Allen & Anderson & Byng v Tricare

The home owners' submissions

1. The home owners rely on written submissions filed on 5 June 2017. Rather than paraphrasing counsel's submissions I have repeated relevant paragraphs verbatim.
2. For convenience the relevant parts of s144 are set out as follows: (4) The compensation payable for the loss of residency is such amount as is reasonable having regard to the following: (a) the length of time remaining for the duration (if any) of the site agreement, (b) the original purchase price paid by the home owner for the home and (if the home was purchased from the owner or operator of the community) any arrangements that were entered into in connection with the purchase, (c) the current on-site market value of the home (determined as if the termination were not to occur), (d) site fees payable for the residential site, (e) any other relevant factor raised by the parties or prescribed by the regulations.
3. The applicants have addressed each of the criteria as outlined by s144 (4) in turn.
4. The applicants submit that there is no time remaining for the home owners to live in their homes and it is noted that both have in fact already moved out.
5. Judy Tucker purchased her home outright in late 1989 or early 1990 for the sum of $60,000.
6. Beryl Anderson purchased her home outright in 2001 for the sum of $37,500.
7. It is submitted that the current on-site market value of each dwelling should be determined as if the termination were not to occur.
8. It is the home owners' contention that the Tribunal would accept the values put forward by their expert, Mr Rutledge, being $230,000 for site 51 and $210,000 for site 59.
9. The site fees are $102.50 per week. In a decision published in related proceedings before Member Bassett, the fees were considered as being "relatively low". This is unsurprising given that development work on site commenced on or around May 2007 which has negatively impacted on the facilities and amenity upkeep and maintenance of the residential community.
10. The home owners submit that the provisions of section 141 are remedial or beneficial in nature.
11. Section 141 relevantly prescribes: 141 Compensation where home not relocated (1) The operator of a community is liable to pay compensation to a home owner as provided for by this section if the operator gives a termination notice to the home owner and the home owner does not want to relocate to another community or is unable to relocate to another community. (2) If the site agreement specifies any compensation amount or method for determining compensation in the circumstances to which this section applies, the compensation payable is to be determined as specified in the agreement. (3) If the site agreement does not specify the manner for determining the compensation payable in the circumstances to which this section applies, the following compensation is payable (in advance of relocation): (a) compensation for the loss of residency, (b) compensation for relocation. (4) The compensation payable for the loss of residency is such amount as is reasonable having regard to the following: (a) the length of time remaining for the duration (if any) of the site agreement, (b) the original purchase price paid by the home owner for the home and (if the home was purchased from the owner or operator of the community) any arrangements that were entered into in connection with the purchase, (c) the current on-site market value of the home (determined as if the termination were not to occur), (d) site fees payable for the residential site, (e) any other relevant factor raised by the parties or prescribed by the regulations. (5) The compensation payable for relocation is such amount as is reasonable determined having regard to the following: (a) the cost of moving, (b) inconvenience to the home owner, (c) the length of time that the occupant or occupants of the home have lived on the residential site, (d) any other relevant factor raised by the parties or prescribed by the regulations. (6) If the home owner intends to keep the home: (a) any amount the home owner is capable of recouping by selling the home off-site is to be deducted from the compensation payable for the loss of residency, and (b) regard is to be had to the cost of removing and transporting the home in determining the cost of moving (and the compensation payable for relocation). (7) If the home owner does not intend to keep the home, the home owner must, in return for the payment of compensation under this section, transfer the home (free of all encumbrances) to the operator of the community. (8) The Tribunal may, on application by a home owner or operator, make an order resolving a dispute concerning the operation of this section in the circumstances of a particular case. (9) This section does not apply: (a) in the circumstances to which section 140 applies, or (b) to arrangements made for the purposes of the sale of a home to the owner or operator of the community.
12. The section is designed to provide compensation where a home owner has in effect been rendered homeless. The two remaining home owners in this case have lost the homes that they have lived in for 27 and 16 years respectively. The home owners submit that the most significant aspect of compensation arising under the statute should be derived from the current on-site market value off the homes determined as if the termination were not to occur (emphasis added).
13. The home owners submit that their valuation expert, Mr Rutledge, should be accepted on the basis that he has identified a number of comparable parks as the starting part point of his report.
