Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Titus v Eddington [2019] NSWCATAP 247 Hearing dates: 3 September 2019 Date of orders: 04 October 2019 Decision date: 04 October 2019 Jurisdiction: Appeal Panel Before: S Westgarth, Deputy President J McAteer, Senior Member Decision: (1) The appeal is dismissed; (2) If the respondent seeks costs of the appeal, written submissions must be filed and served within 14 days from the date of this decision; (3) If the appellants oppose an order for costs being made, written submissions must be filed and served within 14 days thereafter; and (4) The submissions on costs must address the question of whether the Appeal Panel may dispense with a further hearing and decide costs on the papers. Catchwords: Strata scheme – reallocation of unit entitlements – expert evidence – evaluation of evidence Legislation Cited: Civil and Administrative Tribunal Act 2013 Strata Schemes Management Act 2015 Cases Cited: Anderson Stuart & Ors v Treleaven & 1 Ors [2000] NSWSC 283; 49 NSW LR 88 Collins v Urban [2014] NSWCATAP 17 Fox v Percy [2003] HCA 22; 214 CLR 118 John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Makita (Australia) Pty Limited v Sprowles [2001] NSWCA 305 Minister for Immigration and Citizenship v Li [2013] HCA 18; 249 CLR 332 Sahade v The Owners – Strata Plan 62022 [2014] NSWCA 208 Sydneywide Distributors Pty td v Red Bull Australia Pty Ltd [2002] FCAFC 157 Texts Cited: Nil Category: Principal judgment Parties: Stephen Titus (Appellant) Joanne Titus (Appellant) Beverly Eddington (Respondent) Representation: Counsel: V F Kerr SC (Respondent) Solicitors: First Appellant (Self Represented)(Second Appellant) File Number(s): AP 19/27899 Publication restriction: Unrestricted Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 17 May 2019 Before: S Thode, Senior Member File Number(s): SC 18/23506 REASONS FOR DECISION Background 1. This appeal arises out of a decision made in the Consumer and Commercial Division of the Tribunal published on 17 May 2019. We will refer to the decision under appeal as the Decision. 2. The Decision arose out of an application brought by the appellants as owners of lot 1 in a strata scheme by which they sought an order from the Tribunal reallocating unit entitlements. The respondent to the application (who is the respondent to this appeal) is the owner of lot 2 in the strata scheme. There are only two lots in the scheme, lot 1 which is owned by the appellants having a unit entitlement of 45 units and lot 2 which is owned by the respondent having a unit entitlement of 55. In essence, the appellants sought an order that the unit entitlements of lot 1 should be increased and the unit entitlements of lot 2 be decreased so that both units have an equal number of unit entitlements. The application was dismissed. Reasons for the Decision 1. It is helpful in understanding this appeal to have a summary of the reasoning contained in the Decision. That summary is as follows: 1. The appellants bought lot 1 in the strata scheme in December 2013 for the price of $1,925,000.00; 2. The scheme was registered in February 2014. It is a two unit duplex. The appellants bought unit 1 from a Mr Leich who then owned both units. He was an architect and developer who took the necessary steps to have the strata plan registered; 3. In July 2015 the respondent purchased unit 2 from Mr Leich's wife (he having transferred unit 2 to her in the meantime) for the sum of $1,875,000.00; 4. The appellants sought to invoke to Tribunal's jurisdiction under s 236 of the Strata Schemes Management Act 2015 (the SSM Act). That section provides as follows: 236 Order for reallocation of unit entitlements (1) Tribunal may make order allocating unit entitlements The Tribunal may, on application, make an order allocating unit entitlements among the lots that are subject to a strata scheme in the manner specified in the order if the Tribunal considers that the allocation of unit entitlements among the lots: (a) was unreasonable when the strata plan was registered or when a strata plan of subdivision was registered, or (b) was unreasonable when a revised schedule of unit entitlement was lodged at the conclusion of a development scheme, or (c) became unreasonable because of a change in the permitted land use, being a change (for example, because of a rezoning) in the ways in which the whole or any part of the parcel could lawfully be used, whether with or without planning approval. (2) Matters to be taken into consideration In making a determination under this section, the Tribunal is to have regard to the respective values of the lots and to such other matters as the Tribunal considers relevant. (3) Persons who may apply for order An application for an order under this section may be made by any of the following: (a) an owner of a lot (whether or not a development lot) within the parcel for the strata scheme, (b) the owners corporation, (c) the lessor, in the case of a leasehold strata scheme, (d) the local council, or by any other public authority or statutory body representing the Crown, being an authority or body that is empowered to impose a rate, tax or other charge by reference to a valuation of land. (4) Application to be accompanied by valuation An application for an order must be accompanied by a certificate specifying the valuation, at the relevant time of registration or immediately after the change in the permitted land use, of each of the lots to which the application relates. (5) Qualifications of person making valuation The certificate must have been given by a person who is a qualified valuer within the meaning of the Strata Schemes Development Act 2015. (6) Ancillary orders that may be made if original valuation unsatisfactory The Tribunal may, if it makes an order allocating unit entitlements that were not allocated in accordance with a valuation of a