The Gull Lexington Group Pty Ltd v Laguna Bay (Banongill) Agricultural Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0069

THE GULL LEXINGTON GROUP PTY LTD

(ACN 118 870 198)

Applicant

LAGUNA BAY (BANONGILL) AGRICULTURAL PTY LTD

(ACN 612 769 632)

Respondent

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JUDGES:	SANTAMARIA JA and McDONALD AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	6 March 2018
DATE OF JUDGMENT:	10 April 2018
MEDIUM NEUTRAL CITATION:	[2018] VSCA 85
JUDGMENT APPEALED FROM:	[2017] VCC 525 (Judge Marks)

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SUMMARY JUDGMENT – Contract – Asset sale agreement – Where parties appointed expert to value livestock – Whether expert made valuation in accordance with agreement – Whether expert failed to act impartially – Where summary judgment granted – No real prospect of success – Leave to appeal refused.

CONTRACT – Construction and interpretation – Asset sale agreement – Expert valuation – Where agreement required expert to value livestock ‘inclusive of any progeny’ – Where expert valued merino lambs and ewes as a single unit – Whether expert made valuation in accordance with terms of agreement.

CONTRACT – Expert valuation – Implied duty of impartiality – Where party alleged that expert acted with partiality – Whether valuation can be set aside on ground of apprehended partiality – Collier v Mason (1858) 25 Beav 200, Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, Holt v Cox (1997) 23 ACSR 590 and Beevers v Port Phillip Sea Pilots Pty Ltd [2007] VSC 556 discussed.

COURTS AND JUDGES – Apprehended bias – Independent experts – Application of principles of apprehended bias to independent experts – Whether expert made valuation other than on merits or in accordance with terms of agreement – Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 discussed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr A R Kirby	Thomson Geer
For the Respondent	Mr R M Peters	Norton Rose Fulbright Australia

SANTAMARIA JA
McDONALD AJA:

Introduction

The applicant (‘Gull’) was the owner of a property known as Banongill Station, which is located at Skipton. Gull and the respondent (‘Laguna’) entered into an agreement under which Gull would sell its business assets, including livestock, to Laguna. The parties appointed an expert to determine the current market value of the livestock. After the expert submitted his valuation, a dispute arose between the parties as to whether the valuation was made in accordance with the agreement.

Gull issued a proceeding in the County Court seeking orders that the valuation be set aside and that its subject matter be referred to a special referee. It contended that the valuation was not made in accordance with the agreement because the expert had failed to value some 5,000 merino lambs. It also contended that, in carrying out the valuation, the expert had failed to act impartially. Laguna later issued a summons seeking summary judgment of Gull’s claim. The primary judge gave summary judgment for Laguna against Gull. Gull now seeks leave to appeal from the primary judge’s order.

For the reasons that follow, the primary judge was correct in her conclusion that Gull’s claim had no real prospect of success.[1] We would refuse leave to appeal.
[1]See Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27.

Factual background

On 20 July 2016, Gull and Laguna entered into a Business Assets Sale Deed (‘the Deed’) under which Gull agreed to sell to Laguna its business assets, including a substantial number of sheep, lambs, cattle and calves at Banongill Station.

Clause 4.3.1 of the Deed sets out the procedure by which the current market value of the livestock would be determined. It provides:

4.3The livestock shall be bought and sold at their current market value, determined as follows —
4.3.1At least 30 days prior to the Settlement Date, the Vendor and the Purchaser and/or their agreed representatives shall together undertake a final livestock count and current market valuation of the sheep and cattle based upon age, sex and general condition, inclusive of any progeny, and taking into account time of shearing depastured upon the Land to confirm the final numbers and values sold by the Vendor and purchased by the Purchaser under this deed. If during such stocktake by the parties, any animal presents as lame, blind, diseased or otherwise severely disabled, the Purchaser acting reasonably shall be entitled to reject any such animal.
In the event of any dispute over the value of sheep or cattle or those sheep or cattle entitled to be rejected, the Vendor and Purchaser agree to appoint Xavier Shanahan of Landmark (or such other third party as the parties may agree in writing, acting reasonably) (Expert) as an Expert to determine the final value. The expert must be appointed on the following basis:
4.3.1.1the parties must use their reasonable endeavours to ensure the Expert makes his determination as soon as reasonably practicable and in any event within 5 days of appointment;
4.3.1.2the determination of the Expert is final and binding on the parties; and
4.3.1.3the costs of the Expert in determining any such matter will be borne equally by the Purchaser and the Vendor.
4.3.1.4The parties must use their reasonable endeavours to ensure that the stocktake of the livestock under this clause 4 is completed and their value is determined at least 21 days prior to the Settlement Date. If the value of the livestock has not been determined prior to the Settlement Date, the Purchaser may, by notice to the Vendor, defer Settlement (by no more than 4 Business Days).

Clause 4.3.1 therefore provides, in substance, that (a) at least 30 days prior to the settlement date, Gull and Laguna shall together undertake a final livestock count and current market valuation of the sheep and cattle based upon age, sex and general condition, ‘inclusive of any progeny’; and (b) in the event of any dispute over the current market value of sheep and cattle, Gull and Laguna agree to appoint Xavier Shanahan of Landmark Operations Ltd (‘Landmark’) as an expert to determine the final current market value.

Each of the parties arranged for its own valuation of the livestock. Written valuations were prepared by Graeme Nicholson of Elders on behalf of Laguna (‘the Elders valuation’) and James Gordon of TB White and Sons on behalf of Gull (‘the TB White valuation’). The relevant livestock included some 5,000 merino ewes and some 5,000 merino lambs ‘at foot’, being lambs which had not been weaned. Each valuation stated one ‘unit’ value comprising the ewe and the lamb together, rather than a value for the ewe and a separate value for the lamb. In particular, the TB White valuation valued the merino ewes and lambs together at $949,826.[2]
[2]The Elders valuation did not provide a figure representing the overall value of the merino ewes and lambs.

On 25 October 2016, the parties met in an attempt to agree on the current market value of each category of livestock. They were unable to agree. One of the disagreements concerned the lamb valuation component of the merino ewe and lamb unit. Mr Gordon said that the current market value was $40 to $45 per lamb; Mr Nicholson said that it was $35 to $40.

By letter dated 1 November 2016, the parties jointly appointed Mr Shanahan as an expert to determine the final current market value to be applied and paid at settlement for the livestock. The letter of instructions enclosed a copy of the Elders valuation and the TB White valuation. The letter also enclosed a copy of cl 4.3.1 of the Deed. Relevantly, the letter stated:

You have been appointed as an expert to determine the final value to be applied and paid at settlement for the livestock included in the sale of Banongill Station, as a dispute has arisen between the parties over the value of the livestock de-pastured on the land.
We confirm that you shall attend the property on Wednesday 2^nd and Thursday, 3^rd November 2016. You will be accompanied by the farm manager, Patrick Hyland, together with one representative each from the respective parties’ agents, being Graeme Nicholson of Elders and James Gordon of TB White and Sons or their substitute. Please note that the parties representatives will be in attendance in an observational capacity only to ensure transparency of the process.
There should be no other contact with or submissions made to you by the parties or their representatives or agents unless the same is first requested by you.
Following the site visit, you may ask questions of either party. The form of your questions should be a single document with questions for each party clearly set out, and emailed to both parties’ legal representatives. You may then meet with the 2 valuers in person for clarification, being only James Gordon and Graeme Nicholson. The answers to your questions should then be emailed back to the parties’ legal representatives to ensure transparency of communication with you.[3]

[3]Emphasis in original.

On 2 November 2016, Mr Shanahan attended Banongill station to inspect and assess the livestock.

On 7 November 2016, Mr Shanahan submitted his valuation of the livestock (‘the Shanahan valuation’). The covering letter, which was addressed to the solicitors for Gull, relevantly stated:

On Wednesday 2^nd November I viewed and assessed all the livestock at Banongill Station.
After receiving all descriptions and numbers of livestock from Pat Hyland I have compiled a list of values which are attached to this document.
I have valued the livestock without bias and appreciate that both parties have the confidence in me to carry the valuations out accordingly.
The figures I have arrived at are a result of researching current market trends through various avenues including recent store sales (local and away), auctions plus, current hooks prices, prime markets etc.
The values I have listed are figures that I believe the livestock would realise on my day of assessment if they were for sale to the open market.
For the purposes of this transaction I don’t believe any costs to the vendor or purchaser other than GST are relevant, by this I mean my listed value + GST shall be the sale price.
Please note when any price for a ewe & lamb or cow & calf is listed the price is for the ewe or cow and the lambs or calves shall be given in.

