KOUTSOURAS v STATE RAIL AUTHORITY

Court of Appeal (NSW)|1991-10-29|Before: Priestley JA, Meagher JA, Clarke JA, Hemmings J

KOUTSOURAS v STATE RAIL AUTHORITY SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY, CLARKE and MEAGHER JJA 28 and 29 October 1991, 28 November 1991

Facts: Appellant's land resumed by State Rail Authority on 2 November 1984. Parties unable to agree on compensation payable; appellant applies for determination of compensation pursuant. to s124 of Public Works Act. Appeal from judgment of Land and Environment Court on two grounds: 1) that the opinions of the respondent's valuer should have been given little weight as it was based on hearsay evidence; 2) - that the trial judge should have rejected the tender into evidence of certain records and files.

Held (per curiam): 1) Once evidence has been properly admitted at trial, as was the case here, the weight to be accorded the evidence is purely a matter for the trial judge. A ground of appeal that a trial judge gave inappropriate weight to particular evidence raises a question of fact, not a question of law. Moreover, the appellant had been given notice of the sales relied on by the respondent and had ample opportunity to examine the contracts of sale relating to those sales and to cross-examine the respondent's valuer about them.

The rejected evidence, if admitted, would not have favoured but would have been detrimental to the appellant.

ss19(c),24,26(c),27,28,38,57 - Land and Environment Court Act

English Exportees (London) Ltd v Eklonwall Ltd (1973) 1 All ER 726 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Harris v The Minister of Public Works (1912) 12 SR (NSW) 149 Reading v Valuer-General (1923) 6 LGR (NSW) 132 Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLREdmund Barton Chambers (Level 44) Cooperative v Life Citizens Assurance Co Ltd (1985) 6 NSWLR 312 Re Gorman (1912) 29 WN (NSW) 185 Woollams v The Minister (1957) 2 LGRA 338 Beard v The Director of Housing (1961) 9 LGRA 74 Talman Pastoral Co v Housing Commission of New South Wales Land and Environment Court, 17 March 1982, unreported

Priestley JA The details of this case are set out in the reasons of Meagher JAwhich I have had the benefit of reading in draft.

Of the various answers to the first ground of appeal discussed by Meagher JA the one that seems to me the plainest is that which respondents to the appellant's assertion that the trial judge should have placed minimal reliance upon the evidence of the respondent's valuer by pointing out that once the evidence was in, it was a matter for the trial judge what weight he put on it; unless, that is, it was demonstrably so unreliable that it would be a mistake to give it any weight at all. I do not think such a contention could be maintained in the present case. On this basis, in my opinion, the first ground of appeal fails.

In my opinion the second ground also fails; my reason for this opinion is that if the evidence said to be wrongly rejected had been before the trial judge, I can see no way in which it would have helped the appellant to show any entitlement

to a higher award of compensation. Being of this view, I express no opinion on the other matters argued relating to this ground. In my opinion the appeal should be dismissed with costs.

Clarke JA I agree with the judgment of Meagher JA and in general with his Honour's reasons.

I would reserve for further consideration the question of the admissibility of the Deeds relating to the sale of 114 Park Road, East Hills, and the related question whether s38 of the Land and Environment Court Act 1979 entitles a judge of the Land and Environment Court to reject admissible evidence in Class 3 proceedings. I agree, however, with his Honour's view that the admission of the two Deeds and the valuation of 114 Park Road would not have assisted the appellant.

Meagher JA This is an appeal by Mr Koutsouras, the appellant, from a compensation judgment by Hemmings J in respect of cert;ain land owned by the appellant and resumed by the respondent State Rail Authority of New South Wales. The land in question is the land comprised in Certificate of Title Volume 14165 Folio 80 and known as 110 Park Road, East Hills. The appellant was the registered proprietor in fee simple of the said land. His entire interest was resumed by a Notice published in the New South Wales Government Gazette on 2 November 1984. Since the parties were unable to agree on the compensation payable, the appellant applied for a determination of the compensation payable pursuant to s124 of the Public Works Act 1912, and that is the case which Hemmings J decided and is now the subject of this appeal.

The property was located within the East Hills Shopping Centre and erected thereon was a single storey brick shop. At the rear of the shop was a storeroom/office and amenities. The rear yard was fenced and was used for the storage of timber and other saleable items. Construction of the building was generally of full brick, with rendered internal walls and concrete footings and with a floor of timber and concrete. The building had a typical shop front with cantilevered awning, but part of the frontage had been altered to provide a roller shutter door and a rough road base driveway to give access from Park Road to the yard behind the building. The rear of the property and workshop area was used for the purpose of a joinery shop, making kitchen cupboards. Gross floor area of the building was approximately 178m2. The building was structurally sound and did not appear to require any major essential repairs.

