Applicant v Respondent

Supreme Court of Victoria|2011-05-12|Before: DIXON J

ADMINISTRATIVE LAW - VCAT - Leave to appeal on question of law - Whether finding of fact supported by any probative evidence - Whether inferences reasonably open of facts found - Use of expert evidence - Whether basis for opinion proved - Tribunal informing itself as it sees fit - General procedure of VCAT - Section 98 Victorian Civil and Administrative Tribunal Act.

EVIDENCE - OPINION - Whether basis of opinion established - Expert tribunal with informal procedure, not subject to rules of evidence, which may inform itself as it thinks fit.

RESUMPTION AND ACQUISITION OF PROPERTY - Dispute referred to VCAT - Expert opinion evidence of value of business on DCF basis - Whether basis for opinion established - Onus of proof - Causation - Whether extinguishment of business a direct, natural and reasonable consequence of acquisition - Claim of double-counting of trading losses for assessment of disturbance loss - Claim for executive time - Sections 40, 41, 80 Land Acquisition and Compensation Act 1986.

1 This is an application for leave to appeal from an order of the Victorian Civil and Administrative Tribunal. By order of the court, the matter proceeded as a hearing of both the application and if leave is granted, of the appeal itself.

2 Before VCAT, the respondent, Williamstown Bay & River Cruises Pty Ltd ("WBRC") sought compensation from the Acquiring Authority, The Secretary to the Department of Infrastructure ("DOI") for losses arising from the compulsory acquisition of its sub-lease interest comprising part of Shed 9 at South Wharf and the consequent loss of its mooring rights on the Yarra River. The application succeeded and the DOI was ordered to pay compensation assessed at $1,079,423, made up as follows, together with interest on any unpaid amounts in Order 1 in accordance with ss 53(1) and 56 of the Land Acquisition and Compensation Act 1986 ("the Act"):

3 The DOI served a Notice of Intention to Acquire dated 19 October 2006 under Part 2, Division 4 of the Act which was gazetted on 19 April 2007, the relevant vesting date of the acquired interests.

4 Shed 9 at South Wharf is or was at the relevant times Crown land, the subject of a lease to South Wharf Pty Ltd, formerly called Schwartz Hart Pty Ltd. Shed 9 was used by WBRC as a base from which to operate ferry boat, charter (excursions and corporate functions) and water taxi/shuttle services along the Yarra River, and to Docklands, Williamstown and, at an earlier time, St Kilda. WBRC held a valid sub-lease of Shed 9 until the year 2017. South Wharf Pty Ltd had a separate licence from Parks Victoria to use two moorings, one high level (approximately 80 metres long) and one low level (approximately 34 metres) along the river. A sub-licence from South Wharf Pty Ltd to WBRC gave it the right to use the wharf to moor its boats and to load and unload passengers, equipment and provisions from its boats. VCAT's finding that the sub-licence, to August, 2010, was still in place at the date of resumption, albeit that the head licence had not been executed and there was a risk that this would not occur, is not challenged on this application.

5 The ferry service was started, with one boat, in 1984 by the sole director and shareholder of WBRC, Mr Robert Mark Davy. In 1990, WBRC took over operations, at that time operating from moorings at the Spencer Street end of South Wharf. After entering into the sub-lease in 1998 of an area of approximately 208 square metres in Shed 9, the subject of the acquisition, WBRC moved its operations there. The premises provided accommodation for offices, reception, passenger waiting and crew areas, equipment storage, workshop facilities and included six car spaces.

6 A central issue before VCAT was whether WBRC could reasonably have procured premises to replace those in Shed 9 and relocated to other moorings on the Yarra River, thereby replacing the facilities lost and allowing the business to continue as before. WBRC and its advisers contended that adequate replacement facilities were unavailable and the business was extinguished. The DOI contended the contrary, instructing its valuers to assume that alternative premises could have been procured. WBRC attempted to salvage its business following the acquisition. It operated, on a substantially reduced scale (four boats down from 12), incurring mounting losses. WBRC leased a single mooring and an 18.5 square metre office area at Federation Square, after investigating the options for alternate facilities. In founding its claim on total extinguishment of its business it contended that the Federation Square facilities had major deficiencies and no appropriate, viable moorings and service premises were available on the Yarra River or within Docklands.

7 The initial offer of compensation, under s 31 of the Act, was $60,000 plus reimbursement of any legal, valuation and other professional expenses. It was put by letter dated 19 April 2007 attaching a certificate of valuation from the Department of Sustainability and Environment valuing the sub-leasehold interest in the land at $14,211. WBRC's solicitors, on 8 February 2008, rejected that initial offer and claimed instead the sum of $4,305,296. The battle lines were drawn.

8 The application to VCAT was made on 25 July 2008. WBRC claimed compensation under s 41 of the Act, the particular heads of claim being:

Solatium was also claimed under s 44 of the Act.

9 The substantive dispute remaining between the parties is not as to the value of the interest acquired, but rather concerns the disturbance loss for the alleged extinguishment of the business conducted by WBRC at Shed 9 and the associated moorings. The DOI challenges the amount awarded by VCAT for that disturbance loss.

10 Before turning to the findings and reasoning of the tribunal below, I will set the context by noting that the draft notice of appeal stated eleven grounds. Three grounds were not pressed by counsel at the hearing. The grounds pressed can conveniently be grouped.

11 Counsel for the applicant contended for the following errors of law by VCAT:

The financial statements grounds

(a) Did the Tribunal err in law in finding that the financial statements of the respondent tendered at the hearing were fundamentally reliable because there was no evidence that they were fundamentally unreliable?

(b) Did the Tribunal err in law in assessing compensation for the respondent by reference to valuations of the respondent's business which had been based on the respondent's financial statements tendered at the hearing?

Causation grounds

(c) Did the Tribunal err in law in awarding the respondent disturbance loss under s 41(1)(d) of the Land Acquisition and Compensation Act 1986 without finding that the losses were a natural, direct and reasonable consequence of the fact that the Claimant's interest in the land had been divested?

(d) Was it reasonably open to the Tribunal to find on the evidence that the losses suffered by the respondent's business were a natural, direct and reasonable consequence of the fact that the respondent's interest in the land had been divested?

(e) Was it reasonably open to the Tribunal to find on the evidence that the respondent's business had been extinguished?

Minor matters

(f) Did the Tribunal err in law by including in its valuation of the respondent's business an amount for terminal value on the grounds that there was no compelling rationale for excluding terminal value?

(g) Did the Tribunal err in law by awarding the respondent disturbance loss both for the value of the business as at the date of the acquisition and for the trading losses incurred by the respondent after that date?

(h) Did the Tribunal err in law in awarding the respondent $21,094 for Mr Davy's time?

12 For leave to be granted, the applicant must identify a question of law which is relevant to granting the relief sought on appeal and show that there is a real or significant argument to be put on that question of law.[1] The questions of law identified by the applicant have been set out. Leave is opposed, essentially, on the basis that error of law on the part of the tribunal cannot be demonstrated, the issues being essentially factual. It will follow, should I conclude that error of law is not demonstrated and that it was open to VCAT on the evidence to assess the disturbance loss as it did, that leave ought be refused. This necessarily involves, in the context of this matter, a consideration of the merits of the contentions of the applicant.

13 For WBRC, evidence, relevant to these questions of law, was given by Davy and expert evidence was given by Mr Brian Dudakov of Urbis Valuations Pty Ltd and Mr Mark Lipson, Accountant, of Southertons. Lipson, who valued the business of WBRC, was the expert whose evidence supported the claim for disturbance loss. For the DOI, Mr Richard Bowman of Ernst & Young Transaction Advisory Services Ltd gave evidence primarily in response to the evidence of Dudakov. Bowman also gave evidence in respect of assessment of disturbance loss, although he was not professionally qualified to undertake business valuations and did not normally perform them. His qualifications and experience, like that of Dudakov, was in property valuation.

14 There was an unusual turn of events before VCAT in relation to the expert evidence for the DOI about the value of WBRC's business. Throughout negotiations, the DOI was advised, in respect of the business valuation, by Mr Matt Gaffney, also of Ernst & Young Transaction Services Ltd. However, at trial, counsel for the DOI declined to call Gaffney, explaining to VCAT that Gaffney had been misled by cash flow projections which were so aggressive they lacked any credibility, thereby undermining the factual basis of his valuation opinion. Before me, counsel for the DOI, who had appeared at trial, explained that "as things unfolded, it became clear that no reliance could be put on these reports because there was no verification of the underlying factual assumptions, and therefore we declined to call Mr Gaffney". In other words, counsel considered that Gaffney's evidence would now be misleading and of no utility. The DOI preferred to rely on opinions expressed by Bowman as to the value of the business but Bowman's qualifications and assessment were strongly challenged in cross-examination. WBRC later submitted to VCAT that there were obvious deficiencies in Bowman's evidence of business value and it ought be wholly disregarded.

15 I describe this turn of events as unusual because VCAT had, during the interlocutory stages of the application, ordered that the experts for each party confer to produce signed joint statements of the matters agreed and disagreed between them. Lipson and Gaffney had done so and their signed joint statement of experts dated 12 November 2009 was in evidence. The point taken by counsel was not apparent to the experts. Clearly the intention of case management orders and processes in civil disputes, such as this, is to define and manage the issues in dispute. Case management is particularly valuable for ensuring that expert evidence assists the decision-maker and does not form an additional battleground for partisan point taking between the parties.

