South East Queensland Water Corporation Limited v Department of Natural Resources, Mines and Energy
[2004] QLC 16
•4 March 2004
LAND COURT OF QUEENSLAND
CITATION: South East Queensland Water Corporation Limited v Department of Natural Resources, Mines and Energy [2004] QLC 0016 PARTIES: South East Queensland Water Corporation Limited
(appellant)v. Department of Natural Resources, Mines and Energy
(respondent) (applicant)FILE NO: AV2003/0230 to AV2003/0317 DIVISION: Land Court of Queensland PROCEEDING: Application for Disclosure DELIVERED ON: 4 March 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr BR O'Connor, Judicial Registrar ORDERS: 1. The appellant made disclosure by list within 14 (fourteen) days of the date of order, documents held by or on behalf of the appellant directly relevant to the improved value of the subject property and the nature, extent, cost and value of improvements to the subject property, and a list of such documents, including, without limiting the generality of the foregoing, the documents and classes of documents referred to in the affidavits of Graham Smith and Daniel O'Connor sworn herein on behalf of the Chief Executive and filed in support of this application, including documents in the categories listed in the letter from Department of Natural Resources and Mines to Clayton Utz dated 22 January 2004.
2. The respondent make general disclosure by list within fourteen (14) days of the date of this order.
CATCHWORDS: Practice and procedure – Disclosure – Land Court Rules and Uniform Civil Procedure Rules – Test of direct relevance – When Court can order – No requirement by respondent to produce answers to Notice of Appeal – Lack of mutuality – Later mutual exchange of information.
Practice and procedure – Disclosure – Sought for documents on value of improvements on subject property – Objections by landowner – Misconception of case by appellant – Respondent not confined to methodology used to arrive at valuation appealed against – Reasons for disallowing objection do not define issues before Court – Disclosure ordered.
APPEARANCES: Mr RS Jones for the Appellant
Mr TW Quinn for the Respondent (Applicant)SOLICITORS: Clayton Utz for the Appellant
Mr G Smith, Department of Natural Resources, Mines and Energy for the Respondent (Applicant)
This is an application for orders that the South East Queensland Water Corporation Ltd (the appellant) make disclosure by list, documents directly relevant to the improved value of the subject properties. The applicant is the respondent in an appeal under the Valuation of Land Act 1944 (the Act) against the determination by the respondent of unimproved values of lands owned by the appellant.
The lands comprise the major Wivenhoe Dam storage area and associated recreation/administration areas (AV2003/0230), part of Somerset Dam lands mostly inundated (AV2003/0231) and the balance AV2003/0232 - AV2003/0317) individual separately leased parcels owned by the appellant and mainly let to adjoining freehold landowners for grazing purposes only.
Certain of the lands are allegedly substantially improved, in particular those containing the dam structures (or at least parts of such structures).
The nature of the material sought to be disclosed is contained in an affidavit of Graham Joseph Smith, Acting Senior Legal Officer of the Department of Natural Resources, Mines and Energy (in particular Annexure GF 9 of that affidavit). A further affidavit was filed on behalf of the respondent by its valuer, Daniel O'Connor. This also deposes as to the basis for the material sought. In response, affidavit evidence was filed on behalf of the appellant by Brian Hartnett, its Corporate Services Manager. Mr Hartnett states that much of the material sought is either not available, not available in the form sought, does not exist for the relevant period or is available in annual reports already produced to the respondent.
Mr Hartnett also gave oral evidence at the hearing of this application. Mr Hartnett confirms that, although the appellant corporation was only constituted in 1999, transitional arrangements provide that access to relevant records of its predecessor, the South East Queensland Water Board, is guaranteed. Issues of non-party disclosure thus do not arise in this application.
The Relevant Law
Rule 13 of the Land Court Rules provides that Chapter 7 of the Uniform Civil Procedure Rules applies, with necessary changes, to the disclosure of documents in relation to a proceeding in the Land Court. Rule 211 of the Uniform Civil Procedure Rules provides that:
"(1) A party to a proceeding has a duty to disclose to each other party each document -
(a) in the possession or under the control of the first party; and
(b) directly relevant to an allegation in issue in the pleadings; and(c)if there are no pleadings - directly relevant to a matter in issue in the proceeding.
