Giusida Pty Limited v Commissioner for ACT Revenue

[2016] ACTSC 275

1. Leave should be granted to Giusida Pty Limited to appeal against the decision in Giusida Pty Ltd v Commissioner for ACT Revenue [2014] ACAT 50 each of the questions set out in its draft Notice of Appeal except Question 5.
2. The costs of a grant of leave should ordinarily be costs in the appeal, subject to the reservation that the costs of the adjournment should be paid by the Applicant.
3. The parties be heard as to further directions for disposal of the appeal.

APPEAL - DECISION BY AN ADMINISTRATIVE TRIBUNAL - ACT Civil and Administrative Tribunal - question of fact or law -evidence - expert evidence - hearsay evidence - form of questions and issues on appeal - requirement of "obvious" or a "manifestly obvious" error - consideration

REGULATION AND ADMINISTRATION - PLANNING - variation - valuation - comparable sales - costs of remediation of contamination - purchase by an adjoining owner - expert evidence

ACT Civil and Administrative Tribunal Act 2008 (ACT), ss 82, 82(b), 86(1)(a)

Rates Act 2004 (ACT), ss 6(1), 10, 11A, Dictionary

Taxation Administration Act 1999 (ACT), ss 104, 107A, 108A

ACT Human Rights Commission v Raytheon Australia Pty Ltd [2009] ACTSC 55

A v Director of Family Services (1996) 132 FLR 172

Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1998) 74 ALJR 209

Challenger Property Asset Management Pty Ltd v Stonnington City Council [2011] VSC 184; (2011) 34 VR 445

City Hill Pty Ltd v ACT Planning and Land Authority [2015] ACTSC 40; 207 LGERA 48

Commonwealth Custodial Services Ltd v Valuer-General [2006] NSWLEC 400

Coutts v Close [2014] FCA 19

Doherty v Commissioner of Highways (1974) 7 SASR 57

Doney v The Queen [1990] HCA 51; (1990) 171 CLR 207

Duffy v Minister for Planning [2003] WASCA 294

Federal Commissioner of Taxation v St Helen's Farm (ACT) Pty Ltd [1981] HCA 4; (1981) 146 CLR 336

Giusida Pty Ltd v Commissioner for ACT Revenue [2013] ACAT 59

Giusida Pty Ltd v Commissioner for ACT Revenue [2014] ACAT 50

Haritos v Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315

ISPT Pty Ltd and Commissioner for ACT Revenue [2013] ACAT 43

John Flynn Community Group Inc v ACT Heritage Council [2012] ACTSC 50; (2012) 6 ACTLR 266

Junstamp v Commissioner for ACT Revenue [2013] ACAT 50

Legal Practitioner v Council of the Law Society of the ACT [2011] ACTSC 207; (2011) 257 FLR 118

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705

Mangubat and Commissioner for Social Housing of the ACT [2013] ACAT 6

Minister of Environment v Petroccia (1982) 30 SASR 333

Murdesk Investments Pty Ltd v Roads Corporation [2006] VSC 363

O'Donnell v Environment Protection Authority [2012] ACTSC 140

Pires v Dibbs Barker Canberra Pty Ltd [2014] ACTSC 283

R v War Pensions Entitlement Tribunal; ex parte Bott [1933] HCA 30; (1933) 50 CLR 228

Shopfitters Pty Ltd [2003] WASCA 295

Spencer v Commonwealth [1907] HCA 82; (1906) 5 CLR 418

Thornthwaite and the Commissioner for Social Housing for the ACT [2012] ACAT 11

Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

Court/Tribunal: ACT Civil and Administrative Appeals Tribunal

Case Title: Giusida Pty Ltd v Commissioner for ACT Revenue

Citation: [2014] ACAT 50

1. The applicant, Giusida Pty Ltd (Giusida), is the registered proprietor of the Crown Lease to the property known as 3 Lonsdale Street, Braddon, ACT, being Block 11 Section 28 Braddon (the subject land).

2. Giusida seeks leave to appeal from a decision of the ACT Civil and Administrative Tribunal (the ACAT) in Giusida Pty Ltd v Commissioner for ACT Revenue [2014] ACAT 50 (the Appeal Decision) which confirmed the decision of the ACAT originally made on Giusida's application for review: Giusida Pty Ltd v Commissioner for ACT Revenue [2013] ACAT 59 (the Original Decision).

3. On 18 December 2009, Giusida was granted what was called in the Original Decision at [5] a "new varied lease", which appears to refer to the variation of the Crown Lease of the subject land to permit it to be used for residential purposes as well as various community, commercial, transport and retail uses. It is not necessary in these reasons to set out the purposes clause of the Crown Lease as varied, save to note that the new purpose of "residential use" was subject to a proviso that the "site is decontaminated to the satisfaction of the Territory".

4. In the Original Decision at [45], the ACAT described the subject land as follows:

The subject land is situated at the southern end of Lonsdale Street close to Cooyong Street and Civic and is well placed for commercial including retail use. Braddon is rapidly developing into an area of medium density mixed residential and commercial use. The parties agree that the [highest and best] use of the subject land is retail commercial on the ground floor, offices on the first floor with residential on the floors above. They did not agree on the details of a development on the subject land. They agree that the area of the subject land is 1254 square metres and that is in the CZ3 zone which permits a plot ratio of 3:1 provided that residential use is not less than 1254 square metres which results in a gross floor area (GFA) of 3.762m2. The land has a frontage of 30.8 metres to Lonsdale Street and a depth of 40.6 metres. The building height is restricted to 22 metres. It is next to an operating service station.

5. Giusida submitted that three matters raised the possibility of contamination on the subject land which, in accordance with the proviso referred to above (at [3]), would require it to be remediated, if contamination were found on the site, before the land could be used for residential use as part of its highest and best use.

6. As noted, the subject land is adjacent to an operating service station, but it was also 200 metres south of a former dry cleaner's business and another former service station. It was common ground between the parties that the subject land had an underground storage tank that had been decommissioned and filled with sand.

7. The underground tank was not an improvement, but, in a term used by Biscoe J (called in error twice in the Original Decision at [7] Briscoe J) in Commonwealth Custodial Services Ltd v Valuer-General [2006] NSWLEC 400 at [69], a "worsement".

8. Giusida's submission was that the contamination may come in three ways:

• from the adjacent service station and from the previous operations of the northerly service station and dry cleaning business; and

9. An expert employed by Giusida, Dr Gunton, a geologist with Robson Environmental, gave evidence that the underground tank was "a potential primary contaminant source" to the subject land. In the Original Decision at [36], it was held that the tank was not an improvement on the land, and it was found at [72] that it would have to be removed and any "resulting damage ... made good". This cost would ultimately have to be deducted from the unimproved value of the subject land. In the Original Decision, such an allowance was made when calculating the value of the land.

