PTDA v Commissioner for State Revenue
[2017] VSCA 266
•22 September 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0135
| PUBLIC TRANSPORT DEVELOPMENT AUTHORITY | First Applicant |
| and | |
| CIVIC NEXUS PTY LTD | Second Applicant |
| v | |
| COMMISSIONER OF STATE REVENUE | Respondent |
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| JUDGES: | WARREN CJ, MAXWELL P and KAYE JA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 28 April 2017 |
| DATE OF JUDGMENT: | 22 September 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 266 |
| JUDGMENT APPEALED FROM: | [2016] VCAT 1457 (Garde J) |
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VALUATION OF LAND – Land tax – Site value – Highest and best use – Public infrastructure – Railway station and transport interchange – Planning restrictions – Capacity of land to yield monetary return – Potentiality of land – State of Victoria sole hypothetical purchaser – Whether comparable sales method applicable – Whether Tribunal acted as expert – Whether valuation decision reasonably open – No error of law – Appeal dismissed – Valuation of Land Act 1960 s 5A.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr J Delany QC with Dr B Gauntlett | Minter Ellison |
| For the Respondent | Mr C Wren QC with Mr I Munt | Solicitor for the Commissioner of State Revenue |
WARREN CJ
MAXWELL P
KAYE JA:
Summary
This proceeding concerns the site value of certain land (‘the land’), which forms part of Southern Cross Station in Spencer Street, Melbourne. The land is owned by the first applicant (‘PTDA’) and leased to the second applicant (‘Civic Nexus’).
The respondent Commissioner assessed the land for land tax in each of the years 2010 to 2013 inclusive. The assessments were based on valuations of the land by the Valuer-General. The applicants objected to the assessments and, at their request, the dispute was referred to the Victorian Civil and Administrative Tribunal (the ‘Tribunal’).
Land tax is assessed on the basis of the taxable value of the land in question. The taxable value of land is an amount equal to its site value.[1] The term ‘site value’ in the Land Tax Act 2005 has the same meaning as in the Valuation of Land Act 1960 (the ‘Act’).[2]
[1]Land Tax Act 2005 s 19(1).
[2]Ibid s 3(1).
Accordingly, the issue for the Tribunal was the correct determination of the value of the land in accordance with s 5A of the Act. It was common ground before the Tribunal that, for the purposes of s 5A(3)(a) of the Act, the ‘highest and best use’ to which the land might reasonably be expected to be put was its existing use as an ‘intermodal transport interchange facility’.
After considering expert evidence relied on by the applicants and the Commissioner respectively, the Tribunal (constituted by its President, Garde J) concluded that the site values in the relevant tax years were substantially below those on which the Commissioner’s assessments had been based. His Honour did not, however, accept the applicants’ contention that the true site value in each year was nil. Accordingly, the applicants now seek leave to appeal from his Honour’s decision.
For reasons which follow, we would grant leave to appeal but dismiss the appeal. As counsel for the applicants properly conceded, the conclusion as to site value is a conclusion of fact. It follows that appellate intervention is only justified if it can be shown that the finding was not reasonably open on the evidence before the Tribunal.[3] Moreover, as counsel for the applicants also conceded, the valuation tribunal can inform itself in any way it chooses, including by relying on expert opinion evidence, but is not bound to adopt any particular expert opinion.
[3]See, eg, ISPT Pty Ltd v Melbourne City Council (2008) 20 VR 447, 462 [55] (‘ISPT’).
In our view, it was reasonably open to the Tribunal to reach the conclusion which it did. As explained below, the Tribunal was entitled to reject the applicants’ contention that, because the station facility was a loss-making operation, the land had no value. His Honour correctly applied the principles which are engaged when the particular ‘potentiality’ of a piece of land gives it a value to only one potential purchaser. Moreover, his Honour’s reasons disclose a clear path of reasoning and identify the body of expert evidence on which his decision was based.
Factual background
Between 2002 and 2006, the former Spencer Street railway station was redeveloped as Southern Cross Station. The redevelopment took place under a Services and Development Agreement between the Spencer Street Station Authority (‘SSSA’) and Civic Nexus (the ‘PPP Agreement’). (The SSSA is the statutory predecessor of the Southern Cross Station Authority, which was in turn succeeded by the PTDA.)
The PPP Agreement commenced on 27 August 2002. It is for a term of 30 years. Under the Agreement, Civic Nexus was required to ‘design, construct, commission, lease, operate and maintain’ the proposed transport interchange facility.[4] SSSA’s obligations to pay Civic Nexus were subject to specified performance indicators being met. Civic Nexus accepted all risks relating to the project.[5]
[4]PTDA & Civic Nexus Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2016] VCAT 1457 [34] (‘Reasons’).
[5]Ibid [35].
In July 2006, Civic Nexus leased the land under a ‘facility lease’ for a term of 30 years at a nominal rent of $10 per annum. The lease requires Civic Nexus to use the land only for the purposes permitted under the PPP Agreement. Civic Nexus must maintain the transport interchange facility in accordance with its obligations under the PPP Agreement, which include being responsible for the operation of all the physical station facilities.[6]
[6]Ibid [37].
The judge described the land in these terms:
The subject land is an irregular shape, both on the ground and in the air. It comprises basement, ground level, mezzanine, first floor level and roof areas containing train and bus stations, concourse, office and other miscellaneous areas of the station. It includes long ‘fingers’, comprising the platforms at ground level, which are adjacent to rail lines, and improvements such as an open plaza and forecourt which provide pedestrian access between trains and buses, Spencer and Collins Streets. It also includes the access road to Adderley Street.[7]
[7]Ibid [41].
The use and development of the land is governed by a document entitled Spencer Street Station Redevelopment, August 2007. As the judge said, this document ‘contains important provisions which fundamentally affect the use and development’ of the land.[8] The document was incorporated into the Melbourne Planning Scheme by Amendment C70, and is thus referred to as the ‘Incorporated Document’.[9]
[8]Ibid [43].
[9]Ibid [46].
