, at (66) and (67) of his report: Financial advantage would pass to purchaser 66 The Outdoor market is a sophisticated competitive market with three main Outdoor Business competitors - oOh!Fly, JCDecaux and QMS. Each has scale and a broad asset base across all geographies and a variety of product classes. Although each has a different marketing approach, they all derive similar revenue from assets. I do not believe any of them has a distinct competitive advantage, with or without the Acquired Signs, which would allow significant additional returns to be earned. 67 oOh!Fly is not in a unique position to exploit the revenue that could be derived from the Acquired Signs. As shown in Table 1, it is open to other Outdoor Businesses to package sales to advertisers across multiple Airport locations. There is nothing about the operation or method of oOh!Fly that would deliver a reasonable advantage that would not be available to a prospective purchaser, such as another large Outdoor business (i.e. JCDecaux or QMS). 1. In their joint expert report, Mr Whitford and Mr Herring addressed the following question 4(b): Will revenue on oOh!Fly billboards in other airport markets be impacted by not having the Acquired Signs? 1. Their agreed response to this question was in the following terms: ● Due to the replicated audience opportunities of the acquired signs noted in [3] and the dynamics of the market transaction [4a], we do not believe that there would be lost revenue on other oOh!Fly billboards in other Airport markets. ● The Sydney airport audience can still be achieved through a substitute oOh!Fly billboard or a competitor on Joyce Drive, therefore still enabling a national airport campaign. ● An advertiser would not be deterred from advertising to a national airport audience due to the Acquired Signs not being available.

The forensic accounting evidence 1. Mr Halligan's report, at (104), sets out the basis upon which his calculations in section 7.1 of appendix 7 of his expert report are derived. These calculations in appendix 7 are those relating to the Company's "Halo effect" special value claim. It is clear from the factors that are listed in (104), particularly 1(04)(a)(iv), that Mr Halligan's calculations are based on an instruction to assume that the extra value to the Company from its multi-port sales, which form the basis of the "Halo effect" claim was founded on the instruction to him that the premium for this purpose was an uplift of 30%. Because he was instructed to make that assumption as a foundation for his calculations, his calculations cannot be seen to be some form of mathematical justification for such a 30% uplift – merely the adoption of this 30% as a mathematical input to his calculations addressed in appendix 7 of his expert report. 2. Dr Ferrier's comment concerning the Halo effect is set out at 14.7 of his expert report, a paragraph in the following terms: I have not included an assessment of a "halo effect" because the existence of a halo effect is premised on the assumption that the acquired billboards are more valuable to oOh! Fly than they would be to any other operator of the billboard business because the loss of those billboards by oOh! Fly will cause a loss of profits from billboards at other locations. In their joint report dated 2 March 2022 the marketing experts (Messrs Herring and Whitford) state that they "do not believe there would be lost revenue on other oOh!Fly billboards in other Airport markets" (page 6).