The Shanahan valuation indicated that 4,820 ewes and 4,928 lambs had been valued as a single unit. The total current market value for the ewes and lambs together was $812,430. The Shanahan valuation also valued 915 merino ewes with Border Leicester lambs at foot, the total current market value of which was $228,720. The report included the following tables:

MERINO

Merino Ewes with Merino Lambs @ Foot
Description	No:	$ Value per Unit	$ Value (exc GST)
Red Tag (2014 drop)	90	$210	$18,900.00
Yellow Tag (2013 drop)	851	$190	$161,690.00
Purple Tag (2012 drop)	856	$180	$154,080.00
Green Tag (2011 drop_	849	$170	$144,330.00
Orange Tag (2010 drop)	852	$160	$136,320.00
White Tag (2009 drop)	282	$150	$ 42,300.00
Black Tag (2008 drop)	285	$150	$ 42,750.00
CFA (No tag)	721	$150	$108,150.00
Odds	34	$115	$ 3,910.00
Total Ewes Total Lambs	4820 4928	$812,430.00

Merino Ewes with B/L Lambs @ Foot
Description	No:	$ per Unit	$ Value (exc GST)
Red Tag (2014 drop)	582	$290	$168,780.00
Red Tag (Dry)	333	$180	$59,940.00
TOTAL	915	$228,720.00

The Shanahan valuation explained the basis of these current market values as follows:

MERINO EWES & LAMBS
After observing 5 different mobs of Merino ewes with lambs at foot I would describe the growth and condition on the whole as good. The lambs at foot are still obviously young and recovering from marking and mulesing and I consider them to be in a fair condition.
Upon inspection I could see these were carrying lice and foot scald. I consider these issues detrimental to the sale price.
It would be reasonable to assume each of the mobs had the same issue but on different scales of severity. I also observed ewes with other issues such as bad udders, cancer ears and broken skins.
I have figured all of the above issues into my price valuations.
MERINO EWES WITH BORDER LEICESTER LAMBS @ FOOT
The mob of ewes and lambs presented very well. The ewes are well grown for their age and in very good condition. The lambs at foot are in a good fresh condition and well grown for their age.
I have split these ewes into two lines to value.
1. 582 ewes with 100% lambs at foot
2. 333 dry ewes.

On 8 November 2016, Mr Shanahan had a conversation with Gull’s real estate agent, Shane McIntyre, during which Mr Shanahan said that the lambs did not have an independent commercial value because they were not of a weanable age.

On 9 November 2016, the solicitors for Gull emailed Mr Shanahan seeking clarification with respect to the Shanahan valuation, including the following:

In the Merino ewes with Merino lambs at foot category on the 6th page of the PDF report, we request a breakup of the values attributed to the ewes, lambs and wool. It appears that there has been no value placed on the lambs. By contrast the Merino ewes with Border Lester lambs at foot do appear to include a value on the lambs.

On the same day, Mr Shanahan responded as follows:

In reply to the question, regarding the split of values on Merino ewes and lambs I don’t believe its achievable as the lambs can’t be sold separately for reasons including they’re not at a weanable age. I have taken into consideration there [sic] is approximately 100% Lambs at foot and believe the lambs compliment [sic] the ewes to achieve one value. The wool component is the same principal [sic]. I didn’t value the ewes and lambs by adding up a ewe value plus wool plus lamb.
The split between the ewes with border Leicester lambs is achievable because the lambs could be sold separately now.
As I mentioned in my letter at the front of my appraisal I valued the Livestock at a price I thought was achievable on that day if they were sold on the open market.

Procedural background and issues

By writ filed on 19 January 2017, Gull issued a proceeding against Laguna in the County Court seeking, among other things, orders that the Shanahan valuation be set aside and that the subject matter of the Shanahan valuation be referred to an appropriately qualified special referee under Order 50 of the County Court Civil Procedure Rules 2008.

Relevantly, in its statement of claim, Gull alleged that:

(a) the Shanahan valuation was not performed in accordance with the Deed, in that Mr Shanahan failed to take the three components of ewes, wool and lambs into account because he did not value 5,000 merino lambs (‘the omission allegation’) (par 9); and

(b) in breach of an implied term of the Deed, the Shanahan valuation was not carried out honestly and impartially (‘the lack of impartiality allegation’) (par 10).

Although set out as particulars to its lack of impartiality allegation in par 10 of the statement of claim, Gull alleged five facts which, it said, established partiality on the part of Mr Shanahan:

(c) Mr Shanahan had previously carried out work for John Sheehan, the general manager of Banongill employed by Laguna, which was not disclosed to Gull (par 10(i));

(d) Mr Shanahan had a conversation with Mr Sheehan at Banongill on 26 October 2016 which was not disclosed to Gull (par 10(ii));

(e) Mr Shanahan had further conversations with Mr Sheehan after his appointment on 1 November 2016 and before providing his written valuation on 7 November 2016 (par 10(iii));

(f) Mr Shanahan did not value the 5,000 lambs and provided no credible explanation for his failure to do so (par 10(iv)); and

(g) after providing his valuation, Mr Shanahan continued to have a professional relationship with Mr Sheehan (par 10(v)).

By its defence, Laguna admitted the implied term of the Deed that the Shanahan valuation would be carried out honestly and impartially but denied that it had not been so carried out.

Application for summary judgment

On 24 February 2017, Laguna issued a summons seeking summary judgment of Gull’s claim or, alternatively, that the statement of claim be struck out or further particulars be provided in support of the lack of impartiality allegation. Laguna filed and served two affidavits in support of its summons, including affidavits of Mr Shanahan and of Mr Sheehan.

As to the omission allegation, Mr Shanahan deposed that he had valued the lambs as part of a unit. He said that he valued the ewes, the ewes’ wool and the lambs as one unit. He also said that the sentence ‘[p]lease note when any price for a ewe and lamb or cow and calf is listed the price is for the ewe or cow and the lambs or calves shall be given in’ in the covering letter to the Shanahan valuation ‘meant just that’. He added that the words ‘shall be given in’ are well known in the industry to mean that he was valuing the ewes and lambs as one unit. The affidavit did not contain a breakdown of the components of his valuation.

In his affidavit, Mr Shanahan set out his version of the conversation with Mr McIntyre on 8 November 2016 as follows:

In the evening on 8 November 2016 I received a call from McIntyre. He said to me that as so often happens with a valuation, one party is not happy. He said that the vendor was not happy. He asked me how I had valued the merino ewes with lambs at foot and what separate values did I place on the ewes, the lambs and the wool. I told him that the lambs did not have an independent commercial value because they were not of a weanable age. I told him I had taken the lambs into consideration when I valued the ewes. I said to him that it was clear that his vendor and I had different ideas about the values of the merinos. Then he asked me how I came to be in the middle of the values of the two other valuers for the wethers. I said that I thought the value was in a particular range, and it so happened that my range was much the same as the range established by the values of the other valuers so I thought the fair value was at the midpoint of my range. He said that sounded very fair. I was aware of the values adopted by the other valuers as I had been provided with their reports as part of my instructions

For completeness, we note that, in an affidavit sworn on 24 March 2017, Mr McIntyre set out his version of the conversation with Mr Shanahan as follows:

On 8 November 2016, I called Shanahan to query how he had gone about valuing the merino ewes with lambs at foot. Shanahan advised me that in his opinion, the merino lambs were ‘virtually unsaleable’ because they were not of weanable age and they had lice.

In their respective affidavits, Mr Shanahan and Mr Sheehan dealt with the five allegations of fact which constituted the lack of impartiality allegation. Both of them said that Mr Shanahan had had no prior dealings and that Mr Sheehan’s prior dealings were years earlier with Mr Shanahan’s father, Tony Shanahan. Tony Shanahan had also worked for Landmark. Mr Shanahan (not to be confused with Tony Shanahan) said that he knew Mr Sheehan, spoke to him periodically and each year was invited to, and occasionally attended, the Yaloak Estate Christmas party when Mr Sheehan was the manager of Yaloak Estate.

Both Mr Shanahan and Mr Sheehan deposed that they did not meet at Banongill on 26 October 2016, but they spoke on the telephone after Mr Shanahan had left Banongill. Both of them said that, apart from saying hello and answering questions in the company of Gull’s representatives while Mr Shanahan and the parties drove in one four-wheel drive during the inspection on 2 November 2016, they did not speak to one another after Mr Shanahan’s appointment on 1 November 2016 and before provision of his written valuation on 7 November 2016. Mr Shanahan deposed that he had valued the 5,000 lambs.

Both Mr Shanahan and Mr Sheehan also deposed that they had had no professional relationship after the Shanahan valuation was delivered. They disclosed the conversations between them on 26 October 2016 and exhibited their respective telephone records.

On 24 March 2017, Gull filed and served several affidavits, including affidavits of four stock agent valuers (Mr Gordon, Mr Pertzel, Mr McKinnon and Mr McConachy). Among other matters, the stock agent valuers deposed that a method to value ewes with lambs at foot was to provide a total or amalgamated unit value for the ewe, the lamb and the wool. They said that the lambs at Banongill had commercial value and that the lambs could be valued separately from the ewes, with a separate value ascribed to the lambs at foot. Each of the affidavits contained a breakdown of the current market value that each valuer ascribed to the lambs at foot.

The valuers deposed that the words ‘given in’ are understood differently in the industry. Mr Gordon and Mr Pertzel said that it meant that the lambs had not been given any value.[4] Mr McKinnon said that it meant that the ewe and the lamb were valued as one item and no individual value for the lamb at foot is carved out. Mr McConachy said that the term is uncommon and is not used often in the livestock industry. He said that he preferred to use the term ‘as an outfit’, which means that an amalgamated or unit value has been given to the breeding unit and progeny.
[4]Mr Gordon, in particular, said: ‘[T]o say that the price of the lambs shall be given in and that the merino ewes and lambs are valued as one unit is actually quite contradictory’.

Mr Gordon deposed that, in his opinion, Mr Shanahan had not given any commercial value to the merino lambs in calculating the unit value. Mr McConachy said that the merino lambs at foot had commercial value as soon as they were born, irrespective of whether they had been weaned or not. Mr Pertzel said that he gave the lambs a current market value of $35 each and that there was no doubt in his mind that the merino lambs had a commercial value. Mr McKinnon said that he gave the merino lambs an average current market value of $45. He added that it is customary to give a value to lambs at foot and that he always gives the lamb at foot a value when conducting a valuation.

