Deflector Gold Pty Ltd v Valuer General - [2024] WASC 252

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   DEFLECTOR GOLD PTY LTD -v- VALUER GENERAL [2024] WASC 252
CORAM:   LEMONIS J
HEARD:   7 FEBRUARY 2024
DELIVERED          :   18 JULY 2024
FILE NO/S:   GDA 6 of 2023
BETWEEN:   DEFLECTOR GOLD PTY LTD
First Appellant
GULLEWA GOLD PROJECT PTY LTD
Second Appellant
AND
VALUER GENERAL
Respondent

ON APPEAL FROM:
Jurisdiction              :   STATE ADMINISTRATIVE TRIBUNAL
Coram:   MEMBER ROSETTA PETRUCCI
File Number            :   DR 125/2022

Catchwords:

Valuation of land - Interim valuation conducted after the date of the last general valuation - Whether interim valuation should be conducted as at the date of the last general valuation and on the assumption that improvements added after the last general valuation were in situ as new at that point in time

Legislation:

Acts Amendment (Annual Valuations and Land Tax) Act 1993 (WA)
Interpretation Act 1984 (WA)
Local Government Act 1995 (WA)
State Administrative Tribunal Act 2004 (WA)
Valuation of Land Act 1978 (WA)
Valuation of Land Regulations 1979 (WA)

Result:

Leave to appeal granted
Appeal allowed

Category: B

Representation:

Counsel:

First Appellant	:	T C Russell
Second Appellant	:	T C Russell
Respondent	:	C A Ide

Solicitors:

First Appellant	:	Cassandra Lendich
Second Appellant	:	Cassandra Lendich
Respondent	:	State Solicitor's Office

Case(s) referred to in decision(s):

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
Barber v Valuer General (1969) 17 LGRA 409
Beiler v The Valuer General (1980) 23 SASR 385
Commissioner for Consumer Protection v Carey [2014] WASCA 7
Conservation Council of WA Inc v The Hon Stephen Dawson MLC, Minister for Environment; Disability Services [2019] WASCA 102
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
Prichard v M 6:8 Legal Pty Ltd [2024] WASCA 4
Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

LEMONIS J:

This appeal concerns the proper construction of the Valuation of Land Act 1978 (WA) (the Act).
Broadly speaking, valuations conducted under the Act are used by Shires in Western Australia for the purposes of determining the rates payable in respect of land within the relevant shire.
Each appellant (Deflector and Gullewa) is a subsidiary of Silver Lake Resources Limited and is the registered holder of a mining lease in the Shire of Yalgoo (the Shire). Both mining leases have improvements on them. These improvements were added at various times from 2016 to 2019.
Up until 30 June 2020, each mining lease was valued for rating purposes as one parcel of land comprised by the respective mining lease. However, from 1 July 2020 onwards, each mining lease has been valued for rating purposes by reference to two separate parts of the respective mining lease. The first part comprises the area on which the improvements are situated. The second part comprises the balance of the mining lease. The valuation methodology used for the part on which the improvements are situated was the 'gross rental value' method prescribed by the Act. The valuation methodology used for the balance of the mining lease was the 'unimproved value' prescribed by the Act.
This appeal is in respect of the gross rental valuation that was undertaken of that part of the mining lease on which the improvements are situated. The particular valuations the subject of this appeal are in respect of the financial year that ended 30 June 2021. They were undertaken as interim valuations pursuant to s 23(1) of the Act.
The respondent (the Valuer‑General) undertook the assessment of the gross rental value by reference to a percentage of the capital value of each appellant's land. Relevantly to this case, the capital value is constituted by the sum of the unimproved value of the land and the estimated replacement cost of the improvements to the land after making such allowance for physical depreciation (amongst other matters).
This appeal concerns the Valuer‑General's approach to assessing the physical depreciation of the improvements. The Valuer‑General made no allowance for physical depreciation and the appellants contend it was an error of law not to do so.
For introductory purposes, the Valuer‑General's approach can be summarised as follows.
Section 23(4)(a) of the Act relevantly provided that where a valuation is made under s 23(1) (as was the case here), the value of the land shall be determined in accordance with the level of values prevailing in relation to land of the same or a similar character at the date of valuation of the last general valuation. The last general valuation had a date of valuation of 1 August 2014 and came into force on 1 July 2015.[1]
[1] Member's reasons [50].
The Valuer‑General determined that s 23(4)(a) required the gross rental valuation undertaken in respect of the appellants' land to have a date of valuation of 1 August 2014. This was before any of the improvements had been added to the mining leases. The Valuer‑General conducted the valuation on the hypothetical assumption that the entirety of the improvements were in place as at 1 August 2014 and were new at that point in time. Thus, no allowance was made for physical depreciation. The Valuer‑General considered this approach reflected the requirement imposed by s 23(4)(a) that the valuation be determined in accordance with the level of values prevailing in relation to land of the same or a similar character as at 1 August 2014. On this appeal, the Valuer‑General's counsel accepted such an approach was artificial, however pointed out that on occasions the language of valuation legislation requires that an artificial approach is taken in making the necessary assessment.
Deflector and Gullewa objected to the valuations. They contend that the valuations ought to have been conducted by reference to the estimated replacement cost of the improvements at the time of each interim valuation, after making allowance for physical depreciation at that point in time. The Valuer‑General disallowed the objections.
Deflector and Gullewa then served notice on the Valuer‑General under s 33(1) of the Act requiring the Valuer‑General to refer the valuations to the State Administrative Tribunal (Tribunal) for review, which the Valuer‑General did.
The review hearing was conducted by a single member of the Tribunal. The learned member gave carefully considered written reasons, dismissed the applications for review and affirmed the Valuer‑General's decision to disallow the objections.
Deflector and Gullewa now appeal to the Supreme Court.
The appeal is brought pursuant to s 105 of the State Administrative Tribunal Act 2004 (WA).
An appeal under s 105(2) is analogous to judicial review, subject to s 105(2) applying to all errors of law, jurisdictional or otherwise.[2] A decision does not involve an error of law unless the error is material to the decision in the sense that it contributes to it so that, but for the error, the decision would have been, or might have been, different.[3] The appeal is not by way of rehearing.
[2] Commissioner for Consumer Protection v Carey [2014] WASCA 7 [72] (McLure P) and [170] (Murphy JA agreeing).
[3] Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 353.
There is one ground of appeal:
The Member erred in law as to the proper construction of the definition of 'capital value' in section 4(1) of the Valuation of Land Act 1978 (WA) in concluding that no allowance for physical depreciation was required in determining the estimated replacement cost of improvements to the land, where an interim valuation was conducted by the Valuer‑General under section 23 of the Valuation of Land Act 1978 (WA).
This ground clearly raises a question of law, namely the proper construction of the Act. It follows that if the learned member erred in the construction of the Act, then that constitutes an error of law. Further, the asserted error has a substantial effect on the valuations ‑ taking account of physical depreciation will significantly reduce the applicable value. Consequently, the quantum of the rates payable will be significantly reduced. Accordingly, if the learned member did err in the proper construction of the Act, leave to appeal should be granted and the appeal allowed.
Before turning to the specifics of this appeal, it is useful to first explain the applicable principles of statutory construction.

Principles of statutory construction

The principles of statutory construction were recently summarised in the joint reasons for decision of the Court of Appeal in Prichard v M 6:8 Legal Pty Ltd.[4] Their Honours explained:[5]
This court recently reiterated the importance of statutory text to the exercise of statutory construction in Chief Executive Officer, Department of Water and Environmental Regulation v Waroona Resources Pty Ltd. Consistently with that discussion, statutory construction is a process of determining the objective meaning of the legislation by the application of recognised rules of interpretation to the legislative text, understood as a whole and in its context. As the High Court observed in Zheng v Cai:
'It has been said that to attribute an intention to the legislature is to apply something of a fiction. However, what is involved here is not the attribution of a collective mental state to legislators. That would be a misleading use of metaphor. Rather, judicial findings as to legislative intention are an expression of the constitutional relationship between the arms of government with respect to the making, interpretation and application of laws … the preferred construction by the court of the statute in question is reached by the application of rules of interpretation accepted by all arms of government in the system of representative democracy.' (citations omitted) (footnotes omitted)
[4] Prichard v M 6:8 Legal Pty Ltd[2024] WASCA 4.
[5] Prichard[41].
Their Honours also said:[6]
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The statutory text is the surest guide to Parliament's intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of the provision, in particular the mischief it is seeking to remedy.
Legislative purpose is to be ascertained from what the legislation says, rather than any assumption about the desired or desirable reach or operation of the relevant provisions. Identifying the legislative purpose is itself an objective exercise of statutory construction, which does not involve a search for what those who promoted or passed the legislation may have had in mind when it was enacted… Nor is it for a court to construct its own idea of a desirable policy, impute it to the legislature, and then characterise it as a statutory purpose. (footnotes omitted)
[6] Prichard[43] ‑ [44].
Further, in the joint judgment of the High Court in Project Blue Sky v Australian Broadcasting Authority,[7] their Honours observed:
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court 'to determine which is the leading provision and which the subordinate provision, and which must give way to the other'. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. (footnotes omitted)
[7] Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 [70].
Section 18 of the Interpretation Act 1984 (WA) provides that in the interpretation of a provision of a written law, a construction that would promote the purpose or object underlying the written law (whether or not that object is expressly stated) shall be preferred to a construction that would not do so.
Further, pursuant to s 19 of the Interpretation Act, I can have regard to extrinsic material relating to the Act to confirm that the meaning of a provision is the ordinary meaning conveyed by the text, taking into account context and the purpose or object of the legislation. I can also have regard to the extrinsic materials to determine the meaning of a provision when it is ambiguous or obscure. The extrinsic materials include the second reading speech for the Bill which proposed the Act.