10. As to the other matters of potential contamination, they were dealt with in the Original Decision at [40]-[42] as follows:

1. The adjacent service station was considered a high risk contaminant source because contaminants may migrate onto the subject land via underground water flows. Mr Power's [the acting director of Environmental Protection and Water Regulation Branch, called by the respondent] evidence was that the underground water flow was in a southerly direction away from the subject land. Dr Gunton did not dispute this evidence but said that directional flows could reverse. He did not suggest that this flow had. The evidence before the Tribunal does not show that contamination has actually occurred from the adjacent site.
2. Some 200 metres north of the subject land in Lonsdale Street is the site of a former service station and dry cleaning business which had in the past been assessed for contamination by Dr Gunton. In his view, the chemicals used and dumped into the sewer could dissolve in groundwater and migrate to other sites to the south. He said it is possible that by this method the subject land could be contaminated by dry cleaning waste products. Dr Gunton did not say it was probably or likely that this had occurred but only that it was possible. The Tribunal is unable to conclude on this evidence that contamination occurred.
3. The final potential contamination source identified was imported fill. Dr Gunton said it is possible that fill came from a contaminated site. That possibility cannot be disputed. However, there is nothing in the evidence to show that fill was ever used on the subject land or if it was that it was contaminated.

11. No direct evidence was given of actual contamination on the subject land but it appears that the respondent, the Commissioner for ACT Revenue (the Commissioner), accepted that there was a possibility of contamination on land in the Braddon area, though submitting that the cost of such risk was already built into the sales of land in that area.

12. The change in the Crown Lease of the purposes for which the subject land may be used triggered the operation of s 11A of the Rates Act 2004 (ACT), which provides:

11A Redetermination - change of circumstances

(1) This section applies if a change of circumstances happens in relation to a parcel of land that affects the unimproved value of the land.

(2) The commissioner may redetermine the unimproved value of the parcel as at a date if the unimproved value as at that date is used in calculating the average unimproved value of the land for the year in which the change of circumstances happens.

(3) The commissioner may also redetermine the unimproved value of the parcel as at a later date if a determination of the unimproved value as at that date did not take the change of circumstances into account.

(4) A redetermination under subsection (2) applies to the parcel for the period -

(a) beginning on the day the change of circumstances happened; and

(b) ending on 30 June in the next calendar year.

(5) A redetermination under subsection (3) applies to the parcel for the period -

(a) beginning on 1 July in the calendar year in which the relevant date when the redetermination is made falls; and

(b) ending on 30 June in the next calendar year.

(Examples omitted)

13. Although "change in circumstances" is not defined, there can be hardly any doubt that the change of purpose effected by the variation to the Crown Lease in this case would have affected the unimproved value.

14. As a result, the Commissioner made a redetermination of the unimproved value of the land. That concept, for land held under a Crown Lease, is explained in s 6(1) of the Rates Act, as follows:

(1) The unimproved value of a parcel of land held under a lease from the Commonwealth is the capital amount that might be expected to have been offered on the relevant date for the lease of the parcel, assuming that -

(a) the only improvements on or to the parcel were the improvements (if any) by way of clearing, filling, grading, draining, levelling or excavating -

(i) if the Territory or Commonwealth had, before the parcel became rateable as a separate parcel, granted a development lease of land that included the parcel - made by the lessee under that lease or by the Territory or Commonwealth, or the cost of which was met by that lessee or by the Territory or Commonwealth; or

(ii) in any other case - made by the Territory or Commonwealth or the cost of which was met by the Territory or Commonwealth; and

(b) the circumstances that existed on the prescribed date also existed on the relevant date; and

(c) on the relevant date, the lease had an unexpired term of 99 years; and

(d) a nominal rent was payable under the lease for the 99 year term.

(emphasis in original)

15. The "relevant date" is defined in the Dictionary to the Rates Act to mean the date when a determination of the unimproved value of land is to be determined, under s 10, as soon as practicable after 1 January in each year for each parcel of land saleable at that date.

16. The Commissioner re-determined the unimproved value of the subject land as follows:

17. The evidence before me does not allow me to say, but I assume that the Commissioner then issued assessments of the rates payable for those years based on these amounts.

18. Under s 107A of the Taxation Administration Act 1999 (ACT), Giusida objected to the assessments following the re-determination.

19. Such an objection was considered by the Commissioner under s 104 of that Act. After receiving the Commissioner's determination, Giusida, being still dissatisfied, appealed under s 108A of that Act to the ACAT.

20. The ACAT varied the assessment but largely confirmed the Commissioner's assessment in the Original Decision. As noted above (at [2]), Giusida appealed that decision within the ACAT but the decision, however, was confirmed by the ACAT on appeal in the Appeal Decision.

21. There are several ways in which a decision by the ACAT can be reviewed by this Court. In this case, Giusida sought leave to appeal from the decision of the ACAT on the appeal under s 86(1)(a) of the ACT Civil and Administrative Tribunal Act 2008 (ACT).

22. That section permits a party to an application to the ACAT to appeal to this Court with leave from a decision of the appeal tribunal of the ACAT on a question of fact or law.

23. In Pires v Dibbs Barker Canberra Pty Ltd [2014] ACTSC 283 at [48], I set out the principles that I considered should be applied when considering whether leave to appeal from a decision of the appeal tribunal of the ACAT. These were as follows:

• the need for leave is to reduce the number of appeals and provide a filter so that only those of some substance or where there is a miscarriage of justice should be able to be heard, though the test should be applied "in a liberal manner, and not begrudgingly": Perry v Smith [1901] ArgusLawRp 51; (1901) 27 VLR 66 at 68;
• whether leave should be granted or not must depend upon the justice of the case;
• the application for leave must identify the question, of fact or law, which the applicant for leave claims arises and which is important to the substantive appeal succeeding or failing;
• the applicant need not show error - that is for the appeal itself - but must show that there is a real or significant argument to be put that error exists;

• when a question has been identified which bears directly on the relief which will be sought on the appeal and once it has been shown that there is sufficient doubt attending the question to justify the grant of leave to appeal, leave will ordinarily be granted if the order below is a final order or final in effect;
• the public importance of any question of fact or law is relevant but not decisive as to the question of whether leave to appeal should be granted;
• it may be relevant to show that the error, if uncorrected, would impose substantial hardship.

24. The principles have been also succinctly set out by Penfold J in O'Donnell v Environment Protection Authority [2012] ACTSC 140 at [78], in the following way:

(a) whether a question of fact or law has been identified;

(b) whether there is at least an arguable case that the Appeal President erred in his resolution of that question; and

(c) whether the correct resolution of that question would be more favourable to the appellant.

25. Giusida filed, as is appropriate, a draft Notice of Appeal as an annexure to an affidavit in support of the application for leave. Initially, the Commissioner objected to the form of the questions set out in the draft. This initially seemed to be on account of the fact that the questions were set out in interrogatory form. Thus, question 1 was in the following terms:

Did the Tribunal act in accordance with Section 6 Rates Act 2006 and the principle in Spencer v Commonwealth when it:

1. Held that a deduction for the cost of remediation could be properly made only when actual contamination had been shown to exist on the subject land; and
2. Ignored the effect on value of the possibility of contamination?