16 VCAT, in response to the DOI's recasting of its evidence, clearly regarded the turn of events as unsatisfactory. It sought Gaffney's evidence. Notwithstanding their declared position, at the request of VCAT counsel for the DOI agreed to, and did, call Gaffney to explain his rationale and assist VCAT. Bowman's assessments, relating to disturbance and relocation costs, were not accepted by VCAT, a finding which is not now challenged. Presumably it was in that context that VCAT requested, and received, the "assistance" of hearing evidence from Gaffney. The reason does not matter. What is significant is that VCAT had before it the evidence of Gaffney on the issue of disturbance loss and that evidence was not limited to his explanation of his rationale but included his reports and incidental evidence which provided the basis for his opinion.

17 These events and the evidence before VCAT on the issue of the value of WBRC's business are central to the appeal. The last minute withdrawal of Gaffney, as the expert business valuer for the DOI, only became an issue at trial, notwithstanding VCAT's case management of the application. Gaffney had not earlier, either in his reports or in the joint conference process, identified the base financial data for the business as being, in his experience, wholly inconsistent or inherently unreliable, having regard to the nature of the subject business. The issue of reliability of the financial data, involving inquiry into source accounting records, is plainly capable of identification as a contentious issue at an early stage. For one thing, it would have been within Gaffney's expertise to have commented to that effect if appropriate - the problems of proof would have been identified. Importantly, Gaffney did not later, in evidence, consider the basis for his opinion to have been undermined. The submission was that of counsel for the DOI. The data could have been challenged, prior to trial, in other ways.

18 The nature of the business being valued was not without complexities. I note two matters which were emphasised by VCAT - its structure and the changing focus of its commercial activities. Regarding the first matter, the business was informally structured and operated. The accounts were complicated by intermingling of the affairs of WBRC, Davy as its sole director, and his family trust. None of the boats were owned by WBRC. There were interrelated property dealings. There were trust distributions made to WBRC. Financial statements for the years 2000/2001 to 2008/2009 were tendered and in evidence with a summary schedule prepared by the DOI. The data was "verified" by signed, lodged tax returns which were also tendered in evidence. In cross-examination and in submissions, counsel for the DOI highlighted obvious errors and anomalies in the accounts referable to these structural issues and VCAT noted the more significant examples in its reasons.[2]

19 There was a direct attack on Davy's reliability when asked to explain entries in the accounts. VCAT's finding was that Davy left issues about the classification of transactions between his financial entities to the lawyers and accountants. VCAT accepted that Davy had a life-long interest in building, renovating, reconfiguring and operating boats; Davy was a competent boat operator, although not shrewd financially, who gave an honest account of the ferry operations. VCAT held that Davy was not competent to verify all the factual matters in Lipson's report and found that anomalies and errors in the accounts were not a deliberate attempt to maximise compensation. VCAT commented that the DOI did not call any forensic experts and the obvious anomalies and errors did not compel the conclusion that the accounts were fundamentally unreliable. VCAT's finding was that while it accepted the accounts may have been finalised for the purposes of the claim, this did not mean the accounts had been deliberately engineered. VCAT accepted that Gaffney adopted Lipson's data on the basis that it represented the best information available.

20 Regarding the commercial opportunities for the business being in a state of flux, performance assessed by historical earnings before interest and tax (EBIT), up until 2006, was said to inaccurately reflect current and future business prospects. WBRC had invested heavily in providing unprofitable shuttle services to Docklands. However, there were substantial development prospects for WBRC with the planned introduction of new business opportunities broadly based in the Docklands precinct. Three proposed revenue streams were critical to the future of the business. These uncertainties had an important bearing on Lipson's assessment because he employed the discounted cash flow (DCF) approach, based on future earnings, in his valuation. Lipson's cash flows, unlike the historical accounts, reflected these future opportunities. He based his calculations on projections that these new services, commencing in 2008, would start strongly and show annual growth of 15% until 2013, then grow at 3%, in contrast to the existing services which were considered to be mature, growing in line with an assumed inflation rate of 3%.

21 The DOI strongly challenged Lipson's growth projections. VCAT noted that under cross-examination, Lipson had conceded a projected revenue stream, as the Yarra Shuttle service under the Parks Victoria contract, which had ceased, should not have been included. Lipson said that the projected growth overall was not solely related to the Yarra Shuttle contract, but included growth in other services. Overall, he defended his projections, contending they were reasonable and that he was confident about the future prospects of WBRC. Lipson's challenge in cross-examination was carefully noted by VCAT in its reasons.[3] I pause to observe that one effect of this attack on Davy's reliability concerning the financial data was that VCAT dealt with the evidence of Lipson and Gaffney with particular care.

22 VCAT found that Lipson first undertook a valuation in November 2007 as at 30 June 2006, the end of the last complete financial year prior to the acquisition. Lipson adopted a discounted cash flow model in which the free cash flow (FCF) from the business was discounted to give a capital value. In preparing the cash flows, Lipson relied on the financial statements and taxation returns for both WBRC and the Mark Davy Trust, as well as valuations of the fleet, the compensation valuation report prepared by Dudakov, and discussions with Davy on both the historical figures and likely future developments. The financial statements were unaudited and Lipson conceded he could not vouch for their accuracy. On the basis of the projected cash flows, a discount rate of 24.5% and allowance for a terminal value at the end of 2017, Lipson's November 2007 valuation was $3.7 million, of which $920,000 was goodwill.

23 This was not the valuation required for the purpose of assessing the loss to WBRC consequent upon the acquisition, because it included the value of the boats owned by the Davy Family Trust. It was a consolidated valuation of associated Davy entities. VCAT made a finding that there was an intermingling of the operations, management and finances of WBRC, Davy and Davy's Family Trust. Of the 12 boats used by the business, the Family Trust owned eight and Davy personally owned the other four. The undocumented arrangement by which boats were used by WBRC was initially described as a lease and later as an informal arrangement. Davy's Family Trust made distributions to WBRC and rentals paid or stated as being paid in the accounts did not vary by reference to the value of boats being retired or added to the fleet from time to time. The rentals had no proper commercial basis.

24 VCAT observed that, following a compulsory conference and discussions with Gaffney, Lipson adjusted his valuation for various anomalies or incorrect assumptions of the type I have just described. Lipson's adjustments, based on corrected assumptions, allowances and further instructions from WBRC, valued the business on a stand alone basis at $2.88 million. The adjusted valuation did not specify any allocation between goodwill and net tangible assets, Lipson asserting in evidence that the whole of the figure constituted goodwill upon the removal of the value of the boats. VCAT noted that this valuation was, too, conceded by Lipson to be based on incorrect figures. A further (third) valuation dated 13 November 2009 was proffered at $2.81 million. Lipson also proffered yet another calculation, based on Gaffney's assumptions and a resulting discount rate of 41.9%, of a value of $1.406 million.

25 Lipson was, as VCAT records in its reasons,[4] trenchantly pressed in cross-examination by senior counsel for the DOI about these revised and revisited valuations and his explanations were found wanting. Counsel submitted Lipson's evidence should be wholly disregarded, as based on erroneous financial data. Lipson was an unsatisfactory witness who sought only to advance his client's case and not to assist VCAT. As it was entitled to do, VCAT accepted this submission in part, rejecting the submission that his evidence should be wholly disregarded, finding that:

Lipson was an unsatisfactory witness to the extent that he attempted to maintain a high valuation figure in the interests of WRBC and failed to properly maintain his professional objectivity and impartiality. He failed to allow for a commercially based rent for the boats as an appropriate expense and adopted a low discount rate, which did not adequately reflect the risks that the optimistic forecasts of revenues from the new businesses would not be realised.

26 VCAT held that, with important exceptions,[5] Gaffney adopted Lipson's cash flow projections. VCAT observed that in the signed joint statement of experts it was specified that the valuations were based on adopting the same data for the following items: Projected Revenues, Total Revenue, Cost of Sales, Gross Profit, Direct Costs, Trading Profit, and Expenses, other than Depreciation (plant), and Rent (plant).

27 The substantial differences between Lipson and Gaffney in their assessments of value were found by VCAT to be largely due to:

assumptions as to depreciation and boat rental;
terminal value; and
discount rates adopted.

Findings were made by VCAT in respect of these differences.

28 First, boat rental: VCAT adopted Gaffney's figure derived from taking the annual rent identified in the accounts and adjusting it for inflation. Counsel for the DOI had contended the more realistic commercial rent would have been something above $200,000 but there was no finding for that figure.

29 Second, terminal value: Gaffney did not include a terminal value, while Lipson applied a multiple of four to the forecast EBIT revenue to 2017. VCAT's finding, that it was reasonable and appropriate to assess the loss arising from disturbance on the basis of total extinguishment was, on this application, challenged by the DOI. In summary, VCAT's findings were:

the DOI erred in instructing its valuers to assume that suitable, alternative premises were available and neither South Wharf nor WRBC had mooring rights;
no alternative and comparable premises and moorings were available;
WBRC made all reasonable efforts to re-establish its business, but with no comparable facilities becoming available, incurred mounting business losses from a substantially reduced operation; and
a prudent manager would close the operations after an appropriate period, probably not exceeding two years.

Gaffney considered the prospects of a lease extension to be remote, contending that terminal value is often not included in business valuations and that at the applicable discount factor the value added to the business would be a tiny fraction of the calculated gross terminal value. VCAT did not accept this rationale and included a terminal value, but adopted a multiplier of two to adequately reflect risk.

30 Third, discount rate: as I have noted, Gaffney did not, as counsel for the DOI submitted VCAT ought do, reject the base financial data as inherently incredible. Gaffney told VCAT that he applied professional scepticism in the form of a higher discount to reflect the risk that the revenue growth might not be achieved, being aware that the projected revenues showed high growth and that he was valuing the prospect of three new business areas in which WBRC had to generate earnings from a zero base. VCAT embarked upon a careful and detailed analysis of the factors identified on the evidence as relevant to the appropriate discount rate. It is not necessary to set out this reasoning. VCAT arrived at a rate of 47.25% on the basis of its own assessment of the expert evidence of Gaffney and Lipson and the relevant exhibits underlying their reports, including their joint report to VCAT. This assessment, I was told, is not now challenged by the DOI. In finding that the market value of the WBRC business at the relevant date was $871,400, VCAT adopted the net cash flow from Gaffney's report of 4 November 2009.