14. In contrast, the operator's expert, Mr Hoolihan, assumed certain conditions for the park as they were relevant a considerable time ago in 2011. He based his opinion on underlying material and park descriptions as set out in two documents provided to him by persons familiar with the park in 2011. One document provided to Mr Hoolihan as part of his instruction is the affidavit of Peter O'Shay dated 7 May 2014. The second document provided to the expert for the preparation of his opinion is entitled "KHD Management -Risk Assessment - Hasting Point Holiday Report" (hereinafter KHD Risk Management Report). Neither document was attached to the report.
15. Mr Hoolihan, in disclosing all documents provided to him, states in the section of his report entitled GENERAL ASSUMPTIONS AND COMMENTS: … 2.2 I have been provided with and read affidavit of Peter Joseph O'Shea dated 7 May 2014. I have been provided with and read KHD Management - Risk Assessment - Hastings Point Holiday Park Report dated 2011 2.3 I have assumed that Termination became realistic as at July 2011 when Hastings Point Holiday Park was purchased by Tricare and at that time the park was in poor condition. The affidavit of Mr O'Shea notes the following: 1. No in ground swimming pool; 2. No residents' community centre; 3. On site management of the park was conducted by on site park resident; 4. No security gate access; 5. Deficient street lighting; 6. Pot holes evident to internal road networks; 7. The tennis court was dilapidated and used for storage of building rubble; 8. The BBQ hut was present however the BBQs were not in working order; and 9. The amenities building as at July 2011 was in reasonable condition and provided male, female and communal laundry facilities. 2.4 I have internally inspected each of the homes as at the date of the valuation (15 February 2017). 2.5 I have assessed the current on site market value of each home by way of the Direct Comparison Approach and have assumed that the park was in poor condition only as per the Affidavit of Mr Peter O'Shea and the KDH Management report. 2.6 I have been provided with recent market transactions of comparable homes from within parks of relativity (sic) close proximity to Hastings Point Holiday Park. … The recent market transactions that have been provided to me by Mr Kelvin Price of Mr Property Services, whom I meet (sic) with on the 22 February 2017 at Tweed Heads. Mr Price has provided me with sales brochures compiled by Mr Property Services of each of the sales noted in section 5 of my report along with the confirmed sale price and sae late. …. 2.7 I have visited each of the sale parks and have spoken with a park representative and have either walked through each park or been driven by management past each of the sale dwellings.
16. The affidavit of Mr Peter O'Shea and the KDH Risk Management Report were not served on the home owners. The home owners objected to the tender of both documents on the morning of the hearing. Following argument, the tender of Mr O'Shea's affidavit and the KDH Risk Management Report were withdrawn. The expert opinion of Mr Hoolihan was admitted into evidence.
17. It is counsel's submission that in the absence of the O'Shea affidavit and the KDH Risk Management Report, the respondent has failed to establish the assumptions the expert opinion is based upon, and that the opinion of Mr Hoolihan should be afforded no weight.
18. It is submitted that the value for the dwellings should be determined as if the termination had not occurred (emphasis added) and that a true valuation should be based on the condition of the park as it was before development consent was granted, at a time when the park as a going concern was in a better condition. This was the approach taken by Mr Rutledge.
19. Mr Rutledge's approach is correct and accords with the well-known "Point Gourde" principle that "resumed land shall be valued disregarding any increase or decrease in the value of the land arising from the carrying out, or the proposal to carry out the purpose for which the land was resumed" see submissions paragraph 28.
20. The Tribunal should attach little or no weight to Mr Hoolihan's opinion on the following bases: 1. The expert assumed an incorrect date for his valuation, being a "realistic" date of termination at some time in 2011; 2. The documents underlying his assumptions as to the condition of the park not being admitted into evidence; 3. Mr Hoolihan has not challenged the valuations proffered by Mr Rutledge. Mr Hoolihan has failed to visit any of the comparable parks identified by Mr Rutledge with the exception of the park known as "Drifters". This was on the basis, as Mr Hoolihan stated, that his opinion should be preferred because his valuation was based on an assessment of comparable dwellings in the "North Star Park", being a mixed residential and tourist park being the premium park in the area.
21. This leaves the Tribunal with only one set of valuations on the "correct" assumption being those provided by Mr Rutledge. It must be found that the parks chosen by Mr Rutledge as comparable were the correct ones noting of course that Mr Hoolihan failed to visit or inspect any of them other than "Drifters Park".
22. In addition, any waterfront premium assessed by Mr Rutledge must be accepted because Mr Rutledge provided a more comprehensive assessment and actually attributed a specific value for a dwelling located on the waterfront, being an added premium value of $40,000.
23. Mr Hoolihan in his opinion did not attribute specific values to for premium aspects such as "waterfront", nor did his opinion explain the value he attributed to negative features, such as the run down nature of the park and what may be deducted from a base value sum.
24. In addition it is the home owners' submission that the dwellings inspected by Mr Hoolihan were not comparable and that his "Direct Comparison Approach" is flawed and that the opinion, insofar it relies on comparable dwellings should be disregarded and rejected.

