Xianzhu v Chen (No 2)
[2020] VSC 621
•24 September 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2018 02923
| SHI XIANZHU | Appellant |
| v | |
| SHUANGCHAO CHEN | Respondent |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 June 2020 |
DATE OF JUDGMENT: | 24 September 2020 |
CASE MAY BE CITED AS: | Xianzhu v Chen (No 2) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 621 |
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ADMINISTRATIVE LAW – Judicial review – Appeal from decision of a Magistrate on a question of law – Whether the Magistrate erred in law by excluding hearsay evidence – Whether the Magistrate erred in law by admitting an expert report into evidence and having regard to it – Gerlach v Clifton Brick Pty Ltd (2002) 209 CLR 478 – Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 – Wilson v Bauer Media (Ruling No 7) [2017] VSC 357 – Magistrates’ Court Act 1989 s 109 – Evidence Act 2008 ss 63, 79, pt 2 cl 4(1)(f) – Appeal dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J Claridge | McDonald Lawyers |
| For the Respondent | Mr M W Seelig with Mr M J Latham | Destra Law |
TABLE OF CONTENTS
Summary.............................................................................................................................................. 1
Background......................................................................................................................................... 1
Amended notice of appeal............................................................................................................... 2
Applicable principles – s 109 of the Magistrates’ Court Act..................................................... 3
Are the two evidentiary rulings appellable?................................................................................ 4
Mr Xianzhu’s submissions........................................................................................................... 4
Mr Chen’s submissions................................................................................................................ 4
Analysis.......................................................................................................................................... 5
Did the Magistrate err in law by excluding hearsay evidence?................................................ 8
Mr Xianzhu’s submissions........................................................................................................... 8
Mr Chen’s submissions.............................................................................................................. 10
Analysis........................................................................................................................................ 10
Did the Magistrate err in law by admitting the Guan report into evidence and having regard to it?........................................................................................................................................................ 14
Mr Xianzhu’s submissions......................................................................................................... 14
Mr Chen’s submissions.............................................................................................................. 16
Analysis........................................................................................................................................ 17
Conclusion......................................................................................................................................... 27
HER HONOUR:
The respondent took a painting to the appellant for framing and never got it back. He obtained orders in the Magistrates’ Court that the appellant pay him damages. Those orders are the subject of this appeal proceeding.
Summary
The issues for determination and answers follow.
(a) Did the Magistrate err in law by excluding hearsay evidence? No. Grounds 1 and 2 of the appeal are therefore dismissed.
(b) Did the Magistrate err in law by admitting an expert report into evidence and having regard to it? No. Ground 4 of the appeal is therefore dismissed.
Background
Mr Chen (the respondent) delivered a painting to a picture framing business operated by Mr Xianzhu (the appellant). The painting was placed in a workshop and it was lost. Mr Xianzhu acknowledges he bears some liability to compensate Mr Chen for the lost painting. There is a dispute over the amount of compensation.
Mr Chen applied to the Magistrates’ Court for compensation.
On 22 November 2018, following a hearing several days earlier, a Magistrate made final orders. They were for Mr Xianzhu to compensate Mr Chen the amount of $60,550.00 plus interest and costs. The precise orders are as follows.
SHI XIANZHU to pay SHUANGCHAO CHEN
Claim $ 60550.00 and Interest $ 16215.14 Costs $ 0
COSTS (INCLUDING RESERVED COSTS) ON SCALE F UP TO 9 JANUARY 2018 AND SCALE F PLUS 25% FROM 10 JANUARY 2018.
COSTS TO BE TAXED IN DEFAULT OF AGREEMENT
On 12 December 2018, the solicitor for Mr Chen wrote to the solicitor for Mr Xianzhu requiring payment of the judgment amount and interest, being a total of $76,765.14 (at that time) by 24 December 2018, plus costs of $45,000 by 2 January 2019.[1] The letter stated that if payment of the judgment amount and interest was not received by 24 December 2018, then Mr Chen would issue enforcement proceedings without further notice.
[1]Exhibit ‘SS-3’ to the affidavit of Stefan Saponja sworn 14 May 2019 (‘first Saponja affidavit’).
On 20 December 2018, Mr Xianzhu filed a notice of appeal in this Court. At that time he was unrepresented. The notice of appeal sought: orders setting aside the Magistrate’s order, for the proceeding to be heard and decided by another Magistrate and that Mr Chen pay the costs of this proceeding.
On 7 January 2019, the solicitor for Mr Chen wrote to Mr Xianzhu regarding the notice of appeal.[2] On 16 January 2019, in the absence of a response, the solicitor for Mr Chen wrote to Mr Xianzhu informing him of the Supreme Court (General Civil Procedure) Rules 2015 and Practice Note SC CA 3.[3]
[2]Exhibit ‘SS-5’ to the first Saponja affidavit.
[3]Exhibit ‘SS-6’ to the first Saponja affidavit.
A bankruptcy proceeding against Mr Xianzhu was subsequently issued in the Federal Circuit Court.[4] The outcome is unknown.
[4]Exhibits ‘SS-7’–‘SS-9’ to the first Saponja affidavit [11]–[13].
Amended notice of appeal
On 12 May 2020, Mr Xianzhu was given leave to amend his notice of appeal.[5] An amended notice of appeal was filed on 5 June 2020. It follows.
ORDER SUBJECT TO APPEAL:
The appeal is from the whole of the Order.
QUESTIONS OF LAW:
The learned Magistrate [sic] failed to take a relevant consideration into account in making the Order.
Whether the learned Magistrate erred in law in making the Order by admitting into evidence and having regard to the alleged expert opinion of witness Guan [sic].
[5]Xianzhu v Chen [2020] VSC 264.
The two questions of law are accompanied by four grounds relied upon.
1.The learned Magistrate was wrong in law in excluding the statement of Lu Zhixue to the effect that he had never drawn any painting of flowers and/or birds (“Lu’s Statement”);
2.The learned Magistrate ought to have admitted the Lu’s Statement;
3.The appellant reserves the right to and intends to add to these grounds of appeal after receiving and considering the transcript of the proceeding; and
4.The learned Magistrate ought not have admitted the evidence of the alleged expert opinion by witness Guan for the reasons set out in the submissions already served.
Ground 3 is not a ground of appeal and is dismissed.
Mr Xianzhu relies on his two affidavits affirmed on 30 April 2019 and 27 June 2019 together with written submissions filed on 25 September 2019 and 12 May 2020.
Mr Chen relies on two affidavits of his solicitor Stefan Saponja sworn on 14 May 2019 and 12 May 2020 together with written submissions filed on 15 January 2020 and 27 May 2020.