The amendment to the Planning Scheme was accompanied by an explanatory report, which described its social and economic effects in these terms:
Social and Economic Effects
The redevelopment and transformation of Spencer Street Station into a world class transport interchange and landmark for Melbourne, will enhance, revitalise and promote the western section of Melbourne’s CBD and provide direct links to Docklands. The incorporation of the design scheme for the Spencer Street Station redevelopment has significant social and economic implications including, but not limited to:
·The proposal reinforces the transport role of the Spencer Street Station precinct and introduces complementary and appropriate land uses within the precinct to support the development.
·The construction of the new transport interchange (and associated track and signalling works) will involve approximately a $350 million dollar investment and will have substantial positive flow-on effects for the Victorian economy.
·The new residential and commercial buildings, combined with the new transport interchange will generate construction activity worth about $700 million and create approximately 4,400 jobs during construction and 2,200 permanent jobs.[10]
[10]Ibid.
In September 2012, the Valuer-General provided the following assessments of the site value of the land as at 1 January 2006, 2008, 2010 and 2012 respectively:[11]
[11]Ibid [3]–[4].
Year 2006 2008 2010 2012 Value $5,400,000 $9,200,000 $15,400,000 $15,400,000
The assessments were carried out by Mr Matthew Webb, who undertook his assessment on the basis that the land comprised 6.5 ha and was part of a larger property of 11.48 ha. (His Honour ultimately determined that the ‘larger property’ had an area of 55 ha.)[12]
[12]See [56].
On 19 December 2012, the Commissioner issued land tax assessments to Civic Nexus for the 2010, 2011 and 2012 land tax years, based on those valuations.[13] On 8 February 2013, the Commissioner issued a land tax assessment for the 2013 land tax year.[14] The site value was again said to be $15,400,000.
[13]Reasons [5].
[14]Ibid [7].
On 18 February 2013, Civic Nexus objected to the land tax assessments for the 2010, 2011 and 2012 land tax years on the basis that the taxable value (that is, site value) of the land was too high. Civic Nexus contended that the land should have been assessed with the following site values:[15]
[15]Ibid [6].
Year 2010 2012 Value $600,000 $1,000,000
PTDA objected to the 2013 assessment, stating:
The relevant site is defined by the SRO as open space, train platforms, office pods, ticketing windows and any other land relating to the balance of the Civic Nexus lease located at Southern Cross station. The site is zoned mostly CCZ1 and partly PUZ4. It is situated on the corner of Collins and Spencer Streets and is used as open plaza for the movement of people to and from the rail platforms, particularly during peak commuter periods. The subject site is limited in height and depth. Its current use also represents the Highest and Best use of the land. The relevant site has very little potential to generate revenue income due to its requirement to be a plaza for the movement of commuters in accordance with the existing lease and services agreement with the State.[16]
[16]Ibid [8].
PTDA contended that the site value of the subject land should have been assessed as $1,000,000.[17] On 10 May 2013, it amended its position, contending that the subject land ought to have been given a site value of nil.[18]
[17]Ibid [9].
[18]Ibid.
In August 2013, the Commissioner issued reduced site values for the land:[19]
[19]Ibid [10].
Year 2008 2010 2012 Value $9,060,000 $13,430,000 $13,540,000 Statutory provisions
The key definitions in the Act are as follows:
site value of land, means the sum which the land, if it were held for an estate in fee simple unencumbered by any lease, mortgage or other charge, might in ordinary circumstances be expected to realise at the time of the valuation if offered for sale on such reasonable terms and conditions as a genuine seller might be expected to require, and assuming that the improvements (if any) had not been made.[20]
estimated annual value of any land means the rent at which the land might reasonably be expected to be let from year to year (free of all usual tenants' rates and taxes) less—
(a)the probable annual average cost of insurance and other expenses (if any) necessary to maintain the land in a state to command that rent (but not including the cost of rates and charges under the Local Government Act 1989); and
(b)the land tax that would be payable if that land was the only land its owner owned;[21]
[20]The Act s 2(1).
[21]Ibid.
Section 5A directs how the valuation of land is to be undertaken, as follows:
5A Determining value of land
(1) Unless otherwise expressly provided where pursuant to the provisions of any Act a court board tribunal valuer or other person is required to determine the value of any land, every matter or thing which such court board tribunal valuer or person considers relevant to such determination shall be taken into account.
(2) In considering the weight to be given to the evidence of sales of other lands when determining such value, regard shall be given to the time at which such sales took place, the terms of such sales, the degree of comparability of the lands in question and any other relevant circumstances.
(3) Without limiting the generality of the foregoing provisions of this section when determining such value there shall, where it is relevant, be taken into account—
(a) the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;
(b) the effect of any Act, regulation, local law, planning scheme or other such instrument which affects or may affect the use or development of such land;
(c) the shape size topography soil quality situation and aspect of the land;
(d) the situation of the land in respect to natural resources and to transport and other facilities and amenities;
(e) the extent condition and suitability of any improvements on the land; and
(f) the actual and potential capacity of the land to yield a monetary return.
Evidence before the Tribunal
In proceedings such as this, as his Honour noted at the outset:
there is no onus of proof. Rather the burden lies on each party to establish the accuracy of its own valuation.[22]
[22]Reasons [19].
The applicants and the Commissioner each filed multiple expert reports and relied on oral valuation evidence. The applicants relied on expert evidence from Mr Richard Bowman, Partner, Real Estate Advisory Services, Ernst and Young, and from Mr Les Brown, Director of m3Property. The Commissioner relied on expert evidence from Mr Chris Torr of Property Dynamics and from Ms Piera Murone, chartered accountant and a partner of Pitcher Partners. Each expert was cross-examined.
Mr Webb’s report, on which the original valuations had been based, was included in the Tribunal book (absent any calculations). Mr Webb did not give evidence before the Tribunal, however. (Ground 4 concerns the Webb report and is discussed below.)
The applicants also led evidence from several lay witnesses. The Tribunal undertook an accompanied site inspection on 22 February 2016, followed by an unaccompanied CBD and fringe sales evidence site inspection on 8 March.[23]
[23]Ibid [16].