The operator's submissions

1. The operator's submissions deal with each of the matters set out in section 141 in turn:

S 141 (1)(a) - Site agreement remaining length of time.

1. It is submitted that the site agreement between the applicants and the respondent included a term which stated that "the agreement can be terminated by the park owner but in limited circumstances". It is submitted that the length of time remaining for the duration of the applicant's site agreement is, and has for a long time been zero, and that therefore the amount of compensation payable to be considered under s141(4)(a) should b be zero.

S 141(4)(b) - Original purchase price paid.

1. The operator submits that no evidence has been tendered to support the applicant's contention that the purchase prices were $60,000 and $37,500 respectively. In any event, it is submitted that the original purchase prices paid by the applicants do not affect the compensation now payable and that "the compensation payable arising from s141(4)(b) is therefore zero" (see submissions para. 29).

S 141(4)(c) - Current on-site market value of the home

1. Subsection 141(4)(c) deals with the current onsite market value of the home to be determined as if the termination were not to occur. It is submitted that the section should be interpreted to mean that compensation is payable for that part of the "home" which the home owner does not want to relocate, and the section is not concerned with the valuation of any rights that may be associated with a residential site agreement.
2. Secondly, no special meaning should be attributed to the word "current".
3. The phrase the value of the home is to be "determined as if the termination were not to occur" relates to a termination arising from a "Notice of termination" which activates the application of s 141 and not any other termination which may arise. A termination by reason of the existence of a development consent does not of itself provide a footing for compensation. It is the notice of termination of 21 May 2012 which triggered the termination process.
4. Any reduction in amenities in the park prior to that date are not relevant to the question of compensation.
5. Accordingly, it is submitted that the applicants' contention that one must go back in time "to before the development consent was obtained and assess the condition of the park at that time" is incorrect.
6. Mr Hoolihan's opinions should be preferred over those of Mr Rutledge as he assessed the value of the dwelling as at July 2011 when Hastings Point Holiday Park was purchased by the respondent and at that time termination "became realistic".
7. Mr Rutledge's' report should be disregarded because the assumptions relied upon by the expert do not match the real physical state of the Hastings Point Holiday Park at any time from 2011 or after the Notice of Termination dated 24 May 2012. He considered other holiday parks that really were not comparable and much superior to the Hastings Point Holiday Park. He omitted to provide sales data on which he based part of his opinion.
8. Mr Rutledge erred when he added an excessive premium for "rear creek frontage". Such a premium does not apply to Cudgera Creek, and cannot be comparable to "water frontage" dwellings such as those found at Palms Village, a far superior village. The $40,000 premium should be rejected as unrealistic.
9. Mr Hoolihan had confirmed that he had taken the sites' location into account, in determining the valuation, even if no specific monetary value had been attributed to the "waterfront" location.