Gull also filed an affidavit sworn by Patrick Hyland, the farm manager at Banongill. Mr Hyland deposed that, by settlement of the sale of Banongill on 15 November 2016, the lambs would be extremely close to being weaned and they had commercial value. He said that he was ‘baffled’ that Mr Shanahan failed to give any value to the lambs.

On 27 March 2017, Laguna filed and served an outline of submissions. On the same day, Gull filed and served a proposed amended statement of claim and an outline of submissions addressing Laguna’s application and in support of the amended statement of claim.

In the amended statement of claim:[5]
[5] For the references to par 10 of the statement of claim, see [19] above.

(h) the allegation in para 10(i) of the statement of claim was amended to allege that Tony Shanahan and Landmark had worked for Mr Sheehan at other properties and this was not disclosed to Gull;

(i) Mr Shanahan met and spoke to Mr Sheehan when he was at Yaloak Estate and Mr Shanahan attended the Yaloak Christmas party when Mr Sheehan was there;

(j) a new allegation (para 10(ii) of the amended statement of claim) was made that Mr Shanahan and Mr Sheehan had ‘a private phone conversation’ about the Banongill valuation, before Mr Shanahan had been appointed by the parties, but this was not disclosed to Gull;

(k) a new allegation (para 10(iii) of the amended statement of claim) was made based upon ‘a private phone conversation’;

(l) a new allegation (para 10(iv) of the amended statement of claim) was made based on ‘conversations’ between Mr Shanahan and Mr Sheehan during the inspection on 2 November 2016;

(m) a new allegation (para 10(v) of the amended statement of claim) was made that Mr Shanahan and Mr Sheehan had ‘further conversations’ from 8 November 2016 to 1 December 2016 about the Shanahan valuation; and

(n) the allegation in para 10(vi) of the statement of claim was maintained but expanded by reference to the email exchange between Mr Shanahan and the solicitors for Gull on 9 November 2016.

Before the hearing in relation to the statement of claim, and at the hearing in relation to the amended statement of claim, Gull disavowed any allegation that Mr Shanahan had been dishonest in his preparation of the Shanahan valuation.

On 28 March 2017, the primary judge heard the summary judgment application. During the hearing, she made orders by consent that Gull have leave to file and serve the amended statement of claim. The amended statement of claim was filed later that day.

On 9 May 2017, the primary judge delivered a ruling in which she gave summary judgment for Laguna against Gull. She made an order to that effect on 18 May 2017.

Reasons of the primary judge

The primary judge was satisfied that the evidence established that Mr Shanahan had made the Shanahan valuation in accordance with his letter of instructions and cl 4.3.1 of the Deed.[6] She said that Mr Shanahan had taken the lambs into account, albeit as a single unit, in arriving at his valuation. She noted that this is one of the methods available to value lambs that have not yet been weaned and cannot yet be separated from their mothers. The primary judge explained:

At its highest, Gull’s case is that Mr Shanahan did not give the lambs a separate value, and that the total quantum of the valuation was not increased either at all, or sufficiently, by reason of the lambs. However, this does not mean that Mr Shanahan did not carry out the process of considering what they were worth as part of his valuation process, and ascribing a total value to the livestock which included that consideration by him, which is what he was appointed to do.[7]

[6]The Gull Lexington Group Pty Ltd v Laguna Bay (Banongill) Agricultural Pty Ltd [2017] VCC 525 [10] (‘Reasons’).

[7]Ibid.

The primary judge said that it was apparent from the Shanahan valuation itself that Mr Shanahan had considered the lambs in arriving at his valuation.[8] On this issue, she concluded that nothing which has been filed on behalf of Gull established that Gull has a real prospect of success in proving that Mr Shanahan valued the wrong amount of livestock.[9]
[8]Ibid [20].
[9]Ibid.

On the issue of impartiality, the primary judge observed that Gull had pleaded actual partiality on the part of Mr Shanahan.[10] She was not satisfied that any of the matters raised by Gull in its evidence established that Mr Shanahan had failed to act impartially.[11] In response to a submission made on behalf of Gull that Mr Shanahan had acted with apprehended partiality, the primary judge said:

In the hearing of the application, Gull said it also relies on apprehended bias. However, the appearance of partiality is not sufficient to set aside an expert’s opinion, even if that appearance is made out: see the comments of, and cases cited by, Vickery J in 500 Burwood Highway Pty Ltd v Australian Unity Limited [2012] VSC 596 at [174]–[179]. Gull has no real prospects of success in establishing that apprehended bias is available to it as a cause of action to set aside the expert’s valuation. In any event, Gull has no real prospects of success in establishing that the matters particularised in paragraph 10 of the amended statement of claim by Gull could, if proven, establish an apprehension of bias.[12]

[10]Ibid [22].

[11]Ibid [22]–[23].

[12]Ibid [24].

In the result, the primary judge was satisfied that Gull had no real prospect of success in establishing that Mr Shanahan did not carry out the Shanahan valuation correctly or that he did not act impartially.[13]
[13]Ibid [25].

Application for leave to appeal

Gull has proposed the following seven grounds of appeal:

Ground 1:The learned judge erred at paragraph 10 of her reasons in finding that the evidence filed by the applicant established that Mr Shanahan did make the valuation in accordance with the contract appointing him when all of Gull’s witnesses in fact did not state that.
Ground 2:The learned judge erred at paragraphs 10–15 of her reasons in accepting the evidence of Mr Shanahan:
(a)in the absence of any documentation produced by him which supported the methodology and calculations used to complete his valuation of the merino lambs; and
(b)without giving the applicant the opportunity at trial to test his evidence under cross examination and with the benefit of discovery and subpoenae.

Ground 3:Having found at paragraph 16 of her reasons that there was a difference of opinion between the applicant’s and respondent’s valuers as to what is meant by the term ‘give in’, the learned judge should have allowed the case to go to trial on the meaning of this phrase and whether the expert’s valuation was conducted in accordance with the contract.
Ground 4:The learned judge erred at paragraphs 22 and 24 of her reasons in holding that the allegation that the expert failed to act impartially necessarily involved only an allegation of actual bias when the authorities are not settled on that point or are contrary to that position.
Ground 5:The learned judge erred at paragraphs 23 and 24 of her reasons in accepting the untested evidence given on affidavit by the respondent’s witnesses as to the relevant conversations without giving the applicant the opportunity at trial to test that evidence under cross examination and with the benefit of discovery and subpoenae.
Ground 6:The learned trial judge [sic] misapplied the test for summary judgment, in that she held that the applicant’s prospects of success at trial were fanciful when there was a conflict in the evidence given on affidavit by the applicant’s and respondent’s respective witnesses and the applicant should have been given the opportunity to lead further evidence at trial, and test the evidence of the respondent’s witnesses under cross examination with the benefit of discovery and documents obtained on subpoena.
Ground 7:The learned trial judge [sic] should have held that in the circumstances this was an appropriate case to exercise her discretion under section 64 of the Civil Procedure Act 2010 and refuse the respondent’s application for summary judgment.

The first three proposed grounds of appeal

The first three proposed grounds of appeal broadly concern the issue whether Mr Shanahan made the Shanahan valuation in accordance with the letter of instructions and, in particular, cl 4.3.1 of the Deed. For this reason, it is convenient to deal with the first three proposed grounds together.

By its first proposed ground of appeal, Gull contended that the primary judge erred in finding that the evidence filed by it established that Mr Shanahan had made the Shanahan valuation in accordance with the letter of instructions, and in particular cl 4.3.1 of the Deed, in circumstances where the evidence filed on behalf of Gull suggested to the contrary.

By its second proposed ground of appeal, Gull contended that the primary judge erred in accepting Mr Shanahan’s evidence in the absence of any documentation produced by him which supported the methodology and calculations used to complete his valuation of the merino lambs and without giving Gull an opportunity to test that evidence through discovery and the issuing of subpoenas.

By its third proposed ground of appeal, Gull drew attention to the term ‘given in’, which was used in the covering letter to Shanahan’s valuation, and contended that, in the light of the difference of opinion between the valuers on the meaning of that term, the primary judge should have allowed the matter to go to trial so as to determine the meaning of that term and to determine whether Mr Shanahan’s valuation was made in accordance with his terms of appointment, including cl 4.1.3 of the Deed.

In its written and oral submissions, Gull contended that it had adduced sufficient evidence in response to Laguna’s application to satisfy the Court that its prospects of success were more than fanciful. Accordingly, it was submitted, Gull should have been entitled to lead further evidence at trial and test Laguna’s witnesses under cross-examination after the benefit of discovery and the return of subpoenas.

During oral argument, counsel for Gull contended that Mr Shanahan’s failure to ascribe any value to the merino lambs gives rise not only to a difference of expert opinion as to the current market value of the lambs, but also an arguable case that Mr Shanahan failed to value the merino lambs at all. He submitted that the Shanahan valuation did not comply with the terms of cl 4.3.1 of the Deed in so far as that clause required a valuation of livestock ‘inclusive of any progeny’.

Pursuant to the letter of instructions and cl 4.3.1 of the Deed, Mr Shanahan was required to provide a current market valuation of the merino sheep based on age, sex and general condition, ‘inclusive of any progeny’. Mr Shanahan undertook an assessment of Gull’s livestock on 2 November 2016. He provided the Shanahan valuation on 7 November 2016. The covering letter to that valuation stated that ‘[t]he values I have listed are the figures that I believe the livestock would realise on my day of assessment if they were for sale to the open market.’