26. It seemed that, in part, the objection was engendered by the lack of what might be called a "traditional formulation". This appears to have flowed from some comments of Burns J in John Flynn Community Group Inc v ACT Heritage Council [2012] ACTSC 50; (2012) 6 ACTLR 266 at 273; [17]. I gave careful consideration to this issue in City Hill Pty Ltd v ACT Planning and Land Authority [2015] ACTSC 40; 207 LGERA 48 at 58; [27] where, in relation to challenges to the formulations there and, similar to these, I said:

The form of the questions was said to be mandated by authority. A number of such authorities have been suggested: Comcare v Etheridge [2006] FCAFC 27; (2006) 149 FCR 522 at 527-38; [18]- [71]; Eastman v Commissioner for Social Housing [2011] ACTCA 12; (2011) 252 FLR 278 at 287; [51]; John Flynn Community Group Inc v ACT Heritage Council [2012] ACTSC 50; (2012) 6 ACTLR 266 at 273; [17]. I have read them as well as Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515 at 523-33 and Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232; (2003) 38 AAR 55 at 57-63. None of these authorities, however, mandate a particular grammatical formulation of the questions of law the subject of an appeal. What each does emphasise, however, is that whatever the grammatical form of the question, it should be formulated in a way that makes very clear what the question of law is that arose in the appeal and not either a question that may be one of fact or of mixed fact and law, or that requires a broad inquiry into the construction and operation of legislation, none of which are questions of law. These authorities require the Notice of Appeal to specify with clarity the question of law to be considered, whether or not it is prefaced by an expression such as 'Whether the Tribunal erred [in law] in ...' or not, an apparently permissible form of question.

27. As a five member bench of the Full Court of the Federal Court of Australia said in Haritos v Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315 at 350; [92]:

this is not to say that it is impermissible to commence a question of law for the purposes of s 44 with the expression 'whether the tribunal erred in law' if that is given sufficiently precise content by what follows.

28. While counsel may be more comfortable with a traditional formulation of the questions of law or fact, there is no jurisdictional requirement that they be set out in an interrogative way or not; it is the substance and, in particular, the clear and precise identification of a question in a meaningful and intelligible way that engages the jurisdiction of the court that is required, but all that is required.

29. The Commissioner also relied on the need to understand what the role of the ACAT on appeal was. The ACAT, it was said, had given some consideration of this, in previous decisions.

30. The appeal is enabled by s 82 of the ACT Civil and Administrative Tribunal Act. It is always important to have regard to the statute establishing a right of appeal for such a right is always a creature of statute. That section provides

An appeal tribunal may, as the tribunal considers appropriate, deal with an appeal -

(a) as a new application; or

(b) as a review of all or part of the original decision on the application by the tribunal.

31. In the Appeal Decision, at [15] and [22], reference was made to a number of decisions which were said to set out the principles for the review under s 82(b) of the ACT Civil and Administrative Tribunal Act by the ACAT on appeal.

32. In Thornthwaite and the Commissioner for Social Housing for the ACT [2012] ACAT 11, at [54]-[55], the ACAT on appeal said

1. The general rule on appeals is that an appeal court, or an appeal tribunal in this instance, will be reluctant to interfere with the order of a lower court or tribunal unless there is some manifestly obvious error made which, if it was not rectified, will have a substantive bearing - an adverse bearing - on the case - an adverse bearing that would not be in the interests of justice if it were allowed to stand.
2. It basically means that if the tribunal below got a few little things wrong but the order fundamentally was sound, then it is not going to be interfered with.

33. In ISPT Pty Ltd and Commissioner for ACT Revenue [2013] ACAT 43 at [12]- [14], the ACAT on appeal basically re-iterated what it had earlier said, though it did add:

1. An Appeal Tribunal will also look at whether the decision of the tribunal below was a decision that was open for it to make on the facts before it. It is within these parameters that this Appeal Tribunal will operate.

34. Finally, reference was made to Mangubat and Commissioner for Social Housing of the ACT [2013] ACAT 6 at [35]- [36], which did not seem to add much, if anything to what had been said before, except that it re-affirmed that error must be shown. It did, however, at [41], make reference to a decision of Master Harper, in ACT Human Rights Commission v Raytheon Australia Pty Ltd [2009] ACTSC 55, quoting a sentence from [48] of that decision, taking it, however, completely out of context.

35. I have found no justification or argument in any of these decisions for the gloss that is sought to be put on the legislation by making a requirement that there must be "obvious" or a "manifestly obvious" error. Indeed, the tautology of the latter seems intended to establish some sort of protection from review for error by the tribunal at first instance for which there is no legislative remit whatsoever. Indeed, the very structure of the ACAT would suggest that what is required is a proper review of the decision at first instance before the cost to the parties of having to take the proceedings to this Court is required to be incurred.

36. In Legal Practitioner v Council of the Law Society of the ACT [2011] ACTSC 207; (2011) 257 FLR 118 at [13]- [14], I had this to say about s 82 of the ACT Civil and Administrative Tribunal Act:

1. The drafters have, for reasons to which I am not privy, decided not to use terms that have relatively clear meanings, such as 'hearing de novo' and 'rehearing'. These terms have received considerable judicial interpretation and, though the precise boundaries of their meaning may not be exact, are tolerably well understood. See Theodorelos v Nexus Projects Pty Ltd [2009] ACTSC 149 (at [67] to [78]).
   1. It seems to me that the appeal in s 82(a) is what is usually called a 'hearing de novo' and that the appeal in s 82(b) is what is usually called a 'rehearing'.

37. I see no reason to resile from or change my view about the proper meaning of s 82 of the ACT Civil and Administrative Tribunal Act as here expressed. Indeed, careful thought and a consideration of the purpose and meaning of an internal appeal strengthens my view that a wider and generous power is intended and not one which restricts original decisions from proper scrutiny.

38. Thus, while error needs to be shown before the ACAT on appeal will set aside the original decision on the application from which the appeal is taken, it is not required that the error be "manifest", "obvious" or other than an error discernible by a proper assessment of the evidence and the law. I could find nothing in any parliamentary material, such as the relevant Explanatory Statements or the Parliamentary Speeches that suggested any different construction of the provision.

39. A final comment is necessary. The proceedings before the ACAT on appeal and before me refer at times to the common reference in appellate discourse as to what is "open" to a first instance decision-maker. It seems to me that this is a wide term that needs careful consideration. It also needs to be clear that, if there is an error of fact or law in a finding of the ACAT, then it is not open to it to make such a finding unless the error is not a material one.

40. The evidence that permits a decision maker to draw a conclusion must have a character of reliability and reasonable substance; it must not be mere evidence, that it is simply what is put before the tribunal.

41. To take a comparison from the criminal law, the High Court in Doney v The Queen [1990] HCA 51; (1990) 171 CLR 207 made express comparison with evidence that a trial judge will find "tenuous or inherently weak or vague" but which cannot prevent the case being permitted to be put to the jury. This is not the sort of evidence that permits a primary decision-maker to make a decision immune from appellate review. The High Court expressly contrasted such evidence with the power of an appellate court (but not a trial judge) to set aside a verdict which is unsafe and unsatisfactory. In that circumstance, however, what is open to the jury, must be respected, but the appellate court will review it.

42. These, it seems to me, provide the principles upon which the ACAT on appeal should act.

43. Giusida basically relied on the same questions it had relied on in its appeal from the Original Decision. I shall deal with each in turn.

44. I have set out the question above (at [25]) so it is not necessary to repeat it, save that the amended draft Notice of Appeal substituted "disregarded" for "ignored" in part (b) of the question.