The property was rectangular in shape, with a frontage of about 15.24m, with side boundaries of approximately 50.29m, having an area of 765.1 square meter. It had the benefit of services such as water, sewerage, gas, electricity and telephone, and Park Road comprised a bitumen surface with concrete kerbing and guttering and concrete footpaving. The property was situate within a 3a Business General Zone under the provisions of the Bankstown Planning Scheme Ordinance, and a small portion at the rear was partly reserved thereunder for local road purposes.

The property had been subject to a lease to East Hills Holdings Pty Limited for a three year term, expiring on 15th September, 1981, and with a three year option. The annual rental was $7,800.00 and such had not been reviewed at the date of resumption.

The property was resumed pursuant to the Transport Authorities Act 1980 for the purpose of constructing a railway between East Hills and Campbelltown.

URJ KOUTSOURAS v STATE RAIL AUTHORITY (Meagher JA) 3

The property was part of the East Hills Shopping Centre. Prior to resumption, the East Hills Shopping Centre comprised approximately forty five retail outlets, including a Commonwealth Bank, Post Office, Totalisator Agency Board, hotel and a large supermarket/liquor store. At the date of resumption it was not a flourishing commercial centre and was inferior to nearby centres such as Panania and Revesby. It apparently served mainly the needs of the immediately adjoining residential area, as well as commuters using the railway station.

The development of East Hills as a retail centre had not kept pace with other adjoining centres, and had been retarded for many years for a number of reasons; ie

Its location adjacent to a residential precinct of limited area, bounded on three sides by the Georges River and at the termination of the railway line.

The effect of the closure of a migrant hostel on the western side of the Georges River which relied upon the commercial centre.

The uncertainty surrounding the location and resumption of land for the purposes of the extension of the East Hills railway.

The appellant's valuer contended for a figure of $215,000 plus an unspecified sum for stamp duty and the legal. costs of acquiring a new property, but as no evidence was led on the stamp duty and legal costs involved, his Honour disregarded these items and dealt with the case on the basis that the appellant was claiming $215,000. This sum was comprised of two components: buildings and improvements, $43,172 and land value, $150,000. The respondent Authority contended for a total figure of $98,000, made up of the following two components: buildings and improvements, $38,000, land value $60,000. His Honour, in general terms, preferred the evidence of the respondent's valuer to the appellant's, considering the latter's figures extravagant; but he did not entirely accept the respondent's valuer, considering his figures a little on the low side. The figure ultimately chosen by his Honour was $128,000, consisting of improvements $38,000 and land value $90,000.

The appellant challenges his Honour's figure on two grounds. The first ground was that his Honour erred in law in rejecting the submission that the opinions of the respondent's valuer should be given little or no weight, for the reason that the surrounding circumstances and details of comparable sales were based on hearsay evidence and that the contracts in respect of the comparable sales relied on had never been sighted by the valuer, much less tendered in evidence. The proceedings before his Honour were Class 3 proceedings (Land and Environment Court Act 1979 s19(c) and s24), assigned to the Land Tenure, Valuation, Rating and Compensation Division of the Court (see s26(c), s27 and s28 of the Act). S38 of the Act provides as follows:

"38.(1) Proceedings in CL1, CL2 or CL3 of the Court's jurisdiction shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and as the proper consideration of the matters before the Court permit.

(2) In proceedings in Class 1, 2 or 3 of the Court's jurisdiction, the Court is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate and as the proper consideration of the matters before the Court permits.

(3) Subject to the rules, and without limiting the generality of subs(2), the Court may, in relation to proceedings in Class 1, 2 or 3 of the Court's jurisdiction, obtain the assistance of any person having professional or other qualifications

relevant to any issue arising for determination in the proceedings and may receive in evidence the certificate of any such person.

(4) In proceedings in Class 1, 2 or 3 of the Court's jurisdiction, the Court may, in respect of a matter not dealt with by this Act or the rules, give directions as to the procedure to be followed at or in connection with the hearing.

(5) In this section, a reference to the Court includes a reference to the assessor or assessors directed under section 36 to hear and dispose of proceedings."

S57(1) of the Act provides that an appeal lies to this Court only on a question of law. The appellant's valuer relied principally on the sales of 136 Alma Road, Padstow; 163 Tower Street, Panania; 98 Park Road, East Hills; and 364 Hector Street, Bass Hill. The respondent's valuer relied principally on sales of 125 Willington Road, Sefton; 161 Tower Street, Panania; 165 Tower Street, Panania; 163 Tower Street, Panania; 9 Macarthur Street, Revesby; and 122 Cahors Road, Padstow. It is unnecessary to embark on an analysis of any of these sales. It is true that the respondent's valuer had not sighted the contracts in relation to any of the sales he relied on. It is also true in theory that one cannot be quite certain if one does not examine the contract in question that a sale is one between a willing but not anxious vendor and a willing but not anxious purchaser; for example, only the examination of the contract can exclude the possibility that the sale was by a sheriff or a trustee in bankruptcy, or by one relative to another, or by a mortgagee, or on terms not equivalent to cash, or a forced sale, or a sale to a sitting tenant or subject to a tenancy.

