Commonwealth Funds Management Limited v Department of Natural Resources, Mines and Energy
[2004] QLC 45
•28 May 2004
LAND COURT OF QUEENSLAND
CITATION: Commonwealth Funds Management Limited v Department of Natural Resources, Mines and Energy [2004] QLC 0045 PARTIES: Commonwealth Funds Management Limited
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Energy
(respondent/applicant)FILE NO: AV2003/0804 DIVISION: Land Court of Queensland PROCEEDING: Application to Administer Interrogatories DELIVERED ON: 28 May 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RP Scott ORDER: In addition to those interrogatories agreed between the parties (1, 2, 3(d), 6, 7(a), 8(a), 8(e), 9, 10(a) and 11(a)), the applicant will be granted leave to administer the following from the submitted draft: 3(b), 4, 5, 7(b) and 11(b).
For 8(b), (c) and (d) and 10(b), (c) and (d): The respondent should reveal the factors that were taken into account in identification of passing yield and risk loading and in the assessment of applied percentages, but not matters of weight or judgment involved.
For 10(e), the respondent should reveal the differential used in making the decision under appeal.
For 10(f), the respondent should reveal which particular percentage (or percentages) was taken into account.
I ORDER the appellant to file a draft form of interrogatories consistent with the above. The appellant may serve the interrogatories following the grant of leave to the draft form.
I ORDER that the respondent provide answers to the interrogatories within twenty-one (21) days of the date of service.
CATCHWORDS: Practice and Procedure - Interrogatories - Principles - Section 35A Valuation of Land Act 1944 - Complex matter - Questions allowed in part - Questions concerning expert reasoning not allowed - "Fishing" not allowed.
APPEARANCES: Mr S Doyle SC, with him Mr L Kelly, for the applicants
Mr T Quinn for the respondent
SOLICITORS: Minter Ellison for the appellant
Legal Counsel, Legal Services, Department of Natural Resources, Mines and Energy for the respondent
The appellant, as owner of the parcel of land upon which is situated Indooroopilly Shoppingtown, has lodged an appeal under the Valuation of Land Act 1944 against a determination of the Chief Executive of the unimproved valuation of the land. Owners of several other major shopping centres throughout the State have lodged appeals on similar grounds to the appellant. All such appeals will be heard at one hearing set to commence on 12 October 2004.
Following dismissal by the Chief Executive of the appellant's objection against valuation, a statement of reasons was sought and provided pursuant to s.33 of the Judicial Review Act 1991.
By general application dated 19 April 2004 the applicant (appellant) seeks the Court's leave to administer interrogatories in relation to certain aspects of the proceedings. Depending on the outcome of the application, similar interrogatories will be sought in the remainder of the cases under appeal.
The form of interrogatories in which leave is sought is:
"Section 3(1)(b) Assessment
1. Did the Chief Executive, in the course of arriving at the decision under appeal, determine or purport to determine a valuation of the unimproved value of the land as at 1 October 2002 pursuant to s.3(1)(b) of the Valuation of Land Act 1944 ('the Act') ('the s3(1)(b) assessment')?
2. What is the amount of the s3(1)(b) assessment?
3. How was the s3(1)(b) assessment determined or purportedly determined by the Chief Executive, identifying and explaining:
(a)any calculation made in the process of valuing the unimproved value of the land and the reason for or basis of any calculation;
(b)what factors were taken into account in undertaking the s3(1)(b) assessment?
(c)the weight given to each factor taken into account in making the s3(1)(b) assessment:
(d)any:
(i)comparable sale or property that was had regard to;
(ii)comparison or adjustment made to the valuation of the land in order to take account of such comparable sale or property?
Section 3(2) Assessment
4. Did the Chief Executive, in arriving at the decision under appeal, determine or purport to determine a valuation of the unimproved value of the land pursuant to s.3(2) of the Act as at 1 October 2002 ('the s3(2) assessment')?
5. What was the amount of the s3(2) assessment?
6. In making the s3(2) assessment did the Chief Executive apply the cap of 20% provided by Regulation 5 of the Valuation of Land Regulation 2003, in any and if so in what way was it applied?