…"
Rule 223 provides that:
"(1) The court may order a party to a proceeding to disclose to another party a document or class of documents by -
(a)delivering to the other party in accordance with this part a copy of the document, or of each document in the class; or
(b)producing for the inspection of the other party in accordance with this part of the document, or each document in the class.
…
(4)An order mentioned in subrule (1) or (2) may be made only if -
(a)there are special circumstances and the interests of justice require it; or
(b)it appears there is an objective likelihood -
(i)the duty to disclose has not been complied with; or
…"
The above provisions were explained in Mercantile Mutual Custodians Pty Ltd v Village/Nine Network Restaurants & Bars Pty Ltd [2001] 1 QdR 276 at pp.282-283 where Pincus JA stated:
The law in this State differs from that laid down by Brett L.J. in Compagnie Financiere du Pacifique v Peruvian Guano Co. (1882) 11 Q.B.D. 55, in that if a document is not 'directly relevant' to an allegation in issue it need not be disclosed. It is not enough, to justify an order for disclosure, to hold the opinion that 'it is reasonable to suppose [that the document] contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary'. Nor, if a document sought is not directly relevant to an allegation in issue, does it matter whether or not it is a document which may fairly lead [the party requiring discovery] to a train of inquiry, which may have either of these two consequences': see per Brett L.J. at 63.
No doubt this deliberate narrowing of the obligation to provide disclosure makes it all the more important that practitioners and their clients earnestly fulfil their obligations under the rules relating to the topic; but drawing attention, as Mr Wilson does, to a chance that a particular category of undisclosed documents may help one side's case will not necessarily provide a basis for an order for further disclosure."Further, in Robson v REB Engineering Pty Ltd [1993 No. 96] 2 QdR 102 Demack J made observations on the term "directly relevant":
"My opinion is that the word 'directly' should not be taken to mean that which constitutes direct evidence as distinct from circumstantial evidence. Rather, 'directly relevant' means something which tends to prove or disprove the allegation in issue."
The ISPT Case
Observations in the recent Land Court decision of Chief Executive, Department of Natural Resources and Mines v ISPT Pty Ltd as Trustee [2003] QLC 0074 are also relevant to the wider disclosure issues in Valuation of Land Act matters before the Land Court. Such observations include:
(a) Even if it were assumed that the valuation appealed against had been made by comparison with appropriate sales of comparable land, there does not seem to be any reason why the Chief Executive should be restricted to that valuation methodology in responding to the appeal. Annual valuations are struck by the use of mass appraisal techniques and the refinement of the valuation amount will often be justified once a complete valuation report is prepared. The valuation methodology adopted may be refined or altered when a detailed valuation is undertaken. [36, 39]
(b)The Chief Executive is not restricted to adducing evidence in support of the original valuation figure. [38]
(c)There is no requirement in the Valuation of Land Act that the respondent provide an answer to the notice of appeal filed by the appellant, and the procedure governing an appeal against a valuation lacks mutuality at this stage. Even if reasons for disallowing the objection are given, such do not define the matters in issue before the Court. [40]
(d)There is no reason why the appellant should not make disclosure of relevant documents at this earlier stage of the proceedings. The Land Court Rules now have provision for pre-trial procedures to be implemented, and those procedures can ensure that there is mutual exchange of information in due course. [40]
(e) It is not necessary to deal with the respondent's submission that is obligatory for the respondent to carry out a valuation under s.3(2) of the Act in determining the unimproved value of improved land, because, in any event, in supporting the valuation appealed against, the respondent is entitled to undertake the exercise contemplated by s.3(2) of the Act. Such a valuation requires the improved value of the land to be determined in accordance with the definition of "improved value" in s.4. Similarly, the value of the improvements is to be determined. [41]
(f) While s.5(1) provides that "value of the improvements" means the added value which the improvements give to the land, irrespective of their cost, s.5(1) is qualified by s.5(2) which provides that the added value shall in no case exceed the amount that should reasonably be involved in effecting such improvements as at the relevant date. In so far as the order for disclosure sought by the respondent relates to those matters, any such documents that are within the possession or control of the appellant are relevant to the determination by the Court of the unimproved value of the land. [41]
