Bargwanna Pty Ltd v Valuer-General for the State of South Australia - [2011] SASC 67

Supreme Court of South Australia
(Land and Valuation Division: Application)
BARGWANNA PTY LTD & ANOR v VALUER-GENERAL FOR THE STATE OF SOUTH AUSTRALIA
[2011] SASC 67
Reasons for Decision of The Honourable Justice Kourakis (ex tempore)
8 April 2011
REAL PROPERTY - VALUATION OF LAND - OBJECTIONS AND APPEALS - SOUTH AUSTRALIA
REAL PROPERTY - VALUATION OF LAND - VALUERS-GENERAL
Application for discovery - applicants seek access to vaulation methodology and resulting values given by Valuer-General to all industrial and commercial properties in Mt Barker and other regional centres - whether material sought in application relevant to determine value of land subject of appeal.
Held - application refused - value of subject land to be determined by applciation of ordinary valuation principles imported by s 5 of the Valuation of Land Act 1971 - values so determined not adjusted by reference to values assigned by Valuer-General to other properties in area.
Valuation of Land Act 1971 (SA) s 5, s 11, s 12, s 13, s 15, s 24, s 25, s 25B, s 25C; Land Valuation Rules 1970 (SA) r 5, r 73(8)(h), referred to.
Skycity Adelaide Pty Ltd v Valuer-General (2009) 168 LGERA 332; City of Port Adelaide Enfield v Starboard Nominees Pty Ltd [2008] SASC 20; Perpetual Trustee Co Ltd v Valuer-General (No 2) (2007) 99 SASR 251; Ardoch Pty Ltd v Valuer-General (No 2) (2006) 148 LGERA 408; Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369, applied.
Dawkins v Ash Brothers & Heaton Ltd [1969] 2 AC 366; Ladies' Hosiery and Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679; Strike & Sons Ltd v Halifax Assessment Committee [1922] 1 KB 264, distinguished.
Fenton Nominees Pty Ltd v Valuer-General (1981) 27 SASR 258, discussed.

BARGWANNA PTY LTD & ANOR v VALUER-GENERAL FOR THE STATE OF SOUTH AUSTRALIA
[2011] SASC 67
Civil

KOURAKIS J The appellants are the registered proprietors of commercial land in Mount Barker. The appellants, to whom I shall refer as Bargwanna, Euroday, and Mount Barker Property Investments respectively, appeal against the site value assigned to their respective properties as of 1 January 2008 pursuant to s 11 and s 12 of the Valuation of Land Act 1971 (the Act). I have heard, together, applications for discovery in all three appeals.
In short, the appellants seek access to the valuation methodology and resulting values given by the Valuer-General to all industrial and commercial properties in Mount Barker and several other regional centres. I refuse the applications on the grounds that those valuations are neither directly nor indirectly relevant to the issues on appeal. I now give my reasons.
The appellants were dissatisfied with the valuations assigned to their respective properties by the Valuer-General. They objected to his valuations pursuant to s 24, of the Act but the Valuer-General disallowed the objections pursuant to s 25 of the Act. Dissatisfied with the confirmation of the values by the Valuer-General they sought review by a review valuer pursuant to s 25B of the Act. The review decisions were handed down on various dates in early July 2010. The valuation of the Valuer-General of the land of Mount Barker Property Investments was confirmed. There were slight reductions in the values of the properties which are the subject of the other two reviews; pursuant to s 25B(11) the Valuer-General is obliged to amend the valuation roll maintained pursuant to s 11 of the Act to accord with the review valuation.
An appeal pursuant to s 25C of the Act proceeds by way of a hearing de novo. It is not necessary to establish error in the valuation process of either the Valuer-General or the review valuer.[1]
[1] Skycity Adelaide Pty Ltd v Valuer-General (2009) 168 LGERA 332 at [335]; City of Port Adelaide Enfield v Starboard Nominees Pty Ltd [2008] SASC 20 at [4]; Perpetual Trustee Co Ltd v Valuer-General (No 2) (2007) 99 SASR 251 at [60]; Ardoch Pty Ltd v Valuer-General (No 2) (2006) 148 LGERA 408 at [24]; Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369 at [19]; Fenton Nominees Pty Ltd v Vauler-General (1981) 27 SASR 258 at 260.
An appeal pursuant to s 25C of the Act is an appeal against the decision of either the Valuer-General or the review valuer.[2] The decisions of review valuers take effect through the incorporation of their valuations into the valuation roll pursuant to the provisions of the Act. If the decision of either a review valuer or the Valuer-General is varied on appeal then it is that decision, as varied, which is given statutory effect. Whether it is the decision of the Valuer-General or the review valuer which is appealed, the nature of the appeal does not alter. It is, as I have said, a hearing de novo.