Key submissions of each party are outlined below. It does not include the authorities they rely upon. Where necessary, those authorities are dealt with in the analysis further below.
Applicable principles – s 109 of the Magistrates’ Court Act
Section 109 of the Magistrates’ Court Act 1989 follows.
Appeal to Supreme Court from final order made in civil proceeding
(1)A party to a civil proceeding in the Court may appeal to the Supreme Court, on a question of law, from a final order of the Court in that proceeding.
…
(emphasis added)
I adopt the following principles outlined by Derham AsJ in Romas v Green:[6]
It is well established that an appeal under s 109 on a question of law must relate to a question that was involved in the making of the order. The question of law must have been raised in the Court below, whether on the pleadings, by evidence or otherwise.
The appeal under s 109 is an appeal strictly so called, and not in any sense a re-hearing. As Kaye J noted in Fiorelli Properties Pty Ltd v Professional Fence Makers Pty Ltd: ‘[i]t is necessary for the appellant to be able to identify a relevant error of law made by the Magistrate before it is entitled to relief from this Court’.
Thus, the Court is not entitled to interfere with the decision of a Magistrate unless it is satisfied that he acted on a wrong principle of law, misapprehended the facts or made a wholly erroneous assessment of the relevant issues. There is a strong presumption in favour of the correctness of the decision appealed from, and the general rule is that the decision should be affirmed unless the Court is satisfied that the decision is clearly wrong.[7]
[6][2015] VSC 95.
[7]Ibid [24]–[26] (citations omitted).
Are the two evidentiary rulings appellable?
Mr Xianzhu’s submissions
The orders of the Magistrate can be appealed under s 109 of the Magistrates’ Court Act. An interlocutory decision may found an appeal pursuant to s 109 provided that the relevant decision or ruling was ‘involved’ in the making of a final order. Victorian courts regularly treat evidentiary rulings as interlocutory.
Mr Chen’s submissions
The grounds of appeal suggest two erroneous interlocutory orders were involved in the final orders. There are no interlocutory orders being appealed. Accordingly they could not have been involved in a final order. The appeal is therefore entirely incompetent. Mr Xianzhu has not identified any cases where an appeal from s 109 of the Magistrates’ Court Act ran from an evidentiary ruling in the Magistrates’ Court.
The nucleus of the appeal is based on incorrect assertions about the case in the Magistrates’ Court and the way that it was run.
If the Magistrate did err in the interlocutory rulings, then it has no bearing on the outcome of the orders made. This is because there is so much evidence in support of the proposition that Mr Lu did the painting. Accordingly the evidentiary rulings do not reach the threshold as being involved in a final decision.
Analysis
Section 109 of the Magistrates’ Court Act permits appeals from final orders on questions of law. Mr Xianzhu and Mr Chen are in dispute about whether there is an appeal from “final orders” given the amended notice of appeal refers to evidentiary rulings. This is the wrong issue to focus on. The focus must be on whether or not there is an appeal “from final orders on questions of law.” If there is an error of law involved in the final orders, then that may found an appeal pursuant so s 109.
In Gerlach v Clifton Bricks Pty Ltd,[8] the High Court stated:
[8](2002) 209 CLR 478.
In the course of a trial, and even before the trial commences, interlocutory orders may be made which affect the substantive rights of the parties. Rulings that are made in the course of trial about what evidence will be admitted are an obvious example. To adopt a rule that precluded challenging any interlocutory order except by an appeal against that order would provoke unnecessary multiplication and fragmentation of proceedings.
It is not surprising, then, that in at least some circumstances, a party may challenge the correctness of the final judgment entered in a matter on the ground that some interlocutory decision was wrong. Again, evidentiary rulings provide the obvious example. As was said, in a very early judgment of this Court:
There is only one judgment of the Court appealed from … and on the appeal all grounds that were taken by the appellant in the course of the proceedings are open to him.
As Griffith CJ had said earlier, in the course of argument in Nolan v Clifford :
On an appeal from a final judgment, all points raised in the course of the case are open to the unsuccessful party. If a point is decided against him on an interlocutory application, there is no need for him to keep on raising it.
In both Nolan v Clifford and Crowley v Glissan reference was made to Maharajah Moheshur Singh v Bengal Government as authority for the proposition stated.
The proposition that any interlocutory order can be challenged in an appeal against the final judgment in the matter is often stated in unqualified terms. The better view, however, is reflected in the formulation adopted in Spencer Bower, Turner and Handley where it is said that “on an appeal from the final order an appellate court can correct any interlocutory order which affected the final result” (emphasis added).
It is necessary to make the qualification, "which affected the final result", at least to reflect the well‑established principle that a new trial is not ordered where an error of law, fact, misdirection or other wrong has not resulted in any miscarriage of justice...
Further, it may be that there are some kinds of interlocutory decisions made, other than in the course of the hearing which leads to entry of final judgment in the proceeding, which may present some other issues for consideration. There are circumstances in which an interlocutory decision must be treated as concluding an issue between the parties. Whether all decisions of that kind may be challenged in an appeal against the final judgment in the proceeding is a question to which a general answer need not be attempted. It is enough to notice in this regard the decision of the Court of Appeal in New South Wales, in David Syme & Co Ltd v Lloyd. It was held there that a ruling made in the separate trial of an issue (that the article published was capable of bearing the imputations pleaded in a claim for defamation) was open to challenge on appeal against a subsequent jury verdict. This conclusion is consistent with the qualified formulation of the relevant principle. It is, as we say, unnecessary to explore the limits of the principle.[9]
[9]Ibid 482–8 [4]–[8] (citations omitted).
In Thomas v Campbell,[10] Nettle J considered whether interlocutory orders of a magistrate to set aside a summons gave rise to a question of law involved in the final orders of another magistrate. The final orders convicted the appellant of the offences with which he was charged. Nettle J concluded:
In my opinion the decision of the first magistrate to set aside the summons to witness in this case was informed by error of law and in the circumstances of this case it was an error which was involved in the final orders to convict the appellant of the offences with which he was charged.[11]
[10](2003) 9 VR 136.
[11]Ibid 149 [36].
Thomas v Campbell concerned s 92. It contained the same phrase as s 109. Nettle J held:
It was submitted for the respondents that so to hold would open up the intolerable possibility of appellants advancing as grounds of appeal from final orders every arguably erroneous interlocutory order made in the course of the interlocutory stages of the proceeding. But I do not think that is right either. The only orders which may be made the subject of appeal under s 92 of the Magistrates’ Court Act are orders that are “involved in the final orders”. That limits the range considerably. And while the characterisation of orders of that kind is inevitably a question of fact and degree, the task is unlikely to be made much more difficult by the number of magistrates that play a part in the conduct of the proceeding.