The 6 February 2004 documents
7. Look at the document annexed marked A (being page numbered 14 in tab 9 of exhibit 5) and having done so -
(a) state when was this first produced; and
(b)what use, if any, was made of the figure of $109,000,000 identified therein in any calculations performed by the Chief Executive in arriving at the decision under appeal?
8. Look at the document annexed marked B (being page numbered 15 in tab 9 of exhibit 5) and having done so -
(a) state when was this first produced; and
(b)as to the entry 'passing yield (incl land) 5.99%', what were the factors which were taken into account in the identification of the passing yield (incl land), and also in the assessment of the figure of 5.99%, including where matters of weight or judgment were involved, the weight given to each factor taken into account in the formation of that judgment?
(c)as to the entry of 'adjusted passing yield 8.99%' what were the factors which were taken into account in the identification of the adjusted passing yield, and also in the assessment of the figure of 8.99%, including where matters of weight or judgment were involved, the weight given to each factor taken into account in the formation of that judgment?
(d)as to the entry of 'risk loading' what were the factors which were taken into account in the identification of risk loading, and also in the assessment of the figure of 3.00%, including where matters of weight or judgment were involved, the weight given to each factor taken into account in the formation of that judgment?"
(e)Were the calculations shown in this page, or any of them, taken into account in making the decision the subject of this appeal, and if so which of them were taken into account and in what ways?
The 27 February 2004 documents
9. Look at the document annexed marked C (being page numbered 118 in tab 12 of exhibit 5) and having done so -
(a) state when was this document first produced; and
(b)what use, if any, was made of the figure of $109,000,000 identified therein in any calculations performed by the Chief Executive in arriving at the decision under appeal?
The 18 March documents
10. Look at the document annexed marked D (being the spreadsheet which is the last page of the documents at tab 13 of exhibit 5) and having done so -
(a)state when was this document first produced; and
(b)as to the entry of 'passing yield (incl land) 5.99%' what were the factors which were taken into account in the identification of the passing yield (incl land), and also in the assessment of the figure of 5.99%, including where matters of weight or judgment were involved, the weight given to each factor taken into account in the formation of that judgment?
(c)as to the entry of 'adjusted passing yield 8.19% what were the factors which were taken into account if the identification of the adjusted passing yield, and also in the assessment of the figure of 8.19%, including where matters of weight or judgment were involved, the weight given to each factor taken into account in the formation of that judgment?
(d)as to entry of 'risk loading' what were the factors which were taken into account in the identification of the risk loading, and also in the assessment of the figure of 2.20%, including where matters of weight or judgment were involved, the weight given to each factor taken into account in the formation of that judgment?
(e)were the calculations shown in this page or any of them, taken into account in making the decision the subject of this appeal, and if so which of them were taken into account and in what ways?
(f)as to each of the 'adjusted passing yield 8.19%' and the 'risk loading' of 2.20%, did the Chief Executive, in making the assessment the subject of this appeal take these percentages or either of them into account, and if so why were these percentages (or either of them) selected and not those identified in the documents which is annexure B hereto?
11. Identify and explain what account, if any, was taken by the Chief Executive, in arriving at the decision under appeal, of:
(a) comparable sales, each relevant sale and the account taken of it;(b)valuations of any comparable properties, identifying each such property and the valuations. "
The respondent has agreed to answer several of the questions in the draft interrogatories but without conceding that such questions constitute valid interrogatories. Those that are agreed are 1, 2, 3(d), 6, 7(a), 8(a), 8(e), 9, 10(a) and 11(a). Leave is granted to administer these. The respondent opposes the balance.
Introduction
In 2003, s.35A was inserted in the Valuation of Land Act. The section provides for the owner of land to apply to the Chief Executive to have the value of intangible improvements taken into consideration in a valuation of the land (s.35A(1)). The appellant has made application of the type mentioned in s.35A. What exactly constitutes intangible improvements (defined in s.6(5) of the Act) and the valuation of such is likely to be a most difficult task in cases such as the present. The new provisions have yet to be considered by the Land Court
Senior Counsel for the appellant argues that this case is one that is out of the ordinary; that the information supplied to the appellant by the respondent to date has been incomplete and contradictory and matters, particularly relating to "risk loading", are aspects critical to the understanding of the methodology which has led to the appeal against valuation - all these factors point to the need to answer the interrogatories.
