Perpetual Trustee Co Ltd v Valuer-General - [2006] SASC 216

SUPREME COURT OF SOUTH AUSTRALIA
(Land and Valuation Division)
PERPETUAL TRUSTEE COMPANY LTD & ANOR v VALUER-GENERAL, TRUST COMPANY OF AUSTRALIA LTD & ANOR v VALUER-GENERAL
[2006] SASC 216
Judgment of The Honourable Justice Debelle
20 July 2006
REAL PROPERTY - VALUATION OF LAND - STATUTORY VALUES - CAPITAL VALUE
Appeal against assessment by Valuer-General of the capital value of land - definition of "capital value" - meaning of "unencumbered" - whether allowance must be made for a let-up period in determining "capital value".
Valuation of Land Act 1971 (SA) s 5(1), s 24, s 25B, s25B(3), s 25C; Land Act Assessment Act 1910 (Cth) s 3; Valuation of Land Act 1916 (NSW) s 5; Valuation of Land Act 1960 (Vic) s 2(1); Stamp Duties Act 1958 (Vic) s 63, referred to.
Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410; Andreas v Valuer-General (1953) 19 LGR (NSW) 200; Beiler v Valuer-General (1980) 23 SASR 385; Commissioner For Railways v Andreas (1955) 20 LGR (NSW) 99; Commissioner of Land Tax v Nathan (1913) 16 CLR 654; CSR Limited v Valuer-General (1977) 17 SASR 446; Federal Commissioner of Land Tax v Duncan (1915) 19 CLR 551; Gollan v Randwick Municipal Council [1961] AC 82; Harry v Valuer-General (1975) 12 SASR 446; Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; Spencer v The Commonwealth (1907) 5 CLR 418; Stephen v Federal Commissioner of Land Tax (1930) 45 CLR 122; Spicer v Valuer-General (1963) 10 LGRA 319, applied.
Baggett v Meux (1844) 1 Coll 138; 63 ER 355; Commissioner of State Revenue (Vic) v Bradney Pty Ltd (1996) 96 ATC 5130; District Bank Ltd v Webb [1958] 1 WLR 148; Doe d Davies v Davies (1851) 20 LJQB 408, not followed.
Broken Hill Pty Co Ltd v Valuer-General [1970] AC 627; Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of SA Ltd (1947) 74 CLR 358; Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589; Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547; Players Ltd v Corporation of the City of Adelaide [2001] SASC 369; A G Robinson Ltd v Valuer-General (1952) 18 LGR (NSW) 261; Shell Co of Australia v City of Melbourne [1977] 2 VR 615; Sydney City Council v Valuer-General (1956) 1 LGRA 229; Tasmania v Victoria (1935) 52 CLR 157; Toohey's Limited v Valuer-General [1925] AC 439, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"capital value"

PERPETUAL TRUSTEE COMPANY LTD & ANOR v VALUER-GENERAL, TRUST COMPANY OF AUSTRALIA LTD & ANOR v VALUER-GENERAL
[2006] SASC 216
Land and Valuation Division

DEBELLE J. Before the court are two appeals against an assessment by the Valuer‑General of the capital value of land. In each appeal there is a preliminary issue as to the meaning of the definition of “capital value” in s 5(1) of the Valuation of Land…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] SASC 216
Decision Date: 20 July 2006

CaseChat Overview and Summary

The case of Perpetual Trustee Co Ltd v Valuer-General involved an appeal against the assessment by the Valuer-General of the capital value of certain land. The appellants, Perpetual Trustee Co Ltd, contested the valuation process, particularly the interpretation of the term "capital value" as defined in section 5(1) of the relevant Act. The case was heard in the Supreme Court of South Australia.

The central legal issue was the interpretation of the term "capital value" and the extent to which it should be considered "unencumbered." The appellants argued that any uncertainty in the application of the definition should be resolved in their favour as taxpayers, drawing from precedents where courts have adopted a conservative approach in revenue cases. They also contended that the valuation should account for a let-up period, where no tenants are in possession, and the time it would take to secure new tenants.

The court, after reviewing the relevant authorities, concluded that the definition of "capital value" as used in the Act was clear and unambiguous. The court emphasised that while the purpose of valuation differs between compensation and revenue cases, this did not create ambiguity in the definition of "capital value" in this context. The court held that the valuer must assume vacant possession but not necessarily vacant land. Additionally, the court found that the valuation should not include any allowance for a let-up period unless it is determined that tenants will not remain in possession, in which case the valuer must assess the time and inducements needed to attract new tenants.

The court's decision was that the Valuer-General's assessment of the capital value of the land was correct, and the appeal was dismissed. The court affirmed that the valuer's approach was consistent with the statutory definition and did not require adjustments for a let-up period.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

DEBELLE J

The appellants contended that any uncertainty in the application of the definition of “capital value” in s 5(1) of the Act should be resolved in favour of the appellants as taxpayers. In Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of SA Ltd (1947) 74 CLR 358 at 373 – 374 , Dixon J noted that, while the basis of valuation was the same for revenue purposes as when assessing compensation to a dispossessed owner, there were differences in principle which might affect the application of that test. He said:I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.In Gregory v Federal Commissioner of Taxation (1971) 123 CLR 547 at 565 Gibbs J agreed with that approach. See also Shell Co of Australia Ltd v City of Melbourne at 668. The remarks of Dixon J were made in the course of determining the basis upon which shares should be valued for succession duty purposes. The Act provides a tool to assist the State and local authorities in raising revenue. The principles expressed by Dixon J therefore apply. I expressed a contrary view in Players Ltd v Corporation of the City of Adelaide [2001] SASC 369 at [15]. I correct what I there said. However, the principle does not avail the appellants as, in my view, there is no doubt as to the meaning and operation of the definition of the definition of “capital value” in s 5(1) of the Act in the circumstances of this case.Conclusion For all of these reasons, I would answer the questions as follows.1 Yes.2 Yes.3(a) The valuer must assume that there are no leases in existence and that the vendor of the land and improvements will give vacant possession but it is not necessary to assume that the land and improvements are vacant.(b)No, unless the valuer determines that a tenant or tenants will not remain in possession, in which case the valuer will assess how quickly the owner will find a tenant or tenants to replace those tenants and make such allowance for that and for any necessary inducement to attract new tenants.4.1Yes.4.2Yes.4.3Yes.

Ratio Decidendi

Legal Principle Established

Established by: DEBELLE J

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