…
In my opinion the decision of the first magistrate to set aside the summons to witness in this case was informed by error of law and in the circumstances of this case it was an error which was involved in the final orders to convict the appellant of the offences with which he was charged.[12]
[12]Ibid 148 [34], [36].
J Forrest J stated in Kuek v Phillips:[13]
The decision in Thomas [v Campbell] did not, as Mr Kuek’s ground of appeal alleges, give Magistrate Radford the power to set aside the order of Magistrate Holzer. Rather, it primarily stands for the proposition that this Court may, in an appropriate case, set aside final orders of the Magistrates’ Court if an interim order or interlocutory order which is demonstrated to be wrong is sufficiently bound up with the final order.
Whilst I accept that Nettle J also held that a party in the Magistrates’ Court may be able to revisit a previous decision of an interlocutory nature before the Magistrate conducting the final hearing, this was clearly confined to limited situations, and usually in a criminal proceeding.[14]
[13][2017] VSC 332.
[14]Ibid [35]–[36] (citations omitted).
In Menz v Wagga Wagga Show Society Inc,[15] the New South Wales Court of Appeal considered whether or not the trial judge had erred by ruling that much of the report of a purported expert should be excluded. The ruling was an ex tempore one and given on the second day of trial. Leeming JA, with whom Payne and White JJA agreed, held:
It was common ground in the submissions that Ms Menz required leave to appeal from the interlocutory decision excluding much of Ms Smyth’s report. I am far from sure that that is so. Interlocutory decisions which affect the final result may generally be challenged as of right within an appeal brought from that final order: Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [6]-[8]; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [78]. An interlocutory decision on liability where liability has been determined separately from and in advance of quantum is a familiar example. The rejection of Ms Menz’s evidence at least arguably contributed to the judgment insofar as it was based on the rejection of her case of breach of duty.[16]
[15][2020] NSWCA 65 (‘Menz’).
[16]Ibid [103].
I will make brief mention of several other authorities to which the parties made reference but do not advance matters:
(a) Graziano v Graziano[17] discussed whether or not an evidentiary ruling was in the nature of an interlocutory order and appellable, however it was in the context of an appeal concerning an application to re-open evidence;
[17][2008] SASC 142 [45]–[46].
(b) Neely v Southern Cross Feeds Pty Ltd[18] is not a trial decision and was overturned on appeal;[19]
(c) Gu v Tampi[20] was overturned on appeal;[21] and
(d) Director of Public Prosecutions v Paulino[22] concerned interlocutory appeals on evidentiary issues in criminal proceedings and certification of matters pursuant to the Criminal Procedure Act 2009.
[18][2013] VSC 152 [31]–[34].
[19]Neely v Southern Cross Feeds Pty Ltd (No 2) [2013] VSC 238.
[20][2019] VSC 454.
[21]Gu v Tampi [2020] VSCA 61.
[22](2017) 54 VR 109.
Turning now to the true issue, which is whether there was an error of law involved in the Magistrate’s final orders.
Did the Magistrate err in law by excluding hearsay evidence?
Mr Xianzhu’s submissions
Before the Magistrate, Counsel sought to adduce evidence from Mr Xianzhu in relation to a conversation he had with the purported artist of the painting Mr Lu Zhixue.[23] Mr Lu told Mr Xianzhu that he had never painted an artwork of peony imagery. His statement was to the effect that he had never drawn any painting of flowers and birds. Of course, the subject of the painting is flowers.
[23]Transcript of Proceedings, Shuangchao Chen v Shi Xianzhu (Magistrates’ Court of Victoria, G10751088, 19 November 2018) 111–3 (‘Transcript’).
Mr Chen’s counsel opposed the tendering of Mr Lu’s statement on the basis it was hearsay evidence. Mr Xianzhu’s counsel relied on the hearsay exception that the witness was unavailable. The Magistrate said there was no basis to compel by subpoenaing a witness from China. There was a request by Mr Xianzhu that Mr Lu give evidence. It is accepted there was no evidence before the Magistrate that such a request was made. The Magistrate ruled hearsay evidence was not to be permitted. This was the reason that no evidence to adduce was led. If evidence was adduced, then the Magistrate could make findings.
The hearsay exception in s 63 of the Evidence Act 2008 applies because Mr Lu was not available to give evidence. Section 4(1)(f) of the Dictionary to the Evidence Act states that “a person is taken not to be available to give evidence about a fact if all reasonable steps have been taken, by the party seeking to prove the person is not available, to find the person or secure is or her attendance, but without success” (emphasis added).
So grounds 1 and 2 of the appeal reduce to whether all reasonable steps were taken to find Mr Lu or secure his attendance. The only step Mr Xianzhu relies upon is his request to Mr Lu. He met with Mr Lu in China and unsuccessfully sought to persuade him to attend Australia to give evidence in the Magistrates’ Court.
Mr Chen’s contention that more was required to show that Mr Lu was unavailable should be rejected. In particular, there was no practical utility in Mr Xianzhu’s solicitors trying to contact Mr Lu given that he had already refused to give evidence. It would be disproportionate in the context of this litigation, being a claim in the Magistrates’ Court.
Moreover, ‘reasonable steps’ did not require Mr Xianzhu to seek leave from the Magistrates’ Court to allow overseas service pursuant to r 7.08 of the Magistrates’ Court General Civil Procedure Rules 2010. There is no authority to suggest that a subpoena could or should have been issued, and if it was, that it would compel Mr Lu in China to give evidence in the Magistrates’ Court.
Mr Chen’s submissions
The only reference to Mr Lu saying he had never drawn any flowers is from Mr Xianzhu’s counsel.[24] Even if there was some assertion that Mr Lu said he had never painted flowers and there was an error in not accepting the hearsay discussion, there was no evidence of the content of the discussion.
[24]Ibid 94.
There is no dispute that if Mr Xianzhu was giving evidence of the purported statement from Mr Lu, and relying upon it, that it would be hearsay and inadmissible. However, an attempt was made to rely upon the hearsay exception, namely that the maker of the statement was unavailable. At no time did Mr Xianzhu give any evidence of Mr Lu being asked to give evidence in Australia and Mr Lu refusing to do so. We do not know if he was asked if he wanted to give video evidence because there is no evidence in the transcript of any such discussion and response.
