Perpetual Trustees (Australia) Ltd v Chief Commissioner of State Revenue

Land and Environment Court (NSW)|1999-01-14|Before: Sheahan J, Pearlman J, Mr J, Stein J, Kirby P

CITATION : Perpetual Trustees (Australia) Ltd v Chief Commissioner of State Revenue [2001] NSWLEC 285 APPLICANT/RESPONDENT PARTIES : Perpetual Trustees (Australia) Limited RESPONDENT/APPELLANT Chief Commissioner of State Revenue FILE NUMBER(S) : 30163 of 2000 CORAM: Sheahan J KEY ISSUES: Section 56A Appeal :- error of law - denial of natural justice - opportunity to make submissions - "new evidence" adopted by tribunal without refence to parties - costs LEGISLATION CITED: Land and Environment Court Act 1979 s 56A Ashfield Council v RTA [2000] NSWLEC 117 ; Ashfield Council v RTA [2001] NSWCA 370; Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321; Brewarrana Pty Ltd v Commissioner of Highways (No.2) (1973) 6 SASR 541; Brimbella Pty Ltd v Mosman Municipal Council (1993) 69 LGERA 367; Cacalot Pty Ltd v Sydney City Council (1996) 90 LGERA 424; Carstens v Pittwater Council [1999] 111 LGERA 1; Chiow Kiat Ow v Valuer-General (30126 of 1998) 14 January 1999 Commissioner Nott; City Plan Services Ltd v Sydney City Council [1999] NSWLEC 186; Coles v Woollahra Municipal Council (1986) 59 LGRA 133 ; Escobar v Spindaleri & Anor (1986) 7 NSWLR 51; CASES CITED: Flevaris & Anor v Hurstville City Council (7 August 1998); JMH Living Design Pty Ltd v Sutherland Shire Council [1999] 106 LGERA 167; Keller v Drainage Tribunal and Montague [1980] VR 449; Lisafa Holdings Pty Ltd v Commissioner of Police & Ors (1988) 15 NSWLR 1; Martin & Spork Pty Ltd v South Sydney City Council [1999] NSWLEC 73; Port Stephens Council v Fiddler [1999] 103 LGERA 335; Rosebud Village Pty Ltd v Amos & Anor (1989) 8 LGRA 403; Scheinberg v Valuer-General (30530 of 1991); Stead v State Government Insurance Commission (1986) 161 CLR 141; Southside Business Centre Pty Ltd v Rockdale City Council (10544 of 197) Pearlman J; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; Valuer-General v Perpetual Trustee Australia Ltd [1999] NSWLEC 10 DATES OF HEARING: 21/11/2001 DATE OF JUDGMENT: 12/21/2001

APPLICANT/RESPONDENT Mr J Robson (Barrister) Freehills (Solicitors) LEGAL REPRESENTATIVES: RESPONDENT/APPELLANT Mr J Maston (Barrister) Mr B Row (Crown Solictiors Office)

IN THE LAND AND Matter No: 30163 of 2000 ENVIRONMENT COURT Coram: Sheahan J OF NEW SOUTH WALES 21 December 2001

PERPETUAL TRUSTEES (AUSTRALIA) LIMITED Applicant/Respondent v

CHIEF COMMISSIONER OF STATE REVENUE Respondent/Appellant

This is an appeal, by the Respondent, pursuant to s 56A of the Land & Environment Court Act 1979, against the decision of Senior Commissioner Jensen in a class 3 appeal brought against the valuation of two sites in Wollongong.

The Valuer General had attributed to the relevant parcels, (namely 260 Keira Street Wollongong and 207-217 Crown Street Wollongong - see Exhibit R1) values of $2,070,000 and $6,200,000 respectively. On appeal the Senior Commissioner reduced those values to $1,869,000 and $4,223,800 respectively.

The appellant's major contention is that the Senior Commissioner failed to afford procedural fairness to the parties when he included in his reserved judgment a "notional subdivision plan".

The plan reflected the Senior Commissioner's decision to value a whole parcel of land by attributing values to various component areas of it, as depicted in the plan.

The appellant submitted that the Senior Commissioner had thereby created new evidence determinative of the case, without affording the parties the opportunity to lead evidence and/or make submissions in respect of such a methodology.

To succeed in this appeal the appellant has to establish an error of law. In examining a Commissioner's judgment to ascertain if such an error was made, a judge should not take a "fine tooth comb" approach. See Coles v Woollahra Municipal Council (1986) 59 LGRA 133 per Stein J (at 138) and Brimbella Pty Ltd v Mosman Municipal Council (1993) 69 LGERA 367 per Kirby P (at 368).