(g) On the basis that the valuation may be carried out by reference to s.3(2) of the Act, documents relevant to ascertaining the nature, extent, value and cost of the improvements on the subject land as at the relevant date are "directly relevant" to the matter in issue. [44]
(h)As a general principle, the appellant should disclose those documents which are relevant to the determination of the value of the property either at the relevant date, or at some other date from which the value as at the relevant date can be assessed. [46]
The Respondent's Argument
Key matters raised in written outline and subsequent oral submission by the respondent were:
· A valuation appeal in the Land Court is a statutory proceeding and the function of the Court upon such an appeal is therefore to be found by reference to the Statute. It is spelt out in s.66 of the Valuation of Land Act 1944 which, referring to such an appeal, provides that the Court may:
"(a) affirm the valuation appealed against; or
(b) reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act." (emphasis added)
· The Court therefore carries out a determination of "unimproved value" by reference to the provisions of s.3 of the Act, the fundamental operation of which is contained, in the case of improved land, in sub-s.3(1)(b) and (2). The Court will need to consider not only the notional sale price referred to in sub-s.3(1)(b) but as well, for the purposes of sub-s.3(2), both the improved value and the value of improvements.
· Unless the Chief Executive waives the requirement for disclosure to be comprehensive, proper disclosure in the case of an improved property will include documents directly relevant to the issue of improved value and the value of improvements.
· The rules provide for an order to be made where there is a likelihood that the disclosure process may have miscarried - UCPR 223(4)(b)(i). An order will be made where there may have been a misconception by a disclosing party as to the relevant issues resulting in limited disclosure.
· The material before the Court shows that the appellant's disclosure has been prepared on the basis of a misapprehension as to the issues by reference to which disclosure should be made. In particular, the appellant's solicitors' correspondence reveals that material which would be required to be disclosed for the purposes of sub-s. 3(2) of the Act has not been seen to be relevant.
The Appellant's Argument
Key matters raised by the appellant in written outline and oral submission were:
· The appellant disputes the obligation to disclose the documents sought on the basis that they are not documents "directly relevant" to any material matter in issue in these appeals and are not otherwise required to be disclosed.
· Even if the ISPT decision was correctly decided (which is not conceded) it is clearly distinguishable from the facts and circumstances involved in these appeals. By way of example, the ISPT case was clearly concerned with land which was not permanently inundated land and was otherwise concerned with land heavily improved with a subregional shopping centre.
· The affidavits of Messrs O'Connor and Smith contain a number of assertions as to what documents they consider ought to be in the possession and control of the appellant. These assertions are, in essence, based on nothing more than suspicion and/or speculation. This is not sufficient grounds to warrant the Court making an order requiring further disclosure.
· Neither Mr O'Connor nor Mr Smith in their affidavits say that the documents sought are directly relevant. It would appear that, at its highest, Mr Smith considers that the disclosure of such documents are required "in order to assist the Court …" That is not the appropriate test. The same conclusion can be reached in respect of the documents Mr Hartnett says are in the possession and control of the appellant.
· Neither Mr O'Connor nor Mr Smith descend to tell the Court just how these documents might be directly relevant. Mr Smith asserts that the respondent will not be likely to "properly assist the Court" in arriving at a figure to be determined in accordance with s.3(2) of the Act. However, no evidence is put forward to support this conclusion.
· There is no evidence whatsoever before the Court that would enable it to conclude that any of the documents sought, or otherwise in the possession and control of the appellant as identified by Mr Hartnett, are directly relevant to any of the issues in these appeals. It is fatal to the respondent's application to fail to provide any probative evidence to establish that documents exist which are directly relevant to the issues in dispute.