31 The separate head of claim for trading losses was limited by the finding that a prudent business manager would have shut down the business within two years of the acquisition of Shed 9 and the moorings. VCAT found the reasonable estimate of the trading loss to 18 April 2009 to be $42,350. On appeal, this assessment is not challenged. Rather, it is contended that as the market value of the business is calculated on a DCF basis, by including this amount there is a double-counting.

32 I need not dwell on the reasoning as to the remainder of the award made by VCAT as it is not directly challenged, save for one matter. WBRC sought an amount of $47,750 for the cost to it of its director's attendances in relation to the acquisition. It was common ground between Lipson and Gaffney that a reasonable salary to be imputed for Davy would be $94,000 per annum. This would constitute only part of the loss to WBRC as there would also be a consequent loss of revenue for WBRC due to the absence of Davy on the matters relating to the acquisition. Before VCAT, the DOI contended that Davy was the sole director, not paid by WBRC. There was no direct pecuniary loss to WBRC by virtue of the time spent by Davy in looking for replacement premises.[6] This contention was rejected. A further submission, that the time Davy spent was not only on behalf of WBRC but was also in his personal capacity, on behalf of the Trust and included looking for suitable premises as well as endeavours to sell the boats, apparently persuaded VCAT to find that a more realistic assessment of time spent on the business related aspects, as against the time spent by Davy in protecting his personal and family trust investments, resulted in the lesser allowance of $21,094 which was awarded.

33 The matter comes to this court pursuant to s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (the "VCAT Act") which defines the nature of the jurisdiction and this court's powers.

34 The nature and scope of proceedings under s 148 of the VCAT Act was recently restated by the High Court. In Osland v Secretary to the Department of Justice,[7] French CJ, Gummow and Bell JJ said that the section confers original, not appellate, jurisdiction in the nature of judicial review, that is, judicial power to examine for legal error what has been done in an administrative tribunal. The jurisdiction conferred by s 148(1) is confined to appeals on questions of law. Section 148(7) does not enlarge that jurisdiction. It confers powers on the court in aid of its exercise.

35 Where a claim for compensation under the Act is disputed, the disputed claim may under s 80 of the Act be referred to VCAT or the court, VCAT's jurisdiction in respect of this dispute having been determined in accordance with s 81. Coming within VCAT's original jurisdiction, VCAT has, by s 44 of the VCAT Act, the functions conferred on it by or under the enabling enactment. By s 89 of the Act, on an application or referral of a disputed claim, VCAT is to determine the amount of compensation to be paid in respect of the claim in accordance with the Act.

36 When the s 80 referral under the Act comes to VCAT, the tribunal is bound by s 97 of the VCAT Act to act fairly and according to the substantial merits of the case. Its general procedure is governed by s 98 which is in the following terms:

(1) The Tribunal -

(a) is bound by the rules of natural justice;

(b) is not bound by the rules of evidence or any practices or procedures applicable to courts of record, except to the extent that it adopts those rules, practices or procedures;

(c) may inform itself on any matter as it sees fit;

(d) must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of this Act and the enabling enactment and a proper consideration of the matters before it permit.

(2) Without limiting subsection (1)(b), the Tribunal may admit into evidence the contents of any document despite the non-compliance with any time limit or other requirement specified in the rules in relation to that document or service of it.

(3) Subject to this Act, the regulations and the rules, the Tribunal may regulate its own procedure.

37 Other sections relevantly define procedure. By s 80, VCAT may give directions at any time in a proceeding and do whatever is necessary for the expeditious or fair hearing and determination of a proceeding. VCAT may convene compulsory conferences under s 83. By s 94, the tribunal may call in the assistance of an expert to advise it in respect of any matter arising in a proceeding.

38 I record that counsel for the DOI informed the court that the appeal is brought because the DOI considers there are important points of principle which arise from the manner in which VCAT dealt with this application. The DOI considered it unfortunate for WBRC to be caught up in such concerns of principle and stated, by counsel, that it did not seek to in any way disadvantage WBRC. The DOI's open offer to WBRC is that, irrespective of any less favourable outcome for WBRC, it can retain the sum of $220,000 paid, and further, the authority will pay the respondent's taxed costs below and also its taxed costs on this appeal.

39 The items comprising the tribunal's compensation order are set out above at [2]. The items in sub-paragraphs (a), (c) and (d) are not contested. Those items of the award total $201,140. The debate centres on the assessment of item (b), the loss attributable to disturbance. The applicant contends that the items, (b)(i) extinction of business and (b)(iii) Davy allowance, are erroneous assessments. Counsel for the DOI submitted that the issue was whether WBRC should be compensated for the disturbance loss of the business and that the trading losses, item (b)(ii), can stand if the disturbance loss is disallowed. Alternatively if extinction of business is allowed, trading losses must be disallowed. Thus the DOI contends that the proper assessment of compensation is $186,929, or alternatively $1,015,979, in lieu of the award of $1,079,423.

40 Counsel for the DOI contended the findings of VCAT in respect of the reliability of the accounts and the base financial data utilised by the business valuation experts, appear to reverse the onus of proof. An onus was imposed on the DOI to disprove the accuracy of that data, overlooking the fact that no witness on behalf of WBRC actually verified the financial statements. Moreover, in ascribing a terminal value to the business in 2017, VCAT erred, again reversing the onus of proof, effectively imposing on the DOI the onus to prove there is not or would not be a terminal value.

41 The DOI contended that VCAT acted in the absence of evidence. The submission was put this way. What was lacking before the tribunal was any evidence to prove the financial statements of historical trading performance by this business, which provided the basis of the future projections of earnings. There was no evidence about those historical trading results. There were documents, but no evidence that the documents correctly recorded the historical financial trading performance. It appeared initially that Davy was going to say that. He signed the director's reports with the statements, and his evidence-in-chief was that he verified all the facts relied on by Lipson. However, when cross-examined, Davy was unable to verify such facts stating that his accountant, Mr Pardasani, prepared the accounts, knew of such matters and was available to give evidence. Mr Pardasani was not called by either party. Counsel for the DOI submitted it was made clear at VCAT, once Davy had resiled from his witness statement, that verification of the accounts was contested and the fundamental assumptions made in valuing this business were contested. The tribunal therefore erred in law by acting on the evidence of Gaffney and Lipson. It was not open to VCAT make a finding of the value of extinguishment loss, as the fundamental or antecedent facts on which the opinions were expressed were not established in evidence.

42 The tribunal's conclusion that "there was no evidence that the accounts were fundamentally unreliable", coupled with its observation that the DOI had not called a forensic expert on the question of the reliability of the accounts, was attacked as imposing an onus upon the DOI to disprove the reliability of the accounts. In submitting that WBRC bore the onus of proof, I was taken to s 37 of the Act - not the section under which the matter came to VCAT - to Tilgham v Valuer General,[8] Roads Corporation v Murdesk Investments Pty Ltd[9] and to Jacobs, Law of Compulsory Acquisition.

43 Counsel's second ground, broadly speaking, can be called the causation ground. Section 40 of the Act defines the loss attributable to disturbance in these terms.

loss attributable to disturbance means any pecuniary loss suffered by a claimant as the natural, direct and reasonable consequence of -

(a) the service upon the claimant of a notice of intention to acquire, where the Authority has refused or failed to give consent to the carrying out of improvements to the land in respect of which that notice has been served or the effecting or obtaining of any sales, transactions, licences or approvals in respect of that land; and

(b) the fact that an interest of the claimant in that land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in this Part.

44 The causation requirement, "as the natural, direct and reasonable consequence of", is, it was submitted, to be widely interpreted in conformity with common law causation principles. This rather broad proposition was said, in its application here, to require that WBRC had to establish not merely that it suffered losses in its business after acquisition but that such losses were caused by the acquisition.

45 The assessment of loss on an extinguishment basis is challenged on two bases. It was not shown to have been caused by the acquisition and must be attributed to factors other than the acquisition. It was said to be uncontested that the WBRC business had not been extinguished. At the time of the hearing, and even to this day, it continues to operate at Federation Square. Although counsel for the DOI conceded the business did so on a reduced basis, this concession remains vague and undeveloped. It is not clear what alternative finding of fact is said to be open on the evidence.

46 It was contended there were important factors operative after the acquisition which caused losses to the business. WBRC lost the Yarra shuttle contract, a loss which had nothing to do with the acquisition but which effected a 30% loss of revenue. The St Kilda-to-Williamstown ferry service was closed down. Access to alternative moorings was lost. It was submitted that the global financial crisis starkly affected the business. WBRC lost the support of the Davy Family Trust. It was submitted these matters were clear factual issues in the evidence ventilated before VCAT which it appears to have ignored. Thus, the DOI contends VCAT's finding on causation is so much at variance with the weight of the evidence that there was an error of law. Shortly stated, relevant considerations were ignored and VCAT arrived at a decision that was not open or not reasonably open on the evidence.

47 Terminal value reflects the prospect that the business might continue to operate at the expiry of its lease term. The tribunal award included terminal value. The DOI submitted that VCAT did so on the basis that no compelling rationale was given for excluding terminal value. The DOI contended that this reasoning reversed the onus of proof. Further it contended that the finding of a terminal value was not open on the evidence, referring to cases founded in a different factual context.[10]

48 VCAT erred in awarding both value of the business and trading losses, the error being double-counting. Thus, if the court accepts that it should not award the value of the business, which is the applicant's primary case, it accepts the respondent's entitlement to trading losses and does not contest the amount awarded for the trading losses.

