Perilya Broken Hill Ltd v Valuer-General

Land and Environment Court

New South Wales

Medium Neutral Citation:

Perilya Broken Hill Limited v Valuer-General [2012] NSWLEC 235

Hearing dates:

10 - 12 October 2012

Decision date:

19 October 2012

Jurisdiction:

Class 3

Before:

Lloyd AJ

Decision:

The Court makes the following orders:

1. The appeal is allowed.

2. The determination of the Valuer-General is revoked.

3. The value of the property described as ID3448162 as at 1 July 2007 is determined as $4,900,000.

4. The exhibits may be returned.

Catchwords:

VALUATION OF LAND - unimproved value - mines - valuation based on business model - discounted cash flow - depreciation - royalty based on after tax calculation

Legislation Cited:

Valuation of Land Act 1916 s 4, s 6A

Category:

Principal judgment

Parties:

Perilya Broken Hill Llimited (applicant)
Valuer-General (respondent)

Representation:

R P L Lancaster SC (applicant)
T S Hale SC with J B Maston (respondent)
Sparke Helmore (applicant)
I V Knight, Crown Solicitor (respondent)

File Number(s):

30076 of 2011

Judgment

1. The property described as ID 3498162 comprises a number of parcels of land with mining leases known as North, South and Potosi Mines and other land at Broken Hill, covering an area of 3,033 ha. The property is used for the production of lead, zinc and silver.

1. On 13 September 2007 the Valuer-General determined the land value as at 1 July 2007 as $20.9 million. The owner of the land, Perilya Broken Hill Limited, lodged an objection to the valuation, which the Valuer-General disallowed. Perilya now appeals to the Court against the disallowance of the objection, contending for a value of $5.25 million, although during the hearing it contended for a lower sum.

1. The question for determination is: what is the value of the land for the purpose of the Valuation of Land Act 1916?

1. A valuation under the Act is an artificial value. It is the unimproved land value but must include "land improvements". The artificial nature of the exercise is shown by the following provisions of the Act.

1. Section 6A(1) states:

The land value of land is 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, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made.

1. The reference to "land improvements" requires recourse to the definition of that term in s 4:

Land improvements means:

(a) the clearing of land by the removal or thinning out of timber, scrub or other vegetable growths,

(b) the picking up and removal of stone,

(c) the improvement of soil fertility or the structure of soil,

(d) the restoration or improvement of land surface by excavation, filling, grading or levelling, not being works of irrigation or conservation,

(d1) without limiting paragraph (d), any excavation, filling, grading or levelling of land (otherwise than for the purpose of irrigation or…