His Honour’s conclusion was as follows:[24]
[24]Ibid [263].
Accordingly, I find the site value of the subject land at the relevant dates to the respective land tax years to be:
Year
2010
2011
2012
2013
Value
$7,480,000
$7,500,000
$7,500,000
$7,600,000
Ground 1: operation of s 5A(3)(a)(b) and (f) of the Act
As noted above, s 5A of the Act prescribes how the valuation of land is to be undertaken.
Ground 1 alleges that the Tribunal erred by misconstruing the operation of s 5A(3)(a), (b) and (f). The applicants contend that his Honour failed to treat the State ‘as having the same characteristics as the hypothetical purchaser’. Instead, he proceeded to assess the site value on the assumption that the State would be ‘anxious’ to purchase and, as a result, would pay a higher price rather than fail to obtain the land. In doing so, the applicants contend, his Honour failed to have regard to a relevant consideration, being the actual and potential capacity of the land to yield a monetary return (s 5A(3)(f)). They also submit that his Honour did not consider the implications for site value of the relevant planning controls and the obligations upon the applicants under the PPP Agreement and the facility lease.
The applicants’ central contention was a simple one, namely, that the land could not be put to a commercially viable use and, hence, had a nil value. The steps in the argument were as follows:
(a) the effect of the planning controls, and of the contractual obligations on the applicants, was that the land could only be used as a transport interchange facility;
(b) on the evidence, the facility had an operating loss of $5.5 million per annum;
(c) no commercial entity would have any interest in purchasing land on which it was constrained to conduct a loss-making enterprise; and
(d) accordingly, the site had no value at all.
According to the submission, this was the only conclusion reasonably open. Had his Honour taken account of these ‘commercial realities’, it was said, he would inevitably have come to the conclusion that the site value was nil.
As will appear, this submission fails to grapple with the — quite different — reality which lies at the heart of the case. What makes the land valuable is not its commercial potential but its potential to be used for a public purpose, namely, the provision of public transport services. It is that potentiality which his Honour was bound to consider in considering what price the State — as the hypothetical purchaser in the hypothetical transaction — would be prepared to pay for the land.
First, it is necessary to set out the relevant parts of his Honour’s reasoning.
Tribunal’s reasons
His Honour began his analysis as follows:
The definition of site value in s 2(1) of the Act requires the assessment of land value on the basis that the land is held in an estate in fee simple and offered for sale on an unimproved basis. This involves disregarding improvements on the land unless those improvements are crown improvements or are to be taken into account under the statutory definition of ‘improvements’. In broad terms, the site value is defined as what may be considered as the market value of an unencumbered estate in fee simple assuming no improvements have been made. In assessing ‘site value’, all possible purchasers of the vacant land are taken into account.[25]
…
The definition of ‘site value’ envisages a hypothetical sale of the land to be valued. The sale is on the open market, and the highest price reasonably attainable is in contemplation.[26]
[25]Ibid [50] (citations omitted).
[26]Ibid [51] (citations omitted).
His Honour then referred to the considerations set out in s 5A of the Act:
Site value is determined having regard to all of the considerations set out in s 5A of the [Act], including the highest and best use of the land, the effect of laws and instruments which affect use or development, its shape, size, topography, soil quality, position and aspect, its situation having regard to natural resources and transport, and its actual and potential liability to derive a monetary return from its unimproved state. This includes its capacity to derive returns from prospective or possible development.
The parties agree that the highest and best use of the subject land is as part of an intermodal transport interchange facility. This is the existing use.[27]
His Honour then noted:
The crucial issue that arises in this case is how to determine the site value of land required to be used and developed as a major public facility.[28]
[27]Ibid [53]–[54] (citations omitted).
[28]Ibid [56].
His Honour summarised the respective positions of the parties as follows:
The valuers retained by PTDA and Civic Nexus say that the use of the subject land is not commercially viable and therefore that a nil site value should result. They have considered the revenues generated by the uses within the station, the ongoing cost and expense of operating the station; particularly the costs and expenses relating to public areas, the high building costs associated with the iconic design and development of the station under the Incorporated Document. They conclude that the station will never be viable in private hands without the support of the State Government.
By contrast, the Commissioner says that the proposition that the subject land has a nil site value is absurd. No vendor would give the site away for a nil value. According to the Commissioner, it would be bizarre if a large gateway site on the edge of the Melbourne CBD were given a nil site value.[29]
[29]Ibid [56]–[57].
It was common ground that the well-known test in Spencer v The Commonwealth[30] was applicable in assessing site value:
That is, the site value must be determined by asking what price for the land might reasonably be arrived at by a willing, but not anxious, buyer negotiating with a willing, but not anxious, seller. Both buyer and seller are assumed to be perfectly acquainted with the land and cognisant of all circumstances which might affect its value. The circumstances with which both buyer and seller are perfectly acquainted extend to all material uses of the land, development and commercial circumstances that affect the land and the surrounding land.[31]
[30](1907) 5 CLR 418 (‘Spencer’); ISPT (2008) 20 VR 447, 458 [37].
[31]Reasons [52].
The critical part of the Tribunal’s analysis was as follows:
In considering the hypothetical sale of the station site, the pivotal importance of the station site to the State and the people of Victoria who daily use the station is a very strong imperative for the State of Victoria to purchase the station site at the hypothetical Spencer auction. In the hypothetical circumstance that the State or an instrumentality of the State did not own or purchase the station site, it would immediately move to compulsorily acquire the site, or negotiate with the owner to ensure that the site would operate as a major station and intermodal transport facility. This would inevitably mean a long term tenancy or a commercial agreement for the construction and operation of a station in the long term.
As the Privy Council said in Raja, attending any hypothetical auction, there may be poramboke bidders. They may seek to acquire the station site for later resale to the State at a profit. Alternatively, they may seek to use ownership of the station site as a commercial lever to obtain an agreement with the State for the development of the station site. Given the importance of the station site to Victoria, the State would inevitably agree to and negotiate to secure a vital infrastructure property.[32]
[32]Ibid [66]–[67].