The Company's submissions 1. The Company's written opening submissions addressed this aspect of the Company's claim in the following terms (footnotes omitted): 88. The Applicant packages advertising to provide end to end advertising. That is an advertiser, trying to reach the premium market using the airport, can expose customers to the same advertising campaign: • on the road to the airport (within the airport precinct) • within the airport lounge • in the air • within the airport precinct upon landing. 89. The Applicant's evidence is that the ability to package advertising in that way is special to the Applicant and results in increased premiums paid for the advertising packages. 90. A consequence of the loss of the 18 signs is a reduction in the ability to provide the package. No longer will oOh! Media be able to offer the advertising signs on Qantas Drive. The loss of that ability reduces the revenue received from other multi port sales (for other signs). 91. That halo effect, or multi-port advantage, is an advantage that the Applicant had incidental to its use of the acquired land. It is an advantage which is in addition to the market value of the lease, as the additional revenue from the multi port package sales is reflected not only in advertisements on the acquired signs but also in the other multi port sites. 92. There can be little doubt that the halo effect exists. It has been a valuable part of the Applicant's selling strategy. That is, there is a clear advantage from being able to offer the multi port advertising. The Applicant accepts however, that there is difficulty in ascertaining the financial value of that advantage for the purposes of s 57. 93. The Applicant has done the best it can to quantify the financial value of that advantage. The Applicant anticipates that its lay and experts will be questioned on that approach to quantification. Detailed submissions on the financial value of that advantage must wait until the conclusion of the evidence. 1. In addition, in his oral commencing submissions, Mr Hemmings summarised this aspect of the Company's claim in the following terms (Transcript 5 May 2022, page 26, lines 26 to 36): The second, which is our halo effect is it's called, special value claim. I accept unreservedly that it is difficult. It's not difficult to accept that it gives rise to a special value. It is difficult to quantify. The fact that it is difficult to quantify, of course, does mean that my client's not entitled to it and this is one of those classic examples where, in our submission, the Court is we have done the best we can to provide evidence to the Court of the quantification of the increase and the Court will be invited to do the best he can with the maturity it has to identify the financial value that we have of an advantage in addition to the market value, but arises from the increased revenue that we are able to get from other sites as part of the halo effect or the multiport advantage as it's otherwise described. 1. Although there were also exchanges foreshadowing resolution of TfNSW's objections to elements of Mr Dery's evidence and of the possibility of having Mr Whitford and Mr Herring be requested to undertake further joint conferencing and produce a supplementary report concerning matters relating to the Company's "Halo effect" claim, it is unnecessary to set out any matters of detail concerning these exchanges I had with the advocates. 2. At the conclusion of the hearing, the closing written submissions for the Company addressed the "Halo effect" in the following terms: Special Value: Halo Effect 252. The Applicant claims special value pursuant to s. 55(b) of the Just Terms Act in relation to what has been referred to as 'the Halo Effect' in the Amended Points of Claim. 253. Mr Dery, Chief Commercial and Product Officer of the Applicant's parent company, oOh!media Limited, gives evidence regarding the impact of the taking of acquired signs on other parts of the Applicant's business. Prior to his role with the parent company, Mr Dery was Group Director for the Applicant. As a result he has intimate knowledge of the Applicant's business and the airport advertising industry. While Mr Dery's evidence is not relied upon as expert evidence, his expertise and experience in the industry and within the Applicant company mean he is well placed to make observations based on available data, the Applicant's experience and industry expectations. 254. The foundation of the Applicant's claim for the Halo Effect is as follows: a. The Applicant sells packages of advertising across its airport related network (referred to as multiport sales). It has licence arrangements at the airports in Melbourne, Brisbane, Adelaide, Launceston, Newcastle, Alice Springs, Gold Coast, Darwin and Cairns and Qantas Inflight Entertainment and Qantas Clubs/Lounges in Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney. b. The signs on the Acquired Land, targeting the Sydney Airport market (which the advertising experts Mr Whitford and Mr Herring agree is "highly valued"), were sold to allow brands to expose audiences to the same campaign at various parts of their journey. c. To remove the signs on the Acquired Land is to reduce the availability of packaging opportunities for multiport sales. d. Mr Dery estimates that a premium of 30% is paid by advertisers because of the packaging opportunity the Applicant can offer. This is because the Applicant can be a one-stop shop where a media buyer can access multiple audiences across the country with one purchase. 255. The calculation of the estimated 30% premium is set out by Mr Dery at paragraph 36 of this affidavit. Ms Lau's affidavit sets out the number of sales that are the subject of the packaging which Mr Dery says attracts the premium. This is at paragraphs 15-23 of Ms Lau's affidavit. Mr Halligan then takes the data provided by Ms Lau's affidavit (see Paragraphs 103-106 of Mr Halligan's report and his Appendix) to calculate the Halo Effect that the Applicant contends is now lost given the signs on the Acquired Land are no longer available. 256. There are naturally limitations in deriving precise data to found the calculation for the Halo Effect. This is because, obviously, the accounting data kept by the Applicant would not naturally be directed to this kind of calculation. In addition, before and after comparisons that may have been able to have been made between packaging revenues with the acquired signs and without the acquired signs could not be because of the impact of Covid on the advertising industry, especially in relation to airport advertising. In short, it is accepted that the Applicant's claim is based on an estimate (albeit an informed one). Mr Dery is the person best placed to make that estimate given his experience and role with the Applicant and its parent company. He was not challenged on this estimate. 257. The uplift in the value of the Applicant's other signs arising from the Applicant's packaging arrangements is incidental to the Applicant's use of the acquired land that has a financial advantage to it that is not captured in the market value of the acquired lease. It cannot be so captured given they are different signs on different land but nonetheless impacted by the acquisition. 258. That the advertising experts have expressed the opinion that they do not consider that there would be lost revenue on other signs cannot be relied upon as definitive. 259. It is not a matter of saying that an advertiser would not be deterred from advertising nationally by the taking the acquired signs. The issue is that there is a reduction in opportunity for the Applicant to do this to the same extent it did prior to the acquisition because the signs have been taken – not that it has become entirely impossible. 260. Nor is it to the point that another operator could offer a multiport sales package. There is simply no evidence that any other operator does offer the packaging arrangements to which Mr Dery deposes. To the contrary, the Court has the unchallenged evidence of Mr Dery that the packaging opportunity are unique to the Applicant. 261. Further, and in any event, there is nothing in the language of s. 57 of the Just Terms Act that requires the special value to be able to be exclusively exploited by the Applicant. It simply must be the financial value of an advantage "in addition to market value". The fact that the hypothetical purchaser (even if that is purchaser is assumed to be JC Decaux which also has some airport related assets across multiple ports) does not pay for the advantage of the Halo Effect as part of the market value (and there is no evidence that it does in this case) means that it otherwise meets the criteria set out in the language of s. 57. 262. Any other purchaser in the market (an institutional investor or a different advertising company that does not focus on airports) would not be able to exploit the Halo Effect that exists. Either an allowance has to be made to the market value to allow for the benefit in profitability from a multiport offering, or that benefit should be reflected as special value. It is properly the latter. 1. Mr Hemmings also turned to this topic in his oral closing submissions saying (Transcript 17 May 2022, page 364, line 32 to line 48): … [it] is the ability to sell as a single package advertising across the whole of the eastern seaboard, and indeed into Perth, so that advertisers are able … to get their brands exposed to audience to the same campaign at every part of their journey. So, the advertising experts have accepted and agreed that the airport precinct is a highly valued component of the advertising market. They're deliberately trying to target the premium part of the market, and that's why they advertise to that highly valued audience, and the multiport sales or the halo effect gives the ability to - described in a visual way - the intended market, as they drive into the airport precinct, they see the advertisement for the Rolex watch. As they get into the lounge, they see the advertisement for the Rolex watch. As they get on the aeroplane, they see the advertisement for the Rolex watch. As they walk out of the airport, they see the advertisement for the Rolex watch, and as they drive out of the airport at the other end, wherever they are, they see the advertisement for the airport watch. 1. Mr Hemmings later submitted (Transcript 17 May 2022, page 365, lines 5 to 14): So, it's not the loss of the ability to place the Rolex advertisement. It's not the loss, therefore, of an advertisement in Brisbane, Melbourne, or anywhere else on the eastern seaboard or the various other locations we've identified …. That is not what is being lost. What is being lost is … the ability to charge a higher price for the same signs because it advertises by the national coverage in one purchase and with one piece of creative art - i.e., the advertising materials 1. Before turning to the difficulties addressed by Mr Hemmings in his closing submissions concerning quantification of the asserted "Halo effect", it is appropriate to note that he had, in his opening submissions (Transcript 5 May 2022, page 26, lines 26 to 36) acknowledged the difficulties which would arise, if I accepted the principle underlying this element of the company's claim, in quantifying what the outcome of that element of the claim should be. In his oral closing submissions, Mr Hemmings acknowledged that Mr Dery had made an estimate of the premium to be allowed if the company's "Halo effect" claim was accepted submitting that he was appropriately experienced in the outdoor advertising industry generally, and in the Company's business specifically. In this regard, Mr Hemmings said (Transcript 17 May 2022, page 365, lines 25 to 32): It's an estimate that he makes where the respondent makes it's forensic decision to ask no questions, not to challenge him in relation to the existence of the multiport sale and halo effect, not to lead any evidence to suggest that there is no such benefit from multiport sales and halo effect. They don't seek to challenge the data that he relies upon that is being provided by Ms Lau, nor do they seek to challenge the use that Mr Halligan has then put to it in order to consider that his estimate of the quantum of the halo effect. 1. Mr Hemmings submitted that the difficulties in quantifying the "Halo effect" were further hampered by the impact which COVID had had on the advertising industry rendering, effectively, quantification almost impossible. Mr Hemmings submitted, however, that should I accept the existence of the "Halo effect", I was obliged on such evidence as I had available to me to reach a conclusion as to what value should be ascribed to it – submitting, as I understood his position, that Mr Dery's uncontradicted estimate was the appropriate conclusion to reach. 2. Mr Hemmings final substantive point on the "Halo effect" was that the Company had this particular and unique advantage over its competitors in the industry, submitting (Transcript 17 May 2022, page 366, lines 28 to 38): Lastly, in then addressing whether this is something that others could do, for example at 259 we have identified in Mr Dery's evidence that this is something that as we understand oOh! is the first to be able to take advantage of because of its very significant market, and is the only advertiser that has taken advantage of that very significant market reach in order to be able to provide these multiport packages giving rise to this halo effect, and there is no evidence before the Court to suggest that there is anyone else who is able to offer it. Indeed, as we say to the contrary, the unchallenged evidence of Mr Dery is that it is unique to Ooh!. 1. Finally, on this point, Mr Hemmings said (Transcript 17 May 2022, page 366, lines 42 and 43): An allowance should be made. It's in part, can I say, captured in the market value. 1. I then had an exchange over several pages of the transcript concerning how I was to approach Mr Halligan's evidence on the "Halo effect". However, on further reflection, it is not necessary to provide any details of this exchange with Mr Hemmings or to draw any conclusions from it given that, as can be seen from the extracts of Mr Halligan's evidence on the "Halo effect" reproduced earlier, his conclusions were based on foundational assumptions he was instructed to adopt in this respect.