The Commissioner's duty to disclose reasons for his/her conclusion is not as onerous as that of a judge - Flevaris & Anor v Hurstville City Council (Lloyd J, 7 August 1998, No.10079 of 1998, unreported) . However a failure to give reasons is an error of law - Martin & Spork Pty Ltd v South Sydney City Council [1999] NSWLEC 73 per Pearlman J, and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247. The Commissioner's reasons should "expose his train of thought" - City Plan Services Ltd v Sydney City Council [1999] NSWLEC 186 (at par 29).

Lisafa Holdings Pty Ltd v Commissioner of Police & Ors (1988) 15 NSWLR 1 is authority for the proposition that the principles of natural justice apply to judicial, quasi-judicial or executive acts. A court will not lightly conclude that Parliament intended that a statutory tribunal constituted by a judge should make orders affecting property and personal rights without regard to common law principles of natural justice. See also Rosebud Village Pty Ltd v Amos & Anor (1989) 68 LGRA 403.
In Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321, Deane J said (at 367): If a statutory tribunal is required to act judicially, it must act rationally and reasonably. Of its nature, a duty to act judicially (or in accordance with the requirements of procedural fairness or natural justice) excludes the right to decide arbitrarily, irrationally or unreasonably. It requires that regard be paid to material considerations and that immaterial or irrelevant considerations be ignored… When the process of decision-making is disclosed, there will be a discernible breach of the duty if findings of fact upon which a decision is based are unsupported by probative material and if inferences of fact upon which such a decision is based cannot reasonably be drawn from such findings of fact. Breach of a duty to act judicially constitutes an error of law which will vitiate the decision. … it was necessary that any findings of fact made by the Tribunal, upon which a reviewable 'decision' was based, were supported by some probative material which was properly before the Tribunal.

Commissioners of this court have a duty to afford the parties procedural fairness, and that fairness, traditionally, involves an opportunity to make submissions. See Escobar v Spindaleri & Anor (1986) 7 NSWLR 51, per Kirby P (at 57): Can it be said that the Court should not intervene because no real injustice was occasioned to the appellant by the failure to allow his counsel the opportunity of address?... More importantly, the decision he reached amounts, on its face, to a decision apparently arrived at without the proper observance of the normal procedures followed in our courts before adverse conclusions are finally arrived at. It is not only the appellant who has an interest in securing justice in the court. There is a public interest in the manifest performance of the court's function in a proper and regular fashion. See also Cacalot Pty Ltd v Sydney City Council (1996) 90 LGERA 424.

In Keller v Drainage Tribunal and Montague [1980] VR 449, Murray J held that in deciding a matter on a basis not raised by the parties and without giving them the opportunity to call further evidence and make further submissions, the Drainage Tribunal had acted unfairly to the applicants and the principles of natural justice had not been observed.

In Carstens v Pittwater Council (1999) 111 LGERA 1 (at par 45 on p 17), Lloyd J summarised the duty to afford procedural fairness as follows: The provisions of s 38 do not, however, displace the requirement that the Court must observe the principles of natural justice. The principles of natural justice are a fundamental common law entitlement which cannot be removed or displaced except by legislation which clearly and unambiguously so provides; and such principles apply to administrative tribunals or other statutory decision-makers … Moreover, as Deane J observed in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 366, the obligations of a statutory decision-maker to act in accordance with the requirements of natural justice is part of the common law obligation to act judicially. Deane J also said (at 366): These days, it is customary and convenient in this country to avoid reference to 'acting judicially' or 'natural justice' and to speak of the 'requirements of procedural fairness'.

In Southside Business Centre Pty Ltd v Rockdale City Council (10544 of 1997, 2 September 1998), Pearlman J said (par 34): The question then is whether the applicant was given an opportunity to reply to that issue. Nothing has been put to me which would suggest that the applicant was denied that opportunity. In truth, the applicant's complaint is that the assessor drew an inference from the facts which was unfavourable to it and that he did not put that inference directly to the applicant. That does not amount to a breach of a duty to act fairly. The assessor is required to find the facts, draw inferences from them and reach his decision.

In JMH Living Design Pty Ltd v Sutherland Shire Council (1999) 106 LGERA 167, a case concerning "cluster housing", Bignold J held that a Commissioner "had erred in the manner in which he had made use of two sketch plans," having not given the parties and particularly the appellant the opportunity to deal with them at the hearing. Bignold J relied upon the decision of the High Court in Stead v State Government Insurance Commission (1986) 161 CLR 141, in which the court said (at 145): … not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. … Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference.