49 Finally, relying on Melbourne City Link Authority v Telford Pty Ltd,[11] the DOI submitted that the claim in respect of Davy's costs confused Davy with WBRC. There being no evidence that WBRC had suffered any loss, this allowance was in error.

50 WBRC submitted that careful examination of VCAT's reasons demonstrates that it did not place any onus on the DOI to disprove the reliability of the accounts. Further, counsel submitted that the onus of proof does not rest upon WBRC in the manner contended. Referring to the scheme provided by the Act for the assessment of compensation, in particular, Part 3 of the Act and ss 80 and 90(2), counsel contended that the DOI has a positive obligation under the Act to compensate WBRC which it could not seek to avoid by taking a contentious position in relation to the accounts, during the trial without notice and contrary to its previous position. Where the parties apply to the tribunal for determination of a disputed claim, the tribunal's obligation is to determine the amount of compensation payable in accordance with the Act in the particular circumstances of the case. Where the task is, in the statutory context, to determine what is the proper measure of compensation, the onus is not strictly borne by one party or the other.

51 WBRC contended that the DOI's attack on the financial statements was limited to the accuracy of specific line items (such as boat rental, depreciation, and allowance for a proprietors wage) and the historical performance of the business. WBRC relied on a careful consideration of VCAT's reasons to dispel the notion that the tribunal erred in its treatment of the evidentiary material. There was plainly, it was submitted, an evidentiary basis for VCAT to conclude that the financial statements were the accounts of the business of WBRC prepared in the ordinary course of its business by its external accountants. Further, VCAT's approach to the evaluation of this material was permitted under s 98 of the VCAT Act.

52 WBRC submitted that causation under s 40 of the Act imports a causal connection, not a chronological or temporal connection, between a pecuniary loss and the divesting of the claimant's interest in the acquired land. Moreover, s 43(1) of the Act directs that certain matters must be disregarded in assessing compensation.

53 Rejecting the contention that the WBRC business had not been extinguished and continues to operate, counsel for WBRC referred to the tribunal's finding that acknowledges that a business operates from Federation Square. Those findings refer to a substantially different scale of operation, resulting principally from the crippling losses incurred when the business as it existed at the acquisition date was continued, and major deficiencies in available service premises and appropriate moorings. The contention of the DOI that the business had not been extinguished was not based on its continuance in this form. It was based on the issue of availability of other moorings and premises to which WBRC could relocate to continue as before.

54 The essential feature which defined the business extinguished by the acquisition, was that WBRC had a well-established business poised to benefit from new opportunities developing in the Docklands precinct. What remained was a dramatically reduced business, stripped of such opportunities, which became unviable. VCAT found that a prudent manager would have closed down the business no later than two years after acquisition. Thus VCAT's finding was that the natural, direct and reasonable consequence of the acquisition was that the business' value was extinguished by its inability to be relocated to alternative premises and moorings. While such consequences included incurring trading losses during attempts to relocate and save the business, a period of more than two years could not be regarded as reasonable. These findings, counsel submitted, were not only open on the evidence but disclosed no misconception of the meaning of "loss attributable to disturbance".

55 There was, WBRC submitted, a careful analysis by the tribunal of the impact of the circumstances of operation, following acquisition, on the business. It was open to VCAT to find that the loss of the acquired interest caused the business to be extinguished. Counsel characterised the DOI's attack on the tribunal's findings about terminal value to be an impermissible attack upon findings of fact, which were open on the evidence.

56 Counsel contended that the DOI's submission of double-counting in allowance of both disturbance loss and the operating losses after acquisition, was misconceived. The assessed disturbance loss was the whole of the value of the business at the relevant date. The trading losses were mitigation expenses incurred after the acquisition date. The losses were, at least for a two-year period, reasonably incurred. The costs of mitigation, effectively out of WBRC's pocket, were a separate loss which was a direct, natural and reasonable consequence of the acquisition. Further, there was evidence from Lipson that the trading losses were not included in the assessment of the disturbance loss.

57 Finally, in respect of the allowance to WBRC for Davy's time, counsel for WBRC submitted that the relevant test is whether WBRC suffered loss as a direct, natural and reasonable consequence of the acquisition, not whether any payment was made to Davy. This was a factual matter and the tribunal's finding was open on the evidence.

58 In Roads Corporation v Dacakis,[12] Batt J (as his Honour then was) considered appeals on a question of law under s 102(3) of the Act, from a decision of the Land Valuation Board of Review, prior to its repeal upon the enactment of s 148 of the VCAT Act. There being no change in the statutory basis for an appeal, what his Honour there said remains apposite. He said:[13]

... I think that I should proceed on the basis that a finding of fact will only be open to challenge as erroneous in law if there is no probative evidence to support it (and not also if it is not reasonably open on the evidence), whilst an inference will be open to challenge as being erroneous in law if it was not reasonably open on the facts. But, as the statement of Mason CJ at 360 shows, there is virtually no difference between the tests.

59 It is well established that VCAT is not absolved by the Act from acting rationally on probative evidence. Although not bound by the rules of evidence, it is required to act according to the substantial justice and the merits of the case. Evidentiary rules and contemporary litigation management procedures are not ignored by VCAT. The fundamental requirement of s 97 of the VCAT Act, acting fairly and according to the substantial merits of the case, may be informed by reference to the rules of evidence. Such rules need not be wholly ignored.

60 Counsel referred to the pertinent observations of Brennan J (as he then was) in Re Pochi and Minister for Immigration and Ethnic Affairs:[14]

The Tribunal and the Minister are equally free to disregard formal rules of evidence in receiving material on which facts are to be found, but each must bear in mind that "this assurance of desirable flexible procedure does not go so far as to justify orders without a basis in evidence having rational probative force", as Hughes CJ said in Consolidated Edison Co v National Labour Relations Board [1938] USSC 176; 305 US 197 at 229. To depart from the rules of evidence is to put aside a system which is calculated to produce a body of proof which has rational probative force, as Evatt J pointed out, though in a dissenting judgment, in R v War Pensions Entitlement Appeals Tribunal; Ex parte Bott [1933] HCA 30; (1933) 50 CLR 228 at 256. ... That does not mean, of course, that the rules of evidence which have been excluded expressly by the statute creep back through a domestic procedural rule. Facts can be fairly found without demanding adherence to the rules of evidence.

61 Reliance in argument for the DOI to show error was put principally on two cases.

62 In Kostas v HIA Insurance Services Pty Ltd trading as Home Owners Warranty,[15] the High Court recently held that where there is no evidence to support a tribunal's factual finding, the question arising is in respect of a matter of law. The decision of the NSW Consumer, Trader and Tenancy Tribunal, that the appellants had not validly terminated a building contract, was based on a finding that the builder had served two claims for extensions of time in accordance with the contract, and that the appellants had not disputed those claims in the manner required by the contract. A finding that those two claims for extension had been validly served, was necessary for the Tribunal to conclude that the appellants had repudiated the contract.

63 The Tribunal concluded that the claims had been served but did not, in its reasons, identify the evidence relied on for that conclusion and did not specify how or when the claims had been served. An affidavit deposing to service of the claims did not form part of the material put before the Tribunal for its consideration in deciding the separate issue of repudiation. That material did not identify whether, or how, those documents had been served.

64 Section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) ("CTTT Act") provided for a right of appeal to the Supreme Court against a decision by the Tribunal on "a question with respect to a matter of law". The primary judge held that the affidavit was not evidence before the Tribunal. It followed that there was no evidence of service of the time-extension claims in accordance with the contract. The Tribunal had made an erroneous decision of a question with respect to a matter of law. The termination of the contract was lawful and effective. The Tribunal's decision was quashed.

65 In the Court of Appeal, the Tribunal's decision was reinstated on the basis that a contention that there was no evidence to support a factual finding of the Tribunal could not form the basis of a statutory appeal under s 67. There was no "question with respect to a matter of law" to attract jurisdiction.

66 The High Court restored the decision of the Supreme Court, quashing the Tribunal's decision. The High Court held the factual finding in the case was that the builder had served the relevant time-extension claims. There was no evidence before the Tribunal upon which it could make this finding. The jurisdiction of the Supreme Court under s 67 was properly invoked. The section permitted an appeal to the Supreme Court against the Tribunal's decision that there was material properly before the Tribunal which supported the conclusion that the disputed claims for extension of time had been served on the appellants. The conclusion that there was material of that kind, necessarily implicit in making the finding that the disputed claims had been served, was a decision with respect to a question of law. The decision of the judge at first instance on this point was correct.

67 The Chief Justice identified the operating procedures of the Tribunal, which were in most respects analogous with the provisions of the VCAT Act. His Honour described the procedures thus (omitting citations):

The Tribunal may, subject to the CTTT Act, determine its own procedure. It is not bound by the rules of evidence and may inquire into, and inform itself on, any matter in such manner as it thinks fit, subject to the rules of procedural fairness. That freedom is enjoyed by many administrative tribunals. The term "rules of evidence" does not lay out with precision its metes and bounds. Nor does it exclude the discretionary application of such rules. But the authority of the Tribunal to "inform itself on any matter in such manner as it thinks fit" indicates that it is able to act upon information whether or not it is embodied in evidence which would be admissible in a court of law.
There are qualifications upon the Tribunal's procedural freedom. One, which is explicit, is the requirement to observe procedural fairness. The Tribunal's modus operandi must also serve its function, which, in this case, was to hear and determine a building claim. That function implies a rational process of decision-making according to law. A decision based on no information at all, or based on findings of fact which are not open on information before the Tribunal, is not compatible with a rational process.
The exercise of the Tribunal's freedom from the rules of evidence should be subject to the cautionary observation of Evatt J in R v War Pensions Entitlement Appeal Tribunal; Ex parte Bott that those rules "represent the attempt made, through many generations, to evolve a method of inquiry best calculated to prevent error and elicit truth". It is a method not to be set aside in favour of methods of inquiry which necessarily advantage one party and disadvantage another. On the other hand, that caution is not a mandate for allowing the rules of evidence, excluded by statute, to "creep back through a domestic procedural rule".
The Tribunal is required to act as expeditiously as is practicable. A member may, in any proceedings, give procedural directions including directions that, in the opinion of the member, will enable costs to be reduced and will help to achieve a prompt hearing of the matters in issue between the parties in the proceedings. It was not in dispute that this power would enable the Tribunal to hear and determine, as it did in this case, a particular issue where such determination is likely to expedite the proceedings.
It is relevant to the approach to the construction of s 67 of the CTTT Act that the criteria for appointment to the Tribunal do not require, except in the case of the Chairperson, that a member be a legal practitioner or be qualified for admission as such. Moreover, parties are not entitled to be represented by another person unless such representation is approved by the Tribunal ...