45. Giusida submitted to the ACAT, including on appeal, that a desirous purchaser (Spencer v Commonwealth [1907] HCA 82; (1906) 5 CLR 418 at 432) would take account of the possibility of contamination which may require significant remediation at a cost, which it put on a worst case scenario, at $1 034 000. This cost was based on the evidence of Dr Gunton, who outlined a staged process to investigate contamination (unable to be done prior to purchase) and remediation. The desirous purchaser would include such a contingency in the amount he, she or it would be prepared to pay for the land.

46. The Commissioner submitted that there was no evidence of actual contamination (a matter not disputed by Giusida) and that the risk of the need for remediation was already reflected in the sales evidence from elsewhere in Braddon, so that an additional deduction for possible contamination would "amount to double counting".

47. The Original Decision is not easy to read in relation to this issue. It set out the contentions of Giusida at [7]-[12] and the evidence of Dr Gunton at [37]-[44].

48. It set out the Commissioner's contentions on this issue at [15]-[16], [19]-[23].

49. It did not then evaluate the contentions and did not directly come to a stated conclusion, other than, when stating the calculation of the unimproved value for the relevant years, noting that it is "[w]ithout making any deductions for contamination". It then reduced the final amount by $64 000 in each year for what was called "Phase 2" of Dr Gunton's process, namely that which "involves on site sampling and testing to determine the type and extent of any contamination" and which "might require repeated sampling depending on the degree and extent of contamination found".

50. Despite this, the Appeal Decision at [43] found that the ACAT "accepted" Mr Robertson's evidence:

that the possibility of contamination was part of the risk profile for the appellant's land and the other comparative sales properties relied on in Braddon.

51. Mr Robertson's evidence was not before me but it seems clear that it was an ipse dixit and that he had no comparable sales evidence on which to rely. Indeed, the contrary seemed to be the case, for he was prepared to rely in his general valuation on a sale in Turner, well out of Braddon and in, until fairly recently, an entirely residential suburb (apart from community facilities and a shopping centre), only more recently becoming available for commercial use. It is inconceivable that there would be any risk of contamination in Turner. If such a sale was truly comparable, there was, in truth, no allowance for the risk of contamination, otherwise the sale was not comparable.

52. In addition, Mr Robertson relied as a comparable sale on another property in Lonsdale Street, Braddon. This property was used to calculate the value of the commercial development that would be possible on the subject land. The Crown Lease for that property, however, did not permit residential use and thus did not have the provision for a requirement to remediate the land if contamination were to be found. This meant that the risk of a purchaser being required to spend significant sums of money on remediation was not present and so a critical difference between the two on this issue was apparent, but apparently not noted in the Original Decision. It was not, in that respect, a comparable sale.

53. It is curious that such a criticism, that Mr Green, the valuer retained by Giusida, relied on his expertise and experience but without reference to comparable sales, was later made of his evidence. This criticism was made, notwithstanding that Mr Green was head of valuation at Jones Lang LaSalle and described in the Original Decision at [3] as "an experienced commercial valuer". That, however, seemed to be, on this issue, exactly the approach of Mr Robertson, who relied on his expertise and experience but without reference to comparable sales and which was accepted in the Original Decision on this issue without criticism or, indeed, any apparent scrutiny.

54. In neither the Original Decision nor the Appeal Decision was any basis given for the assertion by Mr Robertson that the risk of contamination had been taken into account in sales in Braddon. This would not comply with the approach to expert evidence mandated in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at 743-4, as applied to valuation in Challenger Property Asset Management Pty Ltd v Stonnington City Council [2011] VSC 184; (2011) 34 VR 445 at 457-8; [25].

55. While Mr Robertson's opinion as an expert valuer (he was described in the Original Decision at [3] as "also an experienced commercial valuer with the Australian Valuation Office") is evidence in itself, the weight to be accorded to it depends on the soundness of its basis. The discernible basis as articulated in both of the reasons delivered and the comparable sales on which he relied was inconsistent with his assertion.

56. In my view, the Appeal Decision arguably fell into error in rejecting the contention that an allowance should have been made for the risk that the desirous purchaser would be required to pay a substantial sum to remediate the subject land without evaluating the evidence and the basis for it. It seems to me that this amounts to the Appeal Decision disregarding the risks.

57. Given the quantum at issue, and I make no comment on whether it would be required to deduct the whole of the cost estimated by Dr Gunton, any finding of error on this question would certainly be likely to affect the final valuation.

Did the Tribunal fail to accord the Applicant a fair hearing when it relied on hearsay evidence as to the payment of a premium of 5% in relation Sale 1, the evidence emerging for the first time in cross-examination?

59. This question can conveniently be dealt with at the same time as questions 3, 4 and 5 as well. They were as follows:

1. Was the Tribunal entitled to refuse to take account of the opinion of Mr Green as an experienced valuer that a 10% deduction for adjoining owner influence in relation to Sale 1 was proper on the basis that he had not provided sales evidence in support? [Original Tribunal reasons paragraph 53].
2. Did the Tribunal take into account an irrelevant consideration when it noted the evidence given in the Junstamp case that 5% was an appropriate deduction for adjoining owner influence in relation to Sale 1? [Original Tribunal reasons, paragraph 53].
3. Was the finding of the Tribunal that the appropriate deduction for adjoining owner influence in relation to Sale 1 was 5% a finding against the weight of the evidence?

60. The property the subject of Sale 1 of the three comparable sales considered by the valuers, was, as noted above (at [50]), another property in Lonsdale Street, though an inferior property because it was further from Civic and the purpose clause in the Crown Lease did not permit residential use.

61. The property, however, was purchased by the owner of the properties on either side of the subject land. Both valuers agreed that a discount from the price was appropriately made because of the obvious special value to an adjoining owner who purchased the land.

62. Mr Robertson considered that a reduction of five per cent was appropriate; Mr Green initially agreed, but when he found out that the purchaser had owned both adjoining properties, he increased the reduction to ten per cent.

63. Mr Robertson apparently did not explain in his report the basis on which he arrived at the figure of five per cent. When asked about it in cross-examination, however, he said that he had accessed a data base at the Australian Valuation Office where he worked and this recorded a conversation between a valuer of the office and the actual purchaser, who stated that he had paid a premium of five per cent for the land. Mr Robertson had not formed any opinion on the matter himself.

64. There was a challenge to this evidence because it was, of course, second hand hearsay and, for example, Mr Robertson could not be cross-examined on the conversation with the purchaser to which he was not a party. He could not, for example, be asked what the content and context of the conversation was and what the precise question, if any, was to which this information was the answer.

65. In the Original Decision at [53], the ACAT found, after rehearing this evidence and pointing out that Mr Green had offered no comparable sales for his opinion, concluded:

The Tribunal is not of course bound by the technical rules of evidence. In my view, based on the evidence available the Tribunal believes that a 5% adjustment is the most appropriate. It is of interest to note that both valuers in Junstamp v Commissioner for ACT Revenue [2013] ACAT 50 agreed that the correct adjustment was 5%.

66. Giusida submitted that it was denied procedural fairness by the late introduction of this second-hand hearsay evidence, which should have been excluded and that this would leave only the evidence of Mr Green, which should therefore be accepted. It also submitted that reliance on another decision was inconsistent with proper valuation principles.