The judge relied for this purpose on the decision of the Privy Council in Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam.[33] Raja concerned the compulsory acquisition of land by the local harbour authority, which was constructing a harbour. The land contained a spring which yielded a supply of drinking water needed for harbour works. The appellant’s land was acquired for that purpose. The appellant claimed compensation on the footing of the potentiality that the land had as a source of water supply.
[33][1939] AC 302 (‘Raja’).
On the appeal to the Privy Council, the authority argued that the water source was of no value to the landowner, as he could not exploit it himself. No allowance should therefore be made for it. This argument was rejected. Their Lordships considered that the value of the land had to be assessed taking account of its ‘potentialities or possibilities’, even if there was only one person ‘able to turn the potentiality to account’:
The compensation must be determined … by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser. The disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy must alike be disregarded. Neither must be considered as acting under compulsion. This is implied in the common saying that the value of the land is not to be estimated at its value to the purchaser. But this does not mean that the fact that some particular purchaser might desire the land more than others is to be disregarded. The wish of a particular purchaser, though not his compulsion, may always be taken into consideration for what it is worth.[34]
…
In the case of land, its value in general can also be measured by a consideration of the prices that have been obtained in the past for land of similar quality and in similar positions, and this is what must be meant in general by ‘the market value ’… But sometimes it happens that the land to be valued possesses some unusual, and it may be, unique features, as regards its position or its potentialities. In such a case the arbitrator in determining its value will have no market value to guide him, and he will have to ascertain as best he may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities.[35]
…
Upon the question of the value of the potentiality where there is only one possible purchaser, … would seem that the value should be the sum which the arbitrator estimates a willing purchaser will pay and not what a purchaser will pay under compulsion. It was contended on behalf of the respondent, that, at auction where there is only one possible purchaser of the potentiality, the bidding will only rise above the ‘poramboke’ value sufficiently to enable the land to be knocked down to that purchaser. But if the potentiality is of value to the vendor if there happen to be two or more possible purchasers of it, it is difficult to see why he should be willing to part with it for nothing merely because there is only one purchaser. To compel him to do so is to treat him as a vendor parting with his land under compulsion and not as a willing vendor. The fact is that the only possible purchaser of a potentiality is usually quite willing to pay.[36]
[34]Ibid 312 (emphasis added).
[35]Ibid 312–13 (emphasis added).
[36]Ibid 316–17 (emphasis added).
The applicants argued that ‘ordinary commercial considerations’, still had to be brought to bear. They relied on the following statement of Sugarman J in the Balmain Electric Light Co case:
The decision in Raja’s Case requires that in valuing for compensation upon a compulsory acquisition there be taken into account any unusual or special features or potentialities of the property acquired, even though they are useful only to the authority compulsorily acquiring and that authority is their only possible purchaser.
First then, it must be found that there is such a feature or potentiality. But when that is found, the decision prescribes no extraordinary principle for determining what is to be paid for the feature or potentiality … Neither in principle nor in the application of principle did the Raja’s Case require or suggest any departure from the ordinary rule in land acquisition cases (to which class the Raja’s Case belonged) of willing vendor–willing purchaser, to be applied to the special feature or potentiality, or any disregard of ordinary commercial considerations in applying that rule.[37]
[37]Reference under the Electricity Commission (Balmain Electric Light Co Purchase) Act 1950 (1956) LGR 49, 89 (citations omitted).
Consideration
Senior counsel for the applicants conceded — correctly, in our view — that the task of valuation in the present case was ‘extremely difficult’. The core of the difficulty lay in the artificiality of the hypothetical transaction which had to be postulated. By force of s 5A(3)(b) of the Act, the Tribunal was obliged to take into account the effect on value of the planning restrictions. As explained earlier, the effect of the amendment of the Melbourne Planning Scheme was that the land could only be used as a transport interchange facility. Indisputably, therefore, there was only one potential ‘purchaser’ of the land which would have the requisite interest in its development for those purposes, namely, the State of Victoria.
It is plausible, of course, that a commercial interest — aware of the State’s interest — would wish to purchase ahead of the State, in order to profit from a resale to the State. But the only purchaser with an interest in exploiting the ‘potentiality’ of the site would be the State. Accordingly, there is no ‘market’ for the land. There would be no competing bidders at a notional auction (other than an arbitrageur). If that were the end of the analysis, then the applicants would succeed. But it is not.
As his Honour correctly stated:
[T]he Raja principle highlights that it is wrong to assume that because a proposed development is not viable from an economic or commercial standpoint that it has no value, or that the State would pay nothing for the acquisition of land dedicated for public purposes. On this view, sites reserved for social infrastructure assets, such as hospitals, schools, police stations, prisons and libraries would have no value. As the Commissioner rightly submitted, such a result would be absurd.[38]
[38]Reasons [62] (citations omitted).
As already noted, the judge had regard to the evidence of the prices paid in what were referred to as ‘comparable sales’. These were sales of land in the central business district for development purposes. Given that — for the reasons already set out — the present hypothetical sale is not, and could never have been, for commercial purposes, they are not in the strict sense ‘comparable sales’. But they provided a valuable guide to the Tribunal as to the levels of value which non-government purchasers attached to land in the relevant area. His Honour was, of course, bound to value the land in its planning-restricted condition. But, in our view, it was both necessary and appropriate to have regard to the value of non-planning-restricted land in the area.
His Honour’s conclusion was that those levels of value were ‘clearly too high for the station site’. As his Honour correctly stated:
The station site plainly does not have the potential to achieve $3,000/m2. It is not a high-rise property development.[39]
[39]Ibid [188].
His Honour continued:
Given the significant restrictions on the use and development of the station site, the rates per square metre achieved in the sale of properties for residential or mixed use high rise or tower developments within the CBD provide an upper cap on rates that might be considered for the station site.