Background matters

Deflector is the registered holder of mining lease M59/442, which includes one of the pieces of land the subject of the appeal (the Deflector site). The Deflector site has on it administrative buildings and a workshop facility that were both built in 2016. It also has on it a boardroom that was relocated to the site in 2019 from a different site.
Gullewa is the registered holder of mining lease M59/356, which includes the other piece of the land the subject of the appeal (the Gullewa site). The Gullewa site contains a workers accommodation village which was constructed in two tranches, being 136 units in 2016, and 36 units in 2019.
As I will come to explain, the definition of 'land' in the Act includes tenements and thus captures mining leases.
The sites are relatively close to each other (approximately 1.2 km apart) and are located approximately 50 km southwest of the town of Yalgoo.
Until the 2020/2021 financial year, for rating purposes, the Deflector and Gullewa sites were not valued separately to the mining leases on which they are situated. The mining leases had been valued on an unimproved value basis. A gross rental value valuation had not previously been conducted in respect of the sites.
Section 6.28(1) of the Local Government Act 1995 (WA) provides that the responsible Minister is to determine the method of valuation to be used by a local government as the basis for a rate. Further, s 6.29(2) and s 6.29(3) provide that, relevantly, the basis for a rate on a mining tenement is to be unimproved value, unless the Minister determines that gross rental value is to be the basis and expressly excludes s 6.29(2).
By notice published in the Western Australian Government Gazette of 21 July 2020,[8] the responsible Minister determined that the method of valuation of the sites to be used by the Shire as the basis for rates would change from unimproved value to gross rental value with effect from 1 July 2020. The notice stated that with effect from 1 July 2020, the Minister:
1.[determined] that the method of valuation to be used by the Shire of Yalgoo, as the basis for a rate on the mining tenements referred to in Column 1 of the Schedules (Description), in respect of the portions of land referred to in Column 2 of the Schedules (Portion of Land), is to be the Gross Rental Value of the land;
2.expressly [excluded] the application of section 6.29 (2) of the Act to the mining tenements, in respect of the portions of the land.
[8] Western Australia, Government Gazette, No 124 (21 July 2020) 2396.
The description of land contained in column 1 of the schedule to the determination included reference to 'Silver Lake Resources (Admin and Workshop) Silver Lake Resources Ltd - Deflector Gold Copper Project' and 'Silver Lake TWA Village Silver Lake Resources Ltd ‑ Deflector Gold Copper Project'. The former refers to the Deflector site and the latter to the Gullewa site.
Consequent upon the Minister's determination, the Valuer‑General undertook valuations of the sites using the gross rental value method.
For the financial years from 1 July 2020 onwards, the Shire issued two rates notices in respect of each mining tenement. One notice specified gross rental value for each site the subject of this appeal. The second notice specified the unimproved value for the balance of the area the subject of the mining lease.
The gross rental valuation for each site was calculated by reference to a percentage (5%) of its capital value. The capital value contained two components. First, the unimproved value. Second, the estimated replacement costs of improvements to the land after making such allowance for obsolescence, physical depreciation, and such other factors as are appropriate in the circumstances.
The unimproved value assessed for each site is not in dispute.
The costs of construction of the improvements on each site is not in dispute, those costs being:[9]
1.the Deflector site: $745,683; and
2.the Gullewa site: $6,957,017.
[9] Appellants' written submissions, par 29(g)(ii).
As I have explained, the Valuer‑General conducted the valuation on the hypothetical assumption that the entirety of the improvements were in place and new as at 1 August 2014. On that approach, no allowance for physical depreciation was allowed. Further, the estimated replacement cost of the improvements was assessed as equating to the construction costs set out at [37] above. I was told at the hearing that while construction costs in 2014 were higher, for the sake of simplicity the actual construction costs were adopted as constituting the estimated replacement cost as at 1 August 2014.[10] In relation to the 2016 improvements, it appears the Valuer‑General initially determined the combined cost of those improvements across both sites, and then adopted 90% of those combined costs as reflecting the estimated replacement cost of the 2016 improvements on the Gullewa site, and 10% as reflecting the estimated replacement cost of the 2016 improvements on the Deflector site.[11]
[10] ts 74 - ts 75.
[11] Hearing book of primary court (Hearing book), page 239, see 'comments' section of table.
The parties agreed that if physical depreciation was to be applied, the applicable rate of depreciation was 8% per annum.[12] This would have the consequence of reducing the estimated replacement costs to the following amounts:[13]
1.the Deflector site: $562,823; and
2.the Gullewa site: $5,360,720.
[12] Member's reasons [41] - [42]; [46].
[13] Member's reasons [42], see 'improvements value' column in the table.

Relevant statutory provisions

As the learned member observed in her reasons, the Act does not deal with rates and taxes. Rather, the Act deals with valuations upon which rates are eventually set by the rating and tax authorities.[14]
[14] Member's reasons [106].
The Act defines 'land' as meaning lands, tenements and hereditaments, and any improvements to land, and includes any interest in land.[15] The word 'tenements' would include mining leases. The Act relevantly defines 'improvements' as follows:
improvements in relation to land means the value of all works actually effected to land, whether above or below the surface, and includes fixtures, but does not include …
[15] Act, s 4(1).
The provisions of the Act that specifically deal with valuations are contained in pt 3 div 1. It is structured as follows.
Section 17 establishes the relevant valuation districts. The districts exist for two purposes. First, for the purpose of determining gross rental values. Second, for the purpose of determining unimproved values. I will come to the definitions of gross rental values and unimproved values shortly.
In respect of gross rental values, the valuation districts are those that were in place immediately before the Acts Amendment (Annual Valuations and Land Tax) Act 1993 (WA) came into operation, subject to any reconstitution of those valuation districts by the Valuer‑General since then. In respect of unimproved values, the whole of the State of Western Australia is constituted into a valuation district.[16]
[16] Act, s 17(1), (2) and (4).