68 The plurality[16] also catalogued the procedural features of the Tribunal in like terms, concluding all of these provisions are consistent with the stated object of having the Tribunal determine proceedings informally, expeditiously and inexpensively, a statement recognised as the purpose of VCAT. In Rabel v Eastern Energy Ltd[17] the Court of Appeal, described the underlying purpose of the VCAT Act is "... clearly to achieve expeditious and cost-effective resolution of those disputes which are now committed to VCAT for determination and also to exclude frivolous and unnecessary appeals ...".

69 The plurality held that the Tribunal made a wrong decision with respect to a question of law, stating the principle applying to be:

Whether there was no evidence to support a factual finding is a question of law, not a question of fact. The Tribunal's factual finding in this case, that the builder had served the two relevant claims for extension of time, necessarily depended upon its first accepting that there was evidence to support the finding. As Dixon CJ said in Gurnett v The Macquarie Stevedoring Co Pty Ltd [No 2]:[18]

"... in the legal dichotomy between questions of fact and questions of law we place under the latter head a question whether there is sufficient evidence to submit to a jury in support of a cause of action. That is because it is a question for the court to decide and not for a tribunal of fact."

A tribunal that decides a question of fact when there is "no evidence" in support of the finding makes an error of law.[19] What amounts to material that could support a factual finding is ultimately a question for judicial decision. It is a question of law. And in this case, for the reasons given by the primary judge, there was no evidence before the Tribunal, when it decided the separate question identified by the parties, upon which the Tribunal could find that the disputed notices had been served.

70 In Langham v Commonwealth[20] Keely J commented on the relationship between s 33(l)(c) of the Administrative Appeals Tribunal Act 1975 which provides that "the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate" and s 33(1)(b) which directs "a proper consideration of the matters before the Tribunal".

71 The issue on appeal concerned a finding that the applicant was symptom-free at the end of his course of treatment. The finding was based on two documents, one of which was a file entry made by a doctor. On analysis of this evidence, Keely J relevantly observed:

The file entry showed on its face that the maker of the statement had no personal knowledge of the information recorded in it.
The source of that information was not disclosed by the file or by any other material before the Tribunal ...
Neither the maker of the entry on the file nor the person who was the source of it was called as a witness.
No explanation was given as to the reason why neither of those persons was called as a witness.
The entry on the file that the applicant was "symptom free" had "surprised" Dr Searle, the specialist physician who had been treating the applicant and whose opinion on another aspect had been preferred by the Tribunal to those of other specialists called as witnesses by the respondent ...
During a well prepared cross-examination of some length, the correctness of the file entry was specifically denied by the applicant. It would, of course, have been open to the Tribunal to reject the applicant's sworn evidence as being unreliable. However, the Tribunal said "although he impressed me as generally an honest witness and was adamant that (Dr Oakeshott's file entry) was incorrect, I think that it is much more likely that in fact it (the file entry) was correct".

Keely J noted that the Tribunal's reasons for decision carefully reviewed the medical evidence and the history of the matter but expressed rather briefly the reasons for making the finding that the applicant "was pain free at the end of his course of treatment" at the Rehabilitation Centre. The appeal was allowed, the decision of the Tribunal set aside, and the matter remitted to the Tribunal to be heard and determined according to law after the hearing of such further evidence as it may decide to receive.

72 The cases relied on by the DOI are directed to issues of fact found by administrative tribunals in the informal procedural settings created by their enabling statute. The issue raised here differs in that the challenged fact finding exercise is part of the process of evaluation of expert opinion. Is this a material distinction?

73 It is desirable, I think, to first identify the proper approach to expert evidence, developed at common law, to place in context whether any relevant error has been made by VCAT. Courts require the facts upon which an expert's opinion is based to be identified for scrutiny, and do not usually act upon an expert opinion where there has been no explanation of basis.[21] This requirement focuses on the factual assumptions used by the witness, for it is to such assumptions of fact that experts apply specialist knowledge, or their accepted expertise, to express conclusions. Consistently with Kostas, the question of whether there is material which could support an expert opinion is a question of law.

74 The significance of the primary facts for the conclusion expressed may require, in assessment, a measure of expertise. In context here, the significance of the lack of verification of the quantum of a line item in a profit and loss statement, or the allocation of a transaction recorded in a bank statement to a line item in a profit and loss statement, may properly be an issue for the expert to evaluate by reference to specialist knowledge or accepted expertise. It can be accepted that independent verification by audit, one method of achieving a high degree of reliability in financial statements, is an expense which is not justified in all circumstances, particularly for the financial statements of businesses like WBRC. It is not a requirement of the Act that compensation be assessed on audited statements and audit is not required in many other circumstances where financial statements are used. Thus, accountants and financial valuers have, within their training and expertise, techniques and skills for assessing the veracity and utility of financial statements when used for any particular purpose or task. The same observation may apply in other fields of expertise.

75 Since I reserved my decision, the Full Court of the Federal Court in Castel Electronics Pty Ltd v Toshiba Singapore Pte Ltd[22] considered the admissibility of the evidence of an expert, a financial and management consultant, called to prove the quantum of damages sought. The court observed[23] that forensic accountants, and persons who have qualifications in business administration and the like, practise in a well-recognised field of expertise. Such experts have regard to financial statements and records for the purpose of expressing accounting or audit opinions. They also have regard to such records to identify losses which are said to have been suffered by a business as a result of some actionable wrong or to identify the changes in the financial condition of the business from time to time.

76 Such an exercise could, noted the Court, be carried out by the court itself. It could have regard to the underlying source documents and construct for itself the appropriate inferences for the issue at hand. However to save the time and trouble of the exercise, the practice is to have forensic experts carry out the exercise in advance of the hearing. The Court considered this practice to be an appropriate way of presenting evidence relating to the financial affairs of a company which claims to have suffered a loss. The evidence assists a court in understanding transactions which involve complex accounting treatments. Importantly, the evidence is a summary of the financial records of the company and admissible It is not opinion evidence at all. It is a summary of the company's financial records: Potts v Miller[24].

77 I do not suggest that in law courts proper proof of primary facts is thus avoided. Evidence from an expert to a court of the assumptions of primary fact made is not usually admissible to prove such facts. Commonly, the hearsay rule necessitates proof in other ways. Such proofs are often formal. An apposite example is proof of business records, and as Castel Electronics demonstrates, there can be issues whether the expert's evidence is actually a convenient summary of facts or an expression of specialist opinion. Historically, proof of financial transactions notoriously became productive of expense and delay in litigation in circumstances where there was no good or meritorious ground to dispute their authenticity. Procedures changed. Now proof of the content of documents is regulated by s 48 of the Evidence Act 2008, which states that a party may adduce evidence of the contents of a document by tendering it, as occurred here (or in other ways). Business records are subject to specific exception to the hearsay rule by s 69 of the Evidence Act 2008. Thus, a representation made or recorded in a business record may not be excluded as hearsay when certain conditions are satisfied.

78 There are facilitative proof provisions, for example, in connection with financial statement and business records. Section 147 of the Evidence Act 2008 may permit a presumption, unless evidence sufficient to raise doubt is adduced, that a balance sheet is a document produced by a process and produces a particular outcome - the outcome being that the financial transactions of a company over a nominated period have been collected, classified and summarised from information provided by the director (Davy) in a manner appropriate for the needs of the director and the members of the company. There is a rationale behind these provisions which might be described as a presumption of reliability. Its facultative benefit is not denied to VCAT by its statutory charter for informality, manifest in the inapplicability of the rules of evidence.

79 In Ringrow Pty Ltd v BP Australia Ltd,[25] Hely J considered, pursuant to the provisions of the Evidence Act 1995 (C'th), the admissibility of a valuer's report, which expressed opinion, where the expert was not to be called as a witness on the basis that the report formed part of the records of a relevant business. The valuation was of a service station and was prepared on the instructions of St George Bank. The purpose of the tender of the opinion was to prove that there was, at the relevant date, valuable goodwill attaching to the service station business, the benefit of which could be forfeited, an issue between the parties in the proceeding. The court held that the valuation report was admissible but exercised its general discretion under s 135 to exclude the report. Noting that, in part, the opinions expressed as to the leasehold value of goodwill as a check on the other methods employed to value the freehold were critically dependent on the estimates of sales, profit and expenses set forth in the report, and that those estimates did not reflect actual historical figures, the court considered that s 135 was enlivened where the valuation reports were admitted into evidence with a denial of an ability to cross-examine the relevant expert. That this consequence, which was critical in the discretionary consideration, followed was principally because the reports did not squarely address the issue raised in the proceeding.