Putting aside tower sites, the station site can be considered to have the following development characteristics:
·it is earmarked for specific development as an integrated transport interchange;
· the permissible development can include retail;
· the permitted development will include areas, such as the bus station and the basement area, most analogous in use to light industrial areas, and support areas in the basement and within the station site;
· the Incorporated Document and Incorporated Plans govern the form of development;
· the site has high exposure to major public thoroughfares such as Collins and Spencer Streets, as well as commuter traffic, and is in an excellent location for development;
· the site has good bus and vehicular access from Adderley Street;
· Spencer Street and Collins Street are not available for vehicular access; and
· the site is free from contamination.[40]
[40]Ibid [189]–[190].
It is important to recall the condition of the land subject to valuation in Raja. It was undeveloped and ‘full of malaria’. Unless that state of affairs were remedied, the landowner would be unable to sell his water and the value to him of the ‘special adaptability’ of the land as a water supply was nil. In those circumstances, the Privy Council said:
the possibility of the appellant’s water being made available for the harbour by anyone other than the Harbour Authority was altogether negligible, and the only enhancement in the value to the appellant of his land by reason of its special adaptability as a water supply was the sum that the Harbour Authority, as a willing purchaser, would have been willing to give in excess of the land’s ‘poramboke’ value.
…
[S]uch sum must be taken into consideration in fixing the compensation payable to the appellant, and such…sum is not to be treated as being a negligible one merely because the Harbour Authority was the only possible purchaser.[41]
[41]Raja [1939] AC 302, 329.
The present circumstances are, of course, quite different. But there is an obvious similarity in the nature of the valuation exercise. Just as the land in Raja was — because of its potentiality — of real value to the harbour authority, so does this land have real value — because of its potentiality — to the State, in its unique role as the provider of public transport services. Although there is no commercial market because of the planning restrictions, and no commercial valuation available, the valuer must nevertheless seek to put a value on that potentiality.
As to the applicants’ complaint that his Honour ignored the fact that this land would not provide a commercial return, it will be clear from what we have said that his Honour did have regard to that circumstance — quite explicitly — and concluded that, because of the identity of the hypothetical potential purchaser, it was not determinative of valuation. The judge was correct in that conclusion.
Section 5A(3) of the Act specifies six factors which ‘where … relevant’ shall, be taken into account. Sub-paragraph (f) does not have the effect contended for by the applicants, that if the land does not have an actual and potential capacity to yield a monetary return, the land accordingly is of no value. The factor specified in sub-paragraph (f) could not, alone, override all other relevant considerations. In particular, it could not override the fact that the hypothetical market would include, and probably be confined to, one entity, namely the State, which had a particular and highly important need for the land. Accordingly, his Honour correctly concluded that the land did have a value greater than nil, notwithstanding the absence of a commercial return, and set about ascertaining that value. Accordingly, ground 1 fails.
We turn now to address the grounds which attack his Honour’s valuation methodology.
Ground 2: no ‘intelligible and evident justification’
Ground 2 alleges that the Tribunal erred by setting the site value of the land without an ‘intelligible and evident justification’ for the value adopted for the larger property. This ground relies on a passage from the reasons of Hayne, Kiefel and Bell JJ in Minister for Immigration and Citizenship v Li.[42] That case concerned the ground of judicial review known as ‘Wednesbury unreasonableness’. The relevant part of the joint judgment is in these terms:
As to the inferences that may be drawn by an appellate court, it was said in House v The Kingthat an appellate court may infer that in some way there has been a failure properly to exercise the discretion ‘if upon the facts [the result] is unreasonable or plainly unjust’. The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification.[43]
[42](2013) 249 CLR 332.
[43]Ibid 367 [76] (emphasis added) (citations omitted).
As will appear, his Honour arrived at a ‘base level land value’ of $1,000/m2.[44] The primary argument under this ground was that it was ‘not possible to comprehend’ how that determination was arrived at. Moreover, it was said, there was no possible justification for arriving at that figure when
all land valuation experts agreed that, having regard to the obligations imposed by the planning constraints, the completed development on the [land] was unviable to develop.
[44]Reasons [210].
According to the applicants’ submission, his Honour could only have arrived at that value by disregarding the ability of the land to yield a monetary return. His Honour was not entitled to disregard ‘ordinary commercial considerations’, specifically, the fact that
the planning controls and the agreed highest and best use meant the [land] did not have the capacity to yield a monetary return in the hand of either vendor or purchaser.
As the following analysis will reveal, his Honour’s reasons clearly disclose an intelligible and evident justification for the value he adopted for the ‘larger property’. His Honour set out at length his approach to the task of valuation, beginning with s 2(3) of the Act. He said:
After identifying the subject land, s 2(3) of the [Act] requires a number of steps to be undertaken to assess site value. It is convenient to address the steps in the following sequence:
(1) identify the larger property (or properties);
(2) determine the site value of the larger property (or properties);
(3) determine the EAV[45] of the subject land;
(4)determine the EAV of the other properties which together with the subject land constitute the larger property (or properties); and
(5) determine the site value of the subject land as the sum which bears the same proportion to the site value of the larger property (or properties) as the EAV of the subject land bears to the estimated annual value of the larger property.[46]
[45]Estimated annual value.
[46]Reasons [69].
His Honour considered that the ‘larger property’ for this purpose was the station site as a whole, excluding the rail lines and rail yards.[47] Those findings were not challenged on appeal. His Honour adopted the area of 55,939m2, as determined by Mr Brown, commenting as follows:
If this area is marginally low, it favours the taxpayer. However, I am not satisfied on the evidence before me that I should proceed on the basis of any greater area of the land available for development, given the constraints of the Incorporated Document and the Incorporated Plans’.[48]
[47]Ibid [81], [86].
[48]Ibid [207].
Each expert adopted a different approach to valuing the larger property. Mr Bowman used the ‘hypothetical development approach’ (due to what he considered to be a lack of comparable sales data). He observed that there was no established market for a property with similar attributes. Having accounted for the costs of development (taking into account a margin for profit or risk), Mr Bowman concluded that the station site was uneconomic to develop, and that the site value of the land should therefore be nominal.[49]
[49]Ibid [150]–[152].