Whilst it is true that the Magistrate said that hearsay evidence could not be adduced, at no time did that prohibit counsel from adducing evidence about the request to Mr Lu. There is no evidence supporting the operation of the exception. Mr Chen’s counsel asked rhetorically: who knows what Mr Xianzhu has put to Mr Lu?[25] Mr Xianzhu’s counsel never adduced further evidence about it. Was this a calculated forensic decision or an error? In the absence of evidence of a request to Mr Lu to give evidence, the hearsay exception cannot be relied upon.
[25]Ibid 113.
Analysis
During the hearing in the Magistrates’ Court, Mr Xianzhu wished to give evidence about a conversation that he allegedly had with Mr Lu. Mr Chen objected to that on the basis that it was hearsay. Mr Xianzhu sought to rely on an exception to the hearsay rule on the basis that Mr Lu was unavailable to give evidence. The Magistrate did not allow Mr Xianzhu to rely on the exception. That is, the Magistrate disallowed the proposed hearsay evidence. The transcript is consistent with this although unfortunately the transcript does not pick up all the words in the Magistrate’s ruling.
Mr Xianzhu’s counsel: … [Mr Xianzhu] will also give evidence he conducted research into Mr Lu’s work once the dispute came about, and that he did visit Mr Lu in China. He said that he never painted flowers.
HIS HONOUR: That would be hearsay evidence, though, wouldn’t it?
Mr Xianzhu’s counsel: Yes, Your Hour, and I’d seek to have that admitted on the basis that their witness was unavailable.
Mr Chen’s counsel: We’ll oppose that in due course, Your Honour.
…
Mr Xianzhu’s counsel: What came from that call? What did you do once you’d called him?
Mr Xianzhu: Well I call him first. I introduce myself. I said I’m calling from Australia and my background is (indistinct) Chinese and background as artist from China as well. And I ask him - because we have – I tell him directly it is we have a dispute as a business – because I’m running this picture framing gallery. We have a big dispute with customer. We lost – we lost one of picture which is – and they claim it’s yours. And he asked me what picture - - -
Mr Chen’s counsel: Your Honour, whatever - - -
HIS HONOUR: I think in terms of what he says that’s being led to prove the truthfulness of a hearsay. Do you have an exception to the hearsay order you want to provide?
Mr Xianzhu’s counsel: Yes, Your Honour. I say that it should be accepted on the basis that Mr Lu’s unavailable. The client will give – he’s based in China. Our client will give evidence that he asked him to give evidence and he refused. It’s not possible to formally require that.
HIS HONOUR: You could issue a subpoena. We’ve already had one witness here that’s from China.
Mr Xianzhu’s counsel: You’ll find that that was a voluntary basis and there’s not a basis to compel a witness from China.
HIS HONOUR: What efforts were made to – you said there was a request by him would you come and give evidence?
Mr Xianzhu’s counsel: Yes.
HIS HONOUR: Who made that request? Yourselves or your instructors or Mr - - -
Mr Xianzhu’s counsel: Mr [Xianzhu].
HIS HONOUR: All right. That’s the basis of it?
Mr Xianzhu’s counsel: Yes, Your Honour.
…
Mr Chen’s counsel: On that basis, Your Honour, we don’t say the hearsay objection applies.
HIS HONOUR: Well (indistinct) an exception or allowance of any hearsay evidence about conversations had with Mr Lu.
Mr Xianzhu’s counsel: I accept your ruling on that. Mr [Xianzhu], if you could just tell us – I understand that you visited Mr Lu’s residence in China. Without telling us what he said to you, could you tell us what you saw at the residence?...[26]
[26]Ibid 94, 111–3 (emphasis added). The transcript states “Mr Liu” and it has been corrected in the extract above to “Mr Lu”.
Ground 1 of the appeal asserts the Magistrate was wrong in law to exclude the Lu statement to the effect he had never drawn any painting of flowers and/or birds. Ground 2 asserts that statement ought to have been admitted. Grounds 1 and 2 must be dismissed for the following reasons.
Firstly, the amended notice of appeal identifies the question of law as a failure to take into account a relevant consideration. The Court of Appeal in Chang v Neill[27] stated:
It is a long standing principle that a failure by a decision-maker to take into account a relevant consideration which he or she was bound to take into account will constitute jurisdictional error if that consideration could have materially affected his or her decision.[28]
[27]Chang v Neill [2019] VSCA 151.
[28]Ibid [68] citing Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 40.
The alleged Lu statement is not a relevant consideration. The Magistrate was not bound to take it into account.
Secondly, submissions assert a more generic error of law on the ruling of admissibility because Mr Xianshu had taken all reasonable steps to secure Mr Lu’s attendance.[29] I am not satisfied this is properly framed as a question of law. At any rate, the Magistrate did not err in law. It was open to the Magistrate to rule that the hearsay exception in s 63 of the Evidence Act did not apply. Section 63 of the Evidence Act and pt 2, cl 4(1)(f) of the Dictionary to that Act provide the following.
[29]Appellant’s submissions filed 25 September 2019 [32].
Exception: civil proceedings if maker not available
(1) This section applies in the civil proceeding if a person who made a previous representation is not available to give evidence about an asserted fact.
(2) The hearsay rule does not apply to:
(a) evidence of the representation that is given by a person who saw, heard or otherwise perceived the representation being made…
Dictionary, Part 2 – Other Expressions
Unavailability of persons
(1) For the purpose of this Act, a person is taken not to be available to give evidence about a fact if:…
(f) all reasonable steps have been taken, by the party seeking to prove the person is not available, find the person and secure his or her attendance, but without success, or
…
(2) In all other cases the person is taken to be available to give evidence about the fact.
As the transcript indicates, having ascertained that the only step taken to obtain Mr Lu’s evidence was a request by Mr Xianzhu, it was open to the Magistrate to decide the hearsay exception in s 63 of the Evidence Act did not apply. Indeed, such a ruling was entirely unsurprising.
For completeness, there is nothing to suggest that the Magistrate’s ruling was made entirely on the basis of whether or not the subpoena issued. Certainly, and quite properly, the Magistrate inquired whether a subpoena had been issued. If a subpoena had been issued, then the Magistrate would have needed to consider whether or not Mr Lu was unavailable to give evidence on the basis that “reasonable steps have been taken, by the party seeking to prove the person is not available, to compel the person to give evidence, but without success”.[30] Having ascertained it had not been, the Magistrate moved next to ascertain what requests had been made for Mr Lu to give evidence, as discussed above.
[30]Evidence Act 2008 Dictionary pt 2, cl 4(1)(f).
Did the Magistrate err in law by admitting the Guan report into evidence and having regard to it?