67. It submitted that, while a valuer will inevitably rely on hearsay, there are limits to that. I note, in this regard, that Osborn J said in Murdesk Investments Pty Ltd v Roads Corporation [2006] VSC 363 at [37]

A valuer may express an opinion of value which is founded in part upon hearsay but he cannot give hearsay evidence of disputed facts which lie outside his own personal knowledge. [Wright v Sydney Municipal Council [1916] NSWStRp 52; (1916) 16 SR (NSW) 348; English Exporters (London) Ltd v Eldonwall Ltd [1973] 1 All ER 726; Bromley v Housing Commission of NSW (1985) 3 NSWLR 407.]

68. The introduction of this contentious evidence in the way it was, it was submitted, was unfair for there was no possibility of Giusida testing it in any way. If it was the basis of Mr Robertson's assertion, it should have been included in his report. Thus, the evidence should not be accepted because of the unfairness and also the unreliability.

69. It was accepted that the ACAT is not bound by the rules of evidence. That, of course, does not mean that the Tribunal is able to accept and rely on any information, however unreliable it may be. A classic exposition of the position is the comment of Evatt J in R v War Pensions Entitlement Tribunal; ex parte Bott [1933] HCA 30; (1933) 50 CLR 228 at 256:

But this does not mean that all rules of evidence may be ignored as of no account. After all, they represent the attempt made, through many generations, to evolve a method of inquiry best calculated to prevent error and elicit truth. No tribunal can, without grave danger of injustice, set them on one side and resort to methods of inquiry which necessarily advantage one party and necessarily disadvantage the opposing party. In other words, although rules of evidence, as such, do not bind, every attempt must be made to administer 'substantial justice'.

70. See also A v Director of Family Services (1996) 132 FLR 172 at 177.

71. It was then submitted that, without Mr Robertson's evidence, the evidence of Mr Green was the only available evidence and it should have been accepted. That Mr Green relied on no comparable sales should not necessarily lead to the exclusion of his evidence. In that sense, Mr Robertson did not rely on comparable sales. As Croft J pointed out in Challenger Property Asset Management Pty Ltd v Stonnington City Council at 456-7; [24], there is no prescriptive position on the valuation methodology that a court can accept and "care should be taken to ensure that no single process of reasoning is elevated into a statement of principle".

72. Mr Green explained how he had arrived at his figures; how the fact that the purchaser of the land the subject of Sale 1 had owned both adjoining properties affected his reduction and why.

73. Finally, the reference in the Original Decision to another decision, namely Junstamp v Commissioner for ACT Revenue [2013] ACAT 50, when considering this issue was challenged by Giusida as suggesting that a finding of the value to an adjoining owner of the purchase of land could be somehow resolved by authority. This, it was submitted, is inconsistent with valuation principles.

74. The Commissioner rejected these arguments. He submitted that the finding of five per cent reduction was open to the ACAT on the evidence, especially where Mr Green had originally used that figure (though on a false premise). It was put that Mr Green had "simply plucked 10 per cent out of the air". The suggestion that Mr Green was taken by surprise was also challenged on the basis that "there was no surprise about the proposition that there should be an adjustment".

75. It was also submitted that the purchaser was "a very experienced developer in the Braddon area". He had involvement in a number of matters in Lonsdale Street and "was regarded as someone who would know what he was doing and as a reliable indicator of what premium would be paid". The circumstances and source of the information was, it was submitted, fully identified to the ACAT.

76. The Commissioner pointed out that procedural fairness was a practical concept and not to be applied abstractly. The ACAT on appeal in response to this submission cited a passage from Coutts v Close [2014] FCA 19 at [120]. In doing so the ACAT on appeal inaccurately promoted the judge, Griffiths J (incorrectly referred to as Griffiths CJ, an entirely different judge), where his Honour said

It is also now settled that procedural fairness is not an abstract issue; rather, attention needs to be focused on the question whether conduct which is said to be procedurally unfair produced some practical injustice. As Gleeson CJ observed in Lam (2003) 214 CLR 1 at 14:

Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.

(Emphasis added).

77. Finally, the Commissioner submitted that the reference to Junstamp v Commissioner for ACT Revenue, was merely a passing reference and that it was clear that the ACAT had made it clear it did not place weight on it and was careful not to do so.

78. The ACAT on appeal in the Appeal Decision dismissed the suggestion that there was a denial of procedural fairness, rather disingenuously suggesting that Mr Green "was not taken by surprise" by the evidence from the data base about the comments of the purchaser of Sale 1. After all, it commented "the five per cent premium was noted in both expert's reports". That is hardly fair, for the reference in Mr Green's Report was to a purchaser of one adjoining parcel of land not both; the reference to Mr Robertson's Report was to the purchaser of the land the subject of Sale 1 but who was known to be the owner of both adjoining parcels of land, and where Mr Robertson failed to set out the basis for his assessment of the discount.

79. The unfairness of the characterisation of this by the ACAT on appeal, however, is not the end of the matter, for the ACAT on appeal then accepted that Mr Green had revised his opinion in the light of his new knowledge (his lack of which is a matter of concern in itself) but then accepted the explanation of the rejection of his opinion in the Original Decision because he "did not offer any sales evidence to support his view".

80. The ACAT on appeal did not directly address the question of the hearsay evidence and as to whether it was fair to admit it, merely saying that the ACAT was not bound by the technical rules of evidence and that, as the ACAT had both reports and notwithstanding the adjustment Mr Green made, it did not err in making the finding "based on the evidence available" which, in context, must include to the hearsay evidence.

81. As to question 3, the ACAT on appeal held that, as both valuers gave evidence, it was "within the bounds of an 'adjustment' that the original tribunal was properly able to make" and that it was open to the ACAT to reject Mr Green's opinion "for the reasons given", namely that there was no comparable sales evidence. It is, of course, to be noted that Mr Robertson also gave no comparable sales evidence.

82. The ACAT on appeal rejected the challenge in question 4, holding the reference to the decision was "a passing observation".

83. Finally, as to question 5, the ACAT on appeal concluded that the appropriate deduction of five per cent for adjoining owner influence was not against the weight of the evidence.

84. This is a vexed matter, for the assessment of adjoining owner influence is not an easy matter to resolve. Indeed, as McLure J said in Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 at [55]- [58]:

1. It is apparent from the extracts from Maurici v Chief Commissioner of State Revenue (supra) [(2003) [2003] HCA 8; 212 CLR 111] and Brewarrana Pty Ltd v Commissioner of Highways (supra) [(1973) 4 SASR 476] set out earlier in these reasons that a sale to an adjoining owner must be viewed with caution. There is other authority to the same effect: Barber v Valuer-General (1969) 17 LGRA 409; Hieronymus v Minister for Education, unreported; NSW Land and Environment Ct (Hemmings J); 29 June 1989 at 12 and Minister of Environment v Petroccia (1982) 30 SASR 333 at 345. The preponderance of authority is that although such a sale need not be excluded from consideration as a comparable sale, it needs to be carefully analysed.

1. ... In my view, it is appropriate that a valuer who seeks to rely on a sale to an adjoining owner to justify an inference as to the value be required to satisfy himself or herself that the sale does not reflect any element of special value to the adjoining owner. That may be done in a number of ways. One way would be to consider, as part of the collective analysis, whether the sale was out of line with the basket of sales.