[2] The Vauler-General is the appropriate party to the appeal even when the decision appealed against is the decision of a review panel valuer because it is the Valuer-General who is bound to implement the decision of the review valuer, as varied on appeal, by amendment of the roll.
Although it is not necessary to show error in the way in which the valuation below was arrived at, an appellant appealing pursuant to s 25C of the Act, like any other appellant, has an onus. The appellant must satisfy this Court that a different valuation should have been made.[3] That onus is discharged by leading evidence of the value of the property. If on that evidence the valuation is shown not to fall within the proper range of values for the land, the appeal will be allowed and a different value substituted. I do not intend to derogate in any way from those authorities which hold that a mere difference in value is not, in itself, an error. In my view, the burden of those decisions is that in the case of the valuation of land, the value is not a precise single dollar figure. Rather, the value of land necessarily being imprecise, it is recognised that, for all practical purposes, the value will fall within a monetary range. The limits of that range will obviously vary from case to case.[4]
[3] Cf Fenton Nominees Pty Ltd v Valuer-General (1981) 27 SASR 258 at 263. There is no basis to approach valuation appeals as if the valuation was the exercise of a judicial discretion; the observations of Wells J must be taken to refer to practical, evidential ways in which the appellant may choose to show error.
[4] Section 25B prohibits review valuers "tinkering" with valuations of the Valuer-General by making variations of ten per cent or less.
I proceed on the basis that I have a general discretion with respect to discovery pursuant to Rule 73(8)(h) of the Land Valuation Rules 1970.[5]
[5] The power given by Rule 73(8)(h) is not circumscribed by any express criteria but, by implication, it must be exercised for the purpose of the expeditious and just determination of proceedings. The Rule therefore makes provision for discovery and the general rules are not imported by Rule 5(1) of the Land Valuation Rules 1970.
The applications for discovery in all three matters before me seek material which will disclose the values assigned to industrial and commercial properties in Mount Barker over several years by the Valuer-General. The information sought will, in addition to disclosing the assigned values, disclose some basic information about the properties.
Other paragraphs of the applications seek similar information with respect to industrial and commercial properties in Victor Harbor and Gawler.
Yet a further paragraph of the applications seeks what may be described as the working papers of the Valuer-General with respect to the valuations made of commercial and industrial properties in 2008.
I will return to deal with those paragraphs as a whole in a moment. Before doing so I will deal with a further class of documents sought in the Euroday and Bargwanna appeals, but not in the Mount Barker Property Investments appeal. That class pertains to about 93 sales from which the Valuer-General derived an escalation factor for properties in the Mount Barker area. I am told that it is now not possible to retrieve the information about the 93 sales from the Valuer-General’s database. On the Valuer-General undertaking to file an affidavit to that effect, and for the reason that the information cannot now be derived, I do not order discovery in terms of that paragraph which designated para.1.2, in the Euroday and Bargwanna matters.
I return to the paragraphs in all three matters which seek the valuation information which I have described.
I start by acknowledging that the information requested may include some sales information about the property and does include some basic information about the nature of the land, including its location and the state of improvements. The sales history of commercial land generally in Mount Barker and perhaps even in other regional centres might disclose a trend in the inflation of industrial and commercial land prices. That trend in sale prices may well be probative material on the determination of the appeals. However, the applications for discovery before me are not targeted to that information. If they were, and if there were an opinion from a valuer, perhaps a statistical valuer, that the sales trends had more than merely trivial probative value, then there may be a case, in the interests of justice, for ordering disclosure of that sales information. Of course, much might depend on any difficulties which the Valuer-General might face in attempting to retrieve that data. I have no information in affidavit form before me about that. I simply mention these matters to make it clear that by refusing the present application before me, I should not be taken to have held that information about sales trends for commercial properties is generally not relevant. Moreover, it may well be that it is in the interests of justice and the expeditious disposition of these appeals for that information to be provided. Unless and until such an application directed at that information is made, and supported by appropriate affidavit material, there is nothing further I can usefully say on the question.
Turning to the applications, as they are presently cast, seeking discovery of the Valuer-General’s valuations, I refuse it for the following reasons. It is clear that the general valuation made pursuant to s 11 of the Act is a valuation made in accordance with ordinary valuation principles. Section 11 of the Act provides:
VALUATION OF LAND ACT 1971 - SECT 11
11—General valuations
(1) The Valuer-General must make or cause to be made general valuations of land within the areas of the State.
(2) For the purposes of each such general valuation, the Valuer-General must determine or cause to be determined, with respect to all land subject to the general valuation, the annual value, the capital value, the site value and the unimproved value of the land so far as those values are required for the purpose of levying or imposing any rate, tax or impost.
(3) A separate valuation roll must be prepared in respect of each area.