qualified valuer and, in the opinion of the Tribunal, were allocated unreasonably by an original owner, also order: (a) the payment by the original owner to the applicant for the order of the costs incurred by the applicant, including fees and expenses reasonably incurred in obtaining the valuation and the giving of evidence by a qualified valuer, and (b) the payment by the original owner to any or all of the following people of the amounts (if any) assessed by the Tribunal to represent any overpayments (due to the unreasonable allocation) for which liability arose not earlier than 6 years before the date of the order: (i) the lessor, in the case of a leasehold strata scheme, (ii) the owners corporation, (iii) the owners of lots. (7) Lodgment of order The owners corporation must ensure that a copy of an order made by the Tribunal under this section is lodged with the Registrar-General no more than 6 months after the order is made. Nothing in this section prevents a person who is entitled to apply for an order under this section from lodging a copy of an order made under this section. Note. Section 246 contains provisions with respect to the recording of an order made under this section. 1. The Decision states (and the appellants acknowledged this to be the case) that the effect of s 236 is that the Tribunal must find that the unit allocation was unreasonable at the time the scheme was registered. In support of demonstrating the unreasonableness of the allocation, the appellant's relied upon the report of Mr Casemore, a valuer. Mr Casemore's opinion was that the value of both units as at the date of registration of the strata plan was $1,900,000.00; 2. The respondent relied upon the report of Mr Keen, a valuer. Mr Keen's opinion was that the value of lot 1 at the time of the registration of the strata scheme was $,2000,000.00 (a figure similar to Mr Casemore) but that the value of unit 2 was $2,300,000.00 at the time of registration; 3. The Decision records [59] that the Tribunal found that the report of Mr Casemore was not "particularly persuasive". The Tribunal was of the view that the analysis offered by Mr Casemore did not disclose why he valued each unit as being of equal value at the relevant date (February 2014) [62]; 4. At [64] of the Decision the Tribunal expressed the view that the evidence of both valuers is such that the Tribunal cannot arrive at a finding that the unit entitlement was unreasonable as at the time of registration of the strata scheme. The Tribunal then elaborated upon why Mr Casemore's evidence did not assist in demonstrating that the unit entitlement allocation was unreasonable; 5. The Tribunal found that Mr Casemore failed to value lots 1 and 2 individually. In particular, he did not explain his conclusion that the value of both lots as at the relevant date was $1,900,000.00; 6. The Senior Member concluded that she was not satisfied that the appellants had discharged their onus of proof and that the application should be dismissed; 7. However, the Tribunal also made comments about the evidence of Mr Keen. The Tribunal accepted and preferred the report of Mr Keen because he "adopted a logical approach of comparing lots 1 and 2" and explained the basis for his view that lot 2 is superior to lot 1. As stated above, he valued lot 1 at $2,000,000.00 (as at the relevant date) and lot 2 was valued at $2,3000,000.00 (as at the relevant date); 8. The Tribunal then dealt with submissions made by the appellants to the effect that Mr Keen did not withstand cross examination. The Tribunal disagreed and found that for reasons set out in the Decision the opinion of Mr Keen was to be preferred; 9. The Tribunal found that having regard to the opinion of Mr Keen, the unit allocation was not unreasonable; 10. The Tribunal then stated that even if "I accepted the opinion of Mr Casemore, allocating $1,900,000.00 to each lot at the relevant date, this does not of itself demonstrate that the unit allocation was unreasonable" [72]. The Tribunal dealt with other factors that may be taken into account. This included the evidence of Mr Leich whose evidence explained why he chose the unit entitlement of 45 units for lot 1 and 55 for lot 2. His evidence gave reasons for distinguishing the two lots; 11. The Tribunal made a number of findings based on the contingency that even if "I have erred and the allocation was unreasonable, I would not be minded, in the exercise of my discretion to reallocate the unit entitlements. The discretion is contained in s 236 which provides that the Tribunal may reallocate in the circumstances described in that section"; 12. The Tribunal noted that the current allocation permits the owner of lot 2 to veto all but special resolutions. The current allocation recognises that each unit holder has an equal entitlement to the use of common property but the owner of lot 2 bears a proportionate additional burden of the levies; and 13. The Tribunal found that one of the two appellants, a solicitor bought into the scheme in the full knowledge that he did not have the requisite unit entitlements to either block or force a particular voting outcome. This factor is one to be taken into account: see Sahade v The Owners – Strata Plan 62022 [2014] NSWCA 208 where Basten JA referred to the fact that unit entitlements constitute a right attaching to property and "that fact might provide a reason not to interfere with such rights when units have been sold and purchased on known allocation" [27]. The Tribunal took into account that the appellants acquired lot 1 knowing that they were not acquiring a controlling interest and, conversely, the respondent bought into the scheme aware that lot 2 carried a majority of unit entitlements. These factors resulted in the Tribunal deciding that it "would not be inclined to exercise my discretion to reallocate unit entitlements". The Appeal 1. A Notice of Appeal was filed on 14 June 2019 and an amended Notice of Appeal was filed on 28 August 2019. The amended Notice of Appeal contained deletions and an addition. The addition simply stated that if the Appeal Panel determined that the grounds in the amended Notice of Appeal do not constitute questions of law, then the appellants seek leave to appeal under Sch 4 of cl 12 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) on the basis that the Decision was not fair and equitable and against the weight of evidence in: 1. the non-application of the Makita principles equally to both experts; 2. not deciding Mr Keen was an advocate; 3. not accepting the evidence of Mr Casemore as to value; 4. accepting the evidence of the Summation Method of Mr Keen in the value of lot 2. 