TfNSW's submissions 1. TfNSW's written opening submissions addressed this aspect of the Company's claim in the following terms (footnotes omitted): 96 The purported Halo Effect seems based on the bare assertion that advertising on the Acquired Signs is sold as part of a package together with other sites operated by the Applicant. The claim is that as a result of the acquisition of the Acquired Signs, the Applicant would lose 30% of revenue it earns from those other sites. 97 The purported Digital Advantage is based on the assertion that there would be a difference between the increased cashflows that the Applicant would be able to achieve for the digitised signs for the Relevant Period compared to the increased cashflows that a purchaser would be able to achieve for the digitised signs for the Relevant Period. 98 Special value is defined in section 57 of the Just Terms Act as: special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 99 The special value claims should be rejected on multiple grounds: a) There is no reliable evidence that would support the claim at all; the only "evidence" is bare assertion. The advertising experts agree that there would be no lost revenue on other signs operated by the Applicant in other Airport markets occasioned by the acquisition of the Acquired Signs. Any purported advantage asserted to arise from the Halo Effect or Digital Advantage is one that could equally be exploited by the hypothetical purchaser. b) Even if there were any special value it is captured in the DCF model in any event (and therefore capture in market value). That is because the projected revenues are based on the Applicant's actual revenues, so it would already be included in the future projections of cashflows and thus the valuation thereof. On that basis, the DCF calculations already include any special value and it would be double-dipping to separately make an additional award of special value compensation. 100 The Applicant has not discharged the evidentiary onus to establish that it does in fact derive a financial advantage over and above that which could be derived from the market value. 101 Accordingly, the Applicant's claims for special value must fail. 1. In addition to TfNSW's written opening submissions, after my determining the objections raised by Mr Astill on behalf of TfNSW to elements of Mr Dery's affidavit (as shown in the above extracts from that affidavit), Mr Hutley summarised TfNSW's response to this aspect of the Company's claim in the following terms in his oral commencing submissions (Transcript 5 May 2022, page 45, line 33 to page 46 line 26): … the halo effect begins and ends with the assertion of 30% premium. Your Honour's heard our objections; I won't develop it too much further beyond this: no person can lead evidence that they get, on a continuous basis, 30% above market in any way that could assist your Honour unless your Honour was proved by them, and by admissible evidence and sensible evidence, of what market was. Just because I believe I'm doing better than everybody else doesn't mean I am, and to be above market you must have what is truly market power; that is, you are able to charge consistently over time above market. In our respectful submission and of course I don't cavil with your Honour's ruling the evidence supporting that simply doesn't begin to start to imagine achieving that, and I tell your Honour now, I will not ask one question in respect of that assertion, because in our respectful submission it is simply impossible to prove it that way. Your Honour would be familiar from your Honour's reading of authority the competition cases? Proving market power which is this is what it is; that is, the ability to consistently charge above market requires a very careful analysis of inputs to avoid (1) that you are seeing aberrations, (2) that it's not affected by a seasonal or a peculiarity in a given contract in respect of a particular client, and (3) self interest. None of that has been essayed by the applicant; it is just an estimate across the business of a 30% premium. Of course, that feeds into another peculiarity. This so called halo effect acquires its benefit because of the existence of rights in other markets, and it's said because of those rights in other markets you would be able to, in effect, charge an elevated because you can sell a package and the package will be higher in each market than if, because of in effect what would be called in economics economies of scope, you've got market power to be able to sell the package. One could do that; your Honour will have seen that the experts provide that that market power continuing depends upon renewals of leases in all these markets which come up for renewal, and one in this reflection would tell one that if one did acquire market power by such leases, there would be severage(?) options every time a renewal came up by all potential entrants to obtain that capacity to earn supracompetitive prices. That would tend, as a matter of basic economics, if it existed, to be bargained away, whereby the landlord would capture the rent through i.e. the economic rent through increased rent, rather than, as our friends would have it, oOh!Media for some 20 odd years seems to be in a privileged position or would be likely to be in an unimaginably privileged position in what all the expert says is a hotly contested marketplace. All those factors, which are, with respect, economics 101, would tell one that this case cannot be based upon this assertion. That was the basis and I may be the progenitor of the objection, I was the progenitor of the objection but, your Honour, that is why we say this evidence is simply so valueless was the basis of our objection but, of course, I accept and don't cavil in any way with your Honour's ruling. 1. The closing written submissions for TfNSW addressed the "Halo effect" in the following terms: 184. The Applicant pleads entitlement to compensation for special value under s 57, although the basis on which this entitlement is asserted is not clear. 185. Special value is defined in section 57 of the Just Terms Act as: special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 186. For any entitlement to special value the Applicant would need to establish that its leasehold interest had a financial value in addition to market value which arose from an advantage which, because of its use of the leasehold interest, it was uniquely positioned to enjoy. 187. While it is accepted that the Applicant is an experienced advertising media operator, its use of the leasehold interest is certainly not unique and does not fall within the concept of "any advantage, in addition to market value" within the terms of s 57. 188. Perhaps even more directly relevant is that, even if there were any such Halo Effect, there is no evidence at all that it has been lost. Indeed, to the extent that this is based on the so-called packaging, the Applicant still controls many signs in the vicinity of the Airport and there was no evidence called to the effect that these signs would be inappropriate to be packaged. 189. Indeed the evidence was that the likely hypothetical purchaser would be a similarly experienced advertising media operator who would base their purchase price on a projection of the Applicant's income from the signs. As the advertising experts agreed: The HP would determine the purchase price for the lease on the basis that they would be able to generate 100% of the forecasted future cashflows. 190. The purported Halo Effect seems based on the bare assertion that advertising on the Acquired Signs is sold as part of a package together with other sites operated by the Applicant. The claim is that as a result of the acquisition of the Acquired Signs, the Applicant would lose 30% of revenue it earns from those other sites. 191. The purported Digital Advantage is based on the assertion that there would be a difference between the increased cashflows that the Applicant would be able to achieve for the digitised signs for the Relevant Period compared to the increased cashflows that a purchaser would be able to achieve for the digitised signs for the Relevant Period. 192. The special value claims should be rejected on multiple grounds: a) There is no reliable evidence that would support the claim at all; the only "evidence" is bare assertion. Bare assertion is an insufficient or unsafe basis on which the Court would make such a potentially consequential finding, and the absence of cogent evidence would be sufficient to dismiss the claim. b) However here there is in fact cogent evidence against it in that the advertising experts agree that there would be no lost revenue on other signs operated by the Applicant in other Airport markets occasioned by the acquisition of the Acquired Signs. Any purported advantage asserted to arise from the Halo Effect or Digital Advantage is one that could equally be exploited by the hypothetical purchaser. 193. Even if there were any special value in the Acquired Leases it is captured in the DCF model in any event (and therefore captured in market value). That is because the projected revenues are based on the Applicant's actual revenues, so it would already be included in the future projections of cashflows and thus the valuation thereof. On that basis, the DCF calculations already include any "special value" and it would be double-dipping to separately make an additional award of special value compensation. 194. The Applicant has not discharged the evidentiary onus to establish that: a) it does in fact derive a financial advantage over and above that which could be derived from the market value; and b) has in fact lost any financial advantage. 195. Aside from two discrete circumstances where the Court applied an award of special value in circumstances where no such claim was made, there are no cases under the Just Terms Act where an Applicant has successfully made out a claim for special value. 196. The Applicant's claims for special value must fail. 1. In addition, in his oral closing submissions, Mr Hutley summarised TfNSW's response to this aspect of the Company's claim in the following terms (Transcript 17 May 2022, page 390, lines 8 to 13; lines 23 to 27): The first thing to observe about that is, he does not give one example of a rental of a site in a package at a higher price to the rental of the same package outside a package. Not one. There is not one piece of evidence, other than assertion, that this company has a capacity, because of this so called packaging, to charge consistently above market prices, because he says it is achieved, "Across the applicants business". ….. It is nothing more than a bald assertion without one shred of support, and it's certainly not supported by what's in 36, which is a comparison annually over some periods of price increases without any analysis of what the market position was, without any analysis what the number of signs were, without any. It's just assertion. and (Transcript 17 May 2022, page 390, lines 30 to 36): Secondly, we say, even if it was, there's not one shred of evidence that this so-called halo has been lost. As Mr Hemmings has pointed out, his client has signs, for example on Joyce Drive and nearby, which have been digitalised. There is not one shred of evidence that they cannot be so packaged to retain for their client exactly the same halo. There is not one shred of evidence at all. So, we say there's no - other than assertion, there's no evidence of halo. 1. Mr Hutley addressed the absence of evidence, further, submitting (Transcript 17 May 2022, page 391, lines 13 to 37): Since there's been no attempt to properly approach an exercise which would be undertaken … if you were truly proving that you had what is in effect market power, which would be to get an analysis of what market prices of signage are unpackaged, then prove, perhaps what might be thought the counter intuitive conclusion, that if a client buys in bulk from you, you're going to charge them more than if they buy singularly, because the logic of the position would be, which is somewhat counter intuitive, a client says I want to buy a sign at Sydney, Brisbane, Melbourne, et cetera, and does it sequentially, not on the same day, they won't be buying a package, but they'll get it 30% cheaper than if the buy it as a package. But setting aside that perhaps counter intuitive suggestion, if one was going to attempt this, it's not attempted in para 33 to 36, because it amounts to nothing more than assertion. If this is true, it should be able to establish that they are selling these things, accumulations, including presumably the Qantas Drive sites, at above what the market would pay for individual signs. That should be simplicity itself for an organisation. They'd say, well we sold these 12 Qantas signs down whatshername drive individually, and we sold them for X dollars. Within a month we got an opportunity to sell these ones in a package, and look at the package, and the price for Qantas signs is 30% higher, and they'd have to then do that for each of the other airports and say, for some reason the market which enters into one contract is prepared to pay 30% more than what they'd do if they entered into 10 individual contracts for individual elements of the package. 1. Although Mr Hutley addressed further on the "Halo effect", the above extracts accurately reflect the tenor of the remainder of his submissions.

