FEDERAL COURT OF AUSTRALIA Sleep v Repatriation Commission [2002] FCA 1471 ADMINISTRATIVE LAW – appeal from decision of Federal Magistrate dismissing application for review of decision of Administrative Appeals Tribunal ("Tribunal") – appellant's rate of service pension reduced by delegate of respondent – valuation of assets – appellant challenged valuation of jointly owned property - Tribunal accepted valuation by Australian Valuation Office – appellant sought review of Tribunal decision – factors taken into account by valuer – questions of fact and expertise – whether error in valuation method used – whether error by Tribunal or Federal Magistrate Veterans' Entitlements Act 1986 (Cth) s 37 Nock v Minister for Capital Territory (1982) 43 ALR 527 referred to Hyam, The Law Affecting Valuation of Land in Australia, 2nd ed. 1995 KENNETH JOHN SLEEP v REPATRIATION COMMISSION S 151 OF 2002 TAMBERLIN J SYDNEY (By video conference) 30 OCTOBER 2002 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 151 OF 2002 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT BETWEEN: KENNETH JOHN SLEEP APPELLANT AND: REPATRIATION COMMISSION RESPONDENT JUDGE: TAMBERLIN J DATE OF ORDER: 30 OCTOBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 151 OF 2002 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT BETWEEN: KENNETH JOHN SLEEP APPELLANT AND: REPATRIATION COMMISSION RESPONDENT JUDGE: TAMBERLIN J DATE: 30 OCTOBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an appeal to the Federal Court from a decision of Baumann FM delivered on 17 May 2002 which dismissed an appeal by the appellant, Mr Sleep, against a decision of the Veterans Appeals Division of the Administrative Appeals Tribunal ("the Tribunal") given on 16 November 2001. The decision of the Tribunal set aside an earlier decision of the Repatriation Commission ("the Commission"). The issue before the Tribunal in respect of which the appellant seeks to show an error of law relates to the valuation of a jointly owned property of the appellant and his wife situated at 477 Port Road, Croydon, South Australia, ("the property"), for the purposes of assessment of the rate of the service pension granted under s 37 of the Veterans Entitlements Act 1986 (Cth) ("the Act") 2 The issue as to the value of the property affects the rate of service pension received by the appellant payable under s 37 of the Act which is subject to both an income test and an assets test. The appellant brings this appeal as a result of a reduction in the rate of his service pension by a delegate of the Commission on 13 April 2000, following a valuation of the property by the Australian Valuation Office ("the AVO"). The history of the ascertainment or adoption of the valuations of the property are set out in the decision of the Tribunal and does not need restatement here. 3 It is important to bear in mind in dealing with the specific issues raised by the appellant that the appeal to the Federal Magistrates Court or to the Federal Court from decisions of the Tribunal is on a question of law only. On this appeal, the appellant has focussed his attack on the valuation methodology of the AVO. It is important to bear in mind when considering questions of valuation that they are usually primarily concerned with questions of fact and degree and do not, in general, raise questions of law or principle. However, that is not to say that questions of principle may not arise in cases concerning issues of valuation, as many authorities indicate. The general principle was referred to by Morling J in Nock v Minister for Capital Territory (1982) 43 ALR 527, at 530, in these terms: "… it is necessary to bear in mind that under ordinary circumstances the process of valuation is an exercise in determining facts, not law. In Ex parte Stocks & Parkes Investments; Re The Minister (1969) 72 SR (NSW) 104 at 107 the New South Wales Court of Appeal said: '… we should state that we would respectfully agree that generally the determination of value is a question of fact and if no more than that is involved no question of law can arise. It is a question of expert evidence.'" 4 Other cases indicating support for this line of authority are set out in Hyam, The Law Affecting Valuation of Land in Australia, 2nd ed. 1995, at 322-325. In the present case the valuation which was accepted by the Tribunal was that given by Mr Thredgold, on behalf of the AVO. The Tribunal was satisfied that the appropriate valuation of the property as at the time of the delegate's decision was $120,000. 5 Mr Thredgold approaches the question of the valuation of the property on two bases. The first basis is what is termed the "summation method" which takes the value of the land together with building and other improvements on the land in arriving at a total figure for the value of the property. This method of valuation as adopted by Mr Thredgold was said by him to take into account a series of comparable sales, which led to the selection of the land value and assisted in relation to the valuation of the improvements. The figure he arrived adopting this method was $121,900, which had been rounded to a figure of $122,000. 6 As an alternative, the other method of valuation used by Mr Thredgold was the "capitalisation method" which is based on the annual rental income and certain outgoings of the property. Using this approach, he calculated net income to be at $10,445.90. Mr Thredgold then capitalised this at what he chose to be a capitalisation rate of 8.5 percent net leading to a capital value figure of $122,893 which he rounded up to a figure of $123,000. 