Mr Xianzhu’s submissions
In order to establish the value of the lost painting, Mr Chen relied on a report prepared by Mr Guan, an employee of Mossgreen Auction House. As the relevant painting was not available for inspection, Mr Guan did not inspect it. Mr Guan opined that the market value of Mr Chen’s missing painting was approximately $60,000 to $70,000. The valuation opinion expressed by Mr Guan was based on a set of assumptions and the physical inspection of a different artwork painted by Mr Lu. Counsel for Mr Xianzhu objected, arguing the Guan report was flawed and ought be given little weight.[31] The Magistrate dismissed the objection. His Honour accepted the ‘lower end’ of the range proposed in the Guan report.[32] The admissibility of the Guan report is the primary issue in this proceeding.
[31]Transcript 179.
[32]Ibid 208.
The Guan report gave different values for the insurance value and market value and did not explain the difference.
The Guan report used a sales comparison approach for valuation. It said that approach analyses comparable sale characteristics including “style, quality, rarity, exhibition and publication history and the market in which they were sold, but most important of all, the artist, imagery and artwork dimensions of [the] painting”.[33] However, Mr Guan did not analyse those factors. He did not provide any other reasoning as to how the value ranges are reached. He said, for instance, nothing about the exhibition or publication history which he assessed as being relevant factors. His only comments on the style and quality of the painting are based on reproduced pictures of other paintings.
[33]Exhibit ‘XZS-3’ to the affidavit of Shi Xianzhu affirmed 27 June 2019 (‘second Xianzhu affidavit’), ‘Appraisal Method Adopted’.
Unless Mr Guan’s evidence fell within the scope of s 79 of the Evidence Act, his opinion as to the value of the missing painting was inadmissible. [Section 79 is an exception to the opinion rule and allows for opinions based on specialised knowledge.] The authorities indicate a statement of reasoning is necessary for the Court to assess the admissibility of an expert’s evidence in accordance with s 79. Without it, it is not possible to test the accuracy of the expert’s conclusions. A further justification for the statement of reasoning rule is that allowing an expert to give evidence without identifying the factual basis or path of their reasoning would cause unfairness to the cross-examiner. The rule enables the cross-examiner to go “to the heart of any difference between the parties without the delay of preliminary reconnoitring”.[34]
[34]Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588, 624 [93] (‘Dasreef’).
The Guan report does not have a statement of reasoning. The intellectual basis for the report is absent. It is inadmissible. Neither the Court nor the parties were in a position to assess the accuracy of the valuation opinion in the report. Counsel for Mr Xianzhu was left to cross-examine in the dark.
The Guan report sets out comparable sales which appear to have been extracted from a database. It includes comparable sales prices and comes up with the conclusion as to the value of the subject painting. Anyone could do that. It plainly fails to demonstrate the process by which Mr Guan applies the sales comparison approach in reaching the conclusion as to the value of the lost painting. For that reason, the Guan report was inadmissible.
An objection was made to the admissibility and reliability of the report. It was initially foreshadowed at the time the report was tendered and repeated in closing. The report was not admitted by consent, as contended by Mr Chen. The report was tendered and there was cross-examination. Its admissibility depended on evidence in chief which was disclosed by Mr Guan in the report itself. The objection was ultimately made during closing submissions.
Although Mr Xianzhu did not take up the Magistrate’s offer of a voir dire, this does not mean the Guan report was admitted by consent.[35] A voir dire may be conducted where a preliminary question as to whether certain facts exist requires determination in order to assess admissibility. That was not required here. The objection required a close examination of the Guan report to determine whether the opinions complied with s 79 of the Evidence Act.
[35]The Butterworths Australian Legal Dictionary (1997) defines ‘voir dire’ as follows: a trial within a trial; a hearing where the admissibility of evidence, or the competence of a witness or juror is examined.
This Court may consider the question of admissibility of the Guan report on appeal even if it forms the view that Mr Xianzhu did not object to the admissibility of the Guan report in the Magistrates’ Court. He did not have the opportunity to adduce further evidence to cure the defects in the Guan report.
The Magistrate erred by admitting the Guan report into evidence as admissible ‘expert evidence’ within the meaning of s 79 of the Evidence Act. The Magistrate erred by taking account of the Guan report.
Although the Magistrate’s ruling with respect to the admissibility of the Guan report was ‘interlocutory’, it was clearly ‘involved’ in the Magistrates’ final orders as it related to the only evidence adduced by Mr Chen to establish the quantum of his loss. The Magistrate’s final orders were affected by the Guan report as evident from the ruling. If the Guan report was not admissible, then there was no evidence of valuation at all and so Mr Chen’s claim should have been dismissed.
Mr Chen’s submissions
Mr Xianzhu made submissions in the Magistrates’ Court that the Guan report should be given little weight. He did not make submissions that challenged the admissibility of the Guan report. The objection was foreshadowed but no application was made. The Guan report was admitted into evidence by consent. The Magistrate offered a voir dire to determine the admissibility of the report. The offer was not taken up. There was no objection ever run to the Guan report, and this point cannot now be run on appeal.
In his report, Mr Guan conducted a lot of research on the artist. He referred to valuation being subject to four assumptions, which he made as a matter of fact. He identified the three most important things, namely, artist, imagery and dimensions. There was no arithmetic formula. There is no problem with the report. There are no exceptional circumstances identified that require it to be raised for the first time now.
Analysis
The amended notice of appeal states that the question of law in respect of the Guan report is whether the Magistrate erred in law in accepting it into evidence and having regard to the opinion of Mr Guan. The ground of law refers back to submissions. There is no question of law properly identified. Moreover, for reasons discussed further below, I find that the Magistrate did not err in law by admitting the Guan report into evidence and having regard to it.
A preliminary issue to be decided is whether or not there was an objection to the admissibility of the Guan report. I find that an objection was foreshadowed prior to the Guan report being admitted but not pursued until closing submissions. This is revealed in the transcript. Immediately prior to Mr Guan giving evidence, the following occurred.
Mr Xianzhu’s counsel: Your Honour, I'd just like to foreshadow that I may in closing make an objection to the admission of this evidence. I'm not in a position to make the objection until I've had an opportunity to cross-examine, but I just wanted to foreshadow that for the court.
HIS HONOUR: Do you anticipate this is going to be (indistinct) because what's [sic] tendered as the evidence is tendered into evidence. Do you want to have a voir dire?
Mr Xianzhu’s counsel: No, Your Honour. I believe that the matters that would go to a question of admissibility will also go to weight of the report so I don't consider it's appropriate to have a voir dire on it, but I just want to foreshadow that given the nature of the cross-examination that I will conduct it may be that I propose that it shouldn't be accepted as evidence.