The Company's reply submissions on the "Halo effect" 1. Mr Hemmings returned to the "Halo effect" element of the Company's special value claim during the course of his oral closing submissions in reply. Although also somewhat lengthy, it is appropriate to reproduce this in full (Transcript 17 May 2022, page 409, line 24 to page 410, line 47): Next, in relation to the halo. I do say this with the greatest respect, but can I say that the respondent's approach to Mr Dery and his evidence, and the continued recitation of "not one shred of evidence" and "not one shred of analysis," is something, in our submission, that the Court would reject out of hand. It might be that Mr Hutley doesn't like the evidence, but Mr Dery has identified why he's able to express the views that he does. He's identified primary materials that he's relied upon to determine quantum. No questions were asked in relation to, for example, any of the numbers identified or relied upon in para 36. My friend says you don't cross examine on nothing, but was then apparently able to discuss the evidence and his criticism of that evidence for some considerable time in his closing submissions. There was evidence, and, as we fairly tried to concede, it's the best evidence that is available in circumstances where you don't have an ability to compare the before and after situation because of COVID. That gives rise to the classic example of - my friend wants in a-- HIS HONOUR: But it's not the only evidence I have, is it, Mr Hemmings? I also have, for what I might make of it, para 36 onwards of appendix 18 to Mr Halligan's evidence, don't I? Whatever I might make of that, where he is instructed to make certain assumptions. HEMMINGS: Yes, that goes in relation to the quantification of a discount rate. So, it's at the end of the equation, rather than the beginning of the equation. So, Mr Halligan could have been cross-examined about the adequacy or the appropriateness of accepting those instructions, just like Mr Hutley did in some considerable detail, in relation to the appropriateness of the instructions in relation to completing the calendar year for the Covid impact. Decided not to do it, and we're going to take on Your Honour's invitation to give you the linkages between the assumptions about the bridge - provide the bridge between Mr Dery or other evidence, and those instructions, and we'll take that opportunity. But one classic example that arises from my friend, in a jurisdiction where strict rules of evidence don't apply, inviting Your Honour to draw a Jones v Dunkel inference, but then to fail to comply with a Browne v Dunn obligation, in circumstances where if he wants to make these submissions, with the greatest respect, he needs to, for example, we now have Mr Hutley's evidence telling us about how simple it would have been. HIS HONOUR: I don't have Mr Hutley's evidence about anything, Mr Hemmings. HEMMINGS: It's the only evidence you've got, Your Honour. You've got Mr Hutley's evidence about how simple it would have been to compare one sign and the rate it was getting when it wasn't part of a package, and that sign when it was in a package. That was Mr Hutley's submission this afternoon. Now, of course, that assumes that when signs are sold in a package, they are assigned an individual line item of the revenue that is expected to be achieved from that sign. If that were the case, you'd be able to compare one with the other. Now, the extent Mr Hutley makes a submission about what should have been done, I'll make - from the bar table - I'll make this the equal submission, if he'd asked Mr Dery whether it's possible to extract one sign of a package and compare it to that sign not part of a package, the answer would have been, no, I cannot, because we do not allocate the signs individually within the package, because Your Honour can be assured, a claim by a client like mine, which is a significant claim, they have done the best they can in order to provide the evidence, and something as simple as Mr Hutley's suggestion of a sign before and a sign after, is not something that has escaped us. It's just not something capable of being derived from the evidence, and it is entirely unfair. HUTLEY: That is wholly evidence from the bar table, in the true sense. HEMMINGS: You're exactly right because I was criticising you, with the greatest respect, for not having been fair in putting the submission you made to Mr Dery. Your Honour will have a look at the transcript to see the submission you made about the comparison that could have been done. It was plainly a submission that could only have been made after he had inquired of Mr Dery if in fact it was a criticism properly to be made. Your Honour would be satisfied of our submission that there is a halo, that it can be quantified, quantification is difficult, we've done the best we can, and Your Honour will do the best the Court can in it's evaluative exercise - taking the most recent expression of that view by Preston J in Noubia - to quantify the halo effect.