In our opinion, the evidence before the primary judge strongly supported the conclusion that, when Mr Shanahan inspected the livestock at Banongill on 2 November 2016, he considered that the merino lambs did not have a current market value independent of the merino ewes.[14] Moreover, it is plain from that evidence that Mr Shanahan did undertake a current market valuation as at 2 November 2016 of the merino ewes with lambs at foot. In explaining the basis of the current market values ascribed to the merino ewes and lambs, the Shanahan valuation stated:

The lambs at foot are still obviously young and recovering from marking and mulesing and I consider them to be in fair condition.
Upon inspection I could see these were carrying lice and foot scald. I consider these issues detrimental to the sale price.

[14]So much is consistent with the contents of both versions of the telephone conversation between Mr Shanahan and Mr McIntyre on 8 November 2016 (see [23]–[24] above) as well as Mr Shanahan’s response to the request made by the solicitors for Gull on 9 November 2016 (see [16] above).

The fact that Mr Shanahan concluded that the merino lambs had no current market value independent of the ewes does not support a finding that he failed to carry out a valuation of those lambs. On the contrary, it points decisively to the conclusion that he did undertake a valuation of those lambs, albeit that he determined that the lambs had no independent current market value as at the date of the valuation. On the same day that Mr Shanahan valued the merino lambs, he also valued 915 merino ewes with Border Leicester lambs at foot. He valued the ewes and Border Leicester lambs with a ‘per unit’ valuation. However, he was able to ascribe a separate current market value to the Border Leicester lambs because he considered that those lambs, unlike the merino lambs, were capable of being sold at market on 2 November 2016.

True it is that Mr Shanahan’s opinion as to the current market value of the merino lambs on 2 November 2016 differs from the opinion of the valuers retained by Laguna. Some valuers asserted that Mr Shanahan had not given any value to the merino lambs. In so far those assertions suggested that Mr Shanahan had not given any consideration to whether the merino lambs had value, they are unfounded. In so far as they suggested that Mr Shanahan had turned his mind to the question whether the merino lambs had any value and concluded that the current market value was $0, the opinions of the other valuers alone do not provide a legitimate foundation for challenging Mr Shanahan’s valuation.

We would refuse leave to appeal on the first proposed ground. Our conclusion on this proposed ground is sufficient also to dispose of the second and third proposed grounds. However, we would add two things.

First, as to the second proposed ground, we reiterate that the contents of the Shanahan valuation and the subsequent clarification provided by Mr Shanahan[15] plainly show that, in accordance with cl 4.1.3 of the Deed, Mr Shanahan had given consideration to whether the merino lambs had a current market value. There is no indication that any further documents which shed light on the methodology and calculations used to complete the valuation — assuming that such documents exist[16] — would show that Mr Shanahan had not made the valuation in accordance with that clause.
[15] See [16], [23]–[24] above.
[16]Gull did not issue any subpoena seeking such documents.

Secondly, as to the third proposed ground, we reject Gull’s contention that the uncertainty of the term ‘given in’ should have led the primary judge to allow the matter to go to trial for the purposes of quelling that uncertainty. What is critical for present purposes is what Mr Shanahan did, not how he described what he did. And, as we have explained above, the evidence established that what Mr Shanahan did was in accordance with cl 4.1.3 of the Deed.

We would refuse leave to appeal on the second and third proposed grounds.

The fourth and fifth proposed grounds of appeal

The fourth and fifth proposed grounds of appeal concern the issue of partiality. For convenience, we will deal with these issues together. The fifth proposed ground of appeal, in particular, concerns the factual basis for Gull’s allegation of partiality on the part of Mr Shanahan. It is therefore convenient to evaluate that ground first before moving to the question of law raised in the fourth proposed ground.

By its fifth proposed ground of appeal, Gull contended that the primary judge erred in accepting Mr Shanahan’s evidence with respect to his conversations with Mr Sheehan without giving Gull an opportunity to test that evidence under cross-examination and with the benefit of discovery and the issuing of subpoenas.

In its written submissions, Gull contended that it was reasonably arguable that Mr Shanahan’s conduct in having private conversations with Mr Sheehan, with whom Mr Shanahan’s father had a long-standing relationship, was in breach of Mr Shanahan’s terms of appointment and, in particular, the letter of instructions. Accordingly, argued Gull, the primary judge should not have accepted Mr Shanahan’s evidence with respect to his conversations with Mr Sheehan without giving Gull an opportunity to test that evidence.

In contending that it was reasonably arguable that Mr Shanahan had breached his terms of appointment, Gull relied upon the same particulars upon which it had relied in support of the lack of impartiality allegation.[17]
[17]See [19] above.

We reject Gull’s contention. It seems to us that, even if the particulars to the lack of impartiality allegation could be established at trial, such findings would not have permitted the Court to conclude that Mr Shanahan had breached his terms of appointment. Apart from the communications on 2 November 2016, each of the other communications between Mr Shanahan and Mr Sheehan occurred either before Mr Shanahan’s appointment or after the completion of the Shanahan valuation. They could not be prohibited by the terms of appointment. Moreover, the communications on 2 November 2016 had taken place in the presence of all parties, conformably with the terms of appointment.[18]
[18]It should also be noted that none of Gull’s witnesses contradicted Mr Shanahan’s or Mr Sheehan’s version of the conversations during the inspection on 2 November 2016.

We would refuse leave to appeal on the fifth proposed ground.

By its fourth proposed ground of appeal, Gull contended that the authorities are not settled on the question whether an expert determination, in this case a valuation, can be set aside on the ground of apprehended partiality and, therefore, that this issue required a full analysis and should have gone to trial.

Before going to the heart of the issue the subject of the fourth proposed ground, it is necessary first to touch upon the concept of apprehended bias, which is synonymous with apprehended partiality or an appearance of partiality. It is a concept which commonly arises in the context of judicial or quasi-judicial proceedings where one or more parties make an application for a judicial officer to recuse him or herself (or, in the case of a jury, an application for the discharge of the jury or a juror).[19] It may also be raised as a ground of appeal.[20] In Ebner,[21] the High Court set out the test for the disqualification of a judge on the ground of apprehended bias as follows:

[A] judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial.[22]

[19]See, eg, Livesey v New South Wales Bar Association (1983) 151 CLR 288; Re JRL; ex parte CJL (1986) 161 CLR 342; Webb v The Queen (1994) 181 CLR 41; Johnson v Johnson (2000) 201 CLR 488; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (‘Ebner’); Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577; British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427 (‘Michael Wilson’).

[20]See, eg, Vakauta v Kelly (1989) 167 CLR 568; Isbester v Knox City Council (2015) 255 CLR 135 (‘Isbester’).

[21](2000) 205 CLR 337.

[22]Ibid 344–5 [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ) (citations omitted).

As will be seen from the passage, there are powerful policy reasons which underpin the test for disqualification of judicial officers (or jurors) in circumstances where it is apprehended that such a person (or persons) might not bring an impartial mind to the resolution of the question which they are required to decide. The High Court expanded on these policy reasons as follows:

The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined …
The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty …[23]

[23]Ibid 345 [7]–[8].

In Bodycorp Repairers Pty Ltd v Holding Redlich,[24] drawing on the High Court’s decisions in Ebner and subsequent cases,[25] this Court set out the application of the test for disqualification of a judge on the ground of apprehended bias as follows:

[I]t is incumbent upon the party seeking recusal: first, to identify the conduct said to give rise to the apprehension of bias through pre-judgment; secondly, to articulate the connection between that conduct and the possibility of departure from impartial decision-making with respect to the questions to be decided; and thirdly, to consider of the reasonableness of the apprehension of that departure being caused by that conduct in that way.
The apprehension in question is an apprehension that the judge will not decide the case impartially, not merely an apprehension that he or she ‘will decide the case adversely to one party’. The test does not call for an inquiry into how the judge will in fact approach the matter; rather, it is a question of ‘possibility (real and not remote), not probability’ …[26]

[24][2018] VSCA 17 (‘Bodycorp Repairers’).

[25]See Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507, 564 [185] (Hayne J); Michael Wilson (2011) 244 CLR 427, 445 [63] (Gummow ACJ, Hayne, Crennan and Bell JJ); Isbester (2015) 255 CLR 135, 155–6 [59] (Gageler J).

[26]Bodycorp Repairers [2018] VSCA 17 [81]–[82] (citations omitted) (Whelan and Santamaria JJA and T Forrest AJA).

We now turn to the issue at hand. Where two parties have agreed to appoint a valuer to determine the price of something, the question whether the valuation is binding upon the parties depends in the first instance upon the express or implied terms of that agreement, the nature of any circumstances relied upon to set aside the valuation and the nature of the proceedings in which the issue arises.[27]
[27]Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314, 335 (McHugh JA) (‘Legal & General’); Baber v Kenwood Manufacturing Co [1978] 1 Lloyd’s Rep 175, 181 (Sir David Cairns) (‘Baber’).

A court will give a considerable degree of latitude to experts who have carried out a valuation in accordance with the terms of an agreement. There appear to be three rationales for the reluctance of a court to set aside such a valuation. The first was explained by this Court in Karenlee Nominees Pty Ltd v Gollin & Co Ltd:[28]

The valuation of land and buildings involves matters of judgment. Opinions notoriously vary on this subject matter — it would be surprising to find two valuers who agreed on the valuation to be given to land and buildings of the nature of the subject premises. There is no scientific exactitude in the valuations of land and buildings.[29]

[28][1983] 1 VR 657.