Valuations are undertaken in respect of 'rateable land'. Broadly speaking, rateable land is land in respect of which any rate or tax is assessed under any of the applicable rating or taxing Acts, or in the opinion of the Valuer‑General is reasonably likely to be so assessed.[17]
[17] See Act, s 4(1), definition of rateable land.
Section 18 of the Act provides:
For the purposes of a general valuation, the Valuer‑General shall determine, or cause to be determined, with respect to rateable land, the gross rental value or the unimproved value, as the case requires, so far as that value is required by a rating or taxing authority for the purpose of assessing any rate or tax or is, in the opinion of the Valuer‑General, reasonably likely to be so required before the next general valuation of the land is made.
As can be seen from the text of s 18, a general valuation need not necessarily include both gross rental value and unimproved value. It may include one or the other.
Section 19 provides that the value assigned to land shall be the value as at the date of valuation fixed by the Valuer‑General. This date must not be earlier than 1 July in the financial in which the general valuation is commenced.
Section 20 provides that valuations comprising a general valuation relating to land shall come into force on such day as is determined by the Valuer‑General and supersede any previous valuations of gross rental value or unimproved value.
The key definitional provisions pertaining to value are gross rental value, assessed value, capital value, improvements and unimproved value.
I will address them in that order.
Primarily, 'gross rental value' is the gross annual rental that the land might reasonably be expected to realise if let on a yearly tenancy upon condition that the landlord is liable for certain specified charges and expenses. However, if the gross rental value cannot reasonably be determined on that basis, the gross rental value shall be the assessed value.
'Assessed value' is the prescribed percentage of the capital value of the land. The prescribed percentage is 5%.[18]
[18] Valuation of Land Regulations 1979 (WA), reg 3(2)(b).
The definition of 'capital value' is important. I will set it out in full:
capital value of land means the capital amount which an estate of fee simple in the land might reasonably be expected to realize upon sale -provided that where the capital value of land cannot reasonably be determined on such basis, the capital value of such land shall be the sum of, first, the unimproved value of the land, and, secondly, the estimated replacement cost of improvements to the land after making such allowance for obsolescence, physical depreciation, and such other factors as are appropriate in the circumstances. (emphasis added)
In this case, the assessment of capital value was undertaken pursuant to the second limb of this definition. On that approach, capital value is constituted by the sum of the unimproved value of the land and the estimated replacement costs after making any allowance for the prescribed factors. The italicised words in the definition are of particular importance to this appeal. The Valuer‑General proceeded on the premise that the estimated replacement cost was the estimated replacement cost of the improvements as new as at 1 August 2014. As the assessment was undertaken on the basis that the improvements were new, the Valuer‑General did not make allowance for physical depreciation.
The unimproved value of the land (as the name suggests) does not address the improvements on the land. It can be assessed in a variety of different ways. In this case, the Valuer‑General proceeded under par (b)(vii)(I) in the definition of unimproved value. It provides:
the capital amount that an estate in fee simple in the land not including improvements might reasonably be expected to realize upon sale ...
Consistently with there being several different approaches to valuation prescribed by the Act, the word 'value' in relation to land is defined to mean:[19]
the assessed value, the capital value, the gross rental value, the site value, the unimproved value and a value determined or assessed under section 39(1) of the land or any one or more of those values; … (emphasis added)
[19] Act, s 4(1). Section 39(1) is a permissive provision which permits the Valuer‑General to make valuations of land other than the specific purpose of rates and taxes. It does not bear on this appeal.
Turning back then to the operational provisions of the Act.
Section 22(1) and s 22(1a) are of particular importance. They provide:
(1)A general valuation shall be made within each valuation district constituted or reconstituted for the purpose of determining gross rental values at such times as the Valuer‑General shall determine; but the Valuer‑General shall ensure that, so far as practicable, the valuations comprising a general valuation shall at all times be accurate and up‑to‑date.
(1a)The Valuer‑General shall make or cause to be made a general valuation within the valuation district constituted for the purpose of determining unimproved values, so far as practicable, every financial year.
As can be seen, s 22(1) imposes an obligation on the Valuer‑General to ensure, so far as practicable, that the valuations comprising a general valuation shall 'at all times be accurate and up‑to‑date'. As I will come to explain, I think that is an important provision in resolving the dispute the subject of this appeal.
Section 22(2) provides that if the Valuer‑General is of the opinion that the value of land within a valuation district has not significantly increased or decreased since a previous general valuation, he may declare that the previous general valuation accurately sets forth the values. The declaration is made by publishing the prescribed notices.
Section 22(1a) imposes an obligation on the Valuer‑General to undertake a valuation of unimproved value so far as practicable every financial year.
Section 22(2a) provides that if in a particular financial year it is not practicable for the Valuer‑General to undertake a general valuation for the purpose of determining unimproved values, the Valuer‑General may declare that the previous general valuation made within the relevant district sets forth the unimproved values of rateable land within the relevant district. The declaration is made by publishing the prescribed notices.
A declaration under s 22(2) or (2a) is deemed to constitute a general valuation of the land within that valuation district.[20]
[20] Act, s 22(4).
Section 23 is of particular importance to the disposition of the appeal. I set it out in full:
(1)The Valuer‑General may, at any time, value or cause to be valued any rateable land where such land has not previously been valued or separately valued under this Act or where in his opinion it is necessary or expedient for any reason that such land be valued.
(2)The Valuer‑General shall value or cause to be valued any rateable land where in his opinion the value thereof has for any reason significantly increased or decreased in relation to the value of land of the same or a similar character in the same valuation district.
(3)The Valuer‑General may value any land or cause it to be valued under subsection (1) or subsection (2) without carrying out a general valuation of all rateable land in the same valuation district.
(4)Where a valuation is made under subsection (1) or subsection (2), the value of the land shall be determined -
(a)if there has been a previous general valuation under this Act of rateable land within the same valuation district as that land, in accordance with the level of values prevailing in relation to land of the same or a similar character at the date of valuation of the last general valuation; or
(b)if there has been no previous general valuation under this Act of rateable land within the same valuation district as that land -
(i)in accordance with the level of values prevailing at the time of the last general valuation of land in that valuation district made under any of the rating and taxing Acts;
(ii)or if no such general valuation had been made, in accordance with the level of values prevailing at the date fixed by the Valuer‑General.
(5)A valuation made under this section shall come into force and supersede any previous valuation of gross rental value or unimproved value, as the case requires, in force under this Act and affecting the land to which the valuation relates as from such day, whether before or after the day on which the valuation is made, as the Valuer‑General shall determine. (emphasis added)
The Valuer‑General undertook the interim valuations the subject of this appeal pursuant to s 23(1). Section 23(4) prescribed how the required value was to be determined. Section 23(4)(a) is one of the key provisions that must be construed for the purposes of resolving this appeal.
Pursuant to s 24(2), any improvements that in the Valuer‑General's opinion are not capable of occupation shall not be included for the purposes of determining the gross rental value.
Section 25 permits a rating or taxing authority to engage a valuer to make a general valuation or an interim valuation if they consider it is necessary or expedient. The authority must first obtain the Valuer‑General's approval to do so and the Valuer‑General may impose conditions on the valuation. The valuation obtained is then submitted to the Valuer‑General who may adopt it as a general or interim valuation.
Section 32(3) provides that an objection to a valuation may be made on the ground that the valuation is not fair or is unjust, inequitable or incorrect, whether by itself or in comparison with other valuations in force under the Act. The objection may be made by any person liable to pay tax or rates in respect of the land that is valued. The objection may be made within 60 days after notification of a valuation is given in the Government Gazette. Also, where the valuation is used as the basis of assessment for rates or taxes, the objection may be made within 60 days after the issue of such assessment. [21]
[21] Act, s 32(1).
I turn now to the parties' respective contentions as to the correct approach to undertaking the valuations.