HIS HONOUR: I can receive it as evidence unless under cross-examination there's shortcomings with the valuation and things of that nature. Because it's his evidence it doesn't mean that I have to accept wholly or entirely I might completely reject everything that's in this report. Is that what you're talking about or are you talking about the actual - - -
Mr Xianzhu’s counsel: Yes, Your Honour.
HIS HONOUR: You're happy to have cross-examination that could undermine the strength of this evidence?
Mr Xianzhu’s counsel: Yes.
HIS HONOUR: It can still go into evidence and then you can undermine that and therefore I won't accept this evidence of that, or are you talking about potentially an (indistinct).
Mr Xianzhu’s counsel: I would intend, and it would depend on the cross-examination and the information that comes out, but potentially make an objection in relation to its admissibility in its entirety.
HIS HONOUR: On what grounds is there likely to be - - -
Mr Xianzhu’s counsel: On the grounds of whether or not it actually comes under the expert evidence exception and/or the value given the nature of the basis of the report.
HIS HONOUR: All right. But it's not an admissibility issues that says that he's not a relevant expert or some other admissibility ground. You're saying that I can see this evidence. If, let's say, there's some shortcoming or the opinion is based in error, it's based or couched against a premise or background that is not proper then I can reject the evidence. But it can still be received by me though can't it?
Mr Xianzhu’s counsel: If Your Honour pleases.[36]
[36]Transcript 37–8.
It is evident from the above that Mr Xianzhu’s counsel foreshadowed the objection but did not make it prior to Mr Guan giving evidence. Further, the Magistrate offered the opportunity of a voir dire and it was not taken up. Having made that election, Mr Xianzhu cannot now complain that his counsel’s cross-examination was hampered because there was no statement of reasoning in the Guan report. Had that truly been a concern, the objection could have been pursued prior to Mr Guan giving evidence.
In closing, Mr Xianzhu’s counsel pursued the objection as to admissibility, making submissions on that, by reference to s 79 of the Evidence Act, together with submissions on weight:
Mr Xianzhu’s counsel: So the submissions that I'd like to make are in relation to the reliability of the valuation report. Section 79 of the Evidence Act allows the admission of an expert opinion where the person has specialised knowledge based on a person's training, study or experience, and the opinion is substantially based on that knowledge.
I submit that the report relied upon by the plaintiff is flawed and should be given little weight for the following reasons. The expert has limited training in valuation of Chinese art and less than four years' experience in valuation. It's unclear from the evidence the extent of his experience in that position. There's no evidence as to the number of valuation he's conducted or the quality of those valuations. And prior to conducting this report the expert had not seen any of Mr Lu's work and in fact the only work he's ever seen is the one provided by the plaintiff. He was clearly not familiar with the artist and in fact, in his report, attributes work to this artist which we can now accept is only partially of that artist.
In relation to the report, the plaintiff hasn't proved the stated and partly articulated unstated assumptions upon which the valuation is based. In particular, the plaintiff has not proved the identity of the painting that is shown that it was in fact by Mr Lu. There's no direct evidence of who produced that painting and it is as a matter law (indistinct) a rational inference that can be drawn from the facts in evidence.
The fact that Mr Lu gave the painting to Mr Kui, is no more evidence than Mr Lu was once in possession of the painting. It would be absurd to think that every piece of art that has been in Mr Lu's possession was his own. There's no evidence before the court of the signature of Mr Lu on the painting. There's no evidence that the painting had any of the markings or stamps stated by the expert to be important insert of buying his other painting. There is evidence that the expert, with his extensive research, cannot recall seeing any paintings by Mr Lu of this subject matter and there is no evidence before the court of any such artwork.
Further there's evidence that in Chinese art flower and birds are a different category in painting from landscapes and that artists are often known for only one particular category. If the court accepts that Mr Chen was given one of Mr Lu's paintings, nothing can be drawn from that evidence. It's equally open on the evidence in relation to the identity of the painting that Mr Lu thought that the painting would be enjoyed by his friend and it may be a painting that wasn't painted by him and he may have even put some note on it. The fact that there are unstated assumptions made by Mr [Guan] deprives the court of the ability to properly assess the reliability of that opinion.
In addition, the plaintiff has not proved that the condition of the painting was similar to the waterfall, which is one of the assumptions made by the expert.
...
Secondly in relation to the expert, the expert has not provided evidence of the steps taken to reach his opinion. Therefore, it's not possible for the court to find that the opinion was reached based upon his specialised knowledge.
The High Court in the case of Dasreef v Hawchar (2011) 243 CLR 588 [sic], found that amongst other things, that a report in which the absence of reasoning pointed to the lack of any sufficient connection between the opinion and the relevant specialised knowledge [sic], and that's at paragraph 42.
The valuation states that it's based on a sales comparison approach, yet it is (indistinct) to the steps taken. The experts say that the valuation was not a straight average despite the straight average of the comparison work matching the upper end of the average provided. However he did not explain his reasoning process to allow it to be understood. This also brings into question the reliability of the valuation, given the following points in particular. The value given to the painting was more the double the value 10 of the 12 comparisons and over 1.5 times the eleventh. There's only comparison that was over this amount and that was significantly over this amount. You'd explain that the reason for this outlay was due to the quality emotions-inspired and subject matter, all of which were not known to be present in the subject piece.
He acknowledged that works of the same size sell for different values and that the price of Mr Lu's has not consistently increased over time.
HIS HONOUR: Is there any (indistinct)
Mr Xianzhu’s counsel: That the price of Mr Lu's work has not consistently increased over time.
HIS HONOUR: Consistency reasons.
Mr Xianzhu’s counsel: He didn't explain why the process engaged to determine that work, the work subject to the valuation, was the second-most valuable when put in a pull of their comparatives. In the absence of the reasoning process and in light of the matters – these matters that required explanation, the valuation is fundamentally fraud.
Thirdly, Mr [Guan] attributed art to Mr Lu that he now accepts is not Mr Lu's work. He did not explain how this concession affected his opinion. It is clear that the valuation is nothing more than a speculation as to what paintings by Mr Lu may be worth, and not even a reliable speculation.
As a matter of law, Your Honour, I submit that this not a valuation that can found evidence of the value of the painting and the plaintiff has not adduced any other evidence to support the substantive quantum of the claim.[37]
[37]Ibid 179–84.
Mr Xianzhu’s counsel referred to the final sentence in paragraph [42] of Dasreef Pty Ltd v Hawchar (‘Dasreef’)[38] above. Mr Chen says this relates to the weight of evidence rather than admissibility. Paragraph [42] addresses both weight and admissibility. Read in context, this last sentence relates to admissibility.