85. Neither valuer did that. Mr Green relied on what the Commissioner said were "generalities" and applied no apparent justification for the identified percentage deduction. On the other hand, Mr Robertson relied on the non-expert opinion of a lay person who was an actual participant in the sale, making a statement in an undescribed context, where it was impossible to judge whether the purchaser actually knew what the market price was as to which he paid a premium, as well as any context to assess whether the purchaser had any motivation to assess any premium paid by him or his company at a high or low level.

86. This was not a satisfactory situation to put before the ACAT. On the other hand, I was not favoured with the actual evidence given by either valuer to be able to assess what actual material was available for the Original Decision.

87. Both valuers agreed that, as is clear from the authorities, an allowance must be made for the special interest of an adjoining owner. In the absence of adequate evidence, it becomes a matter of discretion for the ACAT.

88. That, however, is not how it was approached by the ACAT in either the Original Decision or the Appeal Decision. In both cases, questionable evidence was not interrogated but was simply accepted.

89. On the other hand, were the second hand hearsay evidence of the adjoining owner to be rejected, the evidence of Mr Green was not thereby necessarily to be accepted. A judge of the facts is not required to accept the unchallenged evidence of an expert if there is rational basis on which it is to be rejected.

90. Despite this unsatisfactory state of the evidence and the approach to it, the actual questions of fact or law have to be addressed. Giusida says that the hearing leading to the Original Decision was not fair because of the admission of the second hand hearsay evidence which, it says, it could not have anticipated and, therefore, could not have tested.

91. Unfortunately, no authority was cited to suggest that this breached the rules of a fair hearing, but it does seem to me to be arguable that this was so.

92. While, as noted above (at [69]), the authorities suggest that the rules of evidence cannot be completely ignored, a court must be careful that it does not mandate a

re-introduction of such rules despite direct legislative discretion that they not apply. I have discussed this in Pires v Dibbs-Barker Canberra Pty Ltd at [5]-[11] and I did point out at [11], that, while the rules of evidence may not apply in the ACAT:

the underlying principles of fairness, natural justice, reliance on credible and relevant evidence which underpin those rules remain applicable. The approach is to be determined from the circumstances of the precise case.

93. Accordingly, it is sufficiently arguable that the approach of the Appeal Tribunal to the evidence of Mr Robertson did breach the need for reliance on credible and relevant evidence which underpins the rules of evidence and thus justify addressing Question 2 on appeal.

94. Question 3 is a challenge to the basis of the rejection of Mr Green's valuation. There is no doubt that a failure to have comparable sales evidence, especially where it was or could reasonably be available may be a reason for viewing valuation evidence as less reliable. The problem is that the Original Decision only used that to reject the evidence almost as an application of a policy (not, however, applied to Mr Robertson's evidence) and did not engage with the basis for the actual evidence given. It may be, as the Commissioner asserted, that it was too general an assertion to justify the asserted ten per cent premium paid by the purchaser of Sale 1. That, however, is not the basis of rejection in the Original Decision and that basis was simply accepted as adequate in the Appeal Decision. That is not sufficient as a basis for rejection of the valuation as is clear from what Croft J pointed out in Challenger Property Asset Management Pty Ltd v Stonnington City Council which I have quoted above (at [71]). I am prepared to find that there is an arguable question as to an error made in the Appeal Decision.

95. As to the reference to Junstump Pty Ltd and Commissioner for ACT Revenue in the Original Decision, I find that there is an arguable error in the decision of the Appeal Decision.

96. There is no doubt that a valuation, and, indeed, no mathematical part of a valuation, will ordinarily be any kind of precedent. Mason J made that clear in Federal Commissioner of Taxation v St Helen's Farm (ACT) Pty Ltd [1981] HCA 4; (1981) 146 CLR 336 at 383, where his Honour said:

I should make the comment that too much attention is given both by valuers and judges to what has been said by courts in other cases on matters of fact and discretionary judgment, not being matters of law. Essentially valuations are estimations involving findings of fact and discretionary judgment made on the evidence given in the individual case and by reference to the circumstances of that case. To apply slavishly the approach taken by a judge in another case, to apply the same discount or capitalization rate that he applied, as if that rate had the force of a general rule, is to attribute to them the force that should be confined to propositions of the law.

97. The comment in the Appeal Decision at [73], that the reference in the Original Decision was "a passing observation" cannot be easily accepted. Reasons for decisions are not the occasion for "passing observations". They express the basis for findings of the decision maker. There can be no rational basis for the reference to the case unless the ACAT thought that the findings in it somehow validated, strengthened or justified the finding made as to the premium payable by any adjoining owner. I accept that there is an arguable case that Question 4 discloses an error to the Appeal Decision.

98. I am, however, not satisfied that Question 5 discloses an arguable error. This would elevate the opinion of a valuer beyond that which it is capable of sustaining. It assumes that Mr Green's evidence was reliable and must be accepted. That is not the law. I am not prepared to give leave to appeal on the basis of Question 5.

99. There was no Question 6 dealt with by the Appeal Decision as it was withdrawn. The next question is Question 7 which is as follows:

Was the Tribunal entitled to refuse to take account of the opinion of Mr Green as an experienced valuer that a 2% deduction for delays in decontaminating the site was proper on the basis that he had not provided sales evidence in support? [Original Tribunal reasons paragraph 62].

100. Mr Green made an allowance in his valuation for the delay that Giusida would be likely to experience before it could redevelop the subject land to its highest and best use by the four to six months that Dr Gunton's evidence showed that remediation could take, though, if complicated, it could actually take years.

101. Giusida submitted that Mr Green gave "rational reasons" for allowing this deduction, the issue was within his expertise and his evidence was reliable. He did not need to provide sales evidence and his opinion ought to have been accepted.

102. The Commissioner contended that this was tinkering as the component of the valuation of around $5 million was small, being about $100 000, and that as Giusida bore the onus of proof, it had not discharged it.

103. In the Original Decision at [62], the evidence of Mr Green was rejected in what in the Appeal Decision at [82], described as a "succinct paragraph" as follows:

The Applicant urged that a hypothetical purchaser would reduce the UV of the subject land by 2% for delays in decontaminating the site. Mr Green did not provide any sales evidence to support his general proposition nor for the selection of 2%. The Applicant has the burden of proof under section 101 of the TAA and has not convinced that Tribunal that the 2% reduction is justified.

104. In the Appeal Decision at [83], part of Mr Green's evidence was cited as follows, namely that the deduction:

is a minor allowance to reflect that there is additional time required to prepare and decontaminate the site. 2% as a factor of a $5 million unimproved valuer is a small component, $100,000. We are aware of other instances in Braddon where it's taken significantly longer periods to decontaminate sites, and I think an allowance of 2% could easily be more, and we are of the opinion that such allowance is fair.

105. He was then criticised for "not providing evidence of the other instances" (at [84]).

106. Before me, the Commissioner pointed out that the ACAT did not refuse to take account of Mr Green's opinion; it rejected it. In one sense that is correct, as taking account of a matter does not mean that it must accept it. It can consider it and reject it if it is not valid, credible or reliable, or other evidence is rationally to be preferred.

107. It is not correct valuation principles that the opinion of the expert must be accepted.

108. That, however, is not really how the question is formulated. I read the question as a challenge to the basis on which the opinion was rejected, namely only because it was not supported by comparable sales.