His Honour considered that there were ‘fundamental difficulties’ in using the hypothetical development method to value land required or reserved for a major public facility. His Honour said:
While the revenues from retail and commercial activities, and the costs and expenses relating to the various components of the station can be ascertained, the method does not take into account the value to the State of a major public facility. The value of the station to the State is not included in the commercial revenue actually derived from the station.[50]
The nominal value was ‘absurdly low’, his Honour said, given that the highest and best use of the land was ‘as a key public infrastructure asset’.
[50]Ibid [153].
His Honour considered the authorities on the ‘hypothetical development method’. He referred to Waalt Homes Pty Ltd v Road Construction Authority,[51] in which Gobbo J observed that it was well-established that the use of comparable sales is to be regarded as the primary method of valuation.[52]
The hypothetical development analysis method offers many opportunities for error in its various assumptions and calculations.[53]
[51](1987) 64 LGRA 346.
[52]Ibid 354.
[53]Ibid 347.
His Honour also referred to Gwynvill Properties Pty Ltd v Commissioner for Main Roads, where Cripps J said:
The hypothetical development method is normally suspect because it depends on a number of assumptions and a number of estimates, eg, cost of building, estimated gross rentals obtainable, probable outgoings and, most significantly, the rate per centum of return which could be expected and the profit and risk factor expressed in percentage terms. It has been said that because many estimates and assumptions must be made, the hypothetical development method ought not be used where some use can be made of a comparable sale.[54]
[54](1983) 50 LGRA 322, 326.
His Honour found that Mr Bowman’s calculations showed ‘the high degree of variability associated with the use of the hypothetical development method where social infrastructure is to be valued’.[55] He noted, in particular, the impact that different profit and risk allowances had on the calculations and that there was no market evidence to support either of the results. He concluded as follows:
Given the uncertainties inherent in the hypothetical development method, the use of the direct comparison method is more likely to produce a more reliable outcome.[56]
[55]Reasons [154].
[56]Ibid [154], [159].
The applicants’ second expert, Mr Brown, valued the land by capitalising station income. On this approach, the capital value of the station site was ‘far less than its actual cost.’[57] Mr Brown noted that the site was owned by the State Government or a State authority, was not commercially viable in its own right, and would revert to the State at the expiry of the facility lease.[58] In Mr Brown’s opinion, the site would not be viable for commercial development without the support of the State Government. He adopted a nominal value of $1,000,000 for the larger property.[59]
[57]Ibid [161].
[58]Ibid [162].
[59]Ibid [165].
His Honour’s criticism of Mr Brown’s valuation approach was that it did
not address what the State, or an instrumentality of the State, would be prepared to pay at a hypothetical auction of the larger property conducted under the Spencer and Raja principles. Mr Brown does not consider what price the State would pay, rather than forgo public use of the station. … He does not consider or address the site value of the station site on the basis that the most likely bidder at a hypothetical auction would be the State Government. The State would have a very strong interest in acquiring the station site, as the site for a major public transport facility.[60]
[60]Ibid [165]–[166].
His Honour summarised what he regarded as the ‘significant flaws’ in the valuations relied upon by the applicants, as follows:
(1)Mr Brown did not take into account the State’s involvement in the construction, operation and maintenance of the station through the CSPs. He did not make allowance for the fact that expenses relating to public areas were paid by the State under the PPP Agreement;
(2)in using his hypothetical development method, Mr Bowman produced dual results. He found it difficult to take into account the revenue earned through the CSP as a result of the use of the subject land for its highest and best use;
(3)the CSP was negotiated between sophisticated parties after extensive financial modelling. Clearly, the parties were well informed about costs and expenses, and the developer saw the contribution from the State as sufficient to proceed with the project;
(4)the CSP gives no indication of the hypothetical rental that would be payable on the subject land, as it includes no assumption or element of land value. It is not a proxy for market rental;
(5)Mr Brown did not recognize the key role of the CSP in ensuring the construction, operation and maintenance of the station and subject land. It included an ongoing contribution by the State to ensure that the station was built and operated; and
(6)neither Mr Bowman nor Mr Brown assessed site value by reference to a hypothetical sale of the subject land by a willing but not anxious vendor to a willing but not anxious purchaser. The State stood to be treated as the most likely hypothetical purchaser.[61]
None of the grounds of appeal seek to impugn the rejection by the judge of the valuation methodologies adopted respectively by Mr Brown and Mr Bowman.
[61]Ibid [167].
Mr Torr prepared two reports for the Commissioner. In the first, dated July 2013, he adopted the direct comparison method. Mr Torr said that valuation of the land was an ‘almost uniquely complex valuation exercise’, and that ‘the site value of this land could be subject to very wide differences of opinion amongst valuation experts’. He considered that ‘[s]ome of the uses within the subject property are highly specialised including rail platforms and bus station which have no active liquid market, little valuation precedent, and virtually no pool of comparable evidence’. In his view, there were ‘no sales … even closely comparable to the subject property’. Further, the direct comparison method was ‘problematic because there are no sales … which are even closely comparable to the physical land parcel and nor to its restricted development circumstances’.
Mr Torr nevertheless proceeded to value the land by reference to sales of larger land parcels in the CBD; adjacent inner city sales; site values described by Council; and some indirectly comparable properties. He valued the land at rates of $600 per square metre in 2008 and $1,000 per square in 2010 and 2012.
Mr Torr’s second report, dated October 2014, was prepared following the reference of the taxpayers’ objections to the Tribunal. In that report, Mr Torr acknowledged that
the cost of building the subject development, as specified under the Incorporated Document in the planning scheme, and as was built, is likely to vastly exceed the rental returns that can be earned from conventional property market sources in that development.
He went on, however, to consider all of the likely elements ‘in play’ for this property.
In Mr Torr’s view:
Due to its pivotal public transport location, the hypothetical sale of this site will have three, not two, key participants: a vendor, a purchaser and a third key stakeholder, being the State government. Under the [Act] it is assumed that all parties in the hypothetical sale are prudent and knowledgeable and under that test all three parties, and in particular the hypothetical vendor and purchaser, would be fully aware that the mandated specifications for the new station are so high that it would never be financially viable without large financial contributions from the ‘third party’, being the State government, whose objective is to get a high quality station/transport hub built on the site.