S 141(4)(d) - Site fees payable

1. It is not in contention that the applicants paid $102.50 per week. It is submitted that the RLLC Act does not assist how to factor in site fees when assessing compensation payable for loss of residency and that the site fees payable do not affect the amount of compensation payable and that no particular amount should be added in respect of s141(4)(d).

S 141(4)(e) - Any other relevant or prescribed factors.

1. The parties agree that any findings must take into account compensation already paid in the amounts of $85,000 and $40,000 for Ms Tucker and Ms Allen respectively.

Submissions in reply

1. I have had regard to the submissions in reply dated 15 June 2017. I note they were objected to. The applicants submit, as they did in submissions in chief that the value of the dwellings should be assessed "as if termination were not to occur". It is further submitted that the development consent did set the end date for the residential site agreements as 20 September 2016 and termination was therefore linked to the issue of the development consent. Valuation should be undertaken as if termination were not to occur.

Jurisdiction

1. The proceedings arise from two applications filed on 20 September 2016 (RC 16/41917) Susan Tucker, Beryl Anderson, Kevin Byng and RC 16/42122 for applicants Mr Phillip Tucker and Mrs Judy Tucker seeking orders for compensation pursuant to s 141 of the Act.
2. The Tribunal may award compensation to the applicants pursuant to the criteria as set out in s 141 of the Act. Compensation where home not relocated (1) The operator of a community is liable to pay compensation to a home owner as provided for by this section if the operator gives a termination notice to the home owner and the home owner does not want to relocate to another community or is unable to relocate to another community. (2) If the site agreement specifies any compensation amount or method for determining compensation in the circumstances to which this section applies, the compensation payable is to be determined as specified in the agreement. (3) If the site agreement does not specify the manner for determining the compensation payable in the circumstances to which this section applies, the following compensation is payable (in advance of relocation): (a) compensation for the loss of residency, (b) compensation for relocation. (4) The compensation payable for the loss of residency is such amount as is reasonable having regard to the following: (a) the length of time remaining for the duration (if any) of the site agreement, (b) the original purchase price paid by the home owner for the home and (if the home was purchased from the owner or operator of the community) any arrangements that were entered into in connection with the purchase, (c) the current on-site market value of the home (determined as if the termination were not to occur), (d) site fees payable for the residential site, (e) any other relevant factor raised by the parties or prescribed by the regulations. (5) The compensation payable for relocation is such amount as is reasonable determined having regard to the following: (a) the cost of moving, (b) inconvenience to the home owner, (c) the length of time that the occupant or occupants of the home have lived on the residential site, (d) any other relevant factor raised by the parties or prescribed by the regulations. (6) If the home owner intends to keep the home: (a) any amount the home owner is capable of recouping by selling the home off-site is to be deducted from the compensation payable for the loss of residency, and (b) regard is to be had to the cost of removing and transporting the home in determining the cost of moving (and the compensation payable for relocation). (7) If the home owner does not intend to keep the home, the home owner must, in return for the payment of compensation under this section, transfer the home (free of all encumbrances) to the operator of the community. (8) The Tribunal may, on application by a home owner or operator, make an order resolving a dispute concerning the operation of this section in the circumstances of a particular case. (9) This section does not apply: (a) in the circumstances to which section 140 applies, or (b) to arrangements made for the purposes of the sale of a home to the owner or operator of the community.