The competing contentions as to the correct approach

The Valuer‑General's approach was initially set out in an e-mail sent 13 November 2020 from Mr Stephen Fern (the Principal Valuer at Landgate) to Mr Diniz Cardoso of the appellants' parent company. In relation to the Gullewa site, Mr Fern explained:[22]
Depreciation of improvements: The Shire of Yalgoo workers villages were gazetted to GRV [Gross Rental Value] as at 1 July 2020, which is within the Shire's current GRV rating cycle that came into force on 1 July 2015. As per attached GRV gazette notice, the date of valuation for such GRVs is 1 August 2014. All properties that are currently rated on GRV within the Shire of Yalgoo therefore must have their GRVs assessed as at 1 August 2014. If a new house is constructed within the Yalgoo townsite after 1 August 2014 (whether it be built in 2016 or 2020), it's GRV must be assessed as at 1 August 2014 in line with all the other GRVs within the Shire. Likewise with the workers villages, whatever improvements exist as at 1 July 2020 (date of gazettal to GRV) must be assessed for GRV as at the 1 August 2014 date of valuation. As the Silver Lake Village was built in 2015 (ie after the date of valuation), it has not 'aged' and I therefore applied no depreciation in the calculation of the value of the improvements.
[22] Hearing book, page 237.
This was expanded upon in the witness statement of Mr Lester Cousins dated 24 February 2023, which was filed by the Valuer‑General in the Tribunal review. Mr Cousins is a valuer and is the Senior Manager Rural at Landgate. In respect of the valuations the subject of this appeal, Mr Cousins explained:[23]
However, GRVs [Gross Rental Values] were not determined until the [Minister's] decision in July 2020 that the method of valuation should be GRV effective from 1 July 2020, thus requiring a GRV for rating purposes. The GRVs determined included the value of all improvements which existed in July 2020, but valuing them as if they existed at the date of valuation being 1 August 2014. Notionally, the valuer viewed the property at 1 August 2014 and sees the property in its improved state as if the improvements had existed at the DOV [Date of Valuation]. All other properties would be viewed as they existed at DOV.
The GRV is determined assuming the property had existed in its improved state at the DOV and what its value is in comparison to the market evidence and values applied to properties of the same or similar character which did exist at DOV and were included in the general valuation. Improvements constructed after the DOV are assumed to have been new as at DOV to correctly coordinate the value with other similar buildings which were new at DOV, consistent with section 32(3) of the [Act].
…
The approach of applying depreciation to the replacement cost of the improvements would give these properties lower GRVs than a notional identical property built at the date of valuation in 2014 which would have been new and no depreciation would have applied. This would be incorrect in my opinion as it doesn't reflect the value of the improvements and would open the grounds for objection under section 32 (3) by the notional property holder as it would be unjust, inequitable and incorrect.
[23] Hearing book, pages 297 - 298, 299 pars 37 - 38, 46.
Mr Cousins also explained that:[24]
The frequency of general valuations in each valuation district is determined by the Valuer General in accordance with section 22 (1) of the [Act]. Each local government (LG) is a valuation district, and the current cycle is that metropolitan region LGs are valued on a three yearly cycle with regional LGs varying between 3 and 6 years. These cycles reflect the level of activity within the LGs and balancing available resources to ensure that, so far as is practicable the valuations are accurate and up to date. General valuations for GRVs for the Shire of Yalgoo came into force on 1 July 2015 and 1 July 2022- a period of seven years. The COVID-19 pandemic interrupted the frequency of general valuations due to travel and other restrictions. A consequence of this is that the general valuations for the Shire of Yalgoo and other local governments were extended further until a general valuation could be undertaken.
[24] Hearing book, page 290 par 13.
The significant aspects of the Valuer‑General's approach can be summarised as follows:
1.the date of valuation is 1 August 2014.
2.the Valuer‑General was required to value the improvements on the basis that they existed as at 1 August 2014, that being the date of the previous general valuation.
3.as those improvements did not in fact exist as at 1 August 2014, the valuation approach required that the improvements be treated as new as at 1 August 2014.
4.as the improvements were to be treated as new, no allowance was made for physical depreciation.
The Valuer‑General summarised its position on this appeal as:[25]
… the requirement to determine the interim GRV of the subject sites in accordance with the 'level of values prevailing in relation to land of the same or a similar character at the date of valuation of the last general valuation' required the Tribunal to assume that the level of improvements on the subject sites that are in place at the date of the interim valuation are new (or as constructed) as at the [date of the last general valuation]. If that approach is correct, then no depreciation arises …
[25] Respondent's written submissions, par 7.
The appellants' construction is that:[26]
… under the first limb of the definition of capital value, the [unimproved value] is determined in accordance with 'the level of values prevailing in relation to land of the same or similar character at the date of valuation of the last general valuation', being 1 August 2014. Under the second limb of the definition of capital value, when determining the estimated replacement cost of improvements, the allowance for obsolescence, physical depreciation and 'other factors' is made at the date of the interim valuation. (footnote omitted)
[26] Appellants' written submissions, par 38.
While the appellants do not challenge the assessment of unimproved value, it is useful to set out the Valuer‑General's approach to undertaking the assessment of unimproved value. This assists in informing the overall approach taken by the Valuer‑General. In Mr Fern's e-mail sent 13 November 2020, he explained in respect of the Gullewa site that:[27]
As sales of isolated unimproved land with a permitted use of workers village are rare, the direct comparison valuation approach cannot be used and I have therefore adopted the income capitalisation approach. This was deemed the preferred approach in the absence of comparable sales by the State Administrative Tribunal in the matter of Chevron Australia Pty Ltd v The Valuer General (2019) WASAT 7 regarding the [unimproved value] of the Wheatstone gas treatment plant site in the Pilbara. In applying this approach for the Shire of Yalgoo workers villages, I adopted an annual rental rate of $350/SPQ unit to calculate the respective annual rents. (There is evidence of unimproved rents of isolated workers village sites which when analysed on a rate/SPQ unit basis generally range from $280-$500/unit per annum.) I capitalised all the annual rents at a rate of 12% to arrive at the respective land values. (emphasis in original)
[27] Hearing book, page 118.
As can be seen, Mr Fern (initially) adopted an annual rental rate of $350/SPQ.[28] However, this was subsequently reduced to $200/SPQ. In that respect, in a further e-mail to Mr Cardoso sent 7 February 2022, Mr Fern set out:[29]
As previously advised, the [unimproved value] was assessed by the income capitalisation approach (in the absence of comparable sales) for which an annual rental was determined based on a rate of $350/SPQ unit per annum (derived from unimproved rental evidence), to which a capitalisation rate of 12% was applied. Based on additional evidence, I consider an appropriate rental rate to be $200/SPQ per annum. (emphasis in original)
[28] SPQ means single person's quarters, ts 60.
[29] Hearing book, pages 273 - 274.
In relation to the Deflector site, Mr Fern used a land rate of $10 per square metre.[30] I have not been able to ascertain how the Valuer‑General arrived at that figure.

The learned member's reasons

[30] Hearing book, page 239.

In summary, the learned member's reasons for affirming the valuations are as follows.
The learned member considered that pursuant to s 23(4) of the Act, 'the interim valuation must reflect the property market at the date of valuation of the last general valuation (and not at the date of the interim valuation)'.[31]
[31] Member's reasons [132].
The learned member agreed with the position put forward by the Valuer‑General that:^[32]
It can be seen that the factor that is being adjusted for via interim valuations [in] this particular instance is the degree or scale of improvements on site; otherwise the relativities and coordination of value between land with the same or similar characteristics is entrenched at the [date of valuation] (until the next [date of valuation] prompted by the next general valuation).
[32] Member's reasons [132].
Further, in the learned member's view, the ongoing physical depreciation of the improvements on a property valued on the 'assessed value' basis over the years between general valuations cannot be the trigger for an interim valuation. The learned member said this was because 'all improvements on properties that are valued as part of the general valuation will age each year the general valuation remains in force'.[33]
[33] Member's reasons [133].

The learned member considered that such an approach supports the purpose of the Act, including the maintenance of a valuation of all co-ordinated property values. The learned member also considered this to be consistent with s 32(3) of the Act, which enables an objection to a valuation of land to be made if the valuation is not fair or is unjust, inequitable or incorrect, whether by itself or in comparison with other property valuations in force under the Act.[34]
[34] Member's reasons [133].
The learned member was of the view that the appellants' interpretation of the Act 'does not fit the context and purpose of the [Act] because s 23(4) of the [Act] requires that the interim valuation reflect the property market at the date of valuation of the relevant general valuation (and not at the date of the interim valuation)'.[35]
[35] Member's reasons [136].
Further, the learned member was of the view that the appellants' construction would frustrate the purposes of the Act. In this respect, the learned member was of the view that the appellants' construction would require the Valuer‑General to undertake an interim valuation whenever there was a decrease in the value in the improvements of a property because of physical depreciation.[36]
[36] Member's reasons [137].

Disposition

I will start with some general observations regarding valuations of land, and regarding legislation that provides for such valuations to be undertaken.
Valuing land is not a scientific exercise and involves matters of judgment.[37]
[37] See Hyam A, The Law Affecting Valuation of Land in Australia (5^th ed, 2014) 106 - 107, McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 [164] - [165].
Valuing land may also involve elements of artificiality. In that respect, as the Valuer‑General submitted, it is not unusual for legislation to provide that valuations are conducted on an artificial basis. An example of this is the primary definition of 'gross rental value' in the Act. It is defined as:
… the gross annual rental that the land might reasonably be expected to realize if let on a tenancy from year to year upon condition that the landlord were liable for all rates, taxes and other charges thereon and the insurance and other outgoings necessary to maintain the value of the land…
This is 'artificial' in two respects. First, it applies irrespective of whether the land is rented. Second, it assumes applicable conditions of rent, irrespective of whether they accord with the actual rental conditions.
The artificial nature of valuations was discussed in Barber v Valuer General,[38] and Beiler v The Valuer General.[39] The Valuer‑General's counsel referred to Barber in her written submissions as an example of the endorsement of an artificial approach to valuation. The learned member referred to Beiler for the same purpose.
[38] Barber v Valuer General (1969) 17 LGRA 409.
[39] Beiler v The Valuer General (1980) 23 SASR 385.
In Barber, the statutory provision under consideration provided that:[40]
the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, and made or acquired by the owner or his predecessor in title had not been made.
[40] Barber (410).
Else-Mitchell J observed in respect of this provision:[41]
There is, of course, a large measure of artificiality in the conception of unimproved value which is so defined because value in any sense must involve a reflection of a market and in the absence of an available market in unimproved land it is incongruous to speak of such land as having a value. But, with all its artificiality, the unimproved value must be determined as it is the basis of rating and taxing, and this Court and the valuers are obliged to enter upon the difficult task of ascertaining a figure which conforms to the statutory specification.
[41] Ibid.
In Beiler, the statutory provision under consideration provided that 'capital value' means 'the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realize upon sale'. Jacobs J described this provision as follows:[42]
It postulates, for taxation purposes only, a basis of valuation which might in some cases be wholly artificial qua the particular land, or the particular taxpayer, or both. It creates a statutory assumption. (case reference omitted, italics in original)
[42] Beiler (386).
While it may not be unusual for legislation to provide for valuations to be conducted on an artificial basis, the basis for the valuation still must arise from the proper construction of the applicable legislation. An acceptance that it is not unusual for legislation to provide an artificial basis for a valuation means one should not baulk at such a result if it arises on the proper construction of the legislation. However, it does not mean that an artificial result should be read into the statutory text when it does not otherwise arise on the proper construction of the legislation.
The artificiality under consideration in Barber and Beiler arose expressly from the text of the legislation. As I will come to explain, that is not the case here. Rather, the Valuer‑General's contention is that his interpretation arises from the proper construction of the valuation provisions as a whole. I agree that the question of construction raised by this appeal is directed to the valuation provisions as a whole.