A failure to demonstrate that an opinion expressed by a witness is based on the witness’s specialised knowledge based on training, study or experience is a matter that goes to the admissibility of the evidence, not its weight. To observe, as the Court of Appeal did, that what Dr Basden said about the volume of respirable dust to which Mr Hawchar was exposed over time was "an estimate" that was "contestable and inexact" no doubt did direct attention to its worth and its weight. But more importantly, it directed attention to what exactly Dr Basden was saying in his evidence and to whether any numerical or quantitative assessment he proffered was admissible. And if, as the Court of Appeal observed, his opinion on that matter lacked reasoning, the absence of reasoning pointed (in this case, inexorably) to the lack of any sufficient connection between a numerical or quantitative assessment or estimate and relevant specialised knowledge.
Dr Basden’s evidence was not admissible to found the calculation made by the primary judge of the level of respirable dust to which Mr Hawchar was exposed.[39]
[38](2011) 243 CLR 588.
[39]Ibid [42]–[43] (citations omitted).
As Mr Chen’s counsel points out, on appeal, Mr Xianzhu seeks to rely upon a different part of Dasreef that speaks directly to the statement of reasoning rule.
It is evident from the transcript that the Magistrate accepted the Guan report as evidence and accorded it weight. The Magistrate’s ruling included the following.
…I was told prior to his evidence and actually prior to the tendering of the report that his expertise and qualifications were not challenged and [my offer] to conduct a hearing to determine the admissibility of the report was declined and [Mr Xianzhu’s counsel] indicated to me that what she would seek to do was to make submissions later on.
Mr Guan, in is evidence, stated that he estimated that the value of the missing painting to be between [$60,000] to $70,000. In his report he said that the approach that he had adopted was the sales comparison approach and in his report the sales comparison approach is described as the following. “That it utilises recent sales of similar 31 items as accomplished by researching all relevant and available sales records and asking prices. We analyse comparable sale characteristics that includes style, quality, rarity, exhibition and publication history and the market in which they were sold but most important of all the artist imagery and art work dimensions of painting to arrive at an appraisal value.”
So that is what was described by Mr Guan's report in relation to the approach that he took and from the report it is clear when one looks at the biography of Mr Lu that research was done in relation to the background of the artist. In the report there were 12 different paintings that had been sold and were the subject of the analysis in that report and including also obviously the pictures of those reports that were also an opportunity to observe the style and quality of those paintings.
In relation to the three most important things that Mr Guan had described as forming the sales comparison approach that of the artist, imagery and artwork dimensions. The artist, Mr Lu, is unknown and 12 of his paintings, an additional painting being the waterfall that was also gifted to Mr Chen was available for Mr Guan to observe.
Mr Guan had come to the determination that the waterfall was indeed a genuine painting of Mr Lu. The imagery and the evidence of it that it was clear that the painting was sighted by Mr Chen and Mr Chen was able to provide a description of what the imagery was and was also common ground because the imagery of the painting was also sighted by Mr [Xianzhu] and Ms Huang that involved peony or the blossoming peony said to then symbolise prosperity where peony's calm prosperity also calms and that it was not any landscape paintings.
There was much made of the fact that Mr Lu specified more in landscape imagery but what is also important to note is that that very, very issue was actually taken into account by Mr Guan….
...
Hence from the report and from Mr Guan's oral evidence the method that was employed to reach the valuation is known. The research that was done is known. What paintings and their sales price and sales dates are also known and also evidence of the qualifications or evidence or the qualifications that Mr Guan had attached to his valuation was also received and able to be considered.
The defendants in their submissions and in their arguments had said that in addition to the matters that I have already mentioned that they sought to cast doubt on the accuracy of Mr Guan's valuation. One of the points that was submitted was that Mr Guan was limited because he had never, and he conceded about his evidence, had never seen Mr Lu's work before.
Mr Guan is an Asian art specialist according to the report since 2015 at Mossgreen Auction House. His main responsibilities include valuation. I reject that one has to have seen an artist's work before a valuation can be done. That in my view would be akin to saying that a property valuer can't value a house unless he or she has previously seen homes built by the same builder.
It was also said that the last painting or the one that had three images in the report that Mr Guan did not seem to be aware that two of those images were done by two other artists. I have had regard to this and the fact that he did not seem clear about that but it has not caused me to have doubts in relation to the valuations because that last painting in the report is only one of 12 and if you include the waterfall it is one of 13 that Mr Guan would have the opportunity to look at and know of the sale price or the valuation.
One of the three images was indeed done by Mr Lu so that does not cause me to have any other doubts. I have already indicated about my findings in relation to the fact that I am satisfied that Mr Lu on a balance of did indeed do the painting. The final point that was made was the fact that the valuation of [$60,000] to $70,000 was higher than the 11 other paintings in the report except for the birch forest report or the birch forest painting that was in the report.
Again, there is an explanation for that in a sense that most of the paintings were of a smaller dimension and the one that was of a similar dimension was said to have sold in 2006. Again, that does not cause me to then to question or have doubts in relation to the valuation. What I can say about the valuation is this.
That whilst there might have been more detail in relation to how the [$60,000] to $70,000 was arrived at the method that was employed and when one looks at the sales prices for the other paintings and to note their size and to note that the missing painting here was of a much larger size, one can see the approach that was adopted and how that figure of [$60,000] to $70,000 was arrived at.
So therefore I am satisfied on a balance of probability that the bottom of that range given by Mr Guan, a value of $60,000, represents a fair value of the missing painting and represents the loss to the plaintiff, Mr Chen.[40]
[40]Transcript 201–3, 207–8.
I find that the Magistrate did not err by admitting the Guan report into evidence. To the contrary, that decision was entirely open to the Magistrate. It was consistent with s 79(1) of the Evidence Act.
Exception—opinions based on specialised knowledge
(1)If a person has specialised knowledge based on the person’s training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.
I adopt the following principles given by J Dixon J in Wilson v Bauer Media (Ruling No 7):[41]
[41][2017] VSC 357.