It was further submitted that the matters sought by interrogatories are not likely to be available to the appellant by another simple and inexpensive way. The appellant has been asked for particulars of certain things and says it cannot provide these without being told more; hence the need for interrogatories.
The Chief Executive submits that he has already gone into detail - in the calculation sheets provided. The Chief Executive, it was submitted, is in similar position to the plaintiff in Ranger v Suncorp General Insurance Limited [1999] 2 QdR 433 who was sought to be interrogated but was held to have already gone into sufficient detail by particulars in this statement of claim. (See Cross v Queensland Rugby Football Union (2001 QSC 173 at [16]). It is said that the Chief Executive may be properly characterised as a party who has put out a rather detailed set of documents that relate to the valuation in question. He has also provided oral explanations. The Chief Executive's position on "risk loading" and what follows is fairly exposed in the material according to this submission.
In response the appellant submits that there should be no objection in principle to the interrogatories if the Chief Executive claims he has already given the appellant the requested answers.
While the Chief Executive may have already provided the appellant with considerable detail, the following factors have some bearing on whether the sought interrogatories should be answered:
· The new provisions of s.35A (see discussion in [6]) are complex and no case has yet been heard requiring their detailed analysis and application.
· The detail and complexity of the calculations provided by the respondent make the appellant's task of ascertaining the answers sought from them a difficult and perhaps confusing one.
· To the extent that the Chief Executive has provided information orally, there can be no valid objection to that information being provided in writing as an answer to interrogatories.
· The equity and good conscience provisions applying to Land Court matters (see Land Court Act 2000 s.7) enable a more liberal approach by the Court in considering whether to grant leave to administer interrogatories.
The Law
The function of interrogatories is twofold first, to permit a party to prove facts which it would otherwise be unable to establish and second, to potentially extract admissions from the interrogated party so as to save time and expense at trial. Interrogatories are appropriate where a party does not have knowledge of the facts necessary to advance his case: per Chesterman J in Cross at [18].
It has always been a proper purpose of interrogatories to elicit information from a party who has knowledge of facts relevant to facts in issue in the cause of action where the interrogator does not possess that information.
Interrogatories are covered in the Uniform Civil Procedure Rules 1999 (UCPR) at rules 228 to 238. The rules most relevant to the present application are rule 230(1)(b) and 233.
"230 Granting of leave to deliver interrogatories
(1) Subject to an order of the court, the court may give leave to deliver interrogatories -(a) on application without notice to another person; and
(b)only if the court is satisfied there is not likely to be available to the applicant at the trial another reasonably simple and inexpensive way of proving the matter sought to be elicited by interrogatory.
233Grounds for objection to answering interrogatories
(1) The following are the only grounds on which a person may object to answering an interrogatory -
(a)the interrogatory does not relate to a matter in question, or likely to be in question, between the person and the interrogating party;
(b)the interrogatory is not reasonably necessary to enable the court to decide the matters in question between the parties;
(c)there is likely to be available to the interrogating party at the trial another reasonably simple and inexpensive way of proving the matter sought to be elicited by interrogatory;
(d)the interrogatory is vexatious or oppressive;
(e)privilege.
(2)The court may -
(a)require the grounds of objection specified in a statement in answer to interrogatories to be specified in more detail; and
(b)decide the objection.
(3) If the court decides the objection is sufficient, the interrogatory is not required to be answered."
Rule 230 confers a discretion on the Judge to decide in a particular case whether interrogatories should be allowed. The fact that a simple and cheap alternative means of obtaining the information exists is clearly a most relevant factor in the exercise of the discretion, but beyond that the rule does not appear to provide generalisations about the circumstances in which it is appropriate to grant leave. (See Cross [.17])
Chesterman J in Cross observed that rules 228-230 may have been meant to discourage interrogatories in general because of their proclivity to cause inconvenience and expense beyond the benefit normally obtained from answers to them; however, it was not his understanding that these provisions were meant to be applied in such a manner as to inhibit a plaintiff obtaining information which a defendant has and without which he may fail to prove his case.
The general rule is that interrogatories may be delivered which relate to any matter in issue between the parties or any facts relevant to those matters directly in issue (Sharpe and Smail (1975) 49 ALJR 130; Davis v Bo's Plant Hire Pty Ltd (in liq) [1997] 1 QdR 481).