The supplementary submissions on the "halo effect" 1. At the conclusion of the substantive hearing, I had granted leave to the parties to provide me with further brief written submissions on two topics, the second of them arising from the "halo effect" assumption, which Mr Halligan had been asked to address. 2. Although Mr Halligan had not given any oral evidence concerning the "halo effect", he had, in Appendix 18 to his Statement of Evidence, addressed (on instructions) what might be the appropriate discount rate potentially arising, amongst other things, for the "halo effect". 3. The relevant element of his instructions in this regard was in the following terms: (d) the present value at the Acquisition Date of the future cash flows the applicant would have derived from the Acquired Signs: (i) from its ability to sell other advertising signs (not located on the Acquired Land but in other airport precincts in Adelaide, Brisbane, Cairns, Darwin, Launceston, Melbourne, Newcastle, Coolangatta and Qantas Clubs and Lounges) ("Multiport Signs") as part of a package, which included the Acquired Signs ("Halo Effect"); (ii) assuming that the Halo Effect would have lasted until 30 June 2040; 1. His conclusion on the above instructions for the "halo effect" were set out in Appendix 18 in the following terms (Evidence Book, Part D, Document D1, folios 1015 and 1016): Instruction 6(d) re the Halo Effect 36 Instruction 6(d) concerns the additional cash flows from the non-Acquired Signs earned by virtue of being part of relevant multi-port sales. 37 Regarding the non-Acquired Signs, I am instructed to assume that: (a) the licences to operate the signs expire on: (i) 30 July 2023 for Darwin airport; (ii) 31 August 2023 for Cairns airport; (iii) 30 June 2026 for Gold Coast airport; (iv) 31 December 2026 for Brisbane airport; (v) 4 July 2027 for Newcastle airport; (vi) 30 June 2029 for Melbourne airport; (b) the signs at the Brisbane and Melbourne airports are, by far, the most significant of these signs to the multi-port revenue; (c) historically, oOh!media Fly has successfully renewed existing licences or won new licences approximately 80% of the time; and (d) oOh!media Fly's licences to operate the non-Acquired Signs that are relevant to the multi-port sales are likely to be renewed and on similar terms. 38 The risk that the licences for these non-Acquired Signs will not be renewed (and on similar terms), is a specific risk rather than a market risk.121 In my opinion, and in keeping with the logic of the CAPM, specific risk is best addressed in the cash flows while market risk is best addressed in the discount rate through the choice of beta. 39 To reflect this specific risk in the cash flows, I would need to create scenarios that accommodate the main possible outcomes (e.g. relating to the composition and nature of the portfolio of non-Acquired Signs ‒ including any new licences for other airports that might be won and added to the portfolio) and to ascribe probabilities to each scenario to derive a weighted- average cash flow. It has not been possible, however, for me to do this in the time available since I received the instructed assumptions set out in paragraph 37 above and without obtaining further information or instructions on various matters. Given this, my only option is to include an allowance for this specific risk in the discount rate. This is what I do. 40 In my opinion, the following discount rates are appropriate: (a) 9.4% per annum for cash flows occurring up to 31 December 2026; (b) 10.4% per annum, for cash flows occurring between 1 January 2027 and 30 June 2029 (which is approximately a 10% increase from the discount rate of 9.4%); and (c) 11.4% per annum, for cash flows occurring from 1 July 2029 (which is approximately a 10% increase from the discount rate of 10.4%). 1. Mr Halligan addressed relevant computational matters concerning the "halo effect" in Appendix 9 of his expert report. It is not necessary to more than note that he did so. 2. On 30 May 2022, brief written submissions were provided on behalf of the Company. The element of these supplementary written submissions concerning the "Halo Effect" was in the following terms (footnotes omitted): The Halo Assumption The Halo Assumption was founded upon an analysis of the applicant's contract activities from 2002 to 2022. That analysis is not in evidence as the foundation of that assumption was not put in issue by the Respondent. It is Mr Dery's evidence that when "dealing with Australian airports, the incumbent is more likely to be awarded an extension or renewal contract for the airport's signage". He goes on to say that this is because "of the relationship that is built between the airport operators and the advertising companies". The evidence of the Applicant's contract extensions is then set out in the table at [40] of Mr Dery's affidavit. In the absence of the data that sits behind the specific assumption, the Court is nonetheless entitled to make a finding - doing the best it can - regarding the prospect of renewal based on the evidence Mr Dery regarding an incumbent contractor being more likely to be successful on renewal. 1. On 31 May 2022, brief supplementary written submissions in response were provided for Transport. These written submissions were, relevantly, in the following terms (footnotes omitted): The Respondent makes these Further Submissions in reply to the Applicant's Further Submissions dated 30 May 2022 (Applicant's Further Submissions), and particularly the submission regarding the basis of the instructed assumption to Mr Halligan that "historically, oOh!media Fly has successfully renewed existing licences or won new licences approximately 80% of the time" (The Halo Assumption). Specifically these submissions respond to paragraph [10] of the Applicant's Further Submissions that, "The Halo Assumption was founded upon an analysis of the applicant's contract activities from 2002 to 2022. That analysis is not in evidence as the foundation of that assumption was not put in issue by the Respondent." The Applicant's Further Submissions go on to submit that the Court should rely on Mr Dery's affidavit evidence. Those submissions should not be accepted for the following reasons: The Applicant has been on notice since the Respondent's Points of Defence were filed on 5 November 2021, that the Respondent has consistently denied the "halo effect" in its entirety. The Respondent objected to the paragraphs of Mr Dery's affidavit on which the Applicant seeks to rely, with the Court allowing the evidence subject to an assessment of the weight it is to be given. Accordingly, the Respondent submitted in closing that Mr Dery's evidence on the purported "halo effect" is bare assertion and does not constitute evidence on which the Court should rely. Mr Dery's bare assertions (whether based on assumptions or otherwise) regarding the prospects of an incumbent being more likely to be successful renewing a contract does not constitute evidence on which the Court should rely to prove the factual basis of The Halo Assumption. The Respondent maintains its submission that the so-called "halo effect" is pure assertion, not supported by any fact, matter or circumstance and the Applicant has failed to offer any evidence to the contrary. In light of the above, the Court should find that the Applicant has failed to discharge its onus in relation to the "halo effect". Specifically it has failed to establish any evidentiary basis for The Halo Assumption and consequently has failed to make out this part of its case. The dispossessed landowner bears the onus of establishing the factual basis on which they make their claim.