80 For an expert opinion as to the value of a business to be persuasive, it must bear some relationship to the primary facts of the case, as eventually found on the basis of the evidence tendered by the parties. There may be conflicts in that evidence. That was the case here in respect of the financial statements. It was for VCAT, as the trier of fact, to resolve conflicts and to identify the relevant financial features of the business for the purposes of valuation. Unless the relevant financial features of the business, as either assumed or deposed to by the expert, bear some relationship with those identified by VCAT, the expert valuation opinion will be too remote from the business identified to be of any use. As the learned author of Cross on Evidence explains[26] the "basis rule" provides that an expert opinion is not admissible unless evidence has been or will be admitted, whether from the expert or from some other source, which is capable of supporting findings of primary fact sufficiently like the factual assumptions on which the opinion is based to render the opinion of value. In R v Ryan,[27] the Court of Appeal described as basic the proposition that an opinion without any evidentiary basis is inadmissible.

81 In Ramsay v Watson,[28] an issue in an injury claim in the course of employment concerned a physician's opinion evidence that 21 other employees, who had worked at the Government Printing Office and whom he had examined, did not have symptoms of lead poisoning. The High Court said: "[I]f the man whom the physician examined refuses to confirm in the witness box what he said in the consulting room, then the physician's opinion may have little or no value, for part of the basis of it has gone".[29] Although it has been said that this decision stands for the proposition that a failure to prove the assumed factual basis of expert opinion goes only to weight, not admissibility, a proper reading of this case does not bear this out.[30] The High Court identified that there is no absolute rule about the precise impact that a lack of primary evidence has on the admissibility or weight of expert evidence based on it. "Each case depends on its own facts".

82 I consider that, in the present case, VCAT had evidence before it which provided a basis for determining the value of the business. That evidentiary material included the annual financial statements and tax returns about which Davy was unable to offer explanations under cross-examination. Unsurprisingly, the DOI did not object to the receipt and use of those documents by VCAT as part of the evidentiary material in the case. While there may have been an admissibility point at common law, as I have discussed, as VCAT is not bound by the rules of evidence, it is able to inform itself in such manner as it thinks fit. It may admit into evidence the contents of any document. Having done so with the tax returns, financial statements and the statements of the director and accountant accompanying each of them, there was before VCAT evidentiary material capable, if used correctly, of providing a basis for a valuation opinion. Care was required in using such evidence but there was no error of law in the sense that there was no evidence of the fundamental or antecedent facts on which the valuation opinions were expressed.

83 The point taken by counsel for the DOI before VCAT, when they declined to call Gaffney, was tactical. Further, the tactic was broadly based on the rules of evidence. Their approach, had it succeeded, may have had the effect of creating a proceeding where there was no evidence upon which the assessment of compensation could have been made. The evidence might have been limited to that of Davy and Lipson alone, particularly if objection was successfully taken to any weight being attributed to the financial statements and tax returns in the absence of Pardasani. VCAT's response to the DOI's tactical position was based in its power to inform itself in such manner as it thinks fit. VCAT determined its own procedure.

84 When the accountant Pardasani was not called, the DOI called in aid a rule of evidence: the rule in Jones v Dunkel.[31] How the submission was put below was never explained and its application to the failure to call a non-party witness, such as Pardasani, is dependent on matters which do not seem to have been the subject of evidence or submission.[32] There was, for example, no explanation why the DOI did not, or could not, itself call Pardasani who appears from the financial statements to be an independent accountant in private practice. Apparently, he was available to be called. VCAT made no finding about Pardasani. I do not consider that VCAT could draw any inference as to whether either party's case would have been assisted by the evidence of Pardasani. No error of law arises out of the absence of any reasoning by VCAT about the Jones v Dunkel submission.

85 VCAT accepted that the primary financial statements were not wholly reliable. A Jones v Dunkel submission could not go to whether an inference ought be drawn that the primary financial statements were completely unverified and were completely unreliable when utilised by Gaffney and Lipson to form valuation opinions. It cannot assist in establishing the error of law contended, that there was no evidence supporting the compensation assessment.

86 Counsel for the DOI put the submission on the basis that the underlying assumptions upon which Gaffney based his evidence were not proved. This is, in my view, far too wide. VCAT's finding that the primary financial statements were not wholly reliable was plainly open to it. At best, the submission could be that the expert evidence was based in part on evidence of past historical performance of the business, which was successfully challenged as not wholly reliable, in the sense that Davy could not vouch for the information contained in those statements.

87 The financial statements contained a standard form accountant's certificate that the statements were compiled from information provided by the director (Davy) and were appropriate for the needs of the director and the members of the company. The information provided was, presumably[33], source documents: bank statements, invoices, receipts and the like. Procedures based in accounting expertise are used to collect, classify and summarise the financial information. Those certified financial statements represent the product of some process. That there were questions raised effectively, in cross-examination, about the veracity and reliability of the statements was not a matter which deprived the financial statements of all evidentiary status within the procedures of this administrative tribunal.

88 Further, the challenge in cross-examination was not found by VCAT to be about the numbers allocated to line items as such, for example whether gross revenue was justified by the banking deposits or other source data. The challenges made, and accepted by the tribunal, concerned the applicability in the profit and loss statement or balance sheet of line items as a matter of principle, such as those related to consolidation of different entities in the accounts, or allowances for depreciation of boats, or a static annual boat rental notwithstanding changing boat deployment. There were other items. These were matters pertaining to accounting or evaluation principles. Whether the function of the statements, as summaries of base transactions, was so ineffective as to deprive the statements of any utility was a different issue.

89 Less than ideal financial statements for small private businesses are a fact of daily life in litigation. Such statements, once admitted to the material upon which the decision-maker is acting, are legitimately part of that material before that decision-maker, an observation which applies not only to VCAT but also to expert witnesses forming an opinion about value. Each made an assessment of the worth of the data. They were entitled to do so. That assessment involved a judgment, based in expertise, as to whether the data was useful, in any respect, for the valuation. Moreover, there was, drawn, at least inferentially, from Gaffney's statement that the data was the best information available, and the absence of any comment from him that in his experience the financial statements did not bear any reasonable resemblance to the business in question, opinion evidence from Gaffney. It was to the effect that, provided one proceeded with care, a valuation opinion could be expressed on this data which related to the business of WBRC. It was not, and could not be, suggested that the careful approach of either Gaffney in evidence, or the tribunal in its analysis of the opinion evidence, was so perverse as to not be open. In this respect, the decision of counsel for the DOI not to call Gaffney was not based in principle and was tactical.

90 It appears unusual that in the context of a disputed claim under s 80 of the Act, it might be contended at the hearing that there was no evidence on which to formulate an assessment of the value of disturbance loss. That is due to the statutory regime in place. The initial offer of compensation was made by the acquiring authority under s 31 of the Act. A response from the claimant to this initial offer was required under s 33. If not accepted, a notice of claim complying with s 35 must be served. Alternatively, if the acquiring authority has not made an offer, the procedure under s 37 applies. Thereafter, the resolution of the disputed claim is facilitated by reference to the VCAT Act and the tribunal's procedures.

91 The proceeding was in VCAT's Valuation List. For this list, VCAT is constituted as an expert tribunal. It is expected, to some extent, to bring to bear its own expertise[34] and inform itself as it sees fit. It must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of the VCAT Act and the enabling enactment and a proper consideration of the matters before it permits.[35] The identification of the issues in dispute, the exchange of information and the conduct of the hearing are, to these ends, regulated by a practice note. When the attack on Davy's evidence, verifying the financial statements and particular aspects of the statements relevant to the valuation issues, resulted in the DOI deciding not to call Gaffney, VCAT acted, in my opinion correctly using a procedure open to it, by proceeding with demonstrable care including on the basis of the tendered financial statements and by calling for the evidence of Gaffney. VCAT can inform itself as it thinks fit.

92 In Weinstein v Medical Practitioners Board of Victoria[36] Maxwell P considered an analogous provision in the Medical Practice Act 1994, which provides that the Medical Practitioners Board of Victoria "may inform itself on any matter as it thinks fit". The President observed:

The words 'may inform itself ...' were plainly intended to have work to do. They have a meaning and purpose quite distinct from the meaning and purpose of the words 'not bound by the rules of evidence'. Far from the phrase 'may inform itself' being negated or neutralised by other provisions, these words play a necessary part in defining the character of the formal hearing which the panel conducts. For the purposes of 'determining the matter before it', the panel is authorised to 'inform itself in any way it thinks fit' subject always to the overriding obligation to accord procedural fairness.

The learned President went on to say that, by giving the board the power to inform itself as it sought fit, the legislation had "clearly differentiated the panel's conduct of a formal hearing from the judicial paradigm".

93 The tribunal was entitled to know whether Gaffney considered that his opinion was fundamentally impugned by the questions that had been raised by cross-examination of both Davy and Lipson. Gaffney did not, however, give that evidence. VCAT accepted that Gaffney adopted Lipson's data on the basis that it represented the best information available. Gaffney had not, in his reports or in the joint conference process, identified the base financial data for the business as being, in his experience, wholly inconsistent or inherently unreliable, having regard to the nature of the subject business. VCAT was entitled, particularly with the assistance of the evidence and cross-examination of both valuers and its own expertise, to carefully review the basis for the financial projections and the discount factor applied, as well as the other matters, which I will not list again, in order to determine the proper assessment of disturbance loss. This is what VCAT did. There was evidence upon which this task could be undertaken. It was not a situation where there was no evidence upon which compensation could be calculated. It is not a matter for this court to reconsider that assessment. It was not contended that VCAT did not act fairly and according to the substantial merits of the case.

94 Moreover, as the Court of Appeal held in ISPT Pty Ltd v Melbourne City Council and Valuer-General of Victoria,[37] where an overarching complaint of ISPT was that the Tribunal in part conducted its own valuation of site value, both the evaluation of the theoretical intellectual basis of an expert's evidence and the probative force of the evidence founding the expert's opinion are proper inquiries, directed to the foundations of opinion evidence. As occurred in that appeal, I consider here VCAT did not conduct its own valuation without evidence - the task undertaken was one of evaluating Lipson's and Gaffney' evidence.