109. On that basis, the rejection of the evidence was unjustified. I have set out in City Hill Pty Ltd v ACT Planning and Land Authority at 67; [69]-[71] the fact that there is no one method of valuation and I pointed to the comments by Callinan J in Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1998) 74 ALJR 209 at 267, that there is no legal principle that requires any particular method to be rejected or preferred. That has recently been echoed by Croft J in Challenger Property Asset Management Pty Ltd v Stonnington City Council at 456-7; [17].

110. Thus, it is not enough to reject a valuation simply because it does not use a particular valuation method without explaining why it is not an appropriate method, including why the method actually adopted was inappropriate. It almost appeared that in its Original Decision the ACAT was applying a policy that a valuation unsupported by the comparable sales method could not be supported. Not only is that incorrect in law, it was unfairly applied because it was not applied, so it would seem, to some of Mr Robertson's valuation evidence.

111. Further problems here show that, while Mr Green did actually appear to rely on comparable sales, he had not set out his analysis of them. This is parallel to the reliance by Mr Robertson on the statement of the purchaser of comparable Sale 1 without any analysis. In addition, Mr Robertson's assertion that prices paid in sales in Braddon had built in the likelihood of contamination was without any reference to comparable sales.

112. The regularity with which this differential treatment between the valuers has been treated in both the Original Decision and the Appeal Decision is likely to leave Giusida with a reasonable impression that its valuer was treated with unfairness and in a discriminatory way to the government's valuer. The absence of proper engagement rather than generalised rejection, without engagement with the actual evidence and the reasoning behind it is likely to reinforce such an impression.

113. It certainly means that there is more easily discerned an arguable error where evidence is rejected not because there is a real reason for the rejection of the evidence (if such is justified) after proper, judicial engagement with the evidence and the reasoning to support it, showing that it has been understood and that the same approach is applied to the evidence of both valuers, but by application of a general policy which is not a valid principle at all.

114. Mr Green's evidence was said in the Appeal Decision to lack details. This, however, is not the reason given in the Original Decision. On appeal, of course, evidence may be rejected for a different reason than at the trial.

115. The difficulty in this case, however, is that it is not clear whether the Appeal Decision engaged with the issue of whether a reduction should be made at all for delay in remediation for contamination or whether the percentage suggested was correct. It is only the latter that can be rejected for lacking in detail. If the reduction is to be allowed but neither amount is proved to its satisfaction, then the ACAT must address whether it has the evidence to make its own determination.

116. None of that is addressed in the Appeal Decision.

117. It may be argued, in any event, that Mr Green did rely on comparable sales - "other instances" - but simply did not analyse them. The material before me does not show whether Mr Green was, in cross-examination or, indeed, by the ACAT, asked to identify the instances and explain their comparability. This is, again, analogous to the way in which Mr Robertson's assessment of the five per cent premium in the adjoining owner of Sale 1 was obviously not justified until he was cross-examined and he then explained his basis.

118. In my view, there is an arguable case that the Appeal Decision has made the error articulated in Question 7.

119. It is convenient to deal with Questions 8 and 9 together. Question 8 was as follows:

Was the Tribunal entitled to refuse to take notice of the opinion of Mr Green as an experienced valuer that a 10% deduction for difficulties encountered in obtaining finance was proper on the basis that he had not provided specific evidence in support? [Original Tribunal reasons paragraph 63].

Was the Tribunal entitled to refuse to take account of the evidence of Mr Green as to his personal experience of the practice of financiers when considering lending in relation to sites affected by contamination? [Original Tribunal reasons, paragraph 63].

121. These questions raise the issue of how the expert evidence of Mr Green was dealt with in the Original Decision when he opined that a discount of ten per cent should be applied to give effect to what he said were the difficulties that a desirous purchaser would face in obtaining finance for the purchase of the subject land in the context of the risk of contamination.

122. Mr Green's evidence, as summarised in the Original Decision, was that few financiers would be willing to lend in those circumstances and that those few would require additional loan security and charge higher fees, thus limiting the pool of potential buyers and depressing the sale price by ten per cent.

123. In the Original Decision, there was no suggestion of any evidence on these matters given by the Commissioner. The evidence was then rejected (at [63]), as follows:

This gloomy picture was not supported by any specific evidence which the Tribunal believes the Applicant must produce if [it] is to discharge the burden of proof that it carries. The Tribunal accepts the proposition that the general risk of contamination in Braddon has been absorbed into the price structure for the area and that a hypothetical informed purchaser would know this.

124. This approach starkly shows the differential treatment accorded to the two valuers, rejecting the evidence of Mr Green based on his experience because he did not provide "specific evidence" while accepting the evidence of Mr Robertson which had no comparable sales and no "specific evidence" to show that the general proposition about sales in Braddon was reliable.

125. In the Appeal Decision, it was noted that Mr Green's evidence was based on his direct experience. It was said, without contradiction, that he had "significant experience in the area of costs of borrowing" and that this expertise was not challenged.

126. The Commissioner, it was noted, simply relied on the general principle that even unchallenged evidence of a valuer may be rejected and that there were duties of an expert set out in Makita (Australia) Pty Ltd v Sprowles that had not here been met.

127. The Appeal Decision accepted that the ACAT could reject evidence where it was not sufficient to discharge the burden of proof that lay on Giusida and that by doing so, it did not fall into error.

128. It was submitted to me that Mr Green gave "considerable evidence" of his own experience in this area in relation to a particular instance of one transaction, hardly failing to give "specific evidence". He also gave evidence of the sensitivity of financiers to financing the purchase of contaminated land.

129. The Commissioner submitted that the questions did not arise for the evidence had simply been considered but rejected.

130. In Minister of Environment v Petroccia (1982) 30 SASR 333, Wells J had to confront the situation where an expert witness carried out research, analysis and reasoning so far as he could, but also relied on his experience and skill in forming his opinion. He said at 336-7:

I respect such claims and try, as best I can, to receive them into the complex evidence. But, if I am to do so, I am, I apprehend, entitled - indeed, bound - to arrive at a fair assessment of the witness's standing and reliability in the case then before me; in short, I must ask myself, 'Does this man, to me, carry conviction in this matter? Is this man, not just honest - I see no reason to mistrust him personally, but is he, on the whole of showing in the box, dependable as an expert?'

131. The position seems to me to be best explained by two excerpts from the judgment of McLure J, with whom Anderson and Steytler JJ agreed, in Duffy v Minister for Planning [2003] WASCA 294 at [26], [30]-[31]:

1. The general principles relating to the admissibility of and weight to be given to expert evidence are not in dispute. The basic principle is that an expert must either prove by admissible means the facts on which the opinion is based or explicitly state the assumptions as to fact on which the opinion is based: Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370; Pollock v Wellington (1996) 15 WAR 1; Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705.