1. Counsel for the respondent objected to the late addition contained in the amended Notice of Appeal but acknowledged that the respondent suffered no prejudice by reason of that addition. We propose to allow the addition on the basis that in our view the respondent has suffered no unfairness as a consequence. In the following paragraphs we summarise the Grounds of Appeal. Grounds of Appeal 1. We have renumbered the grounds to take account of the deletions. Ground 1 (formerly 2.1) 1. The Tribunal erred in law "by failing to give proper weight to the evidence of Mr Casemore generally and in accordance with the Makita principles as should be more leniently applied in accordance with Sydneywide Distributors Pty td v Red Bull Australia Pty Ltd [2002] FCAFC 157". Ground 2 (formerly 3) 1. The Tribunal erred in law in not finding that Mr Casemore had determined the respective value of the lots to each other in accordance with s 236(2) of the SSM Act and general valuation principles and taking into account the respective purchase price for lot 1 and lot 2. Ground 3 (formerly 6.1) 1. The Tribunal erred in law in not finding Mr Keen breached the expert code of conduct and Makita principles and was an advocate for the respondent and gave undue weight to Mr Keen's evidence in accepting that he regarded the purchase price of lot 2 as out of line without any explanation, when at that time he knew of the very poor condition of the unit. Ground 4 (formerly 8) 1. The Tribunal erred in law in and failed to give proper weight to the evidence that a purchase price of $1,875,000.00 paid by the respondent for lot 2 in July 2015 in a rising market did not allow it to determine it was worth $2,300,000.00 as at February 2014 which was necessary for its decision. Ground 5 (formerly 10) 1. The Tribunal did not properly apply Makita principles equally and consistently to both valuers and failed to comply with requirements of natural justice. The basis for this ground is that the Tribunal erred in accepting that Mr Keen used a three bedroom unit at the Crescent, Manly "as the basis for saying lot 2 was worth $2,300,000.00 without requiring some price concession as lot 2 is a three bedroom unit and in not questioning the explanation given by Mr Keen that this property was inferior". A further example under this ground is that Mr Keen used the Summation Method which was not normally used for residential property. Ground 6 (formerly 11) 1. The Tribunal did not take advantage of its opportunity to see and hear Mr Keen on its assessment of the credit of Mr Keen such that its findings were inconsistent with the evidence and were glaringly improbable. Ground 7 (formerly 12.1) 1. The Tribunal erred in law in the exercise of its discretion in that it placed excessive and inappropriate reliance on the fact of the period of time after purchase when the application was made. This ground states that the Tribunal did not properly consider the effect of the unit entitlement on the power of the respondent and proper control and management of the two units, was so unreasonable that no reasonable person could have made the decision and was made without considering the evidence of Mr Titus on the effect of 55% control in relation to issues such as disputes about privacy walls. Ground 8 (formerly 19) 1. The Tribunal erred in law and gave undue weight and took into account irrelevant and illogical evidence in the acceptance of evidence of Mr Keen in applying the Summation Method. Such method does not take account of the value attributed to views and to the layout of lot 1. Such method does not take into account other aspects such as location, amenity, views, privacy and condition. Further, Mr Keen used inferior properties and not comparable properties to arrive at lineal rates higher than that of lot 1 such that there was no probative evidence to support the calculation. Ground 9 (formerly 20) 1. In the non-exercise of its discretion, the Tribunal acted in a manifestly unreasonable way and demonstrated bias. Ground 10 (formerly 24) 1. The Tribunal erred in law when it said that Mr Casemore had elected not to rely on the purchase price of lot 2 in 2015. In doing so, the Tribunal ignored the later evidence by Mr Casemore following evidence of the poor condition of lot 2 when he commented on the purchase price and better explained the purchase price paid and value of the lot. Ground 11 (formerly 32) 1. The Tribunal erred in law in concluding that Mr Casemore had not explained the conclusion reached and in properly applying Makita principles in valuing both units at $1,900,000.00. Ground 12 (formerly 40) 1. The Tribunal erred in its application of the decision in Sahade in relation to considerations of good governance without considering the evidence that had been led in the proceedings. Ground 14 (formerly 41) 1. The Tribunal erred in law in determining that it had regard to the evidence of Mr Leich as to why he chose the unit entitlements of 45/55 without giving proper weight to the evidence of Mr Titus in reply. Ground 15 (formerly 50) 1. This is the additional ground referred to earlier. Reply to Appeal 1. The respondent has filed a Reply to Appeal. It is not necessary to record the details contained in the Reply. Appellants' Submissions Grounds 2 (formerly 3), 4 (formerly 8), 5 (formerly 10) and 11 (formerly 32) 1. The following is a summary of the appellant's written and oral submissions. The thrust of the appellant's submissions was to put forward arguments as to why the evidence of Mr Keen should be disregarded as compared with the evidence of Mr Casemore. 