To deal with the unusual circumstance it is necessary to envisage the hypothetical vendor and purchaser knowing that the negotiations for development and use of this site will be a tripartite negotiation in which the vendor has an imperative to capture the value of its land, the purchaser has an imperative to build the envisaged development profitably, and the State has an imperative to get a high quality station built on the (notionally vacant) subject site. The ‘deadlock’ in that negotiation will be the exceedingly high specifications the State government has placed on the new station it wants and it is therefore the State who will have to break the ‘deadlock’ by contribution enough funds for the other two parties to meet their respective financial hurdles.
As can be seen, Mr Torr took the lack of financial viability as his starting-point, rather than treating it — as the applicants’ experts did — as requiring the conclusion that the site had a nil value. Mr Torr concluded that
the market value of the subject site is materially influenced by the potential to receive substantial building cost contributions from the State, that a prudent vendor and purchaser would be aware of that fact, and that the commercial development rights on the subject site, at least in 2002, were viable and valuable.
Mr Torr again adopted the direct comparison method in his second report. He analysed two categories of sales: sales in the Melbourne CBD and sales in fringe/adjacent suburbs. He considered that
the first category [was] comparable to the contiguous land section (ie, the non-rail line section) of the rail station site and the bus terminal site. These two land parcels have extensive street frontages, level topography, prominent position, and have contiguous land areas of sufficient size and shape to facilitate extensive development.
He considered the second category of land sales, being sales in fringe/adjacent suburbs with less intensive development potential, as more comparable to assessment of the site value of other parts of the station site.
Mr Torr adopted the following land values for the station site:[62]
[62]Ibid [173], [199].
Summary of adopted land values $/m2
Relevant date
2008
2010
2012
Station site – Contiguous land –
(Collins and Spencer)$1,500
$2,500
$3,000
Station Site – Platform areas
500/375
825/625
1000/750
Bus terminal site – contiguous land
$1,700
$3,000
$3,700
Bus terminal site – Access land
$300
$450
$500
In neither report did Mr Torr seek to explain how he had arrived at his adopted levels of value. In oral evidence, he agreed that his conclusions were very subjective and were not susceptible to analytical testing, because his approach did not depend upon analysis of particular sales. He explained that he had analysed sales of land in the CBD, and around the fringe of the CBD, in order to have a ‘benchmark’ on the level of adjustment to make for the constraints on the highest and best use of the station site.
In his Honour’s view, the preferred method of assessing the value of the larger property was the direct comparison method. That method was ‘clearly more reliable than the other methods attempted by the valuers’. His Honour said:
While there is no single property directly comparable to the station site, the Spencer and Raja principles stand to be applied, having regard to the levels of value discernible in the sales evidence collected by the valuers as it relates to the larger property. The direct comparison method is also appropriate, having regard to the fact that the station site is reserved for a public facility. Its value should be assessed in accordance with the Raja principle, and is only partly dependent on commercial returns.[63]
[63]Ibid [182].
Mr Torr was, of course, the only one of the expert valuers who had used the direct comparison method. His Honour did not, however, accept the level of values adopted by Mr Torr. His Honour said:
These values would lift the site value of the station site close to, or into the range of, values to be found in the sales evidence for CBD tower sites. By contrast, the fringe sites sales evidence for larger sites shows a range from $405/m2 to 800/m2. As might be expected, smaller fringe sites showed a higher range from $513/m2, to $1,903/m2 for a new primary school use. It is a significant jump from these levels of values to some of the levels adopted by Mr Torr. In this respect, I note that the site values of the station site advanced on behalf of the Commissioner have fluctuated significantly at different stages of the assessment process, and during the conduct of the proceeding.[64]
[64]Ibid [200].
In his Honour’s view, another difficulty with Mr Torr’s value was the very wide range of values as between 2008 and 2012. His Honour said:
In my view, the sales evidence assists in the determination of a rate/m2 for the available land within the station site with the potential for development devoid as it must be of improvements. But a more detailed or graduated approach for areas or sub-areas within the site as ultimately developed is unsupported by sales evidence. The wide variation in the range of figures adopted is essentially subjective or judgemental.[65]
[65]Ibid [203].
With the agreement of the parties, the Tribunal undertook unaccompanied site visits to the CBD and city fringe sites identified by Mr Torr. His Honour said:
Although none of the suggested properties can be considered directly comparable to the station site, the sales evidence provided does give significant assistance as to the levels of value achieved in the market across the relevant dates.[66]
[66]Ibid [184].
His Honour proceeded to address, at length, both the ‘significant use and development restrictions’ and what he described as a range of ‘favourable features relating to the station site’, in particular that it occupied ‘a gateway position between the CBD and the Docklands precincts of Melbourne’ and was ‘an iconic location’.[67] His Honour noted that CBD land ‘with tower potential’ had sold over the relevant dates at rates from $3,000/m2 up to $11,000/m2. Since, however, the station was not a site for property development, these levels of value were ‘clearly too high’.
[67]Ibid [185]–[186].
His Honour said:
Given the significant restrictions on the use and development of the station site, the rates per square metre achieved in the sale of properties for residential or mixed use high rise or tower developments within the CBD provide an upper cap on rates that might be considered for the station site.[68]
On the other hand, his Honour considered, the State as hypothetical purchaser would expect to pay ‘a significantly higher rate’ than was achieved by the city fringe sales evidence. This was particularly so because the station site had ‘a far superior location’ and ‘far better exposure to major public streets and people movement’. Recognising that the city fringe was a ‘far inferior location’, his Honour had regard to sales evidence as to values achieved for large sites in that area.
[68]Ibid [189].
His Honour’s conclusions were in these terms:
When the station site was valued by the Valuer General’s office, Mr Webb adopted a land value of $1,000/m2 for the station site in 2010 and 2012, prior to the application of s 2(3) of the VL Act. His valuation shows that he applied a similar rate to determine the site values of the neighbouring properties of 201 Spencer Street, Docklands and the Crown Casino Complex. Regarding the base level land value of $1,000/m2, and as Mr Torr noted there are significant development constraints.