Consideration

Introduction 1. I commence by observing that Mr Dery did not expressly give evidence that each of the 18 acquired billboards has always been packaged as part of an arrangement whereby the advertiser at the relevant Qantas Drive location was also advertising using the packaging locations said to give rise to the "Halo effect". The consequence of this absence of evidence is that there are different alternative scenarios against which the advanced proposition of the "Halo effect" is to be tested.

All 18 sites are always "Halo" packaged 1. The first possible scenario is that all 18 of the sites in Qantas Drive are packaged in the fashion that is postulated by Mr Dery as necessary to value capture the benefits he proposes arise from the multi-format, multi-air travel related locations to which he has referred. On this assumption, the total existing revenue stream for these 18 signs, calculated on the basis of the mandated disregard of the public purpose, must include the entirety of the actually earned increment of the benefits of such "Halo" packaging. On this basis, calculation of the quantum of compensation to be paid for the acquisition of the 18 signs by having regard to hypothetical future earnings until 2040 encompasses the full value of any "Halo effect" delivered to the Company as at the date of acquisition. 2. On this basis, any aggregated premium as a result of the multi-location and/or multi-format uplift to be derived because of the "Halo effect" (on the assumption that it exists) is currently fully priced into the overall value of the Acquired Lease and will, therefore, be fully compensated. 3. On the assumption that all advertising at the Qantas Drive locations was "Halo" packaged, there is no special value as required by section 57 of the Land Acquisition Act above the actual compensation to which the Company is entitled as a result of it being deprived of these advertising opportunities.

Not all Qantas Drive advertising was always "Halo" packaged 1. On the assumption that not all advertising at the Qantas Drive sites was always packaged in a fashion reflecting the described "Halo effect" value, the logical position must arise that such billboards as were "Halo" packaged would generate revenue to the Company for that site that reflected the 30% premium said to arise from the "Halo effect". That is, for signs of similar size on Qantas Drive (there being a variety of different sign sizes) some comparable signs would have "Halo effect" revenue streams whilst other directly comparable signs would not provide such a "Halo" revenue increment to the Company. If this scenario applied, demonstrable revenue evidence would have been available to be given empirically demonstrating that comparative revenue incremental effect for "Halo" packaged advertising. No such evidence is been adduced on the Company's behalf. 2. Mr Hutley said, during the course of his closing oral submissions (Transcript 17 May 2022, page 391, lines 5 to 11): So, in other words we say they haven't started to prove it, and they haven't - even if they'd started to prove it - they haven't started to prove they've lost it. So, in our respectful submission, and my learned friend says we didn't cross-examine, and we didn't, and we didn't cross-examine for exactly the reason that you don't cross-examine nothing, because all one does if one this sort of nothing, is allow people to in effect say whatever they want. 1. As it is to be accepted that there was no obligation on TfNSW to mandate its advocate to cross-examine in a fashion which would assist the Company establish its case, there is no inference in the Company's favour to be drawn from such a failure. 2. On the basis that not all advertising at the Qantas Drive locations was "Halo effect" packaged, the absence of evidence demonstrating the existence of such a "Halo effect" benefit means that, in this scenario, the Company has not demonstrated its existence. 3. Contrary to my earlier postulation of directly comparable signs as to size and orientation, it would have been possible for the Company to adduce entirely conventional valuation evidence adjusting for sign size and/or orientation to be able to demonstrate an adjusted value differential establishing the "Halo effect". No such evidence was adduced on the Company's behalf. 4. On the assumption that there was not, as at the date of acquisition, a 100% "Halo effect" to packaging the Qantas Drive signs, the Company has provided no evidence beyond mere assertion by Mr Dery as to its existence in circumstances where such evidence would have been available to be adduced.

The severance analogy 1. The final possible way in which the Company could have sought to demonstrate the existence of the "Halo effect" would have been, by analogy, showing how, post-acquisition of the acquired signs, advertising pricing on a "Halo" packaged basis may have diminished either for the remaining signs at Sydney Airport that were said to be part of the "Halo" packaging and/or the impacts on advertising revenue from other locations and/or forms of advertising which might have been adversely impacted by the removal of the Qantas Drive signage from the Company's available "Halo" package offering. 2. Such a potentially demonstrable impact would be analogous to demonstrating the impact on a business of acquisition of portion of the freehold title land upon which a business was conducted. Such a process would be an entirely conventional valuation exercise. 3. No such evidence has been adduced on behalf of the Company concerning this potential basis for demonstrating the existence of the "Halo effect" and what value should be attributed to it.

Conclusion on the "Halo effect" 1. I have earlier set out the relevant portions of Mr Dery's affidavit that relate to the claim for the "Halo effect". It is to be noted that, as can be seen from portions of that material, that Mr Dery's affidavit had a number of documents annexed to it. A list of those annexures and the topics covered by them is set out below: Annexure Topic A The Company's marketing map showing its geographic coverage B Extracts from the minutes from board meetings of oOh!media throughout 2015 and 2016 C An extract from the OMA's website obtained on 22 November 2021 D An excel spreadsheet said to demonstrate that 65% of the Company's revenue in 2020 was attributable to digital advertising E An excel spreadsheet comparing the gross profit for the Acquired Signs, signs located on Joyce Drive and external billboards at Melbourne airport and Brisbane airport from 2018 to 2020 F An audit report covering the period from June 2018 to May 2019 (being the first 12 months of operation) showing the gross media revenue generated by the inflight media product G An audit report covering the period from June 2019 to May 2020, showing gross Inflight media revenue generated in that period H A summary of the Company's annual revenue by calendar year between 2011 and 2015

1. None of the annexures specifically address in terms any "Halo effect". 2. To the extent that, in the extracts from the board minutes of the Parent Company, the divisional report concerning the activities of the company in April 2015 discloses the following under the heading "Opportunities": Digital conversion of Qantas and Joyce Drive external sites surrounding Sydney Airport. There is significant revenue and gross profit upside (these are high margins sites with low fixed rent) which can be gained from investing in digital into this precinct. A plan is in the process of being modelled and business cased. 1. There is nothing in that extract referring to, or leading to the inference that, a "Halo effect" is being reported upon. 2. I have carefully examined all of the other elements of the annexures to Mr Dery's affidavit. There is nothing explicit or inferential in any of them, which provides any factual support for the existence of, or (if it existed) quantification to be ascribed to, any "Halo effect". 3. The Company has demonstrated no proper evidentiary foundation, on any basis, for the existence of the "Halo effect" beyond the mere assertion by Mr Dery of its existence. 4. As explained above, given the complete absence of evidence beyond mere assertion to the extent that it might exist, it is appropriate to be regarded as fully priced into the compensation to be awarded to the Company on a conventional valuation basis. If not captured in that fashion, there is no evidence on any other basis that would justify a conclusion that it exists - let alone any proper evidentiary foundation to value it as claimable on a special value basis. 5. The special value claim advanced on behalf of the Company said to arise from a "Halo effect" is, therefore, rejected.