2. The appellants submit that Mr Keen's report stated that the sale price of lot 2 in July 2015 was "out of line" (and therefore to be disregarded) but that he had resiled from that evidence under cross examination. The submissions refer to portions of the transcript which are said to support that conclusion. In our view, the transcript is not supportive of the appellants' submissions. 3. In particular the transcript at 55.25-33 contains Mr Keen's explanation in re-examination. He said the sale price for lot 2 achieved in July 2015 did not fit in with the bulk of other evidence. That fact combined with the fact that the sale significantly post-dated the relevant date for valuation led Mr Keen to conclude that he needed to disregard that sale in his deliberation as to the value of lot 2. The balance of the appellants' submissions in this respect cavil with Mr Keen's view that the lot 2 sale in July 2015 ought to be disregarded. 4. The appellants' submissions refer to evidence that the condition of lot 2 in July 2015 was very poor (explaining the price then paid) and that it would be reasonable to infer that the condition of lot 2 at the relevant date for the purposes of valuation was also very poor. The evidence taken from the transcript referenced above, records that Mr Keen was asked to assume that the condition of lot 2 as at the date of valuation was the same as described as at the date of the sale in July 2015. Mr Keen's evidence has already been summarised above. The appellants referred to the supplementary report of Mr Casemore dated 18 December 2018. In that report Mr Casemore says that the information from the selling agent, Mr Davies as to the poor condition of lot 2 suggests that his estimate of $1,900,000.00 as the value for lot 2 as at 4 February 2014 appears to be more reasonable than the $2,300,000.00 estimate put forward by Mr Keen. The appellants submit that Mr Casemore's opinion was that the poor condition of lot 2 meant that the sale price in July 2015 was not "out of line". Grounds 1 (formerly 2.1), 3 (formerly 6.1), 4 (formerly 8) and 11 (formerly 32) 1. The appellants take issue with the Tribunal's findings that Mr Keen was not discredited in cross examination. The appellants submit that Mr Keen knew of the poor condition of lot 2, had a duty to disclose that condition, did not do so and mislead the Tribunal. At [69] of the Decision the Tribunal took a different view. 2. The appellants refer to the standard required of expert evidence as explained in Makita (Makita (Australia) Pty Limited v Sprowles [2001] NSWCA 305) as further explained in Sydneywide Distrubitors Pty Ltd. The appellants submit that the alleged failure of Mr Keen to acknowledge the poor condition of lot 2 demonstrates that he was an advocate for the respondent and did not comply with his obligations under the expert code of conduct. His evidence should be given little or no weight. The appellants submit that the Tribunal was in error to ignore Mr Keen's concession under cross examination that the sale price of lot 2 was not out of line. Until he was cross examined he held to his view that the sale price of lot 2 was out of line when he knew about its poor condition. Grounds 5 (formerly 10) and 8 (formerly 19) 1. The appellants submit that the summation method used by Mr Keen was used improperly and in circumstances where he acknowledged that it was generally not used in the context of valuing residential properties. He "utilised inferior properties to derive a higher linear square metre rate for units to calculate a multiplier rate". Despite those units either being stated as inferior or being inferior, they had a higher internal rate than lot 1. The Senior Member failed to notice this saying that she agreed with it in the absence of proper evidence in support. 2. Mr Keen utilised a comparable property, a property at X/X XXX Avenue Manly which was clearly inferior. The appellants refer to other comparables used by Mr Keen and submit there is no explanation given by Mr Keen for how he arrived at the value of $2,300,000.00 for lot 2 having regard to the comparable properties. Ground 2 (formerly 3) 1. Contrary to the Tribunal's findings, Mr Casemore did value and compare values between lots 1 and 2. He did carry out the exercise of determining the respective values for lots 1 and 2. 2. The appellants submit that the best comparable is the actual lot sold and its price - $1,875,000.00 in July 2015. 3. Contrary to the findings of the Tribunal Mr Casemore did set out aspects of each lot including the individual features for each lot. He said the two lots were broadly similar. He disregarded the sale of lot 2 as the price seemed too low. Ground 6 (formerly 11) 1. Mr Keen under cross examination moved away from what he had put in his reports about the lot 2 purchase price being out of line and "admitted the process and duty an expert had". The Tribunal should have found that Mr Keen was actively not explaining and actively not disclosing relevant information he had as to the poor condition of lot 2. Thereafter, it should have looked critically at his opinions. 2. Mr Keen did not comply with Makita principles by setting out the basis for his view on the actual purchase price paid by the respondent for lot 2 as being "out of line". 