It is also true that, statute apart, whilst an expert may inform himself in any way he chooses (including in many cases from sources which are necessarily hearsay) he may not give hearsay evidence as to details of any transactions not within his personal knowledge in order to establish such details as matters of fact: English Exportees (London) Ltd v Eklonwall Ltd [1973] 1 All ER 726. In the present case, however, there is a statute, to the terms of s38 of which I have already referred, which largely dispenses with the rules of evidence. Since the statute permitted the reception into evidence of the respondent's valuer's evidence as to the sales relied on by him (and, if it matters, that evidence was given without objection), it can hardly be contended that the evidence was inadmissible. Indeed, Mr Hamilton QC, senior counsel for the appellant, did not so contend. Rather, his contention was that his Honour should have placed minimal reliance on the respondent's valuer's evidence for the reason referred to. But, once evidence has been properly admitted at a trial, the weight to be accorded to that evidence is purely a matter for the trial judge; and, more importantly, a ground of appeal that a trial judge gave inappropriate weight to particular evidence raises a question of fact, not a question of law: see Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139. These considerations alone would dispose of the first ground of appeal adversely to the appellant. But even if they did not exist I would be reluctant to uphold this ground of appeal, because, as Mr Hall QC, senior counsel for the respondent, pointed out to us, the appellant had been given notice of the sales relied on by the respondent, and therefore had ample opportunity to examine, if he wished, the contracts of sale relating to those sales, and to cross-examine the respondent's valuer about them or even tender them; but he denied himself the opportunity to utilize this advantage.

The second ground of appeal relied on by the appellant is that his Honour erred in law in rejecting the tender into evidence of the records and files of the respondent in relation to the agreement to pay compensation in respect of the property known as 114 Park Road, East Hills. This ground of appeal raised an

URJ KOUTSOURAS v STATE RAIL AUTHORITY (Meagher JA) 5

initial difficulty in that the transcript of the evidence taken before his Honour does not disclose that any such evidence was tendered. Both junior counsel were present at the trial and agreed that some such evidence was tendered and rejected, although they are not ad idem as to what was tendered and why it was rejected. Neither senior counsel was present at the trial. The appellants' solicitor, however, was present at the trial and swore an affidavit that certain documents from the file were in fact tendered (although his memory did not permit him to specify with particularity which documents they were) and that his Honour rejected them on the grounds that they were "tainted". Presumably his Honour's reasons for rejecting the evidence were more extended than could be divined from that gnomic utterance, as "tainted" is hardly a term or art, nor indeed particularly illuminating. Nor was it contended that all his Honour did was to confine himself to such a cursory dismissal of the tender. He must have said more than that, but what exactly he said has vanished with the snows of yesteryear. This is obviously a most unsatisfactory position for an appellate court to be placed in; nor would we be in such a position if the parties had, in a timely manner, availed themselves of the opportunity of having the transcript corrected below so as to repair any omission. In future, serious consideration will have to be given to refuse to allow a ground of appeal to be taken in circumstances where a neglect to correct the transcript of proceedings appealed from precludes the court from properly appreciating the nature of the ground of appeal. Nonetheless, in the present case, despite the limitations which such a disability imposes on us, the Court will endeavour to grapple with this ground of appeal.

The land the subject of this appeal is No. 110 Park Road, East Hills. The land in respect of which evidence was sought to be tendered was No. 114 Park Road, East Hills, which is (presumably) only two doors away. No. 114 was owned by a certain Mrs Natoli, who apparently sold it to the respondent Authority in August 1985-April 1986. In relation to this sale, the appellant tendered to us three documents from the respondent's files: a copy of the respondent's valuer's valuation dated 11 October 1984, a copy Deed between Mrs Natoli and the respondent Authority dated 6 August 1985 and a copy I need between the same parties dated 9 April 1986. These may have been some or all of the documents tendered to and rejected by his Honour. In general terms, one would have thought that documents constituting the sale of premises only two doors away, and a recent sale at that, would not only be admissible in a case concerning the valuation of the subject property, but would be the strongest possible evidence, whilst the weight to be accorded to such evidence would be a matter for the judge. Why, then, did his Honour reject the tender?