The values complained about on these appeals are site values. The definition of ‘site value’ in s 5 of the Act is “the capital amount that an unencumbered estate in fee simple in the land might reasonably be expected to realise upon sale, assuming that any unexhausted improvements have not been made”.
I accept that much of the land in any particular local government area will be improved. That means that in valuing the unencumbered and unimproved estate, certain assumptions must be made about the hypothetical sale process that the definition of site value entails. Nonetheless, it is clear that it is that hypothetical market value that must be determined. There is no suggestion in s 11 of the Act that the market value so determined is to be further modified, reduced or increased, by reference to values made by the Valuer-General and assigned to other properties.
Authorities on the operation of similar legislation in faraway lands is of limited assistance because much will turn, not only on the particular terms of that legislation, but also on the socio-economic and legislative context in which it operates.[6]
[6] Cf Dawkins v Ash Brothers & Heaton Ltd [1969] 2 AC 366; Ladies’ Hosiery and Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679; Stirk & Sons Ltd v Halifax Assessment Committee [1922] 1 KB 264.
Section 15 of the Act stands in contrast to s 11. Section 15 deals with the valuation of property in the time between general valuations. Section 15 of the Act appears calculated to deal with new allotments that might be created by subdivision or to the improvement or change in some other way of land in between general valuations. It would very obviously engender a real sense of grievance if the owner of land valued between general valuations were rated or taxed on the basis of higher values than the values assigned to his or her neighbours for comparable land. It is that problem that is addressed by s 15 of the Act. Section 15 meets that mischief by requiring the value of a particular parcel of land in between general valuations to be valued according to values prevailing, in the sense of generally current, at the time of the then applicable general valuation. Therefore, it may well be that s 15 of the Act directs attention to comparable values rather than to comparable sales as the valuation method. I need not finally determine precisely the nature of valuation mandated by s 15 of the Act because whatever it requires, it stands apart from the general valuations required by s 11 of the Act.
I am informed by counsel for the Valuer-General that the valuations appealed against in this matter are valuations which form part of a general valuation made pursuant to s 11 of the Act and notice was given in the Government Gazette pursuant to s 13 of the Act. Accordingly, on the undertaking of the Valuer General to file an affidavit to that effect, I proceed on that basis that the valuations were made pursuant to s 11 of the Act. Therefore, no question of any secondary modification of the hypothetical site value in accordance with s 15 of the Act arises.
In my view, value is an economic fact. It is the product of economic forces. It is the price point of equilibrium between supply and demand for land in the state of improvement premised by the definitions in the Act. Land may for many reasons be sold at a different price to its value so determined. The value of land, even though intangible, may nonetheless be inferred. It can be inferred from the price at which the land itself has itself been sold in the past, with or without adjustment for various factors such as improvements, or the particular reasons for the sale. Even though intangible, value may be inferred by reference to comparable sales or by reference to the capacity of the land to generate income, again with or without adjustments. Qualified valuers can make and express expert opinions about value, based on the inferences they draw from manifestations of value of the sort I have described. However, their opinions are not in themselves economic facts. Nor are they determinants of value, even though some market players may from time to time have recourse to those opinions.
I acknowledge that the Valuer-General, as a matter of internal practice, may determine average values per square metre for classes of land. He may also choose to determine that value by calculating an area wide inflation, or escalation, rate. The values assigned to land in a general valuation may be the result of the application of “averages” determined in that way. The practicality of valuing all land in a local government area may well demand such an approach. However, when the assigned value is tested on appeal it is the value of the subject land which must be determined.
I acknowledge also that it is, at least, implicit in the Act that values will be assigned consistently and coherently. In my view, that coherence will arise from the proper and consistent application of the ordinary valuation principles imported by the very definition of values in s 5 of the Act. Values so determined do not need to be further adjusted by reference to opinions about the values of other properties in the area. If it were otherwise, there would be what are, in my view, undesirable consequences which would not serve any of the manifest purposes of the Act. For example, the Valuer-General on an appeal against a decision of a review valuer might be entitled, as politically undesirable as it might be, to appeal on the basis that although the review valuer arrived at a proper value using traditional methods, it was at an under-value when compared to the over-valuations in the general roll for the local government area. On the other hand, on an appeal by a proprietor of land the proprietor no doubt would insist on a valuation in accordance with ordinary valuation principles, even though there was an over-valuation in the roll but would contend for the converse where there was an undervalue in the roll. This court is not in a position to supervise or amend the valuation roll generally. This Court, on an appeal, can only proceed by applying proper valuation approaches and principles to the subject land. If the valuation so determined leads to some incoherence then it will be for the Valuer-General to attend to any resulting tension in the valuation roll by using the powers available to him under the Act.
For these reasons it is my opinion that the values assigned to other land in the applicable local government area, or comparable areas, from time to time by the Valuer-General are neither directly nor indirectly relevant. For that reason I refuse the applications for discovery in all three matters.