3. It can be accepted that the Act reflects a beneficial purpose which requires a beneficial construction, if open, in favour of the applicants. However the Act is concerned with the rights of both groups, balanced by their respective obligations as is reflected in the objects set out in s4 of the Act. The objects of this Act are as follows: (a) to improve the governance of residential communities, (b) to set out particular rights and obligations of operators of residential communities and home owners in residential communities, (c) to enable prospective home owners to make informed choices, (d) to establish procedures for resolving disputes between operators and home owners, (e) to protect home owners from bullying, intimidation and unfair business practices, (f) to encourage the continued growth and viability of residential communities in the State.
4. Even if one were to accept the beneficial purpose of the Act as a whole that does not mean that every provision has a beneficial purpose or is to be construed beneficially. The purpose of the provision must be identified. The purpose of s 144 is to offer compensation with regard to specific factors as outlined in subsections 144(4) (a) to (e). These provisions require the Tribunal to take into account the length of time remaining; the original purchase price; the current on-site market value; site fees payable and "any other relevant factor". The purpose of s 144 is clear enough. It permits the Tribunal to assess, as best one can, the value of the dwelling in the market place. Its purpose is not solely to be construed as beneficial to the applicants, it is a statutory requirement to be taken into account to arrive at a valuation fair to both sides.
5. It has been urged upon the Tribunal to make an award adding margins for "effluxion of time" and making awards for damages for "loss of rights" (see pp 9-10) of the applicants' submissions.
6. Insofar it is necessary to express a view on the issue, I find the submissions made on behalf of the applicants that the "home owners [have] lost their homes [and] have lost the rights that attached to those homes" is not a helpful analysis and does not address the wording of the relevant provisions of the Act. I am not assisted by the limited submissions made in paragraph 44 of the written submissions: "it is noted that this matter may be the first to determine compensation under the new s141 regime. There are no precedents. However taking into account the remedial nature of the provision it is suggested that a 10% uplift should be applied to the valuation of each dwelling to fully effect the intent of the scheme"
7. The Tribunal has not received any lay evidence from the parties as to how the "loss of residency" may have impacted on either applicant and no assistance has been provided to the Tribunal how compensation may be meaningfully assessed. I have had regard to the second reading speech for the Residential (Land Lease) Communities Bill 2013 (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 18 September 2013 at 23732 and the excerpt reproduced at paragraph 358 of the Appeal Panel Decision in Allen v Tricare (Hastings) Ltd [2016] NSWCATAP 216, Wright J President, R Seiden SC Principal Member and R Titterton, Senior Member. The reading speech relevantly states as follows: "Compensation to Residents in the event of closure or relocation has been improved in the bill….. The bill makes it clear that the home owner is to be compensated for both loss of residency and relocation. Whether the homeowner chooses to relocate the home elsewhere will be up to them. The bill recognises that this may not be possible or desirable and that they may prefer or have no choice but to walk away from the home". In the instant case I have received no evidence whether the applicants have chosen to "walk away" or whether it was not possible to relocate the home and in the absence of any evidence how the loss of residency may be assessed or how it has affected the applicants, I decline to make an award of an additional 10% "uplift" as was submitted.
8. Section 144(4) provides a mechanism to assess "loss of residency". The home owner is entitled to compensation for both loss of residency and relocation (s 141(3)(a) and (b)). The relevant factors are set out in ss141(4) and (5). Section 144(4) does not allow for additional compensation, akin to general damages for pain and suffering, for the loss of residency.
9. In the absence of any case law or other supporting submission or evidence that the intent of the Act is to give "an uplift", I decline to do so. There is no evidence before me to support the submission that this was the intent of the legislative scheme. Nor is there evidence to suggest that a "market adjustment of 5%" should be added to the valuation of each dwelling "to fully effect the intent of the scheme". In the absence of any evidence to support these contentions I decline to make an award for an "uplift".