On what grounds did he consider it "tainted"? Presumably, it was because the sale was a sale to an acquiring authority. It is clear beyond dispute that sales to an acquiring authority are to be scrutinized with care, as their very nature suggests that the prices reflected in them are likely to be unnecessarily depressed and therefore not reflective of true market value. Apart from statute, a real question arises as to their admissibility. There are some cases which seem to espouse the view that such evidence is completely inadmissible: see, for example, Harris v The Minister of Public Works [1912] 12 SR 149; Reading v Valuer-General (1923) 6 LGR. (NSW) 132. Another line of authority would suggest that such evidence, whatever its weight, is always admissible: see, for example, Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR and, semble, the decision of the New South Wales Court of Appeal in Edmund Barton Chambers (Level 44) Cooperative Ltd v Life and Citizens

Assurance Co Ltd [1985] 6 NSWLR 312. There is an intermediate line of authority which would seem to favour the view that such evidence is, or can be, admissible, but only if the judge in his discretion sees fit to admit it. This would appear to be the view of Sir George Rich (Re Gorman (1912) 29 WN (NSW) 185), Hardie J (Woollam) v The Minister (1957) 2 LGRA 338), Crisp J (Beard v The Director of Housing (1961) 9 LGRA 74), and, predictably, Cripps J (Talman Pastoral Co v Housing Commission of New South Wales, La Environment Court, 17 March 1982, unreported).

If it were necessary to resolve this question now (which in my view it is not), I should prefer to follow the second line of authority; and, in particular, I should be disinclined to follow the third line of authority. Under the general law, apart from statute, evidence is either admissible or it is not. Under the criminal law, in certain cases there is in certain circumstances a well-recognized judicial discretion to reject otherwise admissible evidence; but, apart from that, there is, in my view, no situation known to the law where evidence is admissible solely on a discretionary basis. Even assuming, in favour of the appellant, that the evidence would have been admissible apart from statute, the next question which arises is whether that view would be disturbed by the provisions of s38 of the Act. On the one hand, it might be argued that the provisions of s38 enable a judge to reject evidence otherwise admissible just as it enables him to admit evidence which is otherwise inadmissible: to do so would be to execute his statutory mandate to decide the matters before him as expeditiously as possible and with as little technicality as possible. The opposing view, which I personally favour, and which in my view subs(2) makes manifest, is that the section may enable a judge to augment, but not to restrict, the evidence which is admitted.

Nonetheless, whatever view one takes on either of these two questions, I am of the view that the second ground of appeal should also be rejected. This is because the evidence if admitted would not favour, but would have been detrimental to, the appellant. The respondent's valuer, it will be remembered, valued the subject land, No. 110 Park Road, East Hills, in the following manner:

Land $60,000 Building and improvements $38,000 TOTAL: $98,000.

As far as No. 114 Park Road was concerned, the respondent's valuer (the same gentleman who valued No. 110) did not use this method, but used a capitalization of rents method. This yielded the following figures:

Current Gross Annual Rental $19, 656 Deduct outgoings $ 4, 941 Net annual rental: $14, 715 Capitalized at 10.5% per annum $140,143 Add present value of anticipated increased income: $ 11,934 TOTAL: $152,000.

URJ KOUTSOURAS v STATE RAIL AUTHORITY (Meagher JA) 7

Obviously, the two valuations, based on different methodology, cannot be compared directly. However, the respondent's valuer also did, by way of a "check-valuation", a valuation of No. 110 based on the capitalization of rents method. This was to the following effect:

Current Gross Annual Income $8,580 Less outgoings $1 500 Net annual rental: $7,080 Capitalized at 8% per annum $88,500 Plus value of surplus land $ 8 000 TOTAL: $96,500.

It is, therefore, possible to compare the valuer's valuation of No. 114 with his "check-valuation" of No. 110; but not directly, because in the valuation of No. 114 he used a capitalization factor of 10.5% and in the "check-valuation" of NO. 110 he used a capitalization factor of 8%. Since we do not know why he chose either figure, or why he differentiated between the two rates, one can only compare the results if one reduces the former rate to 8% or increases the latter to 10.5%. Taking the latter alternative, one obtains the figure of $67.428 instead of $88,500. On this basis, the valuer's valuation of No. 110 would become $75,928; a figure which is well below his valuation of $98,000 and even more significantly below his Honour's found value of $128,000. A consideration of the valuation of No. 114 would, therefore, not have helped the appellant had it been admitted.

In these circumstances, I am of the view that the appeal should be dismissed with costs.

Appeal dismissed with costs. Counsel for the Appellant: P HAMILTON QC/AA HYAM

Counsel for the Respondent: GB HALL QC/PR STERNBERG AND R LOVAS

Solicitors for the Respondent: STATE RAIL AUTHORITY SOLICITOR, SYDNEY

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