The phrase 'in accordance with'

The phrase 'in accordance with' as it appears in s 23(4) is of particular importance to the disposition of this appeal. It is capable of many different meanings. As Pritchard JA observed in Conservation Council of WA Inc v The Hon Stephen Dawson MLC, Minister for Environment; Disability Services:[43]
The phrase 'in accordance with' has a range of meanings. The verb 'accord' means to be in harmony, or in correspondence, or to be consistent with another thing. Consequently, the phrase 'in accordance with' can mean 'in agreement with', 'in harmony with', 'consistently with' or 'in conformity to'. In this sense, use of the phrase 'in accordance with' will convey a requirement, to a greater or lesser extent, that one thing be consistent with, or compatible with, another thing. At one end of this spectrum of meaning, where the phrase 'in accordance with' means 'in harmony with,' or 'consistently with', use of the phrase may convey a requirement for broad compatibility. At the other end of this spectrum of meaning, use of the phrase may connote a requirement for complete identity between one thing and another. (footnotes omitted)
[43] Conservation Council of WA Inc v The Hon Stephen Dawson MLC, Minister for Environment; Disability Services [2019] WASCA 102 [154].
The meaning to be ascribed to the phrase is to be ascertained having regard to the context in which the phrase is used,[44] and having regard also to the principles of statutory construction.

Relevance of the Valuer‑General's approach in practice

[44] Conservation Council of WA Inc [155].

An aspect of the Valuer‑General's submissions on this appeal and before the Tribunal was to justify, from a practical perspective, the Valuer‑General's approach to the frequency of general and interim valuations. Counsel for the Valuer‑General submitted that the valuation cycles struck a balance between the need for valuations to be accurate and up‑to‑date on the one hand, and what the Valuer‑General can practically achieve on the other. The information regarding valuation cycles is useful background information. However, this appeal concerns the proper construction of the applicable legislative provisions. The Valuer‑General's approach in practice does not affect that question.
A useful starting point in the exercise of construction is to look at what the Act provides in respect of valuations generally.

Valuations generally under the Act

The Act provides for valuations to be conducted in a number of different ways, depending on the applicable circumstances. The primary definitional provisions of value are gross rental value, assessed value, capital value and unimproved value. These definitions are all interlinked yet provide very different criteria for determining value. The definition of 'value' in the Act recognises this. It refers to all, or any one or more, of the approaches to valuation that are provided for by the Act.
The primary definition of 'gross rental value' is directed to gross annual rental. Where gross rental value cannot reasonably be determined in accordance with its primary definition, gross rental value equates to assessed value. 'Assessed value' is determined by reference to a prescribed percentage of capital value. The primary definition of 'capital value' is directed to the amount realisable on sale. Where capital value cannot reasonably be determined in accordance with its primary definition, it is to be determined by reference to the sum of unimproved value and estimated replacement cost of improvements, after making allowance for certain prescribed factors. It is this secondary definition of capital value that has been applied in this case. The definition of 'unimproved value' can be calculated in myriad ways and there is no primary definition.
The secondary definition of capital value expressly provides that the capital value shall be the sum of first, the unimproved value and, second¸ the estimated replacement cost of improvements, after making allowance for the prescribed factors. The estimated replacement cost is not a separate value. It is a component of the secondary definition of capital value.

Frequency of valuations

In terms of the frequency of valuations, s 22(1) requires that so far as practicable, the Valuer‑General shall ensure that valuations comprising a general valuation shall at all times be accurate and up‑to‑date. The significance of this obligation is reinforced by the purpose of the valuations, namely to assist in the assessment of rates and taxes. There is an important public interest in information used for such purposes being accurate and up‑to‑date, so far as practicable.
Where the Valuer‑General is of the opinion that the value of land in a particular district has not significantly increased or decreased since a previous general valuation, pursuant to s 22(2) the Valuer‑General can, in effect, adopt that previous general valuation as accurately setting forth the values.
Further, s 22(1a) of the Act requires the Valuer‑General to ensure that, so far as practicable, a general valuation in respect of unimproved values is undertaken every financial year. However, pursuant to s 22(2a) the Valuer‑General may adopt a previous valuation if, in a particular financial year, it is not practicable to make or cause to be made a general valuation for the purpose of determining unimproved values.
Pursuant to s 19, the date of valuation set by the Valuer‑General must not be earlier than 1 July in the financial year in which the general valuation is commenced. This mandates a degree of temporal proximity between a general valuation and the date of valuation that is set.
In my view, the overall scheme of the provisions is of importance in assessing the question of construction the subject of this appeal. The legislative provisions proceed on the presumption that so far as practicable, the valuations comprising a general valuation 'shall at all times be accurate and up‑to‑date'.
A premise that underpins the Valuer‑General's construction is that an interim valuation does not reflect the value of the land at the date that the interim valuation is undertaken. In this respect, the Valuer‑General submits that:[45]
Section 23(4) of the [Act], correctly interpreted, has the effect that an interim value does not reflect the value of the land at the date the interim valuation is undertaken; rather, it reflects or is 'in accordance with' the property market (ie, 'the level of values prevailing in relation to land of the same or similar character') at the [date of valuation] of the last general valuation. (emphasis in original)
[45] Respondent's written submissions, par 29.
However, this premise fails to recognise that the Act envisages that, so far as practicable, the 'property market' at the date of the last general valuation remains accurate and up‑to‑date. It may be, it may not be, but it cannot be said absolutely that it will not be.
I turn now to the specific provisions addressing interim valuations.