Assessment of the expert evidence

1. It is the Tribunal's task to evaluate the competing expert evidence and to determine which of the expert opinions should be accepted.
2. One issue to be determined, according to the parties, is whether or not the value of the dwelling should be assessed in 2011, 2014, or at some other time.
3. I find that the relevant time to take into account the value of the dwellings is the "current time" within the ordinary meaning of the word and as expressed in the legislation at s 141(4)(c) being the current on-site market value of the home (determined as if the termination were not to occur),
4. Despite the various assumptions and letters of instruction given to the respective expert valuers, each appears to have indeed valued the dwellings as at the "current time" being early 2017. The Tribunal notes there is no evidence to support that the sales prices provided by Mr Hoolihan actually were derived from sales prices achieved in 2011, or if he did derive sale values from that time, his opinion does not expressly state that he valued the homes "as at 2011".
5. Whilst differing assumptions may have been provided to the experts, their opinions as expressed each provide values in the "current" time.
6. I note that Mr Hoolihan relied on two primary assumptions. First, he assessed the current (emphasis added) on site market value of each home by way of "direct Comparison approach"; and secondly, he took into account a point in time in 2011, when the park was in poor condition. I shall return to the second assumption later in these reasons. Nowhere in his report does he specifically state that he has deducted any specific value or amount by reason of the fact that the termination "became realistic" in 2011.
7. Mr Rutledge "has assumed that termination of the site agreement is not to occur" and that the sites are located within a fully operational residential land lease community with all or most of its sites inhabited. Market values of each of the dwellings have been assessed as if the residents were to sell them, with assignment of the residential site agreement included as part of the sale.
8. Mr Rutledge proceeds on the basis in accordance with his instructions, that the residential land lease community at Hastings Point is in a reasonable condition and well maintained with amenities one might expect to find including: "Amenities Block, Swimming Pool, Tennis Court, Barbeque Area".
9. Importantly, when assessing the value of the dwellings Mr Rutledge also proceeded on the "current market value of the homes"
10. Mr Hoolihan as stated above, also assessed the current value of the dwellings. He assessed the value of the dwellings based on comparative recent sale data from 2016 and 2017 (see pp 14 to 18 of his report). Despite the fact that he has had regard to an affidavit of Mr O'Shea setting out general conditions of the park in 2011 and had regard to a KHD Risk Assessment report dated 2011, it appears that he has not, on the face of his report, factored these into the assessments of the value of the dwellings. If he has allowed for a specific deduction in value based on the KHD Risk Assessment report or the O'Shea affidavit than this is not explained in his report. On page 6 of his report he states "the park is considered to be poorly presented at the date of inspection with only basic amenities in place and internal roadways in poor condition". Mr Hoolihan appears to take into account his current observations made in 2017 and his valuation are based sale data obtained for the years 2016 and 2017. Nothing in Mr Hoolihan's report suggests that he has valued the dwellings as at 2011or that he has somehow devalued the dwellings because the residential agreement has been terminated. Quite the contrary, in a letter of instruction dated 10 February 2017 Mr Hoolihan was asked to assume "there are ongoing residential site agreements for each site which enable each of the residents to continue to occupy their dwellings on a continuing basis"…
11. I am satisfied that other than in that section of his report entitled "general assumptions and comments" there was no reference to the 2011 KHD Risk Assessment report, nor to the O'Shea affidavit. There was no evidence, on the face of the report to conclude that Mr Hoolihan's opinions are based on anything other than "current market value". I find that the O'Shae affidavit and the KHD Risk Assessment had no discernible impact on Mr Hoolihan's assessment and that he has based his opinions on "current" valuations and observations.
12. For the reasons that follow I prefer the Rutledge opinion over the Hoolihan opinion.