Interrogatories that do not relate to a fact in issue, but rather seek extraneous answers for the purpose of exploring an additional cause of action or defence are often referred to as fishing expeditions and are prohibited (Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN (NSW) 250.
A party who has received interrogatories must answer the substance of each question to the best of that party's knowledge, information and belief and demonstrate that all proper and reasonable inquiries have been made: Rule 232(2)(a). That party must also make inquiries of employees and agents, both current and former, where relevant.
A party may object to answering an interrogatory on the grounds that it is vexatious or oppressive: Rule 233(1)(d). Examples of such would include:
· there has been a substantial lapse of time since the events queried;
· substantial volumes of records had to be located and examined;
· ambiguity or vagueness of the question could result in the interrogated parties speculating upon what was being asked.
The order granting leave to deliver interrogatories should set out the time period within which the interrogated party must answer: Rule 231(2)(a).
Consideration of Disputed Interrogatories
Interrogatory 3(a), (b) and (c)
Respondent's Submission
It is sufficient to provide, in relation to a s.3(1)(b) assessment, information concerning any comparable sales that regard was had to and any comparison or adjustments made in valuing the subject land in considering such comparable properties (as sought in draft interrogatory 3(d)(1) and (2). The details sought in questions 3(a), (b) and (c) amount to a request for material that would be supplied in a "speaking" valuation. Such will be supplied when exchange of valuations takes place at a later stage of proceedings. The information agreed to be supplied is sufficient to enable the appellant to prepare their case in relation to a s.3(1)(b) valuation.
Appellant's Submission
The appellant is entitled to particulars of any s.3(1)(b) valuation that has already been made. That one was made is implicit in the statement of reasons. The appellant is not seeking the valuation that would be supplied on exchange. The appellant is entitled to such information to ascertain if the valuation approach is fundamentally erroneous in principle (Brisbane City Council v Valuer-General (1978) 140 CLR 41) so as to rebut the presumption in s.33 of the Valuation of Land Act that the Chief Executive's valuation is "deemed to be correct until proven otherwise".
The appellant cannot presently avoid the s.33 prima facie presumption of correctness and cannot get the material requested information by disclosure.
Conclusion
I appreciate the appellant's argument that they need further information on the respondent's approach before they can hope to show that such a process is flawed in principle.
I am prepared to allow question 3(b), that is factors to be taken into account, so that the appellant may gain an appreciation of the general approach taken by the Chief Executive in any s.3(1)(b) valuation. However, I consider questions 3(a) and (c) relate more to detailed evidence of proving such a valuation with the weight applied to any factor being a matter for the individual valuer. Such evidence relates to expert reasoning and not to facts which are the subject of interrogatories. Leave to administer interrogatories on these two matters is thus refused.
Interrogatories 4 and 5
Respondent's Submission
The respondent argues that it is unnecessary to answer questions 4 and 5 in light of the evidence of Mr Paterson and the summary sheet provided (Exhibit 5, Tab 9, p.13). Mr Paterson was asked whether he recognised that as a s.3(2) calculation and he answered that question.
Appellant's Submission
It is not said in the statement of reasons that a calculation was done using a s.3(2) approach, although documents later provided suggest a s.3(2) calculation has been done. The appellant claims Mr Paterson's evidence as to certain figures being s.3(2) calculations is uncertain. Because of inconsistency and uncertainty 4 and 5 are appropriate questions.
Conclusion
There exists some uncertainty in the evidence and in the material supplied such that the questions in 4 and 5 can be confidently answered from such. As there is no apparent inconvenience or disadvantage to the Chief Executive to answer these with short simple answers, I am prepared to grant leave to administer Interrogatories 4 and 5.
Interrogatory 7(b)
Respondent's Submission
The respondent argues that it is unnecessary to answer 7(b) as no use was made of the figure of $109,000,000 and the respondent should have known so from the material already supplied.
Appellant's Submission
One cannot tell from the material supplied that no use has been made of the figure of $109,000,000; however, if it is an arguable point there can be no objection to answering 7(b) by saying "none".
Conclusion
As there is some doubt as to whether the figure has, in fact, been used and as minimal effort is required to clarify it, the respondent should answer this question (presumably as indicated by counsel in submissions).