1. An illustration of the practical application of the principles is seen in Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409. In that case the subject land to be valued was a container terminal site. It was common ground that that was the best and highest use for the land. Notwithstanding that there was no sales evidence of container terminals, one expert used the comparable sales method and the basic sale he relied on was of industrial land with no water frontage. The valuer added between $100,000 - $120,000 per hectare as an adjustment for the subject land's water frontage. It was common cause that the expert did not have any sales evidence on which to rely for his quantification of the water frontage adjustment and he said it was fixed as a matter of judgment. The appellant in that case submitted that while judgment based on experience is a permissible method of making adjustments in the course of valuing, the selection of a figure based on nothing could not alter its character as in essence a guess or an arbitrary figure. The Court held that the need to make adjustments to values to arrive at the true valuation of subject land does not preclude the valuer or the Court who has the task of valuing the land from making adjustments which may be nothing more than the best guess that can be made in the circumstances. The Court also rejected an argument that a judgment of that nature was not valid unless there was evidence to establish the upper and lower limits within which the judgment must operate.
2. An opinion that is not based on sales or other empirical evidence is often referred to as a judgment, usually said to be based on skill and experience. Sometimes it may be difficult to draw the line between judgment and mere speculation. A rule of thumb is that a judgment formed without some disclosed rational basis will be speculation to which little, if any, weight should be given. However, generalised statements of principle are best avoided because whether and if so what weight should be accorded to a valuer's opinion will depend on the facts and circumstances of each case.

132. It seems to me that there is an arguable question that the evidence of Mr Green was admissible and cogent and that neither the Original Decision nor the Appeal Decision engaged with it to the extent of evaluating it properly. Both dismissed it for reasons that do not accurately reflect the evidence.

133. The amount of the deduction may be the subject of disagreement, but the fact of a deduction, far from being peremptorily dismissed as "a gloomy picture", required proper evaluation and consideration.

134. I am satisfied that there is an arguable question for consideration on appeal.

135. Question 10 raises the question of whether the use of an adjoining site was a relevant influence. The question was:

Was the Tribunal entitled to refuse to take account of the opinion of Mr Green as an experienced valuer that a deduction for the negative influence of an adjoining service station was proper on the basis that he had not provided sales evidence in support? [Original Tribunal reasons, paragraph [64]].

136. Mr Green had opined that the operation of a service station on the land adjacent to the subject land was a negative influence. Initially, he allowed a five per cent deduction for this but then revised it to ten per cent, arising from a comparison with Sale 3 of the comparable sales to which the parties referred. It was acknowledged that the sale was regarded as not comparable because it was not at arm's length, but it was submitted that the original unrevised deduction should stand.

137. When, in the Original Decision, it was noted that Sale 3 had been discarded, the opinion of Mr Green was rejected because (at [64]), Mr Green "did not offer any other comparative sales evidence to support his ten per cent deduction".

138. Again, it was submitted, that this failed to engage with the reasoning used by Mr Green and applied a general rule of thumb that, absent comparable sales evidence, the opinion of Mr Green (unlike that of Mr Robertson) should be rejected.

139. The Commissioner submitted that the Original Decision was appropriate in finding that Giusida had not discharged its burden of proof.

140. It is no answer to say that the matter was considered and rejected with reasons. That there are reasons does not avoid appellate review, which can assess the reasons and their validity and acceptability so far as fairness, rationality, engagement with the real issues and application of proper principle is concerned.

141. In the Appeal Decision, it was accepted that there was no "obviously manifest error" (despite the tautology) and reaffirmed the Original Decision. It referred to what it said was Mr Robertson's evidence that there was no "principle" that the service station influence was negatively set at five per cent.

142. It seems to me that this falls into the same category as the error suggested in Questions 8 and 9. It did not seem to me that Mr Green was asserting "a principle" and that both the Original Decision and the Appeal Decision applied an unprincipled and discriminatory approach to Mr Green's evidence without engaging with it in any realistic way.

143. It may be that Mr Green's evidence was based on experience. That is relevant and, as shown above, acceptable. It may be that that experience should have been more explicit, showing how sales evidence, and not necessarily in this area, would show the relevant difference. Nevertheless, the Original Decision and the Appeal Decision did not engage in that way.

144. It seems to me that there was an arguable question that justifies leave to appeal.

145. Insofar as both valuers did address what were said to be comparable sales, Giusida seeks to challenge the approach taken. Thus, Question 11 addresses this issue as follows:

Was the approach of the Tribunal to arriving at the unimproved value of the subject lease, for 2009 on the one hand and 2010 and 2011 on the other hand, consistent with the principles applicable to the analysis of comparable sales evidence? [Original Tribunal reasons paragraphs 67-68].

146. Giusida submitted that Sale 1 was the most comparable Sale for the 2009 valuation, having taken place in the reasonable vicinity, and in August 2008. Sale 2 was the most comparable for the latter years as it took place in the period July 2010 to March 2011.

147. While the Original Decision disregarded Sale 1 it took, for 2009, an "assumed value" for commercial and residential use derived from Sale 2, which is not as reliable as a direct comparison with Sale 1.

148. As to Sale 2 for the later date, the Original Decision did not use a direct comparison but again used an assumed value (not derived from Sale 2) and a residential value derived from Sale 2 without adjusting for size of block, though adjusting for the proportion of commercial and residential use.

149. Thus, it was submitted, the Original Decision actually failed to apply the comparable sales method but a hybrid method involving hypotheticals that were not necessarily based in the relevant sales information.

150. The Commissioner submitted that this was an attempt to re-argue the case made by Giusida. He submitted that both valuers had addressed the relevant features of the sales evidence and arrived thereby at conclusions.

151. The Appeal Decision accepted the Commissioner's submissions and held that the questions raised no issue of fact or law. It held that in the Original Decision the evidence from both valuers was considered and set out its reasons for preferring the evidence of Mr Robertson.

152. It held that the appeal should not re-visit the "discretionary merits of competing arguments or opinions of expert witnesses" (at [45]).

153. The Commissioner adopted these arguments before me.

154. The finding of a sale as comparable must be a finding of fact. If, in fact, the sale is not comparable but is relied on, or is comparable but not relied on, then this seems to me to be a mixed question of fact or law.

155. While discretionary decisions are limited in the way they can be subject to appellate scrutiny, they are not immune from such scrutiny.

156. If a sale is comparable, but is not considered, then that is a feature to be taken into account as a relevant consideration. Conversely, if a sale is not comparable, but is relied on, this is to fail to take into account a material consideration.

157. It is important to bear in mind the oft-repeated comment by the courts that the Court is not a valuer and cannot "piece together a valuation of [its] own": Challenger Property Asset Management Pty Ltd v Stonnington City Council at 453; [17], though that does not mean that a Court cannot accept some evidence from one valuer and other evidence from another on a separate issue. As Zelling J said in Doherty v Commissioner of Highways (1974) 7 SASR 57 at 83:

Judges do not have to accept the valuations of the valuers of either side and frequently arrive at a figure or figures which constitute a modification or modifications of the figures submitted by one or more valuers. For a typical example of the process, see the judgment of Walsh J in Anthony v Commonwealth [(1973) 47 ALJR 83], especially at p 94. They are guided in coming to the conclusion by the evidence of the valuers together with the other evidence in the case.

158. It seems to me that this question does raise an arguable issue that justifies the grant of leave.

159. I have found that each of the questions except Question 5 does justify a grant of leave.

160. I am also satisfied that the questions, if answered as Giusida wishes to have them answered, are likely to have material effect on the outcome of the proceedings.

162. The costs of a grant of leave should ordinarily be costs in the appeal. That is the appropriate order here, subject to the reservation that the costs of the adjournment so that Giusida could amend its draft notice of appeal should be paid by Giusida.

163. I shall hear further directions as to the disposal of the appeal.

I certify that the preceding on hundred and sixty-three [163] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Refshauge.