7 It is to the capitalisation method of valuation which the appellant, Mr Sleep, directs his primary attention. He contends that the correct rental value to have been selected in place of the rental figure of $11,054 was a figure of $10,659. Using the same deductions as Mr Thredgold has used and the same capitalisation rate, this gives a figure in the order of $118,000 as the valuation of the property. Mr Sleep says that other deductions ought to be allowed and that the capitalisation rate is inappropriate. 8 However, these are matters of fact for the determination of the valuer and there is no evidence to the contrary of an expert nature on the material before me in relation to what is the appropriate figure to take. The opposing valuation that was produced by Mr Sleep before the Tribunal was that of a Mr Andrews, who arrives at a figure of $113,000, on the basis of a gross rental of $11,520 per annum. However, as Mr Sleep has pointed out, this valuation was produced a considerable period after the relevant date, namely, 18 April 2001. 9 It is important to bear in mind that the valuation reached by Mr Thredgold was on two alternative bases so that even if a successful attack were made on the valuation using the capitalisation method, and I do not think one has been demonstrated in the present case, nevertheless, there is the independent and alternative valuation, based on the summation method, which provides a figure of $122,000. In so far as Mr Sleep has referred to the comparable sales used as the basis of calculation as not being comparable, that is essentially a question of fact and degree which does not raise any question of law for consideration by the Court. 10 The selection of factors such as capitalisation rates, the comparability of sales, the adjustments which need to be made to other sales, the dates of the sales, whether they are before or after the valuation date, and other factors, are all matters of expertise and in the present case I am not satisfied that the expert evidence has been shown to have been wrong. Even in relation to the capitalisation method used by Mr Thredgold, I do not consider that if one accepts the figure of $10,659, which has been advanced by Mr Sleep, that it demonstrates an error of any sufficient degree to amount to an error of law or principle in the carrying out of the valuation. 11 I should note that Mr Sleep has indicated that he felt that he had been lured into a false sense of security about what he saw as an assurance from the Deputy Commissioner of the Department of Veterans Affairs that the Commission's policy was to use the AVO when required and that being a Federal Government Agency, it will act with impartiality and confidentiality. I should add that on the material before me there is no indication whatsoever to support a proposition that there was anything untoward in the approach which was taken by the valuer in this matter. 12 It is one thing for Mr Sleep to be suspicious as to what may have occurred but there is no indication in the material to support this proposition, and his allegations in this respect seem to me to be matters of pure speculation. Accordingly, on examining the matter as a whole, I am not persuaded that there has been any error of law in the decision of the Tribunal in this matter nor am I satisfied consequently that there has been any error of law by Baumann FM in his consideration of the appeal in the matter. 13 I reiterate that I understand the grave concern of the appellant in relation to any reduction in the rate of his service pension but it seems to me that applying normal valuation principles to the present case and having regard to the careful manner in which the valuation has been prepared that by taking two separate bases on which to arrive at a figure, there is nothing to demonstrate that the figure is inappropriate in the circumstances. It is notorious that questions of valuation raise matters of judgment which are fine and on which different experts may reach widely different conclusions. 14 If one examines the authorities in relation to valuation in general, be it land or financial instruments, there is often a great discrepancy between the valuation which may be arrived at by different valuers. That is not to say that there is any dishonesty in reaching these different conclusions but, provided that the range of figures is within a reasonable approximation, that will generally be sufficient to establish a proper valuation unless something to the contrary has been established. In the present case nothing to the contrary has been established. 15 Accordingly, for the above reasons I have reached the conclusion that no error of law having been shown and the decision of the Tribunal ought be upheld. The appeal from the decision of Baumann FM should be dismissed. So far as the question of costs is concerned, the general principle of course is that costs follow the outcome of the proceedings and I consider the appropriate order is that the appeal to the court should be dismissed with costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 19 December 2002 The appellant was self-represented. Counsel for the Respondent: S Maharaj Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 30 October 2002 Date of Judgment: 30 October 2002