3. In a rising market, the purchase price of $1,875,000.00 paid by the respondent in July 2015 did not fit with the conclusions Mr Keen came to about it having a value of $2,300,000.00 in February 2014 to justify a unit entitlement of 55/100. He had been told about the inferior state and presentation of lot 2 at the time of the sale in July 2015. 4. The appellants submit that the summation evidence of Mr Keen should be given no weight or very little weight. The Tribunal gave undue weight to the evidence of Mr Keen when he failed to comply with the expert code in not disclosing initially his knowledge of the poor condition of lot 2. Ground 14 (formerly 41) 1. The Tribunal accepted the views expressed by Mr Keen and Mr Leich in [68], [74] and [76] but said nothing about the evidence of Mr Titus which answered matters raised by Mr Keen and Mr Leich as to why lot 2 was superior. The Tribunal ignored relevant material which resulted in the Tribunal accepting a higher lineal rate for lot 2 than lot 1 when they were both equal. Grounds 7 (formerly 12.1), 9 (formerly 20) and 12 (formerly 40) 1. These grounds essentially submit that the Tribunal erred in law and was manifestly unreasonable, including by showing actual bias or the apprehension of bias in the Tribunal's decision to conclude that even if it had found that the valuation of the two properties were equal, it would not have exercised its discretion to reallocate unit entitlements. The appellants submit that if the Tribunal found that the values were equal, fairness and equality requires there to be a 50/50 unit allocation. The Decision was so unreasonable and unjust that no reasonable Tribunal could have made it. 2. The appellants further submit that a purchaser can buy into a strata scheme knowing that they have the right to apply to change the unit entitlement if they regard it as unreasonable at the time the strata plan was registered. The appellants submit that it was manifestly reasonable for the Tribunal to hold that even if it accepted the opinion of Mr Casemore allocating $1,900,000.00 to each unit, that this did not of itself demonstrate the unit entitlements were unreasonable. It would be clearly unreasonable if both units were worth the same to give a higher unit allocation to unit 2. 3. The unit entitlements were allocated by Mr Leich, the developer. He sold lot 1 and retained ownership of lot 2. He wanted to maintain power and control. The later sale price of lot 2 even with evidence of its very poor condition, did not justify the unit entitlement given by Mr Leich. Respondent's Submissions 1. The Tribunal applied the three step process for dealing with applications to vary unit entitlements set out in Anderson Stuart & Ors v Treleaven & 1 Ors [2000] NSWSC 283; 49 NSW LR 88 (Santow J) at [144]. The first Anderson step was to ascertain the respective values of the lots at the registration date. The Tribunal found that the evidence of Mr Casemore was not particularly persuasive so that the appellants had failed to discharge their onus of proving the respective values of the lots at the registration date being a matter to which the Tribunal was required to have regard under s 236(2) of the SSM Act. In any event, the Tribunal preferred the evidence of Mr Keen that the respective values of the lots at the registration date were $2,000,000.00 for lot 1 and $2,300,000.00 for lot 2. 2. Having made the finding that the appellants had failed to discharge their onus of proving the respective values of the lots at the registration date, the Tribunal did not need to proceed to the second or third Anderson steps but did so. The second Anderson step was to determine whether, having regard to the respective values of the lots and such other matters that the Tribunal considers relevant, the allocation of the unit entitlements was unreasonable when the strata plan was registered. The Tribunal found that the unit entitlements were not unreasonable and even if the valuation for lot 2 of Mr Casemore was preferred, the original unit allocation of 45/55 was still not unreasonable primarily because Mr Leich provided a coherent, rational and unchallenged explanation for doing so. 3. If the original allocation was unreasonable, then the third Anderson step was to consider whether to exercise the discretion to reallocate unit entitlements. Even if the original allocation was unreasonable, the Tribunal would not have exercised its discretion to alter the allocation mainly because to do so would create deadlock and the likelihood of disharmony, contrary to the allocation of control to lot 2 that the registered scheme had effected and into which the parties had deliberately bought. The Tribunal recognised the importance of considering the "control issue" in the exercise of its discretion in small schemes, a matter to which the Court of Appeal had referred to in Sahade. 4. The respondent submits that the appellants have failed to show that the Tribunal erred in law. 5. Appeal Ground 2 (formerly 3) challenges the Tribunal's finding that Mr Casemore had not determined the respective values of the lots. It is a requirement of s 236(2) of the SSM Act that the Tribunal have regard to the "respective values" of the lots rather than the relative values of the lots. The Tribunal accepted the respondent's submission below that Mr Casemore had not valued the lots individually, but rather only relative to each other. 6. The respondent submits that it is important to understand the relevance, or more accurately, lack of relevance of the sale of lot 2 in the valuation exercise. That sale occurred 17 months after the registration date. Both valuers took the view that the lot 2 sale should not be taken into account as a comparable. Mr Casemore persisted in that view even after he had become aware that lot 2 was in a poor condition at the time of the lot 2 sale. Mr Casemore's evidence was that the poor condition of lot 2 at the date of the lot 2 sale did not change his view that the lot 2 sale did not assist in valuing lot 2 at the registration date. Mr Keen gave evidence to the same effect. The appellants' submissions recite parts of Mr Casemore's evidence and the Tribunal's findings concerning it and assert, without reasons, that Mr Casemore did value each of lots 1 and 2 independently. They take this ground of appeal no further. 