Disturbance ‑ Mr Halligan's fees

Introduction 1. I have earlier set out the terms of s 59(1)(a) and (b) of the Land Acquisition Act, these being the provisions pursuant to which the Company can seek to recover the costs of professional advice which it has been necessary to be obtained for the purposes of these proceedings. For the most part, there is agreement as to the nature of the expenses to which the Company is entitled to reimbursement and to the quantum of that reimbursement. 2. There is, however, a single element of the Company's s 59(1) disturbance claim which is disputed by TfNSW. That element concerns the entitlement to reimbursement for, and quantum of, the fees charged by Mr Halligan for his pre-litigation advice. 3. As noted in the table earlier set out listing the issues requiring to be determined, it was noted that there was a dispute as to whether the Company was entitled to be reimbursed, pursuant to s 59(1)(a) of the Just Terms Act, for the fees charged by Mr Halligan, the forensic accountant who gave pre-litigation advice to the Company's legal representatives. 4. The dispute arises because TfNSW says that Mr Halligan is to be regarded as giving his advice as a valuer and he does not meet the statutory definition in the Land Acquisition Act to be regarded as a valuer for disturbance reimbursement purposes. The position advanced on behalf of TfNSW was that these fees were not legal costs falling within the scope of the statutory provision. 5. The relevant definition of what constitutes a valuer for the purposes of s 59(1)(b) has also earlier been set out (see s 59(2) at [26]). There is no dispute that Mr Halligan does not satisfy this definition. 6. However, the Company does not claim reimbursement for Mr Halligan's fees pursuant to this provision, as it accepts that Mr Halligan does not meet the statutory definition. The Company claims reimbursement for Mr Halligan's advice fees (and the costs of the members of his staff who have supported him in the provision of that advice) pursuant to s 59(1)(a) of the Land Acquisition Act on the basis that Mr Halligan's advice and evidence were activities necessary to provide an appropriate basis for legal advice provided to the Company. 7. This reimbursement for necessary ancillary professional advice has been accepted by TfNSW as appropriate to be reimbursed pursuant to s 59(1)(a) for the advice and evidence provided by the Company's town planning, traffic and outdoor advertising experts. Reimbursement of the costs of that professional expertise as ancillary to, and necessary in support of, the giving of legal advice is not contested by TfNSW (and is entirely consistent with conventional application of principle in this Court on such matters). 8. There have been three recent decisions of this Court that have confirmed this approach. Those decisions have been: 1. Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 (Duggan J) at [153] (Eureka); 2. Antonino Gaudioso v Transport for New South Wales [2021] NSWLEC 91 (Duggan J) at [149] to [152]; and 3. Sales and Ors v Transport for NSW (No 2) [2021] NSWLEC 96 (Robson J) at [271] ‑ [272] 1. However, TfNSW relies on an element of the decision of Duggan J in Eureka where, at [157], her Honour rejected a claim for reimbursement of the fees of Mr Firth, a forensic accountant, who provided expert advice and evidence on behalf of that dispossessed owner. This rejection was on the basis that Mr Firth did not meet the statutory definition of being a valuer. The claim for reimbursement for the cost of Mr Firth's services was made pursuant to s 59(1)(b) on the basis that Mr Firth's advice had been given as a valuer. This was clear from her Honour's summary of the submissions made for Eureka, the dispossessed owner (at [146]): 146. …. As to the fees of Mr Firth, whilst he was not a registered valuer at the date of the giving of the advice he was, at that time, qualified to seek registration (and he has since done so) and therefore, falls within the provisions of s 59(1)(b) or in the alternative his fees are also recoverable separately under s 59(1)(f). 1. The relevant paragraphs of her Honour's judgment (at [152] to [157]) rejecting this claim for reimbursement were in the following terms: 152 The terms of s 59(a) specifically, in terms refers to: "(a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land." 153 The text and context of this provision indicates a legislative intent that the dispossessed owner is not to be responsible for the costs of obtaining appropriate (reasonable) legal services relating to the acquisition. In that context such legal services must include, at least in part, the determination of the appropriateness of the offer of compensation. Where a legal practitioner determines that some further advice is required from another qualified person to enable them to provide the legal services of advising on the offer, it would be inconsistent with the legislative purpose to compensate the dispossessed owner for only part of the fees required to be incurred to enable the legal advice to be provided. Whilst the reference to legal costs is quite specific in terms it is broad in substance. The fees are to be recoverable if they are reasonably incurred and to that extent if they are reasonably necessary for the legal practitioner to provide the advice relating to the acquisition then such fees are recoverable as a s 55(a) disturbance claim. This construction does not turn on the contractual relationship of the retainer of the consultant or whether it is recoverable as a disbursement, but rather whether it is reasonably necessary to enable the legal services to be provided in connection with the compulsory acquisition of the land, including, but not limited to, any offer of compensation. … 154 Whilst a similar argument could be made with respect to the fees of Mr Firth, reading s 59 as a whole, his fees as a valuer can only be recoverable if he meets the statutory character of a "qualified valuer". It would produce an inconsistency with the operation of s 59 if unqualified valuers fees could only be recoverable as legal costs under s 59(a) and qualified valuers fees under s 59(b). To read the section as a whole in its context valuers fees are recoverable whether as legal costs, or where no lawyer is retained, as valuers' fees only if the valuer is a qualified valuer as defined in s 59(2). 155 Accordingly, for Mr Firth's fees to be recoverable at all his fees must be the fees of a "qualified valuer" as defined in s 59(2). It is agreed that at the date the fees were incurred Mr Firth was not relevantly a qualified valuer, as defined. The question is whether, for the purposes of s 59(b) he was a qualified valuer, in that he was capable of being registered as a valuer but had not, at the date of the fees were incurred, effected registration. 156 The statutory language indicates a temporal requirement that at the time the fees are incurred that the person is as a matter of fact, a qualified valuer. The capacity for becoming a registered valuer is not envisaged in that statutory language. It is apparent that the statutory intention is to ensure that a dispossessed owner obtains advice relating to the acquisition from a person who has nominated qualifications at the time the advice is given, not the date the payment of the fees is sought. That was not the case in the present circumstance. To allow valuation fees to be claimed as a s 59(b) disturbance item of the basis of some future capacity to fall within the definition of qualified valuer (or on the basis that at the time the person was not precluded from so applying) would be to ignore the clear words of the section in the context and would require the importation of words into that section that is not warranted on a reasonable construction of the Act as formulated. The fees claimed for Mr Firth are not claimable as disturbance for valuation fees under s 59 at all. 1. As earlier noted, the Company does not claim reimbursement for the cost of Mr Halligan's pre-litigation advice services pursuant to s 59(1)(b) but claims these cost pursuant to s 59(1)(a). 2. During the course of the hearing, I had drawn Mr Hutley's attention to the three decisions earlier cited on why the costs of ancillary experts providing advice to lawyers supporting claims under the Land Acquisition Act where those experts were not valuers was appropriate. 3. Mr Hutley acknowledged that, unless I concluded that Duggan and Robson JJ were clearly wrong, I was entitled to adopt and follow their reasoning. Mr Hutley submitted (Transcript 17 May 2022, page 394, lines 5 to 29): Although we make a formal submission that legal costs could not include experts reports, other than the charging for legal fees, but your Honour, we would accept that that is not clearly right, such that your Honour would depart from the position taken by your Honour's fellow judges in the Eureka decision, the Sales decision, and the Gaudioso decision, but we rely on para 155 of her Honour Duggan J's decision in Eureka, to maintain that Mr Halligan's fees are not claimable under s 59(1)(a). HIS HONOUR: That's the paragraph, is it not, where her Honour records that the parties agreed that Mr Firth was a valuer, and her Honour held that he was not a valuer within the meaning of that defined term in the Just Terms Act? HUTLEY: Mr Firth, as your Honour sees, was an accountant and business valuer, and he had the same expertise, and carried out the same role as Mr Halligan as in this case, therefore, the same result should apply in this case as was held in Eureka. While non-valuation experts can be claimable under the authorities in the case under 59(1)(a), as a consequence of Duggan J findings in Eureka, business valuers, specifically acclaimable under 59(1)(b), and not at all under 59(1)(a), or not at all, and that's her Honour's decision at para 155. We say, the Sales decision at para 271 and Gaudioso at 153 both deal with claims for non-valuation fees under s 59(1)(a), and so don't assist on the point. Sales dealt with town planning fees, and Gaudioso with urban designers' costs. So, our simple point is because Mr Halligan's position is akin to that of Mr Firth's, we say they are either claimable under 59(1)(b) or not at all. 1. Mr Hutley also left to me the question of whether I was satisfied that the quantum of the claim made for Mr Halligan and his staff was justified or not (Transcript 17 May 2022, page 394, lines 5 to 29): HUTLEY: Mr Halligan's affidavit attaches an explanation of his non-speaking bills. Now, if Your Honour's satisfied that those bills were exorbitant, then Your Honour wouldn't allow them. That's the law. But beyond that, all we can put is that that is a matter for Your Honour, but I haven't cross-examined, and that's where we are.

