Corporation of the City of Adelaide v City of Port Adelaide Enfield

The City of Adelaide appeals against the valuation of land for rating purposes by the City of Port Adelaide Enfield. The land is used as a landfill for waste disposal. The respondent had assessed the rateable value of the land at $18 million. The appellant contends that the correct rateable value was significantly lower. The issues for determination were whether the discounted cash flow method was the appropriate method of valuation, the correct royalty rate, and the appropriate capitalisation rate. The court found that the discounted cash flow method was not appropriate because the hypothetical purchaser of the land was not purchasing a business. Instead, the appropriate method was to assess the royalties likely to be received by a hypothetical purchaser and to apply an appropriate discount factor to arrive at the net present capital value of that sum. The appropriate royalty rate was 11% and the appropriate capitalisation rate was 18%. The court found that the value of the land for rating purposes was $11 million. The final valuation figure and the costs of the appeal will be determined by the court at a later date.