[29]Ibid 669 (Lush, Murphy and Jenkinson JJ). See also Email Ltd v Robert Bray (Langwarrin) Pty Ltd [1984] VR 16, 21 (Crockett, Kaye and Gray JJ) (‘In our opinion, the parties have clearly bestowed upon the valuer the obligation of determining what circumstances are relevant to the question of fixing “a reasonable rental”. We do not consider that the Court should make a declaration which delineates the circumstances to which the valuer should have regard.’)

The second rationale seems to be that an expert who negligently determines a valuation will be held liable in damages to the party who suffers loss as a result of the expert’s negligence. This obviates the need for a court to interfere with a valuation unless the valuation departs from the terms of the agreement or there are other vitiating factors such as fraud, collusion or impartiality, for example.[30]
[30]Holt v Cox (1997) 23 ACSR 590, 596 (Mason P, with whom Priestley JA agreed), citing Arenson v Casson Beckman Rutley & Co [1977] AC 405 (‘Arenson’); Sutcliffe v Thackrah [1974] AC 727.

The third rationale concerns what is often a discrepancy in the level of expertise of a court and that of an expert in the particular area which is the subject of the valuation. It was explained by Mason P in Holt v Cox[31] in the following terms:

It appears to me that the trend in recent years [scil. ‘why the courts have hardened in their attitude to reviewing valuation determinations’] has also been influenced by a recognition that courts have no greater expertise than expert valuers; and that where parties have chosen voluntarily to commit the determination of valuation to an expert, judicial restraint is an appropriate response.[32]

[31](1997) 23 ACSR 590.

[32]Ibid 596.

A seminal example of the deference accorded to the work of an expert may be found in Belchier v Reynolds.[33] In that case, two parties entered into an agreement for the purchase of land. They agreed to be bound by a valuation of that land by one Harris. A dispute ensued, and one of the parties rejected the valuation. Sir John Strange MR said:

Whatever be the real value is not now to be considered, for the parties made Harris their judge in that point; they thought proper to confide in his judgment and skill and must abide by it, unless they could have made it plainly appear that he had been guilty of some gross fraud or partiality …[34]

Strange MR made an analogy between the case before him and ‘the case of a submission to arbitrators, whose award will never be set aside but on the plainest proof of fraud or partiality’.[35]

[33](1754) 3 Keny 87.

[34]Ibid 91.

[35]Ibid.

In Collier v Mason,[36] two parties agreed to the sale of a house and property at a price to be fixed by one Englehart. Englehart returned a price which the purchaser thought was exorbitant. The purchaser refused to complete the agreement, and the vendor sought specific performance. Consistently with the caution which attends the task of reviewing an impugned valuation, Sir John Romilly MR said:

It is not proved that Mr Englehart did not exercise his judgment and discretion in the best way he could. It may have been improvident as between these parties to enter into a contract to buy and sell property at a price to be fixed by another person, but that cannot avoid the contract. Here the referee has fixed the price, which is said to be evidence of miscarriage, but this Court … must act on that valuation, unless there be proof of some mistake, or some improper motive, I do not say a fraudulent one; as if the valuer had valued something not included, or had valued it on a wholly erroneous principle, or had desired to injure one of the parties to the contract; or even, in the absence of any proof of any one of these things, if the price were so excessive or so small as only to be explainable by reference to some such cause; in any one of these cases the Court would refuse to act on the valuation.[37]

Romilly MR said that, although it appeared to him ‘a very high and perhaps an exorbitant valuation’, he could not say that it ‘amounts to evidence of fraud, mistake or miscarriage’.[38] In the event, he decreed specific performance.

[36](1858) 25 Beav 200.

[37]Ibid 203–4.

[38]Ibid.

Two observations should be made about the passage extracted above. First, it is apparent that Romilly MR did not consider the excessive or inadequate nature of a valuation, in and of itself, to be a ground for setting aside that valuation; such excess or inadequacy must amount to ‘evidence of fraud, mistake or miscarriage’. In most cases, this will be difficult to prove.[39] In the present case, it was suggested during the course of oral argument before this Court that the Shanahan valuation may have been so low as to reveal partiality on the part of Mr Shanahan. In the light of the current market value ascribed to the merino ewes and lambs in the TB White valuation ($949,826), compared to that in the Shanahan valuation ($812,430), we are not persuaded that this is so.
[39]In Legal & General (1985) 1 NSWLR 314, McHugh JA said (at 335) that ‘[i]t will be difficult, and usually impossible to imply a term that a valuation can be set aside … because the valuation is unreasonable’.

Secondly, while Romilly MR made no reference to partiality as a ground for setting aside a valuation, it should be borne in mind that the authorities tend to use different terminology to express such grounds, and some omit reference to partiality altogether.[40] At any rate, it is accepted now that actual partiality is a ground for setting aside a valuation.[41]
[40]See, eg, Emery v Wase (1801) 5 Ves Jun 846, 847 (Sir RP Arden MR) (‘[T]he transaction shall not be overhauled unless upon fraud and imposition or gross mistake’); Weeks v Gallard (1869) 21 LT 655 (‘The only defence to such a suit will be fraud or collusion’).
[41]Arenson [1977] AC 405, 442 (Lord Fraser) (‘Both [scil. a mutual valuer and an arbitrator] have a duty to act impartially between the parties’); Baber [1978] 1 Lloyd’s Rep 175, 182–3 (Sir David Cairns) (‘Plainly it must be implied that the valuation is to be made honestly and impartially’); Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1, 17 [69] (Debelle J) (‘Ceneavenue’) (‘The proposition that a term will be implied that the valuer will act honestly and impartially is also well established’).

Before turning to the specific issue whether a valuation can be set aside on the ground of apprehended partiality, it is necessary to consider the statements of principle in three cases that shed light on the circumstances in which a valuation can be set aside generally.

The first case is Legal & General.[42] A lessor and a lessee were unable to agree on the open market rental value of a commercial premises. The lease provided that, in those circumstances, a valuer would be appointed to determine the value. In the event, the valuer prepared a valuation based on a calculation of the floor space demised, which included an area of a mezzanine floor which had been removed by the lessee with the lessor’s consent after the commencement of the lease. At first instance,[43] Waddell J held that the valuation was vitiated due to an error by the valuer in including the mezzanine floor as part of the demised premises. He considered the error to be of such a kind that the valuation was not carried out according to the terms of the lease.
[42](1985) 1 NSWLR 314.
[43]A Hudson Pty Ltd v Legal & General Life of Australia Ltd [1984] 1 NSWLR 1.

The New South Wales Court of Appeal overturned the decision at first instance. In separate judgments, Mahoney and Priestley JJA did not consider that the valuer had erred in his valuation: there was no evidence that the valuer had valued the premises on the mistaken basis which was alleged.[44] Accordingly, neither judge determined whether any such error would have vitiated the valuation. McHugh JA, in contrast, said that the valuer had erred in his valuation but that the error did not vitiate the valuation as the valuer had not departed from the question which was referred to him; the mistake was one made in the process of valuation.[45] Nor had the valuer departed from the terms of the relevant agreement.[46]
[44]Legal & General (1985) 1 NSWLR 314, 321–3.
[45]Ibid 331, 336.
[46]Ibid 336.

McHugh JA set out a number of familiar principles on the circumstances in which a valuation can be set aside:

In my opinion the question whether a valuation is binding upon the parties depends in the first instance upon the terms of the contract, express or implied. This was pointed out by Sir David Cairns in the Court of Appeal in Baber v Kenwood Manufacturing Co Ltd … A valuation obtained by fraud or collusion can usually be disregarded even in an action at law. For in a case of fraud or collusion the correct conclusion to be drawn will almost certainly be that there has been no valuation in accordance with the terms of the contract. As Sir David Cairns pointed out, it is easy to imply a term that a valuation must be made honestly and impartially. It will be difficult, and usually impossible, however, to imply a term that a valuation can be set aside on the ground of the valuer’s mistake or because the valuation is unreasonable. The terms of the contract usually provide, as the lease in the present case does, that the decision of the valuer is ‘final and binding on the parties’. By referring the decision to a valuer, the parties agree to accept his honest and impartial decision as to the appropriate amount of the valuation. They rely on his skill and judgment and agree to be bound by his decision.[47]

[47]Ibid 335 (citation omitted).

Echoing the earlier English authorities, McHugh JA emphasised the importance of having regard to the terms of the agreement when determining whether a valuation can be set aside:

While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless, the mistake may be of a kind which shows that the valuation is not in accordance with the contract. A mistake concerning the identity of the premises to be valued could seldom, if ever, comply with the terms of the agreement between the parties. But a valuation which is the result of the mistaken application of the principles of valuation may still be made in accordance with the terms of the agreement.[48]

[48]Ibid 335–6.

McHugh JA said that ‘the critical question’ in each case must always be: ‘Was the valuation made in accordance with the terms of a contract?’[49] He continued:

If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract.[50]

[49]Ibid 336.

[50]Ibid.