Interim valuations

Section 23 empowers the Valuer‑General to conduct interim valuations, which are valuations conducted during the period between general valuations. The interim valuations are directed to particular pieces of rateable land within a district.
There are two foundations upon which an interim valuation can be made.
First, s 23(1) provides the Valuer‑General with a discretion to conduct an interim valuation. The discretion can be exercised by any one or more of three avenues. First, if the land has not previously been valued. Second, if the land has not previously been separately valued. Third, where in the Valuer‑General's opinion it is necessary or expedient for any reason that the land be valued. This third avenue provides a broad discretion to the Valuer‑General to conduct an interim valuation. The interim valuations the subject of this appeal were conducted pursuant to s 23(1). I understand this was done via the third avenue as a consequence of the Minister's determination that the respective sites were to be valued on a gross rental value basis.
Second, s 23(2) requires an interim valuation be undertaken in certain circumstances. Specifically, s 23(2) requires the Valuer‑General to undertake an interim valuation of rateable land where in his opinion the value of the land has 'for any reason significantly increased or decreased in relation to the value of land of the same or a similar character in the same valuation district'. Section 23(2) is not directed to a significant increase or decrease in the value of the relevant land. Rather, s 23(2) is directed to a comparatively significant change in value between the subject land and land of the same or a similar character in the same district.
Section 23(3) provides that the Valuer‑General may undertake a valuation of land under s 23(1) or s 23(2) without carrying out a general valuation of all rateable land in the applicable district. Presumably, if the Valuer‑General undertook a general valuation, he would not need to undertake an interim valuation in accordance with s 23(1) or s 23(2).
Section 23(4)(a) is the key provision relied on by the Valuer‑General to justify the approach taken to the interim valuations. I will set it out again in full:
… the value of the land shall be determined -
(a)if there has been a previous general valuation under this Act of rateable land within the same valuation district as that land, in accordance with the level of values prevailing in relation to land of the same or a similar character at the date of valuation of the last general valuation…
The statutory text requires that the value be determined in accordance with the 'level of values prevailing in relation to land of the same or a similar character at the date of valuation of the last general valuation'. It makes no reference to the value being determined as at the date of the previous general valuation. It also makes no reference to an assumption that improvements added after the date of the last general valuation are to be treated as if they were in existence, and new, at that earlier date.
Further, s 23(4)(a) proceeds on the premise that there are prevailing values of land of the same or a similar character in the relevant district. Where there are not, there is nothing with which s 23(4)(a) can engage.
The Valuer‑General's approach is that his construction of s 23(4)(a) applies irrespective of whether there are 'values prevailing in relation to land of the same or a similar character'. That approach ignores the text of the section. If there are no values prevailing in relation to land of the same or a similar character, then the requirement in s 23(4)(a) is not engaged.
The Valuer‑General's approach also proceeds on the premise that the date of valuation is the date of the last general valuation, being 1 August 2014. However, s 23(4) does not impose a date of valuation. Rather, it requires that the value of the land be determined in accordance with the earlier level of values prevailing in relation to land of the same or a similar character.
None of the other provisions in s 23 speak of the value being assessed as at the date of the last general valuation.
Further, the Valuer‑General's approach would result in a material disconnect between s 23(1) and s 23(2) on the one hand, and s 23(4) on the other.
The opinion formed under s 23(2) concerns whether the value of the land has changed significantly in comparison to the value of land of the same or a similar character. This requires there to have been a change since the last general valuation. The matters giving rise to that change cannot therefore have been in existence at the time of the last general valuation. In relation to s 23(1), the Valuer‑General may undertake a valuation of rateable land where in his opinion it is necessary or expedient for any reason that such land be valued. The necessity or expedience is informed by the circumstances in place at the time that opinion is formed.
Section 23(4) is directed to instances where 'a valuation is made under subsection (1) or subsection (2)'. Section 23(1) and s 23(2) are the operative provisions under which the valuation is made. Section 23(4) directs how that valuation is to be carried out. That being so, in my view s 23(4) pertains to the same circumstances that founded the decision to conduct an interim valuation under s 23(1), or the opinion formed under s 23(2). The Valuer‑General's construction has the result that s 23(4) engages with a different set of circumstances to s 23(1) and s 23(2), namely an assumed scenario in place at the date of the last general valuation.
Moreover, a valuation under s 23(1) and s 23(2) is a valuation of the land that is either the subject of the decision made under s 23(1) to undertake the valuation, or is the subject of the opinion that requires a valuation under s 23(2). The text of the provisions makes this clear. The discretion to value provided for by s 23(1) is to value or cause to be valued any rateable land where such land is the subject of the qualifying criteria which engage that discretion. The requirement to value provided for by s 23(2) is to value or cause to be valued any rateable land where in the Valuer‑General's opinion the value thereof has the requisite change in comparative value. The 'land' that is valued under s 23(1) and s 23(2) is the same land that is the subject of the relevant decision or opinion that engages the relevant provision.
On the Valuer‑General's construction, 'land' in s 23(4)(a) encapsulates an artificial construct of the improvements. The Valuer‑General's position assumes that improvements were in place and new as at the date of valuation of the last general valuation, when that was not the case. This approach would result in the 'land' the subject of s 23(4)(a) being different to the 'land' the subject of s 23(1) and s 23(2). Further, this approach does not sit consistently with the statutory definitions of 'land' and 'improvements'. Neither definition envisages that improvements may be constituted by an artificial construct. Similarly, the assessment under s 24(2) as to whether improvements are not capable of occupation must be directed to the actual improvements in place, not an artificial construct of improvements.
In my view, s 23(1), s 23(2) and s 23(4) should be read consistently with each other. In that respect, as I have explained at [125] above, s 23(1) and s 23(2) are the operative provisions under which the valuation is made and s 23(4) directs how that valuation is to be carried out. It follows that when s 23(4) refers to the 'land', it is referring to the land, as it is constituted, that is the subject of either the decision under s 23(1), or the opinion under s 23(2). Section 23(4) directs how that land is to be valued. It does not alter the characterisation or constitution of that land.

Absolute nature of the Valuer‑General's approach

The Valuer‑General's approach mandates that the date of valuation is the date of the last general valuation, irrespective of whether the prevailing level of values have any application to the interim valuation being undertaken. Such an approach is quite absolute.
The need for the legislative regime to operate coherently requires the construction of s 23(4)(a) to recognise that valuations can be conducted in many different ways and that the previous level of values may have little, or no, relevance to the interim valuation being carried out. In my view, the absolute nature of the Valuer‑General's approach does not give sufficient recognition to these matters.
By way of an example that previous levels of value may be of little assistance, the definition of 'unimproved value' provides that land in respect of which there is a lease or licence held under the Mining Act 1978 (WA) or the Petroleum and Geothermal Energy Resources Act 1967 (WA) is to be valued by reference to a specified multiple of the annual rent or annual fee payable for the lease or licence.[46] It is a pure mathematical calculation. The level of prevailing values of land of the same or a similar character can have no relevance to that calculation. As another example, if the previous values were conducted under the primary definition of gross rental value (expected annual rent), this may have limited application to an interim valuation that is conducted on the basis of capital value.
[46] See Act, s 4(1), definition of unimproved value, (b)(ii)(II) - (IV).
The Valuer‑General's approach to assessing the unimproved value of the Gullewa site illustrates that the previous level of values may be of limited assistance. The Valuer‑General had regard to 'unimproved rents of isolated workers village sites which when analysed on a rate/SPQ unit basis generally range from $280-$500/unit per annum'.[47] Having done so, the Valuer‑General initially arrived at a rental of $350/SPQ, to which a capitalisation rate of 12% was applied to arrive at the unimproved value. On considering further evidence, the Valuer‑General reduced the rental rate to $200/SPQ, which again was capitalised at 12% to arrive at the unimproved value.[48]
[47] Hearing book, page 118.
[48] Hearing book, page 274.
By proceeding in this way, the Valuer‑General adopted a rental rate which was lower than the range of unimproved rents of isolated workers village sites to which he initially had regard. Also, the Valuer‑General did not have regard to previous levels of unimproved value of those other sites. Rather, the Valuer‑General determined that unimproved value should be calculated by capitalising the annual rental. The Valuer‑General then had regard to evidence relating to the necessary inputs for that calculation, namely expected annual rental and an appropriate capitalisation rate.
The examples at [131] - [133] above illustrate the varying degrees to which the prevailing level of values may be relevant. That there is such variance does not sit comfortably with an absolute approach to the operation of s 23(4)(a).

The extent of the artificial nature of the Valuer‑General's approach

The Valuer‑General's construction requires that where there have been changes to the land since the last general valuation, those changes are presumed to be in place as new at that earlier date. However, that presumption may necessitate an artificial approach which is so wide‑ranging that it affects more than the subject land itself.
The implementation of the Valuer‑General's construction might be achievable in practice if the change in value since the last general valuation arises from a change to the actual land itself. In that respect, Mr Cousins (the Senior Manager Rural at Landgate) pointed out that the typical scenarios where interim valuations are conducted are subdivisions of land, new buildings, additions to improvements, change of use and demolitions.[49]
[49] Hearing book, page 294 par 28.
However, a change in value that engages s 23(2) may arise from factors external to the land itself. For example, improved amenities or infrastructure that benefit only a particular part of the relevant Shire. Another example is the change in use of a particular property that operated as a downward pressure on the value of nearby properties, such as the cessation of a business that generated excessive noise or attracted much pedestrian and/or vehicular traffic. The Valuer‑General's construction would require that such external factors are assumed to have been in existence at the date of the last general valuation. Such external factors, for example a new shopping centre development, may be of such significance that their presumed existence at the date of the last general valuation gives rise to an artificial construct of the Shire itself, or of large parts of it.