7. The appellants further submitted that the Tribunal failed to give proper weight to Mr Casemore's evidence. The respondent submits that such submissions do not identify any error in the Tribunal's treatment of Mr Casemore's evidence because Mr Casemore himself said that the evidence that lot 2 was in a poor condition at the date of the lot 2 sale did not change his opinion of the value of lot 2 at the registration date. 8. A question of weight to be given to a particular evidence is a matter for the trier of fact. An error in findings of facts will never be vulnerable to an attack as an error of law unless there was no evidence to support a factual finding. The relevant propositions are reflected in the potential errors of law listed in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. 9. Appeal Ground 1 (formerly 2.1) asserts that the Tribunal erred in failing to give proper weight to the evidence of Mr Casemore. The respondent submits that this ground has not been made out. 10. Appeal Ground 3 (formerly 6.1) alleges that the Tribunal erred by giving "undue weight" to Mr Keen's report. This ground does not raise any question of law. The weight to be given to particular evidence is a matter for the trier of fact. 11. The essence of the appellants' complaint appears to be that Mr Keen failed to explain why he considered the lot 2 sale was out of line and failed to disclose in his original report that he had been told by the selling agent that lot 2 was in a poor condition at the time of the lot 2 sale. Mr Keen's report and evidence explained what he meant. The lot 2 sale occurred at a price that reflected its condition and the market at the time of sale (July 2015) so that the actual sale price of lot 2 was out of line as at the date of sale. When the actual price was adjusted to allow for changes in the market over the 17 months since registration, the resulting figure ($1,480,000.00) was irreconcilable with contemporaneous evidence so that the adjusted sale price of lot 2 was "out of line" as at the registration date. Mr Keen explained in cross examination that he had not mentioned that he had been told lot 2 was in a poor condition at the time of the lot 2 sale in his primary report because he understood the information to be hearsay. Non-disclosure of that information in his initial report did not affect matters. Both valuers disregarded the lot 2 sale as a relevant comparable. The Tribunal did not err [69] in its treatment of Mr Keen's evidence concerning the condition of the lot 2 sale. 12. Appeal Ground 4 (formerly 8) alleges that the Tribunal failed to give proper weight to the evidence that a purchase price of $1,875,000.00 paid for lot 2 in July 2015 "did not allow it" to determine lot 2 was worth $2,352,000.00 as at 14 February 2014. However, both valuers opined that the lot 2 sale was irrelevant to determining the value of lot 2 as at 4 February 2014. 13. Appeal Ground 12 (formerly 32) alleges that the Tribunal erred in finding at paragraph [65(2)] that Mr Casemore's report failed to comply with the principles in Makita. The appellants do not explain how the Tribunal's findings were inconsistent with the application of Makita principle. 14. Appeal Grounds 5 (formerly 10) and 9 (formerly 19) concerned the appellants criticism of Mr Keen for using the Crescent, Manly as a comparable. The respondent submits that Mr Keen did not use that property as the sole comparable, but also had regard to the sale of lot 1 prior to the date of valuation. The appellants have not identified any principle of law that requires the Tribunal to question each comparable used by the valuers. Mr Casemore who provided a critique of Mr Keen's report did not challenge Mr Keen's use or analysis of the Crescent sale. The Tribunal did not err by accepting Mr Keen's evidence concerning the value of lot 2 having regard to his analysis of, amongst other things, the Crescent sale. 15. This ground also concerns Mr Keen's use of the summation method. The respondent submits that the appellants do not explain how the Tribunal's acceptance of Mr Keen's expert opinion concerning the use or application of any particular valuation methodology constitutes an error or law. The appropriate valuation methodologies are quintessentially matters upon which the expert valuers are to opine. The Tribunal did not err by accepting Mr Keen's opinion based, in part, on using the summation method. Mr Keen used the summation method as a check on his primary valuation methodology which was the direct comparison basis. The internal rates for lots 1 and 2 derived from Mr Keen's valuations of those lots using relevant comparables fell at an appropriate position within the range of adjusted internal rates for those comparables using the summation method. The appellants' submissions contain their own critique of Mr Keen's summation analysis of five comparables. The appellants seek to usurp the role of expert valuers in providing opinions about value. Mr Casemore did not undertake that exercise and Mr Keen was not cross examined about those matters. In these circumstances, the Tribunal did not err by accepting Mr Keen's evidence. An appeal on a question of law is not the forum to mount the comparable by comparable criticism of Mr Keen that the appellants seek to undertake without reference to evidence. 