The second case, Holt v Cox,[51] reinforces the paramountcy of the terms of the contract when determining whether a valuation can be set aside. For present purposes, it is necessary only to draw attention to the following remarks of Mason P, with whom Priestley JA agreed:

A close reading of McHugh JA’s judgment in Legal & General indicates that his Honour was not propounding the view that a valuation will stand regardless of error. Rather he was making the point that mistake is not itself a ground of vitiation: see also Wamo Pty Ltd v Jewel Food Stores Pty Ltd (1983) ANZ Conv R 50 . A valuation may contain factual error or embody consideration of matters which should not have been taken into account, but it does not follow that the result is outside that which the contract contemplated would be within the realm of determination by the valuer. As McHugh JA makes plain, ‘in each case the critical question must always be: Was the valuation made in accordance with the terms of [the] contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value’ (emphasis added). The statement in the next sentence (‘Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account’) must be read in the same context. His Honour is not saying that these matters are never relevant. Rather he is saying that they are not relevant if the valuation was in accordance with the terms of the contract.[52]

[51](1997) 23 ACSR 590.

[52]Ibid 597.

The approach taken by Mason P in this passage highlights the result that flows from answering the ‘critical question’ identified by McHugh JA: if, for example, a valuation was not made in accordance with the terms of the contract, then, as Mason P noted, ‘the result is outside that which the contract contemplated would be within the realm of determination by the valuer’.[53] This language, which attaches importance to what the contract (or, more precisely, the parties to the contract) contemplated, suggests that the terms of the contract are key to determining the objective intention of the parties. This is trite law.[54] But it nevertheless deserves emphasis, for it shows the end to which ‘the critical question’ identified by McHugh JA is directed — that end being the determination of the objective intention of the parties to the contract.
[53]Conversely, if the valuation was made in accordance with the terms of the contract, it may be said that the result is not ‘outside that which the contract contemplated would be within the realm of determination by the valuer’.
[54]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

The third case is AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd,[55] which also concerned the issue whether an expert determination could be reviewed on the ground of error. The relevant statement of principle, which draws on the approach of Mason P in Holt v Cox, is found in the judgment of Nettle JA, with whom Maxwell P and Bongiorno AJA agreed:

[T]he question of whether it is open to review an expert determination on the ground of error is in the first place to be decided according to whether the determination answers the contractual description of what the expert was required to determine … [T]he question of whether an error in determination deprives the determination of compliance with the contractual description of what the expert was required to determine is in the first place to be answered according to whether the error occurred in respect of a task which the contract entrusted to the expert. As Mason P explained in Holt v Cox, although mistake is not itself a ground for vitiation of a final and binding expert determination, a mistake may still be of such a nature that the resultant determination is beyond the realm of contractual contemplation — beyond anything which the parties may be supposed to have intended to be final and binding — and therefore susceptible to review.[56]

[55](2006) Aust Contract R 90-241 (‘AGL’).

[56]Ibid 89,425 [51] (emphasis added) (citation omitted).

After drawing an analogy between cases that concern the review of an expert determination and those that concern judicial review of administrative error, Nettle JA said:

Therein lies the distinction drawn in some of the authorities, and observed by the judge in this case, between an error in the exercise of a judgment, opinion or discretion entrusted to an expert, and an error which involves objective facts or a mere mechanical or arithmetical exercise. Subject to the contract in question, it is easier to suppose that parties to a contract contemplate that an error of the former kind be beyond the realm of review than it is to think that they intend to be fixed with errors of objective fact or in processes of mechanical calculation.[57]

[57]Ibid 89,425 [53] (emphasis added).

Conformably with the approach of Mason P in Holt v Cox, Nettle JA framed the test as follows:

The question in each case is what the parties should be presumed to have intended, and that is to be determined objectively from the terms of the contract, bearing in mind the context in which it was created.[58]

[58]Ibid 89,426 [54].

With this principle in mind, we now turn to the judgment of Robert Walker J in Macro v Thompson (No 3),[59] which bears directly on the issue whether a valuation can be set aside on the ground of apprehended partiality. The factual background is somewhat complex and must be reduced to its essentials in order to avoid verbiage.
[59][1997] 2 BCLC 36 (‘Macro’).

The articles of two family companies contained a pre-emption clause under which shareholders who wished to sell their shares were obliged to offer the shares to other shareholders at a fair value fixed by the companies’ auditor. The minority shareholders of the companies succeeded in an oppression proceeding against a majority shareholder. They obtained an order that the majority shareholder purchase their shares. The auditor instructed an expert to assist with preparing a valuation. The expert used figures which a judge had erroneously included in her judgment.[60] The final valuation was favourable to the majority shareholder. The minority shareholders issued a proceeding to set aside the valuation. Relevantly, they contended that the auditor had acted with partiality.
[60]Ibid 42–3. The judge had copied a mistake contained in a valuation that was tendered in evidence.

The circumstances alleged to give rise to partiality on the part of the auditor merit attention. During the process of valuation, the auditor had instructed his own solicitor and the expert to seek advice from the solicitor acting both for the companies and the majority shareholder. The auditor discussed specific valuation figures with the solicitor[61] and, as Robert Walker J found, seemed to have allowed the solicitor ‘to obtain a position of psychological ascendancy over him’, which the solicitor seemed ready to exploit.[62] However, the auditor did not in fact agree with the solicitor or accept his views. At one meeting, he called the solicitor ‘a bloody fool’, which Robert Walker J found indicated some independence on the auditor’s part.[63] Furthermore, in the days leading up to the valuation being finalised, the auditor seemed to take his own counsel and that of the expert.
[61]Ibid 48. A number of experts gave evidence at trial. Each of them agreed that it was surprising to find an auditor, in the middle of a valuation, revealing specific valuation figures to a solicitor acting for one shareholder (even if he also acted for the company).
[62]Ibid 66.
[63]Ibid 66.

As a starting point, Robert Walker J set out what is now a familiar statement of principle on the duty of an expert, such as a valuer, to act with impartiality:

[A]n expert entrusted with the duty of issuing certificates under contractual arrangements between two other parties is under a duty to act fairly and impartially, and the other parties implicitly contract on that basis.[64]

[64]Ibid 64.

Robert Walker J accepted a submission made on behalf of the majority shareholder that, ‘on the authorities as a whole … when the court is considering a decision reached by an expert valuer who is performing a quasi-judicial function, it is actual partiality rather than the appearance of partiality that is the crucial test.’[65] The rationale was explained as follows:

Otherwise auditors (like architects and actuaries) who have a long-standing professional relationship with one party (or persons associated with one party) to a contract might be unduly inhibited, in continuing to discharge their professional duty to their client, by too high an insistence on avoiding even an impression of partiality.[66]

[65]Ibid 65.

[66]Ibid.

Robert Walker J found that the auditor, while not guilty of fraud or collusion in the sense of any conscious and positive cooperation in forwarding the interests of the majority shareholder, was ‘extremely imprudent’ in his actions.[67] However, Robert Walker J concluded:

On the whole, although the entire episode is a classic example of how not to conduct an articles valuation of shares in a private company, I am not persuaded that [the auditor] yielded sufficiently to [the solicitor’s] influence as to invalidate his valuation on the ground of partiality. I reach this conclusion on the balance of probability, and bearing in mind that a finding of partiality against a professional man is a serious matter …[68]

He added that he was ‘inevitably influenced’ by the fact that the minority shareholders had abandoned their claim against the auditor.[69]

[67]Ibid.

[68]Ibid 66.

[69]Ibid.

In Beevers v Port Phillip Sea Pilots Pty Ltd,[70] Dodds-Streeton J examined several English and Australian cases that have dealt with the various grounds for setting aside a valuation or other expert determination, including the decision of Robert Walker J in Macro. She made the following remarks with respect to the state of the law in this area:

Historically, there has been a considerable degree of diversity in judicial identification of the deficiencies or flaws sufficient to vitiate an expert valuation. The fundamental principle endorsed in modern Australian authority is that an expert valuation will be binding if it is within the terms of the contract. Conversely, if an expert valuation can be said to depart from the terms of the contract, it will invite curial review and intervention. The fundamental principle is very general, and its application will, in each case, depend on the terms of the particular contract. The decided cases provide guidance on the construction of a contract under which an expert is appointed to determine a value or price. An expert’s determination on discretionary matters is not ipso facto immune from review, but where, by the contract, such matters are entrusted to the expert without the prescription of criteria or restrictions, whether express or implied, it has frequently been inferred that the parties intended to be bound by the expert’s bona fide judgment, even if it is in some way erroneous. On the other hand, it has been inferred that the parties would not intend to be bound by gross errors of objective fact or mechanical calculation. Further, the expert’s determination may fail to satisfy a term of the contract because, when construed in context, the term is held to bear a special meaning which was not addressed.[71]

[70][2007] VSC 556 (‘Beevers’).

[71]Ibid [295].

As to whether a valuation can be set aside on the ground of a mere appearance of partiality, Dodds-Streeton J said:

Given the sometimes fine distinction between an appearance of partiality and a finding of partiality on the balance of probabilities, I am not persuaded that the parties would intend to be bound by a valuation attended by a credible appearance, or soundly based apprehension, of partiality. It is not necessary, however, to determine that question in the present case, because I conclude, on the balance of probabilities, that although Mr Ryan was not guilty of collusion, dishonesty or conscious partiality, he did not perform the valuation with the degree of independent skill and judgment and impartiality required of an expert acting between two parties.[72]

[72]Ibid [300].

Four observations should be made about this particular passage. First, it may be construed as lending support to the proposition that an appearance of partiality may be sufficient to set aside a valuation — a proposition that was expressly rejected by Robert Walker J in Macro in favour of a test based only on actual partiality. In her judgment, Dodds-Streeton J did not attempt to distinguish Macro in point of principle.[73]
[73]But see ibid [305], where Dodds-Streeton J distinguished Macro on the facts.