The extent to which the Act requires co-ordination of values

A particular emphasis of the learned member's reasons, and the Valuer‑General's submissions, was the need for co-ordination of values between properties.
In his statement, Mr Cousins explained that gross rental value:[50]
… is determined assuming the property had existed in its improved state at the [Date of Valuation] and what its value is in comparison to the market evidence and values applied to properties of the same or similar character which did exist at [Date of Valuation] and were included in the general valuation. Improvements constructed after the [Date of Valuation] are assumed to have been new as at [Date of Valuation] to correctly coordinate the value with other similar buildings which were new at [Date of Valuation], consistent with section 32 (3) of the [Act].
[50] See [71] above.
This passage is directed to achieving a quite precise level of co‑ordination. It is said that improvements are assumed new at the earlier date to correctly co-ordinate the value with other similar buildings which were new at that earlier date. It reflects an absolute position, divorced from the applicable circumstances. For example, in this case, there is no suggestion there were any similar buildings which were new at the date of the last general valuation. The expressed need for co‑ordination set out in the passage at [139] above does not arise in this case, at least on the material before me. Furthermore, the expressed need for co-ordination arises irrespective of the significance of the replacement cost of improvements to the overall value. So, that is, it would apply even where the replacement costs are insignificant to the overall value.
The extent to which the Act requires co-ordination of values has to be assessed against the legislative provisions. Co-ordination itself is not an absolute concept that drives the interpretative process. Moreover, as I will explain, the extent to which co-ordination can be achieved depends on the applicable circumstances.
It can be accepted that a purpose of the Act is to maintain a valuation roll of co-ordinated property values. This arises principally from the nature of a general valuation itself, which is directed to the entirety of the relevant valuation district. It also arises from the requirements of s 23(2). In particular, s 23(2) requires the Valuer‑General to conduct an interim valuation when the value of a particular piece of rateable land has significantly increased or decreased in relation to the value of land of the same or a similar character in the same valuation district.
Section 23(2) is however directed to achieving substantial, not absolute, co‑ordination of values within the same valuation district. The phrase 'significantly increased or decreased' reflects that co‑ordination is sought to ensure there are not significant differences, not to ensure there are no differences. Further, s 23(4)(a) directs attention to the 'level of values' prevailing in relation to 'land of the same or a similar character'. The generality in these concepts does not necessarily lend itself to precise co-ordination of values.
Similarly, s 22(2) is directed to achieving substantial, not absolute, co-ordination of values within the same valuation district. It permits the Valuer‑General to adopt a previous general valuation if he is of the view that the value of land within a valuation district has not significantly increased or decreased since then.
Furthermore, s 23(4)(b) recognises that there may not be relevant prevailing values of land of the same of a similar character. Section 23(4)(b) provides that if there has been no previous general valuation under the Act of rateable land within the same district, then the value of the subject land is to be determined in accordance with one of two alternatives. First, the level of values prevailing at the time of the last general valuation of land in the relevant district made under any of the rating and taxing Acts. Second, where there is no such general valuation, in accordance with the level of values prevailing at the date fixed by the Valuer‑General. As can be seen, these two alternatives do not have the qualifier that the level of values is in relation to land of the same or a similar character. Thus, the level of values referred to in s 23(4)(b) may have little, or no, relevance to the interim valuation being undertaken.
It must also be kept in mind that valuations of land are not a precise exercise.
In my view, it follows from what I have said at [141] - [146] above, that the legislation seeks to achieve, where possible, a substantial degree of co-ordination of values.
Such a construction is confirmed by the second reading speech for the Bill for the Act. The then Treasurer said:[51]
Provision is made for the valuer general to make interim values for rating or taxing purposes such as for new subdivisions or new improvements taking place between general revaluations. In these cases the values determined will have to be related to the values ruling at the last general valuation.
…
The proposed Act is designed to give this State uniform provisions for making valuations for rating and taxing purposes, removing anomalies in the existing law, simplifying procedures, and enabling improved efficiency in the control and co-ordination of values, together with common objection and appeal procedures. (emphasis added)
[51] Western Australia, Parliamentary Debates, Legislative Assembly, 24 August 1978, 2616, 2617 (Sir Charles Court, Treasurer)
This passage speaks of enabling improved efficiency in co‑ordination and ensuring the interim values are related to the valuations at the last general valuation. The concept of the interim values being 'related to' the previous values recognises that co‑ordination may only be achievable to a limited extent.
It also needs to be recognised that it may not be possible to achieve any significant co-ordination in values. Where there are no properties of the same or a similar character, there is nothing to co‑ordinate with. Where there are no, or few, previous valuations conducted on the same basis as the interim valuation, the ability to achieve co-ordination is quite limited. This is itself illustrated by the Valuer‑General's approach to determining the unimproved value of the Gullewa site.[52]
[52] See [132] and [133] above.
For these reasons, in my view the Valuer‑General's submissions overstate the Act's requirement for co-ordination of value.

Section 32(3)

The Valuer‑General also relied on s 32(3) in support of his construction, which was another factor that the learned member relied on in accepting the Valuer‑General's approach. The terms of s 32 are summarised at [69] above.
Section 32(3) is in pt 4. The valuation provisions the subject of this appeal are in pt 3 div 1.
Section 32(3) applies to all valuations, not just interim valuations. The objection may be made by any person liable to pay any rate or tax assessed in respect of land. Relevantly to this appeal, s 32(3) provides that an objection to a valuation may be made on the ground the valuation is not fair or is unjust, whether by itself or in comparison with other valuations in force under the Act.
The Valuer‑General submits that s 32(3) supports pt 3 div 1 being construed in a manner that eliminates or substantially reduces comparative unfairness or unjustness in values. I do not accept that submission. The question of whether a valuation is not fair or is unjust needs to be assessed in the relevant circumstances against the provisions of pt 3 div 1 and the other relevant provisions of the Act pertaining to the conduct of valuations. Understood in that way, s 32 does not drive the construction of pt 3 div 1. Instead, s 32 provides a mechanism for relief if the application of pt 3 div 1 in the relevant circumstances results in a valuation that is not fair or is unjust. That is, s 32(3) provides relief where it is demonstrated that a valuation is not fair or is unjust. Section 32(3) is not intended to operate so as to reduce the prospect of there being an unfair or unjust valuation in the first place.
It must also be recognised that pt 3 div 1 permits the Valuer‑General to act in a way that may be unfair to landowners. Section 22(2a) permits the Valuer‑General to adopt a previous general valuation of unimproved value, irrespective of whether the values have since significantly increased or decreased. Such an adoption would be unfair to any landowners whose land has significantly decreased in value. Section 22(2) permits the Valuer‑General to adopt a previous general valuation if he is of the opinion the value of land in the particular district has not significantly increased or decreased. Such an adoption may be unfair to a landowner whose land has decreased in value, albeit not significantly. And the requirement in s 22(1) to ensure that valuations are accurate and up‑to‑date is subject to the qualification 'so far as practicable'. That updated valuations are not carried out because it is not practicable to do so may well be unfair to those landowners whose land has decreased in value and may advantage those landowners whose land has increased in value.
Accordingly, when looked at as a whole, pt 3 div 1 permits unfairness. This reinforces my view that s 32(3) does not drive the construction of pt 3 div 1, but rather provides a mechanism for relief if the application of pt 3 div 1 results in a valuation that is not fair or is unjust.