16. Appeal Ground 6 (formerly 11) concerns a challenge to the Tribunal's findings that Mr Keen was not discredited by the cross examination. This ground does not raise a question of law. A factual finding based on credibility findings would only be overturned in rare cases where in-controvertible facts demonstrate the finding to be erroneous or glaringly improbable or contrary to compelling inferences: see Fox v Percy [2003] HCA 22; 214 CLR 118. In Fox v Percy the High Court stressed the need for appellant respect for the advantages of trial judges and especially where the decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellant court does not. 17. The appellants' submissions include criticism that Mr Keen was inconsistent with his description of the lot 2 sale price as "out of line". The respondent submits otherwise and say that Mr Keen's primary evidence was that the lot 2 sale price, when adjusted to the registration date 17 months earlier was out of line with other contemporaneous evidence and should therefore be disregarded. He did not resile from that position. Mr Casemore agreed with Mr Keen and this criticism goes nowhere. 18. Ground 14 (formerly 41) concerns the appellants' submission that the Tribunal erred in having regard to Mr Leich's explanation for adopting a 45/55 allocation of unit entitlements without given proper or any weight to Mr Titus' evidence in reply. This ground does not raise a question of law because Mr Titus' evidence was irrelevant. These findings were addressed to the second Anderson step, namely determining whether the allocation was reasonable at the time of registration. The Tribunal took the view that a relevant factor in assessing reasonableness was whether the person who made the allocation had an honest and rational explanation for doing so. Mr Leich gave evidence of his reasons and he was not cross examined. Mr Titus disputes Mr Leich's assessment of the comparative features of lots 1 and 2. That evidence is not relevant to the question of whether Mr Leich honestly and rationally held the view that he expressed. 19. The Tribunal made no error of law in accepting Mr Leich's explanation and it is not for the Appeal Panel to now undertake the task, on appeal, of assessing the comparative value of the features of lots 1 and 2 having regard to Mr Leich's and Mr Titus' competing views. 20. Grounds 7 (formerly 12.1), 9 (formerly 20 and 21) and 12 (formerly 40) concern the contention that the Tribunal's exercise of discretion in the third Anderson step to refuse the application was so unreasonable that no reasonable Tribunal could have properly exercised its discretion in that way. These grounds of appeal seek to invoke Wednesbury type unreasonableness as explained in Minister for Immigration and Citizenship v Li [2013] HCA 18; 249 CLR 332. Where the decision maker is required to exercise a discretion, Wednesbury unreasonableness might encompass acting on a wrong principle, taking irrelevant matters into consideration or arriving at a decision that lacks an evident and intelligible justification. The appellants' submissions fail to meet the requirements of Wednesbury unreasonableness. On the contrary, the Tribunal's exercise of discretion resides comfortably within the bounds of legal reasonableness in which it had a genuinely free discretion under s 236 of the SSM Act. 21. The appellants' submissions are effectively to the effect that unit entitlements in a two lot scheme in which the lots had equal value at the date of registration must always be allocated 50/50. The premise that the lots had equal value has not been made out. However, even if it had been, then accepting that submission would mean in those circumstances that the Tribunal has no discretion under s 236 of the SSM Act. The Tribunal always had a discretion under that section, the exercise of which is affected by factors such as control, knowledge with which lot owners acquire their lots and any prejudice that arises from altering existing unit entitlements, as recognised in Sahade. The Tribunal had regard to evidence before it concerning disputes between the lot owners involving privacy screens and other matters and formed a view that a 50/50 allocation of unit entitlements would more likely exacerbate than resolve disputes about more substantial matters. That is the antithesis of a decision lacking an evident and intelligible justification. Reply Submissions 1. The appellants' submissions in reply have been considered, but it is not necessary to summarise them. Decision 1. Appeals from decisions made in the Consumer and Commercial Division of the Tribunal are regulated by s 80 of the NCAT Act and by cl 12 of Sch 4 of that Act. Essentially, there is an appeal as of right on any question of law or with leave pursuant to the grounds described in cl 12. 2. The cl 12 grounds were the subject of explanation in Collins v Urban [2014] NSWCATAP 17. It is necessary to establish that the appellant has suffered a substantial miscarriage of justice (that is a significant possibility or chance that was fairly open of achieving a more favourable result) because the decision under appeal was: 1. Not fair and equitable; 2. Against the weight of evidence (where the evidence in its totality preponderates so strongly against the conclusion reached by the Tribunal that the decision was not one a reasonable Tribunal could have reached); and 3. There is new evidence which was not reasonably available at the time of the first hearing. 1. In Collins v Urban it was held that that it is insufficient that the decision maker was arguably wrong. Rather, the appellant must demonstrate that the decision involves a question of principle, a question or public importance or an injustice central to the Tribunal's decision or a clearly mistaken factual error. 