13. Mr Hoolihan's opinions are expressed from page 18 onwards: 1. Mr Hoolihan agrees with Mr Rutledge's observation that the Hastings Point Holidays Park is in a reasonable condition and well maintained with amenities "including Amenities Block, Swimming Pool, Tennis Court, and Barbeque Area." 2. He opines that sales in the Tweed Heads area are not comparable because they are superior to Hastings Park because they are closer to amenities and transport; 3. He does not agree that the "waterfrontage" to the creek is comparable to a water frontage to a substantial inlet and therefore finds $40,000 as a premium for water frontage inflated;
14. His actual expert opinion is distilled in only two paragraphs and expressed in the shortest of terms: In assessing the market value for site 51 I'm of the opinion that the most comparable sales are sale 5, sale 8, sale 9 and sale 12 which range in value from $115,000 to 145,000. I have adopted a In-Use Market value of $120,000. In assessing the market value for site 58 and site 59 I'm of the opinion that the most comparable sales are Sale 4, Sale 6, Sale 10 and Sale 14 which range in value from $72,000 to $90,000 and to most of which sites 58 and 58 (sic) are inferior I have adopted a In Use Market value of $75,000 for both site 58 and 59.
15. I find that the opinion in respect of site 51 as expressed does not offer actual analysis why sales 5, 8, 9 and 12 are comparable, nor can I understand why a figure of $120,000 is arrived at.
16. I have had regard to the briefest of description of the comparable sale 5 at Drifters or Ingenia Holiday Park. These descriptors are provided by Mr Hoolihan without photographs: "a single level vinyl clad caravan and rigid annexe comprising two bedrooms one bathroom and detached single carport. Features air conditions with small front deck and covered rear timber deck".
17. I cannot assess similarities (or differences) when comparing this description to the full page description of lot 51, including 4 photographs, contained at page 9 of the Hoolihan report which states, inter alia. 2 bedrooms, lounge, meals , kitchen, bathroom separate toilet, laundry, on rear deck, living 70sqm outdoor 21 sqm attached carport 14sqm. … The home is in good condition having been refurbished with modern kitchen and bathroom facilities
18. In the absence of any further analysis or explanation why these properties are comparable, or different, the conclusion that lot 51 is valued at $120,000 is not explained sufficiently and I do not find the opinion persuasive.
19. During cross-examination the maker of the report conceded that he had not visited the dwelling described as "sale 5" and had not inspected its interior. Mr Hoolihan also agreed with the proposition put on behalf of the home owners that if he compared "sale 5" with lot 51 and considered all attributes of the "sale 5" dwelling with those of lot 51, he would have to increase the sale value of lot 51.
20. In coming to his conclusion the expert does not explain how the assumptions and valuation as set out in the beginning of the report have supported his opinion.
21. He does not explain on what basis he states that site 58 is inferior to comparable dwellings or what difference his adoption of the "in use market value" has made to the valuation. I assume for the purpose of these reasons that he means that the dwelling is occupied under an ongoing residential agreement. However, the opinion does not express whether this "adoption" increases or decreases the value, or had any discernible impact on his opinion.
22. In Makita, Heydon JA said that for expert opinion to be admissible, the facts required identification and proof by admissible evidence: [T]he opinion proffered must be 'wholly or substantially based on the witness's expert knowledge'; so far as the opinion is based on facts 'observed' by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on 'assumed' or 'accepted' facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it.
23. This is the 'basal principle' that requires the facts upon which the opinion is based to be proved by admissible evidence 'to render the opinion of any value'.
24. In conclusion, I find that the Hoolihan report, while admissible, provides limited relevant conclusions I am able to take into account in assessing the value of each dwelling "occurring in or existing at the present time". I find that the bases on which Mr Hoolihan arrives at his cursory opinion expressed on page 20 of his report are not based on facts or analysis made apparent by the expert.