Depreciation

In relation to depreciation, the learned member found that ongoing physical depreciation of improvements on a property valued on the 'assessed value' basis cannot be a trigger for an interim valuation as 'all improvements on properties that are valued as part of the general valuation will age each year the general valuation remains in force'.[53]
[53] Member's reasons [133].
The proposition that appears to underpin the learned member's observation is that the improvements will depreciate at the same rate. Thus, on that basis, there would be no comparative change of such a magnitude to trigger an interim valuation. On this appeal, the Valuer‑General submitted that it is logical that improvements on properties of the same or similar character would age at the same rate. [54] In support of that proposition, the Valuer‑General cited par 27 of Mr Cousins' statement. However, that paragraph is a generalised proposition to the effect that improvements would age at the same rate, without substantive analysis as to why that is the case.
[54] Respondent's written submissions, par 26.
The secondary definition of 'capital value' speaks of physical depreciation. It can be accepted that improvements on land will age each year. However, I do not accept as a general proposition that improvements will physically depreciate at the same rate from year to year. Some improvements may be such that they will physically depreciate at a much faster rate. This may be because of the materials used, the particular location of the improvements, or the level of usage of the subject land. For example, some improvements, due to their location or orientation, may be significantly more exposed to the wind or sun, compared with other properties of the same or a similar character. Further, improvements on land that attracts high levels of traffic, whether vehicular and/or pedestrian, may depreciate at a faster rate than properties of the same or similar character that have low levels of traffic. That properties are differently orientated or have differing levels of usage does not mean they are of a different character. They will remain of the same or a similar character, but the improvements will depreciate differently.
Once it is accepted that improvements on one piece of land may physically depreciate at a much higher rate than improvements on properties of the same or similar character, there may well be cases where the greater rate of depreciation results in a comparatively significant decrease in value such that s 23(2) is engaged.
Further, s 23(2) is directed to disparity in value. Even if improvements across different parcels of land physically depreciate at the same rate, the extent to which overall comparative value is affected depends on the extent to which replacement costs contribute to the overall capital value. For example, where the estimated replacement cost of improvements make up a higher proportion of the overall value in comparison to other properties, then a similar rate of depreciation may still result in a comparative decrease in value such that s 23(2) would be engaged.
For these reasons, I do not accept that ongoing physical depreciation of improvements on a property valued on an 'assessed value' basis can never be a trigger for an interim valuation. Further, the Valuer‑General has a general discretion in any event to conduct an interim valuation where in his opinion 'it is necessary or expedient for any reason that such land be valued'. The relevant Shire may also engage their own valuer to conduct a valuation, with the Valuer‑General's approval.
The learned member also found the appellants' construction would have the result that the Valuer‑General would be required to undertake an interim valuation whenever there was a decrease in the value of improvements to a property because of physical depreciation.[55] However, that observation does not account for the requirement in s 23(2) that there be a significant change in value compared to the value of land of the same or a similar character. Whether there is such a significant change depends on the different rates of decline across properties of the same or similar character. And, as I have explained at [162] above, it also depends on the extent to which the quantum of the overall replacement costs contributes to the overall value. Accordingly, the appellants' construction does not have the result that troubled the learned member.

Conclusion on construction issue

[55] Member's reasons [137].

In my view, the preferred construction of the legislative provisions is as follows.
An interim valuation is a valuation made under s 23(1) or s 23(2). An interim valuation is a valuation of the land which is the subject of the decision to value under s 23(1), or of the opinion which activates the requirement to value in s 23(2). The constitution of that land is determined by reference to the statutory definition of 'land' and thus includes, where relevant, the improvements actually effected to the land. The constitution of that land does not include an artificial construct of the improvements.
Further, depending on the circumstances, the Valuer‑General's decision or opinion under s 23 may be directed to the land as constituted at a point in time prior to that decision or opinion. So, for example, the Valuer‑General may decide that it is necessary or expedient that land as constituted at a particular earlier date be valued. However, this does not permit an assumption to be made as to the existence or state of the improvements. Rather, what is being valued is the land as it was in fact constituted at that point in time.

Section 23(4) directs how the land the subject of a s 23(1) or s 23(2) valuation is to be valued. Section 23(4) does not alter the characterisation or constitution of that land. Nor does it direct that the land is to be valued as at the date of the last general valuation.
Section 23(4)(a) seeks to achieve consistency in values to the extent reasonably possible, while also recognising that the values as at the last general valuation are, so far as practicable, accurate and up to date. That being so, the phrase 'in accordance with the level of values' means more than just 'have regard to the level of values'. However, on the other hand, the meaning of the phrase needs to accommodate that the extent to which co-ordination with the prevailing level of values can be achieved will vary from quite precise co‑ordination to little, if any, co-ordination. Taking account of these matters, in my view the phrase conveys that the value is determined by reference to the level of values prevailing in relation to land of the same or a similar character at the date of valuation of the last general valuation, to the extent any such level is applicable to the interim valuation being carried out. Understood in that way, the previous level of values provides a reference point, where applicable, for the interim valuation being carried out.
In my view, the construction I have set out at [166] - [169] above pays proper regard to the statutory text. It also provides for a coherent operation of the legislative scheme, including consistency in the operation of s 23. The construction takes into account that there may not be any land of the same or a similar character to the land being valued. And it takes into account that valuations can be conducted in myriad ways and accordingly, the levels of prevailing values of land of the same or a similar character may be of little, or no, relevance to the interim valuation being undertaken.
Further, in my view the construction set out at [169] is also supported by the structure of s 23(4) as a whole and the need for consistency within it. Section 23(4) commences with an introductory requirement that 'the value of the land shall be determined …'. This requirement then directs attention to the matters set out in either s 23(4)(a) or s 23(4)(b). The phrase 'in accordance with the level of values' appears in both of those subsections.
There is ordinarily a presumption that the same words will bear the same meaning wherever they appear throughout an Act, although that presumption may be displaced by the context in which the words appear.[56] In an overall sense, s 23(4) requires that 'the value of the land shall be determined… in accordance with the level of values' prescribed by either s 23(4)(a) or s 23(4)(b). Accordingly, both s 23(4)(a) and s 23(4)(b) require engagement with the generalised concept of 'level of values', which reinforces, rather than displaces, the presumption that the phrase has the same meaning. Further, like s 23(4)(a), the meaning of the phrase in s 23(4)(b) needs to accommodate that the extent to which co-ordination with the prevailing level of values can be achieved will vary from quite precise co-ordination to little, if any, co-ordination. Accordingly, the construction of the phrase as set out at [169] aids the coherent operation of both s 23(4)(a) and s 23(4)(b).
[56] Conservation Council of WA Inc [156].
Section 32(3) provides a mechanism for relief for other landowners if an interim valuation gives rise to unfairness when compared to the valuations of their land. Section 32(3) recognises that on occasion the legislative scheme will result in unfairness and provides relief where unfairness is demonstrated, as opposed to operating to prevent or substantially reduce the prospect of unfairness in the first place. Section 32(3) does not support s 23 being construed so as to eliminate or substantially reduce unfairness in the operation of s 23.
In my view, the Valuer‑General's construction gives rise to a much broader reading of the statutory text than the language allows and does not sufficiently recognise that previous valuations may be of little, or no, relevance. The Valuer‑General's construction also gives rise to internal inconsistencies within s 23.
Further, in my view the Valuer‑General's emphasis on the need for co-ordinated values is overstated. I also do not consider that s 32(3) supports the Valuer‑General's construction.
For these reasons, the learned member erred by accepting the Valuer‑General's construction of the Act. The error in the construction of the Act is an error of law. Further, that error materially affects the quantum of each interim valuation. Accordingly, leave to be appeal should be granted and the appeal allowed.

Application of preferred construction to the circumstances of this appeal

At the risk of stating the obvious, the first step in conducting the interim valuations is to identify the land that is being valued, and the constituent parts of that land. Relevantly to this appeal, the land being valued is the land that is the subject of the Valuer‑General's decision under s 23(1) to undertake the interim valuation of each site.
There is limited material before me concerning that decision. However, the Valuer‑General's decision to value under s 23(1) is clearly directed to the land referred to in the Minister's determination made 21 July 2020. In respect of that land, the determination changed the basis of the valuation to the gross rental value method with effect from 1 July 2020. I think the preferred view is that the land the subject of the Valuer‑General's decision to value is the land referred to in the Minister's determination as it was constituted at 1 July 2020, that being the date when the new valuation method came into effect. This differs from the appellants' approach, which was that the sites were to be valued having regard to their constitution at the date of the interim valuation - see [76] above. There may be little practical difference, however I will permit the parties to make submissions on that point if they wish.
Once the constituent parts of the land have been finally determined, the capital value the subject of the interim valuations is assessed as follows:
1.the capital value of the land is the sum of, first, the unimproved value of the land, and, secondly, the estimated replacement cost of the actual improvements to the land after making such allowance for obsolescence, physical depreciation, and such other factors as are appropriate in the circumstances;
2.the unimproved value is determined by reference to the level of any values prevailing in relation to land of the same or similar character at the date of valuation of the last general valuation, being 1 August 2014, to the extent that any such level is applicable to the unimproved value;
3.the estimated replacement cost of the improvements is determined by reference to the estimated replacement cost of the actual improvements that make up the land, after making such allowance for obsolescence, physical depreciation, and such other factors as are appropriate in the circumstances. On the initial view I have expressed at [178], the assessment in respect of the improvements is undertaken having regard to their condition as at 1 July 2020.
There is no dispute between the parties concerning the unimproved value component of the interim valuations. As I have explained at [39] above, the parties have agreed the rate of depreciation to be applied if physical depreciation is to be taken into account. I will hear further from the parties as to the quantum of that amount having regard to these reasons and any further submissions in respect of the matter identified at [178] above.

Conclusion

Leave to appeal should be granted and the appeal allowed. I will hear from the parties as to the appropriate form of orders to give effect to these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SP
Associate to the Hon Justice Lemonis
16 JULY 2024