2. Here, the thrust of the appellants' appeal lies in the submissions that the Tribunal was in error to prefer the evidence of Mr Keen over that of Mr Casemore, and that the evidence of Mr Casemore should have been preferred. The appellants submit that had the evidence of Mr Casemore been preferred, then it would have followed that the allocation of unit entitlements should have been held to have been unreasonable requiring the unit entitlements to be reallocated. 3. The various Grounds of Appeal were put forward as errors of law but, in our respectful view, there was no identification of the nature of the questions of law sought to be raised, other than the error referred to as Wednesbury unreasonableness. 4. As many of the Grounds of Appeal overlap, we will deal with them without specifically identifying which ground of appeal they fall under. 5. Generally, we are in agreement with the submissions of the respondent and are of the opinion that the appeal should be dismissed. Our reasons follow. 6. A good portion of the appellants' submissions were directed to attacking the evidence of Mr Keen. One attack concerned the submission that he had been made aware of the poor condition of lot 2 in July 2015 but that he had failed to declare that knowledge in his initial report. The Tribunal accepted Mr Keen's explanation: see [69] of the Decision. The Tribunal reasons do not display any error of law or an error requiring leave under cl 12 of Sch 4 of the NCAT Act. The grounds concerning this issue are rejected. 7. A further attack on Mr Keen alleged that he was an advocate for the respondent and that his evidence therefore should not be given any weight. This ground was based on the contention that his explanation for not initially acknowledging that he knew of the poor condition of lot 2 as at July 2015 should be rejected. In our view, there was evidence upon which the Tribunal could base its conclusion that it was entitled to accept the explanation of Mr Keen. The submission that Mr Keen was an advocate is rejected. 8. The appellants' further submissions concerning Mr Keen's evidence were to the affect that his evidence that the sale price for lot 2 in July 2015 was "out of line" was given undue weight and that in cross examination he resiled from the view that that sale price was out of line. As we said earlier in this decision, the transcript does not support the appellants' submissions (see paragraph 24 of this decision). 9. The appellants submit that Mr Keen was in error in using as a comparable property the unit at the Crescent Manly. As the respondent correctly submits, that was not the only comparable. Another was the sale price for lot 2. Similarly in our view, the appellants' criticism of the use of the summation method by Mr Keen is misplaced. The valuation methodology used by Mr Keen was accepted as persuasive by the Tribunal and the appellants have not shown where the Tribunal engaged in an error of law, or engaged in findings establishing the existence of a leave ground under cl 12 of Sch 4 of the NCAT Act. 10. The appellants submitted that the evidence of Mr Casemore was that the sale price of lot 2 was not out of line given its poor condition. The respondent submit that that was not the effect of Mr Casemore's evidence and rely on page 857 of the appeal book. That page contains the second page of Mr Casemore's supplementary report dated 18 December 2018. In that report he discussed the sale price of lot 2 in July 2015 and whether it was out of line given the poor condition of that lot. He concludes on page 857 by stating that he cannot "interpret a revised value (if any)". He explains his inability to revise the value of lot 2 on the basis that the description of the condition of lot 2 is "brief and does not readily match available photos". The appellants' submissions do not demonstrate any error by the Tribunal in its treatment of Mr Casemore's evidence. 11. In our view, the Tribunal's analysis of the evidence of two experts and its preference for the opinion of one (Mr Keen) over the opinion of the other (Mr Casemore) does not display any error of law, nor a ground involving the requirement for leave. In particular there is no basis for the submission that the Tribunal applied the "Makita principles" unequally. 12. Having decided that the evidence as to value did not establish that the unit entitlement was unreasonable, the Tribunal nevertheless considered the position on the basis that the valuation of lot 2 was approximately the same as lot 1 and decided that having regard to other matters, the unit allocation was not unreasonable. This included consideration of Mr Leich's evidence. The appellants' submission is that the Tribunal erred in not comparing that evidence with the evidence of one of the respondents, Mr Titus. We agree with the respondent's submission that the evidence of Mr Titus was not relevant to the question of whether at the time of registration of the strata plan Mr Leich had a rational explanation for the unit allocations. That involved a consideration of Mr Leich's evidence. 13. In respect of the attack on the Decision for refusing to exercise its discretion to reallocate unit entitlements, the Tribunal took into account considerations that were not inappropriate. No error of law, nor an appeal ground has occurred and we agree with the respondent's submissions. Those considerations were consistent with the decision in Sahade to which the Tribunal expressly referred. 14. For the above reasons, the appeal should be dismissed. Orders 1. The Appeal Panel makes the following orders: 1. The appeal is dismissed; 2. If the respondent seeks costs of the appeal, written submissions must be filed and served within 14 days from the date of this decision; 3. If the appellants oppose an order for costs being made, written submissions must be filed and served within 14 days thereafter; and 4. The submissions on costs must address the question of whether the Appeal Panel may dispense with a further hearing and decide costs on the papers. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 October 2019