In Stead the personal injury plaintiff claimed that the accident caused a neurotic condition rendering him totally incapacitated for work. The judge said during Counsel's closing address that he did not accept a particular doctor and did not need to hear further, but in his reserved judgment, the judge accepted the doctor's evidence on the relevant point. The full court of the South Australian Supreme Court dismissed an appeal on the ground that by stopping Counsel from addressing, the judge deprived him of an opportunity of presenting an argument on a vital issue. The High Court allowed the appeal and ordered a new trial limited to damages saying (at 147): All that the appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result.

In JMH Living it was suggested (at par 101) that the Commissioner had prepared the two sketch plans from a number of documentary exhibits, and Bignold J said (at pars 106 to 109, and 111): It may be the case that the Commissioner's creation of, and reliance upon, these two sketch plans, was intended as some illustrative device either to supplement or to substitute for, verbal elaboration of his reasons for judgment.

In the result, the sketch plans appear to be some form of illustrative adjunct to the Commissioner's consideration of what he described as a conventional two lot subdivision of the development site and a conventional three lot subdivision of the development site, which considerations I have already concluded misconceived the Commissioner's task of evaluating the SEPP No 1 objection.

That conclusion means that it is not strictly necessary to consider the appellant's attack on the Commissioner's judgment, based upon the ground of denial of procedural fairness by virtue of the Commissioner bringing into existence and utilising in his judgment the sketch plans 'A' and 'B', without notice to the parties.

However, I am constrained to say that it is generally unwise for any tribunal to create for its own use, if only serving illustrative purposes, documents including sketch plans, which are not revealed to the parties in order that they might fairly deal with them in the course of the hearing. … In my judgment, the Commissioner erred in the manner in which he made use of the two sketch plans, without giving the parties (and particularly the appellant), the opportunity to deal with them at the hearing.

In Rosebud Village, a Victorian planning tribunal hearing an objector appeal based its decision to refuse a permit for a residential subdivision on a ground relating to the perceived effect of major transmission power lines on residents. That ground had not been within the notice of objection, had not been argued before the Tribunal, and neither party had been given an opportunity to be heard. Young CJ said (at 406): It is not difficult to sympathise with the tribunal, which is of an expert nature, advancing its views as to the desirability or otherwise of a particular development, but the fact that the tribunal is of an expert nature cannot alter the fundamental requirement of the law as expressed in the statute to which I have referred that the rules of natural justice are to be obeyed and where there is a departure from those rules, the decision will be vitiated..

In Brewarrana Pty Ltd v Commissioner of Highways (No.2) (1973) 6 SASR 541, Wells J discussed the use of comparable sales and hypothetical subdivisions as the bases for valuation of land in claims for compensation. His Honour said (at 544): I must act on the evidence, and if any of it is, in any wise, defective, incomplete or irreconcilable then I must make such use as I can of whatever other evidentiary material is available to correct, complete or reconcile.

Later (at 578) His Honour said: The judicial task is to see the combined results of the valuers' work not as another valuer would see them, but as material fit to be used in the course of applying the principle laid down in Spencer's Case (1907) 5 CLR 418; the two roles of buyer and seller must, in my opinion, finally merge in the Court. I must bear in mind the conclusions of the valuers, and try to accord to each the sort of bearing and weight that would be accorded to them in the notional transaction of sale and purchase propounded by Spencer's Case.

In Valuer-General v Perpetual Trustee Australia Ltd [1999] NSWLEC 10, Lloyd J pointed out (par 22-23) that the then Senior Assessor was not: confined to accepting the views of either one expert or the other, or the submissions of one party or the other … It is not an error of law for the Senior Assessor in his capacity as a judicial valuer to reject both approaches ['A' and 'B'] and adopt valuation approach 'C' ".

His Honour went on to say (par 24): It is by no means uncommon for the judicial officer, in sitting down to write the judgment, to find an additional authority or authorities in the cause of researching the case or in researching a topic or an issue in the case, to which neither party made any reference. The authority or authorities thus found may be determinative. Is the judicial officer under an obligation to reconvene the hearing to afford the parties the opportunity of making further submissions in the light of the judicial officer's research? I think not. The judicial officer may do so if he or she requires further assistance. It is not an error of law, however, neither is it a denial of natural justice, for the case to be decided on the basis of some principle disclosed in an authority which was not referred by either party at the hearing.

In Chiow Kiat Ow v Valuer-General (30126 of 1998, 14 January 1999), Nott C applied his earlier decision of 6 February 1992 in Scheinberg v Valuer-General (30530 of 1991) to hold that the whole of the parcel comprising four lots included in one valuation notice should be assumed to be sold at the basic date to a single buyer, and that the buyer (purchasing for the purpose of selling individual lots) would take into account (in the price he was prepared to offer) the costs associated with the resale of individual lots, holding costs and an amount for profit and risk.