Consideration of Issues
Two matters now require determination. First, is the material sought to be disclosed “directly relevant” to an issue in the proceeding? Second, if it is, is there an objective likelihood that the duty to disclose has not been complied with?
As there are no pleadings in this matter, it is necessary to determine what matters are in issue in the proceedings (Rule 211(1)(c)). In the ISPT case the Court concluded that the notice of appeal and reasons, if any, provided by the Chief Executive on objection do not determine the final issues between the parties. The overall procedure in these preliminary stages is weighed in favour of the Chief Executive - there is a lack of mutuality at this stage (see ISPT, para [40]). The balance is restored at a later stage when exchange of expert reports and the like are to be completed (Rule 23, Land Court Rules). In the interim the Chief Executive is not bound by the original methodology by which he arrived at his initial valuation (see ISPT and AMP Life Limited v Chief Executive, Department of Natural Resources and Mines[2002] QLC 0099).
It appears that the original Chief Executive valuation in this present case was based on comparable grazing sales without any detailed analysis of improvements on the subject lots. The Chief Executive now argues that, as at least some of the appeal lands are substantially improved, evidence relevant to such improvements should be disclosed. The ISPT case considered this issue and concluded that the Chief Executive is at least entitled (if not obliged) to pursue an alternative valuation method under s.3(2) of the Valuation of Land Act at a stage subsequent to the issue of the original valuation.
A substantial part of the land subject to the present appeal is inundated (with water not being an improvement - (see Brisbane City Council v Valuer-Generalfor the State Queensland 140 CLR 41) (Somerset Dam decision). However, it is considered there is sufficient evidence before the Court of improvements on the lands to warrant a valuation approach under s.3(2). That evidence is contained in the affidavits of Mr Smith and Mr O'Connor, that of Mr Hartnett, as well as the Board reports tendered in evidence. That some of the dam structures may not be on the appeal lands is not fatal to an approach under s.3(2).
The structures actually situated on the appeal lands is a matter for evidence at the eventual hearing. All that is necessary at this stage is to establish that improvements are in issue.
In my view, the circumstances of the current appeal lots are not distinguishable in principle from the highly developed shopping centre improvements in the ISPT case. The reasoning in the latter case, that value of improvements are directly relevant to an issue in the proceedings, should thus apply here.
The second question is whether there is objective evidence that disclosure has not been complied with. The affidavit of Mr Hartnett, which the appellant properly supplied, refers to substantial evidence relevant to valuation of improvements held by the Corporation. This evidence has not been produced because of a misconception held by the appellant as to the obligation to disclose such (see letter of Clayton Utz dated 23 January 2004). Given this evidence and the finding of direct relevance in the first issue, it follows that the appellant should now disclose the material sought.
This is so even if it be part of wider composite material on related dams or prepared at earlier times and progressively updated.
Matters of unravelling such composite material or the evidentiary weight of earlier reports are matters for consideration and submissions at the full hearing.
Other Matters
Counsel for the respondent has indicated that an order for disclosure should also include an order requiring general disclosure by list by the respondent. This direction will form part of the present order.
Counsel for the appellant advised the Court that, if disclosure was ordered against his client, certain of the material is likely to be of a commercially sensitive nature. The respondent, now aware of this likelihood, has undertaken to treat such material appropriately under the legal requirements pertaining to disclosed material. No additional order protecting this sensitive material would thus seem necessary.
Orders
1.The appellant made disclosure by list within 14 (fourteen) days of the date of order, documents held by or on behalf of the appellant directly relevant to the improved value of the subject property and the nature, extent, cost and value of improvements to the subject property, and a list of such documents, including, without limiting the generality of the foregoing, the documents and classes of documents referred to in the affidavits of Graham Smith and Daniel O'Connor sworn herein on behalf of the Chief Executive and filed in support of this application, including documents in the categories listed in the letter from Department of Natural Resources and Mines to Clayton Utz dated 22 January 2004.
2.The respondent make general disclosure by list within fourteen (14) days of the date of this order.
BR O’CONNOR
JUDICIAL REGISTRAR
0
0
0