Interrogatory 8(b), (c) and (d) and Interrogatory 10(b), (c) and (d)
The parties agreed that whatever decision was made in relation to 8(b), (c), (d) should also flow to 10(b), (c) and (d).
Respondent's Submission
Passing rental is taken from the improved valuation (as nominated in the appellant's s.35A application) and the "passing yield" is simply a capitalisation rate to be applied to the passing rental to arrive at the appellant's improved valuation figure. The information is already available in the material supplied by the respondent to the appellant. The experienced valuers for the appellant (Messrs Brett and Slater) should have no difficulty from the supplied information in working out what has been done.
"Risk loading" is a manual input. It involves a valuation judgment. Further details can be provided when the Chief Executive presents his speaking valuation report at the hearing. The appellant's valuers can presently work with the 3% risk loading figure and form a view as to whether it represents too much or too little in the way of risk loading. No corresponding information now sought has been supplied by the appellant, either via the Price Waterhouse Coopers model or elsewhere.
Appellant's Submission
The appellant is entitled to particulars of the determination subject to challenge, in particular the methodology used. The appellant is not concerned with trying to analyse the evidence that might be led. Risk loading is a critical aspect of the methodology; it is a manual input which cannot be obtained by disclosure. The risk loading is a variable percentage over various parcels of land. It shows that someone has made an assessment of the relevant factors. The appellant needs to know what it is they are assessing to determine if it is right or wrong. The appellant needs information or to obtain admissions to overcome the presumption of validity put against them (s.33).
Conclusion
I consider it appropriate that the "factors" taken into account in the risk loading should be provided by the Chief Executive at this stage. They are not otherwise available by disclosure and seem to be a key aspect in understanding the methodology involved. However, matters of weight and judgment are as I say at [26] more matters of evidence to be provided at a later stage.
Interrogatory 10(e)
Respondent's Submission
The matter is sufficiently identified in the Exhibit 8 formula and the affidavit of Mr Paterson dated 16 April 2004 at paragraph 12.
Appellant's Submission
In regard to Indooroopilly, two sets of calculations were provided to the appellant, two differentials used (3% and 2.2%). The appellant does not know which one was used.
Conclusion
I consider it appropriate that the respondent should reveal which differential has been used. I think, however, that the balance of the suggested question suffers the same defect identified in [26] above.
Interrogatory 10(f) and 11(b)
Respondent's Submission
The respondent argues both of these interrogatories constitute "fishing". In particular, 11(b), it was submitted, involves speculation as to what extent there may have been valuations of other properties which were relied on.
Appellant's Submission
With regard to 10(f) the Chief Executive has produced calculations on both 2.2% and 3% loading. It is relevant to say why the 2.2% was relied on rather than the 3%. It is not a fishing expedition, it is a question which arises from the documents provided by the respondent to the appellant in pursuance of an undertaking for disclosure.
As regards 11(b), the request arises out of information provided by the Chief Executive in the statement of reasons as to surrounding properties said to have been taken into account in rejecting the appellant's objection.
Conclusion
With regard to 10(f) the respondent should indicate which particular percentage (or percentages) was taken into account. The second part of the proposed question is clearly fishing and is thus disallowed.
As regards 11(b), as it was said in the statement of reasons to have been a matter taken into account, it is appropriate that it now be subject to an interrogatory.
Orders
In addition to those interrogatories agreed between the parties (1, 2, 3(d), 6, 7(a), 8(a), 8(e), 9, 10(a) and 11(a)), the applicant will be granted leave to administer the following from the submitted draft: 3(b), 4, 5, 7(b) and 11(b).
For 8(b), (c) and (d) and 10(b), (c) and (d): The respondent should reveal the factors that were taken into account in identification of passing yield and risk loading and in the assessment of applied percentages, but not matters of weight or judgment involved.
For 10(e), the respondent should reveal the differential used in making the decision under appeal.
For 10(f), the respondent should reveal which particular percentage (or percentages) was taken into account.
I ORDER the appellant to file a draft form of interrogatories consistent with the above. The appellant may serve the interrogatories following the grant of leave to the draft form.
I ORDER that the respondent provide answers to the interrogatories within twenty-one (21) days of the date of service.
RP SCOTT
MEMBER OF THE LAND COURT
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