In Port Stephens Council v Fiddler (1999) 103 LGERA 335 the Court of Appeal held that the trial judge had erred in valuing the subject lands contrary to valuation principles, and that he had failed to give reasons for rejecting the Council's valuation.

In his judgment in this matter, reserved on 4 May 2001 and delivered on 9 August 2001, the Senior Commissioner collated the "comparable sale" evidence relied upon by the respective valuation experts assisting the parties (Wilson for the applicant and Whealing for the respondent). The two valuers appear to have had five sales in common, but Wilson relied upon four others as well (Exhibit A1 and Exhibit A2 c.f. Exhibit R2 and Exhibit R3).

The clear conflict in their evidence is dealt with in detail in (pars 10 to 45 of) the Senior Commissioner's judgment, which then went on to consider the market in which the lands occur (pars 51 to 54), and concluded that: Given this market situation, reliance on comparable sales becomes even more critical than perhaps the normal circumstance would demand, given the particular and unusual characteristic of the subject land and the adjoining carpark in relation to the pedestrian mall created by the Council.

The Senior Commissioner then proceeded to review the comparable sales in more detail (pars 55 to 65). None of the comparable sales exhibited all the salient features of the subject sites - a conclusion of fact clearly open to the Senior Commissioner.

At par 66 the Senior Commissioner dealt with a particular part of Wilson's approach to his criticism of Whealing's assessment. I will not repeat the passage of the valuation evidence which the Senior Commissioner quoted at length; suffice to observe that it suggested a distinction between the value to be attached to a Crown Street frontage and other portions of such a site.

The Senior Commissioner seized upon that approach as the best way to address the conflict in the evidence, observing (in par 68): By segmenting the sites into a series of areas with characteristics similar to the comparable sale sites that are being used as a basis for achieving land value, hopefully a more consistent and coherent answer will be arrived at and as contained in the attached tables.

I read in the Senior Commissioner's judgment the judicial valuer establishing his methodology, endeavouring to explain it, and then applying it to the facts of the matter. He was entitled to accept the evidence, or view expressed, that the value was very high at the Crown Street frontage, and radiated away through the site. That evidence was clearly before him.

As Mr Robson points out, the appellant adduced evidence before the Senior Commissioner that different parts of the sites would be of different value and the Senior Commissioner was required to form an opinion in the absence of a truly comparable sale of vacant land.

The Senior Commissioner did not postulate a hypothetical subdivision, nor a separate sale of hypothetical parcels, but was making a genuine effort to resolve a true conflict between rival valuation approaches. As the judicial valuer he was entitled to form his own opinion, and obliged to neither accept, nor reject, totally, the evidence of any particular witness.

The alleged notional subdivision, read in the context of his judgment, appears to me to be no more than schematic representation of such a "segmentation" of the subject sites. As Mr Robson submits, the plan was no more than an articulation of his train of reasoning which sprang from the evidence before him, particularly that of Mr Wilson (see judgment pars 66-67). It is neither the creation of evidence, nor new evidence as that expression is properly understood.

In fact, he did precisely the same sort of thing as Lloyd J upheld in Valuer-General (par 19 above). The parties in this case were sophisticated and experienced in property matters, and they dealt in argument with the competing evidence; so the Senior Commissioner did not commit the error criticised by Bignold J in JMH Living. However, there is a "fine line" here, and I support His Honour's general words of caution (see par 16 above).

I adopted a similar approach to comparable sales in Ashfield Council v RTA [2000] NSWLEC 117, and there was no demur from that approach by the Court of Appeal when reviewing the decision on other grounds - [2001] NSWCA 370.

Any approach he chose to adopt would be artificial in any event, because he was required to value the subject land on the basis that it was vacant.

The fact that the Senior Commissioner's chosen approach had not been specifically adopted, or put to the court, by either valuer does not point to any reviewable legal error, or certainly not to any legal error which would be sufficient to vitiate his decision.

I conclude that the Senior Commissioner apportioned value to various elements of the subject land in accordance with the evidence presented, and prepared a diagram merely to illustrate his methodology.

The appeal should be dismissed, and I so order.

The normal costs regime should apply, but, as the question was not argued before me, the question of costs is formally reserved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

(1999) 106 LGERA 167

(1999) 103 LGERA 335

At a glance

Court

Decision date

Before

Source

Judgment (47 paragraphs)

Parties

Cases Cited (17)