In Dura v Hue, I set out a summary of the relevant considerations that bear on this question, drawn from the detailed analysis in the judgment of Heydon J in Dasreef as follows:
In summary, the matters that will usually be considered at both stages of the inquiry that considers whether the exception under s 79(1) renders opinion evidence admissible may conveniently be referred to as four “rules” (one of which is in three parts), which are:
a)is the opinion relevant (or of sufficient probative value) (the relevance rule);
b)has the witness properly based ‘specialised knowledge’ (the expertise rule);
c)is the opinion to be propounded ‘wholly or substantially based’ on specialised knowledge (the expertise basis rule);
d)is the opinion to be propounded ‘wholly or substantially based’ on facts assumed or observed that have been, or will be, proved, or more specifically (the factual basis rules):
i.are the “facts” and “assumptions” on which the expert’s opinion is founded disclosed (the assumption identification rule);
ii.is there evidence admitted, or to be admitted before the end of the tendering party’s case, capable of proving matters sufficiently similar to the assumptions made by the expert to render the opinion of value (the proof of assumptions rule);
iii.is there a statement of reasoning showing how the “facts” and “assumptions” relate to the opinion stated to reveal that that opinion is based on the expert’s specialised knowledge (the statement of reasoning rule)?
…
There is no doubt that an expert opinion is inadmissible unless the expert states in the report or in evidence in chief the reasoning by which the expert conclusion arrived at flows from the facts proved or assumed by the expert so as to reveal that the opinion is based on the expert’s expertise. The court does not have to be satisfied that the reasoning is correct for the opinion to be admissible but the report must identify the relevant facts and assumptions, the tendering party must be able to prove those matters and the expert must state the reasoning showing how the facts and assumptions relate to the opinion stated to reveal that that opinion is based on the expert’s specialised knowledge.
In R v Juric, the Court of Appeal said:
[T]he jury must be able to evaluate the strength of [expert opinion] evidence by reference to its factual or scientific basis. Whether it can properly do so is a matter initially for the judge in determining whether that evidence is admissible. ... [T]he admissibility of [expert opinion] evidence must depend upon the judge’s satisfaction that the jury can, on the basis of material put before them, properly and reasonably evaluate the differing opinions expressed and make a responsible determination as to which of them is to be preferred.
Approving of that statement in Dasreef, Heydon J continued to explain the function of the statement of reasoning rule.
The rule protects cross-examiners by enabling them to go straight to the heart of any difference between the parties without the delay of preliminary reconnoitring. It also aids the court in a non-jury trial, because at the end of the trial it is the duty of the court to give reasons for its conclusions. And it aids jurors, because at the end of the trial they have the duty of assessing the rational force of expert evidence. If there is not some exposition of the expert’s reasoning it will be impossible for the court to compose a judgment stating, and for the jurors to assemble, reasons for accepting or rejecting or qualifying the expert’s conclusion.
Heydon J concluded that s 79 could not be construed as abolishing the common law rules for six reasons.
First, the court may not be able to understand the opinion so as to decide what weight to accord it. Secondly, the court will not be able to assess whether it corresponds with the facts which the court finds at the end of the trial. Thirdly, the court will not be able to assess whether the opinion is one wholly or substantially based on the expert’s knowledge. Fourthly, there would be unacceptable difficulties for the cross-examiner, who should not have to perform, in the dark, particularly in relation to lengthy and complex expert opinion evidence, the "task of teasing out in cross-examination all the circumstances that the witness had in mind." Fifthly, the cross-examining party should not be left at a disadvantage in deciding whether and how to meet the evidence. Sixthly, the respondent’s construction reduces the chance of the parties getting to grips, or at least getting to grips quickly. It would thus cause trials to become slower, more complicated and more costly.[42]
[42]Ibid [12], [14]–[17]. See also Menz [108].
Relevance was not an issue here.
The Magistrate accepted Mr Guan had specialised knowledge. Mr Guan’s formal qualifications and experience are set out in his report.[43] They were not challenged. He gave oral evidence under cross-examination regarding his experience. The Magistrate ruled that he was an Asian art specialist whose main responsibilities include valuation. It was open for the Magistrate to do so on the evidence before him.
[43]Exhibit ‘XZS-3’ to the second Xianzhu affidavit, ‘Brief Introduction of the Expert’.
The challenge here was whether the Guan report complied with the ‘statement of reasoning rule’. The Guan report identifies three different methods of appraisal, including the sales comparison approach.[44] It explains the sales comparison approach and states why the author considers it to be the most appropriate for the appraisal of the artwork here.[45] As outlined above, the Magistrate described the valuation method used by Mr Guan together with the research undertaken.[46]
[44]Ibid ‘Appraisal Method Adopted’.
[45]Ibid.
[46]Transcript 202.
Here, the Magistrate identified the three most important things that the Guan report identified in this aspect being artist, imagery and artwork dimensions.[47] The Guan report provides reasons for the valuation conclusion based on the sale comparison approach and the Magistrate accepted that conclusion.[48] The Guan report identifies the painting to be the work of Mr Lu, and refers to the imagery and artwork dimensions. The report identifies other artworks of Mr Lu, together with information about each including the date of sale and price of sale. The Guan report also includes information on the artist’s history including exhibition history.[49]
[47]Exhibit ‘XZS-3’ to the second Xianzhu affidavit, ‘Appraisal Method Adopted’; Transcript 202.
[48]Ibid ‘An Ink and Colour Peony Painting by Lu ZhiXue measuring 180cm x 97cm’.
[49]Ibid ‘Artist’s Background’.
Given all these factors, Mr Xianzhu’s submission that the Magistrate erred by allowing admission of the report because it does not contain “comparable sale characteristics that include, style, quality, rarity, exhibition and publication history and the market in which they were sold” must be firmly rejected. The Guan report identifies its reasoning and is therefore distinguishable from authorities such as Rolleston v Insurance Australia Ltd,[50] where an expert valuer simply described “in fairly general terms the differences and similarities between the various comparable sale properties and the subject property, and then [expressed] a view as to the value of that property”.[51]
[50][2017] NSWCA 168.
[51]Ibid [6] (Meagher JA).
Finally, Mr Xianzhu says the Magistrate erred by admitting the Guan report because it gave different values for the insurance value and market value and did not explain the difference. That, too, must be firmly rejected. Firstly, those values were in respect of another artwork that was being appraised. In respect of the artwork here, a market valuation is given, but not an insurance one. Secondly, the Guan report explains the difference between market and insurance values:
Market Value:
Market Value – The value of an item when selling via Moss Green [sic] in its local open market. It is based on our professional opinion of what the item may reasonably expect to realize at a local auction.
…
Insurance Value:
Insurance Value – The full cost, including GST, to either replace an item in the condition as sighted/described with a similar item or the cost to have that item manufactured or remade in the current market.
…[52]
[52]Exhibit ‘XZS-3’ to the second Xianzhu affidavit, ‘Market Value’ and ‘Insurance Value’.
Conclusion
The appeal is dismissed. I will give the parties an opportunity to make submissions on orders consequential to the ruling including costs.
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