95 The assessment of disturbance loss was a question of fact to be resolved on the whole of the evidence before the Tribunal. The proper approach to an appeal on a question of law in such circumstances is not in doubt. In S v Crimes Compensation Tribunal[38] Phillips J stated:

The determination of that question of fact may depend upon the acceptance or rejection of evidence that is led; it may depend upon a choice between witnesses, and an assessment of their credibility or reliability; or it may depend more directly upon the sufficiency or insufficiency of the evidence that is given. All these things are committed to the tribunal, and not to the court; and although I speak of evidence, the same is true where the tribunal is authorised to obtain information otherwise than from witnesses on oath or to act upon its own expertise. Essentially, the question whether the particular circumstances of the claimant are such as to bring his or her case within the statutory description is a question of fact, not law ... Nevertheless, if in determining whether the particular circumstances of the claimant are such as to fall within a relevant statutory description, the fact finding tribunal arrives at a conclusion which was simply not open to it, that is an error of law...[39]

96 For the reasons I have expressed above it was clearly open to the Tribunal to reach the view it did as to the evaluation of the expert evidence, including the probative force of those opinions in the context of the evidence which founded them.

97 Although it is not strictly necessary for my decision, I would go further. The questions raised by cross-examination of Davy as to the reliability of the financial statements and the response of the DOI bore significantly upon the proper approach to be adopted by the tribunal in the assessment of value. Did the tribunal act fairly and according to the substantial merits of the case in acting as it did? It is not suggested that there was any failure to observe the rules of natural justice in these circumstances. As I have suggested, by reason of the challenge, the tribunal also proceeded with demonstrable care and caution.

98 I bear in mind the principle enunciated in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd:[40]

It would not be proper for this court on an appeal of this nature to substitute its own opinion for that of the court below unless it were satisfied that the court below acted on some wrong principle of law, or that the value was entirely erroneous (Rook v Fairrie [1941] 1 KB 507; Lee Transport Co Ltd v Watson [1940] HCA 27; (1940) 64 CLR 1; Federal Commissioner of Taxation v Sagar [1946] HCA 6; (1946) 71 CLR 421): Cf Charan Das v Amir Khan (1920) LR 47 Ind App 255 at 264, where Lord Buckmaster, delivering the judgment of the Privy Council in an Indian appeal said: "Now this Board will not interfere with any question of valuation unless it can be shown that some item has improperly been made the subject of valuation or excluded therefrom, or that there is some fundamental principle affecting the valuation which renders it unsound".

99 This principle has been applied in the High Court on many occasions. In The Commonwealth v Reeve,[41] when applying the principle, Dixon J at 423 added this explanation:

The rule thus laid down is almost indispensable to the administration of justice in compensation cases. For the estimation of a money sum is usually so much a result of judgment and sound discretion and so little the product of an analytical reasoning, that, were it otherwise, every appeal would mean an assessment of compensation de novo, without any assignment of error in the reasoning or conclusions of the court appealed from.

100 Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd[42] is yet another application of that principle. Mason J remarked:

As with the assessment of damages, especially in personal injury cases, the valuation of property by a court has many of the characteristics of a discretionary judgment. Valuation is a matter of estimation, not of precise mathematical calculation. It certainly involves the making of a value judgment in the metaphorical as well as the literal sense.

101 As Batt J has explained in Dacakis,[43] in these cases the principle was applied where the decisions appealed from were those of judges and the appeals were general appeals, not appeals on questions of law as here. The principle serves to place, in compensation cases, a restriction on general or unlimited appeals from judges, recognising the considerations described by Dixon J in Reeve. Further, it reinforces the respect to be accorded to the proper determinations of expert valuation tribunals, recently explained and affirmed by the Court of Appeal in ISPT.[44]

102 It was also contended by the applicant that the onus of proof was effectively, and improperly, cast upon the DOI and error of law was thereby demonstrated. In my view, the proper approach in assessment disputes under the Act is that the burden of proof is borne by the party making a particular allegation affecting the measure of compensation. For example, here, WBRC, contending for a disturbance loss, bears the onus of proving the material facts necessary to establish that loss. On the other hand, the DOI, contending that suitable alternative premises were available, bears the onus of establishing that fact. Thus, the burden of proof on particular aspects of the claim for disturbance loss is spread between the parties.

103 It is not strictly correct to assert that the burden of proof upon WBRC included proving the truth and reliability of the financial statements in respect of its historical performance. The burden was to establish a sufficient basis to support the expert business valuation evidence as relevant and applicable to WBRC's business. It is fundamental that the party which desires a tribunal to make an order in its favour must prove its case to the tribunal's satisfaction. The party must satisfy the legal burden of proof. Assessment of where the obligation of proof lies needs to be particular, not general. In law, the first question asked to determine burden of proof is a general one. Which party would succeed if no evidence was given on either side? That question strikes me as inapplicable to the statutory regime under the Act. The context of the Act is that an obligation to pay compensation arises upon compulsory acquisition. What is referred to the court, where a dispute arises, is the assessment of the proper quantum of that compensation. The burden is more helpfully considered from the perspective of the evidentiary burden. The better question then is what would be the effect of striking out any particular allegation? Applications under the Act are not resolved by reference to pleadings but it can be accepted that reference to particular allegations, in this context, is to particular issues involved in assessing compensation under the Act. Hence, the example given.

104 The evidentiary burden is relevant in another sense, which is, has a party established, to a prima facie standard, proof of a particular issue, meaning, is the evidence which has been adduced, if accepted, sufficient to prove that issue? It is trite to state that satisfying the evidentiary burden during the hearing "shifts" the burden of proof to the party opposing the finding on that issue, requiring the opposing party to adduce evidence to avoid absolute acceptance of that prima facie conclusion.

105 So understood, I do not consider VCAT's reasons disclose that an onus was inappropriately cast on the DOI to disprove the reliability of the accounts. There was sufficient material in evidence for the valuers and the tribunal to proceed on the issue of quantifying the disturbance loss. The financial material, if analysed carefully as it was, provided that basis at least in part. The onus shifted. VCAT's statements are an acknowledgement of this shift. The DOI needed to affirmatively displace that prima facie conclusion, not to disprove the reliability of the accounts in a wholesale way, but rather to establish that the financial material in evidence could not form a proper basis for a valuation opinion. In its consideration of that latter issue, VCAT properly identified the pertinent considerations and its reasons show it did so bearing in mind that each particular consideration should be established by the party contending it was material to the valuation assessment.

106 This assessment was undertaken on an issues basis. For example, line items in respect of boat rent or depreciation were discounted or adjusted from the figures contended by Lipson to those calculated or assessed by Gaffney. WBRC was regarded, correctly, as bearing the onus on such issues and as having failed to discharge it by establishing that such line items should be adopted at Lipson's values. In respect of terminal value, establishing that the business had a terminal value was a matter which fell upon WBRC, which contended that there was a prospect of a new lease or a lease extension. The DOI had instructed Gaffney to assume suitable alternative premises were available but there were no mooring rights. Gaffney considered the prospects of lease extension to be remote. These were matters having a tendency to depress the assessment of the proper compensation by removing any basis for any terminal value. The DOI bore the onus in respect of such matters and VCAT's reasons show no error in that respect. Thus VCAT, on the basis of its findings as to the prospects of WBRC re-establishing its business, allowed a terminal value but adjusted the discount factor applied to adequately reflect the risk. The discount factor, too was subject to careful evaluation by VCAT which demonstrates no error on respect of the burden of proof.

107 There was no relevant error in the reasoning or conclusions of VCAT in relation to the financial statements grounds. If leave was granted the applicant could not make out the grounds of the proposed notice of appeal collectively described as the financial statements grounds.

108 What a claimant must show to demonstrate a loss attributable to disturbance "in consequence" of the acquisition of land is a causal, not necessarily temporal, connection between acquisition and the head of loss claimed. A causal connection is shown in respect of any loss sustained by a claimant, which flows from the acquisition if it is not too remote and is the natural and reasonable consequence of the dispossession of the claimant.[45]

109 Counsel for the DOI referred me to Mario Piraino Pty Ltd v Roads Corporation [No 2].[46] In a different statutory context, namely s 98 of the Planning and Environment Act 1987, which provided a right to compensation for loss suffered as the natural, direct and reasonable consequences of a refusal of planning permit, Gobbo J expressed the opinion that the term "consequence" had a causal and not chronological connection. His Honour held, referring to Prasad, that expenditure incurred before a refusal was recoverable, provided such expenditure was lost or rendered abortive because of the refusal.

110 In King & Ors v Minister for Planning and Housing,[47] Gobbo J was concerned with the statutory provisions in issue in this proceeding. The issue was whether a claim for "any loss attributable to disturbance" pursuant to s 41(1)(d) of the Act extended to expenses incurred prior to service of a notice of intention to acquire land. His Honour, noting the different statutory and factual context of Mario Piraino, accepted the principles in Prasad as applicable to the interpretation of the expression in the Act. More recently, Osborn J in Brimbank City Council v Keilor Homes Pty Ltd,[48] a case concerning loss consequent upon amendment of a permit, reasoned to the same conclusion, and I would, with respect, agree with his Honour's observation that the principle stated in Prasad has now been accepted, as a result of decisions of this Court over a number of years, as applicable to the interpretation of the compensation provisions of both the Land Acquisition and Compensation Act 1986 and the Planning and Environment Act 1987.