25. In contrast, I have had regard to the opinion expressed by Mr Rutledge: Based on the broad range of sales analysed in terms of sites without Creek frontage I consider that the sale of site 88 for 195,000 within "The Palms Village" in March 2016 is the most comparable given the similar two bedroom, one bathroom accommodation, with the provision of air-conditioning, good size living area and recent internal painting, albeit does not enjoy Creek frontage. Based upon my research and investigation set out in 12. 3 above I have then allowed a premium of some $40,000 for the creek frontage at site 51 in comparison to this property, hence an analysed and adjusted price of $235,000 results. 13.2.2 In terms of Creek frontage I consider the sale of site 18 which sold for 257,000 in January 2016 within The Palms Village to also be very comparable as it is similar to site 51 in terms of its rear creek outlook. However, site 18 has been recently renovated. I have deducted 30,000 from this sale price to allow for these renovations to compare on a similar basis to site 51, which results in an analysed sale price of $227,000. Renovation allowances for site 18 comprise $5000 painting, $3500 final plank flooring, $2000 carpet, $1500 new appliances, $5000 replacement of decking, bathroom renovation $8000, $2500 split system air conditioning and $2500 incidental external works. 13.2.2. Based upon this analysis, I have assessed a market value of 237,000 for site 51 subject to the assumptions contained within.
26. His opinion in respect to lot 58 is expressed at page 25 of his report. Site 59 13.5.1 I consider that the sale of site 18 for $257,000 within The Palms Village in January 2016 is the most relevant as it is directly comparable given the similar size and offering similar outdoor spaces with water aspect. An allowance of $30,000 for renovations to site 18, The Palms Village has been made, which results in $227,000. Renovation allowances for site 18 have been set out in 13.2.2 above. Further adjustment has been made for the replacement of worn carpets on site 59 $5000 which results in $212,000. 13.5.2 I consider that the sale of site 30 for $146,500 within The Palms Village in December 2016 is directly comparable given the 2 bedroom / 1 bathroom configuration and similar condition to site 59, albeit does not enjoy Creek frontage. Site 30 also requires the carpet to be replaced and does not afford the large rear deck of site 59. I have allowed an additional $10,000 for the large rear deck afforded by site 59 and an additional $5000 for the superior floorcoverings offered by site 58 and $3000 for interior painting. This results in an adjusted amount of $164,500. I have then allowed a premium of some $40,000 for the creek frontage at site 59 in comparison to this property as detailed on 12.3, hence an analysed and adjusted price of $204,500 results. 13.5.3 based upon this analysis I have assessed a market value of $210,000 for site 59 subject to the assumptions contained within.
27. I prefer and accept the detailed analysis of Mr Rutledge. I am satisfied that each aspect of his conclusions allows the reader to understand how his opinion, that site 30 is comparable, is arrived at. In addition, each differentiation is identified and valued. These values were not challenged in cross-examination, other than the $40,000 creek premium.
28. Mr Rutledge was cross-examined. He conceded that he did not visit all comparable dwellings but that he relied on photographs available to him electronically from sales brochures.
29. On balance, I do not find that the opinion of Mr Hoolihan is supported by sufficient detail or analyses, nor am I certain how his assumptions support his opinion.
30. I find that the opinion of Mr Rutledge is comprehensively argued, provides many similar and differentiating factors which fully explain how his opinion is arrived at.
31. In conclusion I prefer and accept the Rutledge opinion.
32. During submission I was asked to incorporate the terms of settlement reached between the remaining parties, Mr Phillip Tucker, Ms Susan Allen, Mr Kevin Byng and Ms Lorraine Byng and I make final orders in accordance with the written terms of settlement as agreed by the parties and placed with the papers.
33. In accordance with the Rutledge opinion I award $210,000 to Ms Beryl Anderson in respect of lot 59 but deduct $40,000 already paid to her, as requested by the parties.
34. In accordance with the Rutledge opinion I award $230,000 to Ms Judy Tucker in respect of lot 51 but deduct $85,000 already paid to her, as requested by the parties.
35. Accordingly I make the following orders: 1. In RC 16/41917 the respondent shall pay to Beryl Anderson the sum of $170,000 immediately. 2. In RC 16/42122 the respondent shall pay to Judy Tucker the sum of $145,000 immediately. In RC 16/41917 the Tribunal notes the terms of settlement and makes the following additional consent orders in respect of Philipp Tucker as filed and served on 24 April 2017. 1. Proceedings are dismissed. 2. No orders as to costs. In RC 16/41917 the Tribunal notes the terms of settlement and makes the following additional consent orders in respect of Susan Allen, Kevin Byng and Lorraine Byng as filed and served on 24 April 2017. 1. Proceedings are dismissed. 2. No order as to costs. S Thode Senior Member Civil and Administrative Tribunal of New South Wales 9 August 2017 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 08 September 2017