Secondly, the apparent basis for the inclusion of the appearance of partiality as a ground for setting aside a valuation is ‘the sometimes fine distinction between an appearance of partiality and a finding of partiality on the balance of probabilities’. The tenuous nature of this distinction led Dodds-Streeton J to doubt whether ‘the parties would intend to be bound by a valuation attended by a credible appearance, or soundly based apprehension, of partiality’.

Thirdly, the test adopted by Dodds-Streeton J, viz. whether the parties would intend to be bound by the valuation, appears to emanate from ‘the critical question’ identified by McHugh JA in Legal & General and accords with the approach of Mason P in Holt v Cox and Nettle JA in AGL.[74] That is, the question whether a valuation is binding upon the parties is to be determined by reference to whether the parties would have objectively intended to be bound by the valuation, having regard to the terms of the contract appointing the valuer and bearing in mind the context in which that contract was created.[75]
[74]Dodds-Streeton J discussed each of these cases at length. See ibid [218]–[237], [247]–[258].
[75]See [81] and [84] above.

Fourthly, Dodds-Streeton J did not express a concluded view on the issue whether the appearance of partiality may suffice to set aside a valuation. On the contrary, the case was decided on the basis that the expert, Mr Ryan, ‘did not perform the valuation with the degree of independent skill and judgment and impartiality required of an expert acting between two parties’.

In Ceneavenue,[76] Debelle J, with whom Anderson J agreed, said that ‘there seems to be much to commend’ the view of Robert Walker J that actual partiality, rather than the appearance of partiality, is the crucial test in determining whether to set aside a valuation.[77] He added:

The task of the valuer is not infrequently assigned to a person such as an auditor or accountant who has a professional or other association with one of the parties. To apply the test of the appearance of partiality could, therefore, have a real potential to invalidate the valuation made by such a person.[78]

[76](2008) 106 SASR 1.

[77]Ibid 17 [71].

[78]Ibid.

Debelle J noted the contrary view expressed by Dodds-Streeton J but, since the parties had not addressed the point in their submissions, thought it undesirable to express a concluded view on the issue.[79]
[79]Ibid 18 [71].

In Candoora No 19 Pty Ltd v Freixenet Australia Pty Ltd (No 2),[80] a valuation by Ernst & Young was vitiated because it had not been made in accordance with the terms of a put option deed.[81] The issue was whether the Court should remit the task of valuation back to the same expert or appoint another expert. Among other things, the plaintiff contended that, if the task were remitted back to Ernst & Young, a fair-minded observer would have a reasonable apprehension that Ernst & Young would not bring an impartial mind to bear on the contractual task.[82]
[80][2008] VSC 478 (‘Candoora’).
[81]Candoora No 19 Pty Ltd v Freixenet Australasia Pty Ltd [2008] VSC 367.
[82]Candoora [2008] VSC 478 [6].

Hargrave J referred to the statement of Robert Walker J in Macro that actual partiality, rather than the mere appearance of partiality, was necessary in order to justify setting aside a contractual determination.[83] He noted, however, that Beevers left open the question whether this aspect of Macro should be followed.[84]
[83]Ibid [25].
[84]Ibid [25] fn 20.

Hargrave J held that, ‘[v]iewed objectively, there are reasonable grounds for [the plaintiff] to assert that it is not confident that Ernst & Young will bring a fair and balanced mind to any further valuation.’[85] He reached this conclusion on the basis that (a) Ernst & Young had made an error ‘of a most substantial kind’ in its previous valuation and that that error was a matter about which the plaintiff was ‘entitled to feel real concern’;[86] and (b) since completing the valuation, Ernst & Young had ‘demonstrated a propensity to support the impugned valuation’.[87]
[85]Ibid [30].
[86]Ibid.
[87]Ibid.

In Kenros Nominees Pty Ltd v Tipperary Group Pty Ltd,[88] Hollingworth J rejected a submission that Candoora ‘is authority for the bald proposition that a person can be prevented from acting as valuer on the basis of apparent bias.’[89] She noted that the party making that submission could not ‘point to any case in which an injunction has been granted to prevent a valuation by a person acting as expert, or even where an actual valuation has been set aside, on the basis of apparent bias’.[90] She added that ‘[a]ll of the cases to which the parties referred deal with the setting aside of a valuation after it has been performed, on the basis of actual bias’.[91]
[88][2009] VSC 524 (‘Kenros Nominees’).
[89]Ibid [104].
[90]Ibid [95].
[91]Ibid [95] (emphasis added).

Hollingworth J distinguished Candoora in the following terms:

Hargrave J was dealing with a case in which an expert determination had been performed and then set aside for error. Unlike here, the contractual power to appoint the valuer had been exercised and exhausted. His Honour had to consider whether the court should refer the valuation task back to the same expert or appoint a new expert. With respect, it is not entirely clear from the relatively brief reasons for decision what the jurisprudential basis was, on which his Honour concluded that the valuation would not be remitted back to Ernst & Young; at times he seems to be dealing with it as a matter of judicial discretion, in other places as a matter of contractual principles. Rather curiously, one of the parties had sought to argue the matter by reference to administrative law principles.
His Honour considered what the parties would have intended to happen on a re-determination, after the valuation contemplated by the contract had been performed and set aside, and in the particular circumstances before him. That is a completely different situation to the present case, where the valuation contemplated by the contract has not yet been performed. His Honour made it perfectly clear that each case had to be considered on its own facts, in determining whether to remit to the original valuer or appoint a new valuer.[92]

[92]Ibid [104]–[105].

Finally, Hollingworth J doubted that a valuer could be prevented from performing his or her original contractual task on the basis of ‘apparent bias’:

Even if [Candoora] could be read as authority for the proposition that a valuer can be prevented from performing his or her original contractual task on the basis of apparent bias (which I doubt), it represents a very recent development in the law, which could not have been within the reasonable contemplation of the parties at the time of contracting in this case.[93]

[93]Ibid [106].

In Vale Belvedere Pty Ltd v BD Coal Pty Ltd,[94] an issue before the Queensland Court of Appeal was whether a valuation of a joint venturer’s interest in a mining project should be set aside for alleged errors. One of the joint venturers had also pleaded that the valuer in that case had failed to act impartially when carrying out the valuation. Fraser JA, with whom White JA agreed, mentioned in passing that the ordinary meaning of ‘impartiality’ ‘comprehends conscious wrongdoing in the form of actual bias and prejudice’.[95]
[94][2012] QCA 77.
[95]Ibid [49] (emphasis added), citing the definition of ‘impartial’ in the online Macquarie Dictionary.

In McGrath v McGrath,[96] two brothers were shareholders in the holding company of a group of companies. The brothers fell into dispute. By a heads of agreement, they agreed that the plaintiff would buy out the defendant’s shares in the group’s holding company. To that end, they appointed a valuer to value the group pursuant to the heads of agreement. Later, the defendant refused to agree to the terms of engagement of one Collins as a valuer. The plaintiff sought specific performance of the heads of agreement, requiring the defendant to sign Collins’ letter of engagement. In resisting the suit, the defendant alleged that Collins was biased. The defendant pointed to communications between the plaintiff (and his solicitor) and Collins before Collins had issued his letter of engagement.
[96][2012] NSWSC 578.

Pembroke J said that the defendant’s case was really a case of apprehended bias on the part of Collins. He explained:

Stretching the defendant’s case to its limit, there is an apprehension that Mr Collins’ valuation, if and when he is appointed, and if and when it is completed, will not have been made impartially and will be affected by a bias towards the plaintiff. The practical apprehension must be that Mr Collins will not decide the question of valuation on its merits and that the result might favour the plaintiff.[97]

[97]Ibid [17].

Pembroke J held that the defendant’s contention had no factual foundation. He added that the defendant’s case also had several legal difficulties. It did not satisfy the test for apprehended bias, as stated in Ebner, which requires the articulation of the supposed rational connection between the relevant conduct and the possibility in the mind of a reasonable observer that the decision-maker might be diverted from deciding the question on its merits.[98] Moreover, added Pembroke J, the principle of apprehended bias will rarely, if ever, have a role to play in relation to independent experts or, more precisely, someone who is not ‘a judge (or other judicial officer or juror)’.[99]
[98]McGrath v McGrath [2012] NSWSC 578 [18].
[99]Ebner (2000) 205 CLR 337, 344–5 [6]–[8], quoted in McGrath v McGrath [2012] NSWSC 578 [19].

Pembroke J turned to the line of authority, starting from the decision of Robert Walker J in Macro, on whether the appearance of partiality will suffice to set aside a valuation or otherwise enjoin a valuer from carrying out a valuation.[100] He referred to the view in Macro as the orthodox position on this issue. On Beevers, Pembroke J observed:

The reasoning of Dodds-Streeton J in Beevers v Port Phillip Sea Pilots Pty Ltd [2007] VSC 556 is a little more difficult to discern on this issue. Her Honour referred to the orthodox position … but then introduced the concept of ‘a credible appearance or soundly based apprehension of partiality’ … However she did not consider it necessary to determine the question on the facts of the case before her. Three more recent decisions support the orthodox position: Lahoud v Lahoud [2010] NSWSC 1297 at [42]; Andrews v Queensland Racing Ltd [2009] QSC 364 at [24]–[25]; Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd [2004] 2 Lloyd’s Rep 352 at 372.[101]

[100]McGrath v McGrath [2012] NSWSC 578 [18], citing Macro [1977] 2 BCLC 36; Ceneavenue (2008) 106 SASR 1; Candoora [2008] VSC 478; Kenros Nominees [2009] VSC 524.