111 Here, the causation question for VCAT was whether extinguishment of the business was a pecuniary loss which was a direct, natural and reasonable consequence of, and not being too remote from, the dispossession of the claimant by the acquisition. I do not accept the contention that VCAT did not make a finding that the disturbance loss had been caused by the acquisition. Immediately following a recitation of the parties' submissions about the text of s 40 of the Act, including the submission for the DOI that WBRC should claim for impairment rather than extinguishment, the tribunal held that with mounting losses, in the absence of suitable alternative premises and moorings, and after making all reasonable efforts to re-establish but with no comparable facilities becoming available, a prudent manager would close the operations. It was, said the tribunal, reasonable and appropriate to assess the loss arising from disturbance on the basis of total extinguishment. This is a finding that the lack of suitable alternative premises and moorings was a factor which materially contributed to the extinguishment of the business. In argument, counsel for the DOI was prepared to concede that implicit in the tribunal's chain of reasoning there was a finding, and I consider that this concession was correctly made.

112 Now the error of law contended was whether that finding was open. Whether this lack of adequate facilities from which to operate the business was a direct, natural and reasonable consequence of the dispossession of WBRC by the acquisition, was essentially a question of fact to be answered by the tribunal on evaluating the evidence before it by reference to commonsense and experience. This was the inquiry which the tribunal undertook. As I have set out above, there was evidence on which to base its findings on this question but the DOI made a different point. It submitted both to VCAT and to me, that the business had not in fact closed and therefore was not extinguished. I do not agree.

113 There is an extinguishment of the business of WBRC, as a matter of fact in these circumstances, notwithstanding that some form of commercial activity continues. The business conducted from Federation Square by Davy was not found by the tribunal to be the business which was extinguished. The submission for the DOI assumes that what now operates is the essence of what once operated at Shed 9. I accept WBRC's submission, which I have described at [53], that this factual question was carefully considered by VCAT and its finding of extinguishment was open to it on the evidence. It matters not that other factors may have contributed to the losses suffered by the business after acquisition of the premises and moorings because the acquisition was a material contributing cause of the disturbance loss.

114 I accept the submission made on behalf of WBRC, that the contention of double-counting in respect of trading losses is misconceived. The assessment of the value of the business was undertaken on the discounted projected cash flow basis. By this methodology, the value of a business is assessed as the present value of its projected future net cash flows. Usually, the calculation proceeds from an assessment of the projected cash flow to be generated over the projected life of the business[49] after payment of costs and outgoings including, in small businesses, the proprietor's remuneration. To this is added the net cash amount expected to be received upon sale of the business or a calculated hypothetical exit value may be employed, the latter amount commonly being referred to as terminal value. The appropriate discount rate, which is an assessment of the opportunity costs for the capital of the business, is a matter of separate assessment. The projected future net cash flows employed in the valuation assessment are those of the WBRC business continuing to operate in its undisturbed environment.

115 The trading losses are all together different. Compensation for trading losses is not awarded as any part of the assessment of future net cash flow. Rather, it was found as a matter of fact by the tribunal, that it was reasonable for the operation of the business for a period of time after acquisition to attempt to mitigate the prospect of an extinguishment loss. As such, trading losses are a separate loss experienced as a direct, natural and reasonable consequence of the acquisition.

116 Melbourne City Link Authority v Telford Pty Ltd,[50] on which counsel for the DOI relied, was a decision, in the trial division of this court, applying the causation principle embodied in s 40 in respect of a claim for executive time brought under s 41(1)(d) in similar circumstances. On an analysis of the evidence before the tribunal on that appeal, Balmford J was satisfied that there was no evidence before the Tribunal to justify a claim for pecuniary loss in respect of executive time. Counsel for WBRC took me to Mario Piraino Pty Ltd v Roads Corporation [No 2],[51] another decision in the trial division of this court applying the causation principle embodied in s 40 in respect of a claim for executive time brought under s 41(1)(d). In similar circumstances, Gobbo J found there was evidence before the tribunal sufficient to permit the finding. These decisions are but instances of application of the principle.

117 I consider the tribunal correctly applied the principle. It recognised that Davy was not paid and that there was no direct evidence of a pecuniary loss. However, this was not the totality of the evidence in respect of this issue and it does not follow that there was no evidence of an actual loss to WBRC, capable of assessment by the tribunal. The tribunal found Davy had expended time on behalf of WBRC looking for suitable premises, and that the imputed reasonable salary for Davy, agreed between Lipson and Gaffney, would constitute only part of the loss to WBRC as there would also be a consequent loss of revenue for WBRC due to the absence of Davy on matters relating to the acquisition.

118 The issue was whether WBRC suffered loss as a direct, natural and reasonable consequence of the acquisition. It was open to the tribunal to award a component of compensation under this head and the quantum of it was a matter for its assessment. There was no error in this regard.

119 For the above reasons I do not accept that the DOI has demonstrated error of law on the part of the Tribunal and accordingly, the application for leave to appeal will be dismissed. In view of the concession, noted at [38], I will order that the applicant pay the respondent's costs of the proceeding.

120 The orders I will make are, subject to any further submission:

1. The application for leave to appeal is dismissed.

2. The applicant pay the respondent's costs of the proceeding.

[1] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; ISPT Pty Ltd v Melbourne City Council and Valuer-General of Victoria [2008] VSCA 180.

[2] Williamstown Bay & River Cruises Pty Ltd v Secretary Department of Infrastructure (Land Valuation) [2010] VCAT 415 at [97].

[4] Ibid at [128]-[132], [137]-[140].

[5] In the main, these reflected Lipson's data errors, depreciation on plant and the rents on the premises and boats.

[6] Relying on Melbourne City Link Authority v Teford Pty Ltd [1999] VSC 106.

[9] [2008] VSCA 16, per Redlich JA.

[10] The Minister v NSW Aerated Water and Confectionary Co Ltd [1916] HCA 48; (1916) 22 CLR 56; Pengly v Commissioner for Railways (1951) 69 WN (NSW) 25.

[13] Ibid 520. Batt J drew on the judgment of Mason CJ, who used the word "reasonably" in Australian Broadcasting Tribunal v Bond & Ors [1990] HCA 33; (1990) 170 CLR 321, 365. In S v Crimes Compensation Tribunal [ 1998] 1 VR 83, Phillips JA commented on the intrusion of the word "reasonably" as a distraction. Whether centred on a finding of fact based upon the acceptance of direct evidence or on an inference of fact based upon other facts of which there is direct evidence, the question is whether that finding or that inference was open to the tribunal. Callaway JA and Hedigan AJA did not find it necessary to comment.

[14] [1979] AATA 64; (1979) 26 ALR 247, 256 (sitting as President of the C'th AAT).

[16] Ibid at [73], per Hayne, Heydon, Crennan and Kiefel JJ.

[17] [1999] VSCA 103; [1999] 3 VR 45 at [17]; see also Magazzu v Business Licensing Authority (2001) 17 VAR 264; [2001] VSC 5 at [41]; Kearney v Legal Services Board (Legal Practice) [2006] VCAT 2303 at [4]; Re AB and CD (2007) 26 VAR 136; [2007] VCAT 525 at [50]; Tan v Xenos [2008] VCAT 1273 at [10]; Kracke v Mental Health Review Board [2009] VCAT 646 at [857]; Graham v Stonnington CC & Ors [2009] VCAT 1897 at [7].

[19] Lombardo v Federal Commissioner of Taxation (Cth) [1979] FCA 66; (1979) 28 ALR 574, 578 per Bowen CJ; TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (Cth) [1988] FCA 119; (1988) 82 ALR 175, 187 per Gummow J.

[21] Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at [64]-[82]. See also Re Doran Constructions Pty Ltd (in liq) [2002] NSWSC 215; (2002) 194 ALR 101 at [59]-[61]; BHP Billiton Iron Ore Pty Ltd v NCC [2007] FCAFC 157; (2007) 162 FCR 234 at [185]; and Cross, commencing at [29065].

[22] [2011] FCAFC 55 (20 April 2011).

[24] [1940] HCA 43; (1940) 64 CLR 282 per Dixon J at 302-303; see also Australian Securities and Investments Commission v Rich [2005] NSWSC 149; (2005) 53 ACSR 110, (Austin J).

[27] [2002] VSCA 176 at [9] (Ormiston, Vincent and Eames JJA).

[32] See O'Donnell v Reichard [1975] VicRp 89; [1975] VR 916; Payne v Parker [1976] 1 NSWLR 191; Heydon, Cross on Evidence, 8th Aust ed at [1215].

[33] This did not appear to be explored in evidence before VCAT.

[34] ISPT Pty Ltd v Melbourne City Council and Valuer-General of Victoria [2008] VSCA 180 at [15]- [23], approving the observations of Stephen J in Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1, 10-12.

[38] [1998] 1 VR 83, 89; see also Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280; Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389, 395; Myers v Medical Practitioners' Board of Victoria [2007] VSCA 163.

[39] See also ISPT Pty Ltd v Melbourne City Council and Valuer-General of Victoria [2008] VSCA 180 at [63]-[69].

[40] [1947] HCA 10; (1947) 74 CLR 358, 367 per Latham CJ and Rich and Williams JJ.

[45] Prasad v Wolverhampton Borough Council [1983] Ch 333.

[47] [1993] VicRp 11; [1993] 1 VR 159; see also Halwood Corporation Ltd (Scheme Administrator Appointed) v Roads Corporation (1995) 89 LGERA 280, 297.

[49] In conventional valuation practice, a period of 10 years may commonly be used rather than the projected life of the business, whichever is the lesser.

[50] [1999] VSC 106; see also Roads Corporation v Love [2010] VSC 32.

Acquisition and Compensation Act 1986

Civil and Administrative Tribunal Act 1998

Trader and Tenancy Tribunal Act 2001

Appeals Tribunal Act 1975

Environment Act 1987

Acquisition and Compensation Act 1986

Civil and Administrative Tribunal Act 1998

At a glance

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Judgment (194 paragraphs)

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Legislation Cited (48)

Cases Cited (23)