Consideration

Eligibility 1. Mr Halligan deposed an affidavit dated 4 May 2022 concerning the work undertaken by him and under his supervision in preparation for the commencement of litigation and during the course of the proceedings. It is appropriate to reproduce the first and second paragraphs only of this affidavit as they disclose relevant matters of timing. Those paragraphs were in the following terms: 1. I was first instructed by Thomson Geer to provide forensic accounting services in connection with the compulsory acquisition that is subject of these proceedings (Acquisition) around 3 June 2016. 2. I am instructed that the decision to commence these proceedings was made on 23 March 2021. 1. This makes it clear that Mr Halligan's engagement significantly pre-dated commencement of the proceedings. 2. I am satisfied that Duggan and Robson JJ were each not clearly wrong in the conclusion which they had reached concerning the appropriateness of ordering reimbursement for ancillary professional advice. Consistent with the approach by Duggan and Robson JJ (one which it would have been available to Transport to have challenged in the Eureka proceedings on appeal but was not ‑ see Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56 at [62]), and having regard to the totality of Mr Halligan's affidavit concerning the work he and his staff had done on behalf the Company, I am satisfied that his fees, to the extent that they are in contest, fall within the scope of s 59(1)(a) and are, therefore, encompassed within the scope of the costs reimbursement order to be made in the final orders resolving these proceedings. 3. As Mr Halligan's expertise is appropriately characterised as being in the field of forensic accounting rather than valuation, I am satisfied that the claim for reimbursement of the costs of his services properly falls under s 59(1)(a) and not s 59(1)(b) and, therefore, as a matter of principle, is potentially appropriate to be subject of an order for reimbursement. 4. In this context, it is appropriate to note that Mr Halligan's expert report for the proceedings – dated 24 March 2022 – in Exhibit B (together with its 19 appendices and further annexed documents or calculation tables) comprised 452 folios of that exhibit. Mr Halligan also took part in joint expert conferencing and reporting with Dr Ferrier and gave concurrent oral evidence, with Dr Ferrier. There is no suggestion he was not appropriately qualified to give expert evidence joining issue with Dr Ferrier. That evidence is not conventional valuation evidence ‑ that role was fulfilled for the Company by Mr Dyson. 5. The claim for Mr Halligan's fees is in the sum of a little over $300,000. Mr Halligan deposed an affidavit of 4 May 2022 setting out details of the work done by, and the basis of charges for, work undertaken by him and his staff on behalf of the Company. That affidavit was read without objection. I have closely examined the detailed information provided by Mr Halligan's affidavit and its supporting annexures. Although the quantum of the fees claimed for this work is in a significant sum, nonetheless, I am satisfied that the detail given by Mr Halligan provides appropriate and sufficient justification for the incurring of these costs.

Quantum 1. I am also satisfied, on the basis of my consideration of the evidence given by Mr Halligan in his affidavit of 4 May 2022 (and its annexures) that the quantum claimed for reimbursement, although substantial, has been justified as to total of those costs and does not warrant being moderated in any fashion.

Giving effect to the outcome on Mr Halligan's fees 1. Although the substantive orders to give effect to my detailed findings will necessarily await, as elsewhere explained, calculation using the modelling processes addressed by Mr Halligan and Dr Ferrier and settlement by the legal representatives as to the terms of those orders, those orders are also to incorporate an order for the reimbursement of Mr Halligan's pre-litigation fees.

Directions 1. The matter is listed for mention on 28 September 2023. 2. The parties are directed to consider the various determinations made in this judgement and bring in settled orders to give effect to it with those orders to be provided to my Associate by 4pm on 26 September 2023. If this direction is complied with, I will make orders in chambers and vacate the mention on 28 September 2023.

********** Annexure A Annexure B Static billboards owned at Sydney Airport (812009, pdf) Annexure C Extract of folio 224 of the Evidence Book - Annexure B to the Affidavit of Ms Lau (99485, pdf)

Amendments 13 November 2023 - Elements subject to non-publication orders agreed between the parties. 11 June 2024 - Unredacted version of judgment published, in accordance with orders made by the Court of Appeal on 24 May 2024. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 June 2024