[101]McGrath v McGrath [2012] NSWSC 578 [20].

Pembroke J concluded that apprehended bias was not available in point of principle,[102] expressing his support for the orthodox position as follows:

When it comes to the principle of apprehended bias in relation to independent experts, I prefer the orthodox approach. To my mind, that approach accords with sound principle and persuasive authority. Too high an insistence on independent experts being required to avoid even an impression of partiality would not be in the interests of justice. It might, as it has in this case, encourage unwarranted challenges and unnecessary litigation by those too readily prone to suspicion and paranoia. The better course would be to allow the independent expert to complete his determination.[103]

[102]Ibid [39].

[103]Ibid [21].

In 500 Burwood Highway Pty Ltd v Australian Unity Ltd,[104] Vickery J held that actual bias or partiality must be shown in order to impugn an expert determination.[105] He cited with approval the remarks of Pembroke J in McGrath v McGrath to the effect that the appearance of partiality, even if made out, will not suffice for this purpose.[106]
[104][2012] VSC 596 (‘500 Burwood Highway’).
[105]Ibid [174].
[106]Ibid [175].

Vickery J addressed the concept of ‘a credible appearance or soundly based apprehension of partiality’ to which Dodds-Streeton J referred in Beevers. As the following passage shows, Vickery J declined to follow Beevers:

To the extent that Dodds-Streeton J in Beevers opened the door to the prospect of the appearance of bias as being sufficient to call into question and bring down the determination of a contractually appointed expert, I do not follow the decision. Absent something in the contract which works against this outcome in a particular case, actual partiality and not the appearance of partiality is the critical test: Macro v Thompson (No 3). Such observations are consistent with the views expressed by the Court of Appeal concerning experts called upon to give independent opinion evidence, such experts not being disqualified from that role due to previous association with the parties …[107]

[107]Ibid [177] (citations omitted), citing FGT Custodians Pty Ltd v Fagenblat [2003] VSCA 33.

Vickery J identified ‘a substantial body of further authority on the point’,[108] citing Ceneavenue, Candoora and Kenros Nominees, and referred to other authorities in support of the proposition that apprehended partiality, or the appearance of partiality, is insufficient to set aside an expert determination.[109]
[108]500 Burwood Highway [2012] VSC 596 [178].
[109]Ibid, citing Legal & General (1985) 1 NSWLR 314, 335; Holt v Cox (1997) 23 ACSR 590, 595; Andrews v Queensland Racing Ltd (No 2) [2009] QSC 364 [24]–[25]; Bernhard Schulte GmbH & Co KG v Nile Holdings Ltd [2004] 2 Lloyd’s Rep 352, 372. See also Thomas v UTS Rail Pty Ltd [2016] NSWSC 991 [24] (Pembroke J).

In our opinion, the state of the law on whether the appearance of partiality may suffice to set aside a valuation is not so uncertain as to cast doubt over the primary judge’s remark that ‘the appearance of partiality is not sufficient to set aside an expert’s opinion, even if that appearance is made out’.[110] Beevers appears to be the only decided case which suggests that an appearance of partiality may be sufficient to set aside a valuation. In this sense, the relevant statement of principle is an anomaly in what is otherwise a settled body of authority on this topic. It is also an obiter remark made by a judge sitting at first instance. The primary judge was therefore not bound to follow it.
[110]Reasons [24].

In support of its allegation that Mr Shanahan had acted with an appearance of partiality in carrying out the Shanahan valuation, Gull relied upon the particulars to the lack of impartiality allegation.[111] Those particulars, in substance, include his engaging in private conversations with Mr Sheehan, the previous relationship between Mr Shanahan’s father and Mr Sheehan and the continuing professional relationship between Mr Shanahan and Mr Sheehan after the Shanahan valuation was finalised. As we see it, even if Gull could have established these particulars at trial, we are not at all persuaded that Mr Shanahan had acted with an appearance of partiality in carrying out the valuation. Two points should be made.
[111]See [19] above; Reasons [24].

First, applying Ebner, the test for apprehension of bias would require Gull to articulate the logical connection between the particulars to the lack of impartiality allegation and the possibility in the mind of a reasonable observer that Mr Shanahan might have been diverted from making the valuation on its merits. We say ‘making the valuation on its merits’ because the equivalent test in the case of judicial officers (and jurors) is ‘deciding the case on its merits’.[112] This raises the question of what it means to make a valuation ‘on its merits’. Does it mean to make the valuation in accordance with the contract appointing the valuer (in this case, the letter of instructions and cl 4.1.3 of the Deed)? If not, how would the making of a valuation ‘on its merits’, whatever that term might mean in this context, interact with the obligation of a valuer to make a valuation in accordance with the contract? It may be readily observed that there is an inherent fragility in the application of the principle of apprehended bias to independent experts.[113]
[112]Ebner (2000) 205 CLR 337, 350 [30].
[113]See also McGrath v McGrath [2012] NSWSC 578 [19]–[21].

Secondly, whichever touchstone is adopted, Gull has not articulated any logical connection between the particulars to the lack of impartiality allegation and the feared deviation from the course of making the Shanahan valuation ‘on its merits’ or in accordance with Mr Shanahan’s terms of appointment. Gull has referred to a number of conversations between Mr Shanahan and Mr Sheehan. But some of those conversations have not been particularised and others plainly accord with the terms of Mr Shanahan’s appointment (such as the communications at Banongill Station on 2 November 2016). Gull has also pointed to what it labels as an undisclosed ‘long-standing relationship’ between Mr Shanahan’s father and Mr Sheehan as well as Mr Shanahan’s occasional attendance at a Christmas party hosted by Yaloak Estate, the manager of which is Mr Sheehan. However, none of these matters tells in favour of finding that Mr Shanahan did not bring an impartial mind to the task of valuing the livestock at Banongill Station.

In the light of our opinion that Mr Shanahan had not acted with an appearance of partiality in carrying out the Shanahan valuation, it is strictly unnecessary in the present application to express a concluded view on the issue whether a valuation can be set aside on the ground of an appearance of partiality.

However, it is important to recognise that the categories of grounds for setting aside a valuation or other expert determination are not closed. The reason why this is so may be seen from ‘the critical question’ posed by McHugh JA in Legal & General and refined over time by Mason P in Holt v Cox and Nettle JA in AGL — namely, whether a valuation is binding upon the parties is to be determined by reference to whether the parties would have objectively intended to be bound by the valuation, having regard to the terms of the contract appointing the valuer and bearing in mind the context in which that contract was created. Thus, the starting point is the contract itself. We do not foreclose the possibility of there being cases in which the terms of the contract are such that the parties could not have objectively intended to be bound by a valuation where they might reasonably apprehend that the valuer might or did not bring an impartial mind to the task of valuation. However, such cases are difficult to imagine because, in the words of Debelle J in Ceneavenue, ‘[t]he task of the valuer is not infrequently assigned to a person such as an auditor or accountant who has a professional or other association with one of the parties’.[114]
[114]Ceneavenue (2008) 106 SASR 1, 17 [71].

Another reason why it is difficult to imagine cases in which the terms of the contract are such that the parties could not have objectively intended to be bound by a valuation where they might reasonably apprehend that the valuer might or did not bring an impartial mind to the task is that, when it comes to impartiality, experts could not possibly be held to the same standards as judicial officers. As the High Court observed in Ebner, the importance of the basic principle that judicial officers (or jurors) be independent and impartial is such that even the appearance of departure from that principle ‘is prohibited lest the integrity of the judicial system be undermined’.[115] Such a consideration does not arise in the case of experts, who are in most cases appointed voluntarily by the parties, and who have no role to play in the administration of justice under our constitutional arrangements.
[115]Ebner (2000) 205 CLR 337, 345 [7].

We would refuse leave to appeal on the fourth proposed ground.

Sixth and seventh proposed grounds of appeal

By its sixth and seventh proposed grounds of appeal, Gull contended that the primary judge misapplied the test for summary judgment in view of the conflicts in the evidence, as Gull identified above, and that she should have exercised her discretion under s 64 of the Civil Procedure Act 2010 and refused Laguna’s application for summary judgment.

In an application for summary judgment under s 63 of the Civil Procedure Act 2010, it is necessary for the applicant in that application to show that the plaintiff’s claim has ‘no real prospect of success’. In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[116] Warren CJ and Nettle JA set out the following principles:

(a)the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
(b) the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
(c) it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[117]

[116](2013) 42 VR 27.

[117]Ibid 40 [35].

For the reasons given above, we reject the contention that the primary judge misapplied the test for summary judgment. The conflicts in the evidence concerned the issues whether the merino lambs had a separate current market value and the meaning of the term ‘given in’. These issues had no bearing on the question whether Mr Shanahan had made the Shanahan valuation in accordance with cl 4.1.3 of the Deed. Furthermore, the evidence with respect to the conversations between Mr Shanahan and Mr Sheehan on 2 November 2016 (which, we would add, were expressly permitted by Mr Shanahan’s terms of appointment) was not contradicted by any evidence filed on behalf of Gull. In all of the circumstances, we consider that the primary judge was correct in her conclusion that Gull’s claim had no real prospect of success.

We would refuse leave to appeal on the sixth and seventh proposed grounds of appeal.

Conclusion

The application for leave to appeal must be refused.

[2018] VSCA 85

10 April 2018