Seabridge Australia Pty Ltd v JLW (NSW) Pty Ltd

[1991] FCA 117

Re: SEABRIDGE AUSTRALIA PTY. LIMITED
And: JLW (NSW) PTY. LIMITED and LEZAM PTY. LIMITED
No. G745 of 1989
FED No. 117
Evidence
101 ALR 147

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.(1)

CATCHWORDS

Evidence - business record - whether statement inadmissible because made for the purpose of a judicial or administrative proceeding - Evidence Act 1905, s.7C.

HEARING

SYDNEY

#DATE 4:4:1991

ORDER

Rule that the statements made in the documents MFI "1" be admitted into evidence as exhibit "2". Reserve liberty to the applicant, if so advised, to apply under s.7M(1)(a)(b) or (c) of the Evidence Act 1905 for exclusion of the evidence.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The second respondent has tendered statements made in three documents, M.F.I. "1", under the provisions of Part IIIA of the Evidence Act 1905 as business records. The applicant accepts that the statements are contained in a business record of the kind provided for by Part IIIA and, in particular, s.7B., but objects to the tender on the grounds that ss.7C and 7M make the material inadmissible.

1. By s.7C, it is, relevantly provided as follows:
   

"7C (1) A statement is not admissible under section 7B in a proceeding if it was made or obtained for the purpose of, or in contemplation of, any judicial or administrative proceeding. ...

(3) In this section, 'judicial or administrative proceeding' means -

(a) a proceeding before any court, whether a court of Australia or of another country; or

(b) a proceeding before any other person or body (not being a court) authorized by law, whether a law of Australia or of another country, or by consent of parties, to hear or receive evidence."

1. On behalf of the applicant, it is submitted that s.7(3)(b) applies here.

2. In order to understand the submission, it is necessary to describe some background. In the present proceedings, the applicant seeks orders varying a lease dated 16 December 1986 entered into by the first respondent as lessor and the applicant as lessee. Clause 7 of the lease provided for a rent review so far as presently relevant, as follows:
   "7. ...
   

(4) If in relation to any Review Date the Lessee disputes the Lessor's assessment as aforesaid then the current market rental value of the premises as at that Review Date shall be determined by two (2) qualified valuers, one (1) to be selected by the Lessor and one (1) to be selected by the Lessee or (in the event of failure of such valuers to agree on the proper rent within twenty-one (21) days of the expiration of the period of one (1) month referred to in clause 7(3)) by a qualified valuer to be agreed upon by the valuers selected by the Lessor and the Lessee or if no valuer is agreed upon by such valuers within seven (7) days after the aforesaid period of twenty-one

(21) days has elapsed then the matter is to be referred for final determination to an independent valuer appointed by the President for the time being of the Australian Institute of Valuers PROVIDED THAT any such valuer appointed pursuant to the provisions of this Clause shall be a member of the Australian Institute of Valuers (or should such Institute then have ceased to exist of such body or association as then serves substantially the same objects as such Institute) and shall be registered under the Valuers Registration Act, 1976 to value property of the type concerned in the determination and:

(a) any determination by any such valuer or valuers shall be (made) as an expert and not as an arbitrator;"

1. The documents M.F.I. "1" are valuations given by three valuers pursuant to the provisions of cl.7(4).

2. In my opinion, the three parties nominated in cl.7(4) were acting as valuers, and not as arbitrators. The distinction is discussed by Mr Justice B.H. McPherson, writing extra-judicially, in a paper "Arbitration, Valuation and Certainty of Terms" (1986) 60 ALJ 8. He says (at p 8):
   

"Everyone knows that arbitration is a process that is different from valuation or appraisement. To see an arbitrator at work is to observe that he acts, even if he does not dress, very like a judge. What a valuer does, and the way he goes about it, is not at all reminiscent of a court or a judge. There is obviously a distinction between arbitrators and valuers or appraisers. What in law that distinction is may present serious difficulties of definition; but certain undoubted legal consequences follow from the distinction. Those consequences are both fundamental and far-reaching."

He concludes (at p 16):

"Despite a marked tendency discernible in two recent decisions to assimilate agreements to arbitrate with agreements for a valuation, arbitration and valuation remain separate concepts which, because of the widely differing legal consequences that attach to them, it remains necessary for most purposes of the law to distinguish and keep apart. Essentially an arbitration is an inquiry of a judicial kind that involves the determination of a dispute about existing rights according to an external (and therefore objectively ascertainable) standard or criterion. A valuation, on the other hand, is an inquiry that presents a question to be answered on the basis of individual experience, expert knowledge, and personal inquiry and investigation. The same or a similar question (such as market value) may arise for determination in the course of both arbitration and valuation, but the method of determining it, and the legal consequences of doing so, are different."

1. I agree.

2. This is not to say that a valuation purportedly made by a valuer pursuant to a provision such as cl.7(4) is immune from challenge on any ground (see A Hudson Pty. Ltd. v. Legal and General Life of Australia Ltd. (1985) 1 NSWLR 314; Horwitz Grahame Pty. Ltd. v. Mid-City Centre Pty. Ltd., Bryson J., Supreme Court of New South Wales, unreported, 5 February 1990; Jacobs, Commercial Arbitration Law and Practice at p 3593 and following).

3. In my opinion, none of the documents now tendered was made or obtained for the purpose of, or in contemplation of any judicial or administrative proceeding within the meaning of s.7C. Where, as here, the persons in question are acting as expert valuers, and not as arbitrators, it cannot, in my view, be said that there is "a proceeding before (a)...person or body (not being a court) authorised by law...or by consent of the parties, to hear or receive evidence" within the meaning of s.7C(3). It is not suggested that any law authorised the valuer to hear or receive evidence. Nor, in my opinion, did the parties to the lease authorise this. Clause 7(4) did not authorise the valuer "to hear or receive evidence". Under that provision, the lessor and the lessee agreed to accept the valuer's determination of market rental value in certain events. This is, in principle, a different thing from an authority "to hear and receive evidence."

4. The applicant also contends, in the alternative, that the weight of the material is so slight that it ought to be excluded in the exercise of the Court's residual discretion under s.7M(1) of the Evidence Act 1905. I propose to defer ruling on this submission until the real issues emerge more clearly.

5. In the result, I propose to admit the evidence but to reserve liberty to the applicant, if so advised, to apply under s.7M(1)(a)(b) or (c) of the Evidence Act for the exclusion of the evidence.