In my view, a base level land value of $1,000/m2 is appropriate as at 2012. If this rate is in error, it is marginally on the low side, favouring the taxpayer. However, I am not satisfied on the sales evidence that I should adopt Mr Torr’s higher rates.
Having considered all things and circumstances that affect the station site, and doing the best I can with the evidence as a whole, I adopt a rate of $1,000/m2 as at 1 January 2012. I have had particular regard to the highest and best use and development in the context of the Incorporated Document and Incorporated Plans, and the sales evidence before the Tribunal in adopting this figure. Applied to an area of 55,939m2, this gives a site value for the larger property of $55,939,000.[69]
[69]Ibid [209]–[211] (citations omitted).
For those reasons, ground 2 is not made out. The judge’s reasons disclose a clear, intelligible and evident justification for the value that he assessed for the larger property. In short, the judge found flaws in the approaches adopted by Mr Bowman and Mr Brown, the experts relied on by the applicants. His decision disclosed the reasons for rejecting their evidence. The judge adopted Mr Torr’s approach, with two principal qualifications. First, he did not accept the level of values adopted by Mr Torr since they equated to the values for CBD tower sites. Secondly, he rejected the approach of differentiating between four parts of the site because he did not consider that it was properly supported by the sales evidence.
With those qualifications he otherwise applied the same approach as Mr Torr, treating the sales evidence used by Mr Torr as ‘benchmarks’. In that way the judge disclosed the basis upon which he concluded that the appropriate valuation was to be assessed at $1,000 per square metre. Accordingly, ground 2 must fail.
Ground 3: the Tribunal ‘pieced together its own valuation’
The third ground of appeal alleges that the Tribunal erred by purporting to use a method of valuation that was not supported on the available evidence and piecing together its own valuation of the ‘larger property’.
The applicants submitted that the purported use of the ‘direct comparison method’ lacked an evidentiary foundation. Once again, the argument highlighted the planning restrictions which, it was said, ‘were a cost or detriment to any landowner’. The submission pointed out, once again, that ‘the only permitted development on the [land] was unviable without State Government intervention’. Since that characteristic did not apply to any of the sales used by comparison, the direct comparison method was simply unavailable. Even Mr Torr had conceded that there were no sales that were ‘even closely comparable’.
As a result, the applicants submitted, the figure which his Honour arrived at could not in any sense be viewed as one arrived at by application of the direct comparison method. Rather, it was said, his Honour had ‘pieced together’ his own valuation. Instead of evaluating the evidence given by the respective experts,[70] his Honour had effectively substituted his own opinion, drawing on ‘pieces of the evidence as he considered to be relevant’.
[70]ISPT (2008) 20 VR 447, 456 [29].
The classic exposition of the role of the judge in a valuation case is that of Wells J in Brewarrana v Commissioner of Highways [No 2].[71] The essential point made in that case was that the judge was not intended to be, or become, an ‘independent expert in the very field in which testimony will be tendered to him that he will be called on to evaluate’.[72] For that reason, Wells J rejected a submission which, he considered, was
an invitation to the Court to piece together, from the several valuations placed before it, what would be, in effect, a paramount evaluation of its own. In my opinion, that invitation must be refused, because to accept it would necessitate my accepting, pro tanto, the role of an expert.[73]
[71](1973) 6 SASR 541.
[72]Ibid 544.
[73]Ibid 545.
In our view, this characterisation of the Tribunal’s approach to valuation must be rejected. There is nothing about his Honour’s careful explanation of his approach to valuation which suggests that he arrogated to himself the role of an expert.[74] On the contrary, his Honour was making adjustments to the evidence of Mr Torr, being evidence which he was ‘otherwise disposed to accept’.[75]
[74]Ibid.
[75]101 Collins Street Pty Ltd v City of Melbourne (Unreported, Supreme Court of Victoria, Batt J, 2 April 1996) 81 (‘101 Collins’).
In 101 Collins, Batt J cited what Handley JA (with whom Kirby P agreed) had said in Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority, as follows:
The method of deducing market value from sales of comparable land almost invariably involves the making of adjustments to allow for differences from the land to be valued or timing differences. [76]
In that case, Handley JA quoted the following statement from Hope JA in Leichardt Municipal Council v Seatainer Terminals Pty Ltd:
The need to make adjustments to values deduced from sales in order to arrive at the true valuation of the land to be valued does not preclude the Court … from relying upon the sales as comparable … nor from the making by the Court or by valuers of adjustments which may be nothing more than the best guess that can be made. [77]
[76](1991) 24 NSWLR 156, 182 (‘Yates’).
[77](1981) 48 LGRA 409, 434.
Handley JA commented:
A judicial valuer is not required to formulate verbal reasons for such guesses or exercises of judgment.[78]
He then cited the following statement by Lord Hobhouse in Secretary of State for Foreign Affairs v Charlesworth, Pilling and Co:
in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to other. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at.[79]
[78]Yates (1991) 24 NSWLR 156, 182.
[79][1901] AC 373, 391.
In our view, it is clear from his Honour’s reasons that he relied on Mr Torr’s expert evidence, both as to methodology and as to the sales figures provided. Quite properly, his Honour treated those sales figures not as directly comparable but as a series of benchmarks or reference points. He then made his own adjustments, in precisely the way approved by the authorities, after making clear his reasons for regarding Mr Torr’s level of values as too high.
Understood in this way, his Honour’s approach is unexceptionable. His path of reasoning was clearly set out. He was not, however, required to explain how he arrived at the figure of $1,000. That was, first and last, an exercise of judgment. The making of such judgments is of the essence of the task of valuation, whether undertaken by an expert valuer or by a judicial valuer with the assistance of expert opinion.
For the reasons discussed earlier, the unique features of this site, and of its specified use, meant that the judge had no market value to guide him. As a result, he was required to
ascertain as best he may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those potentialities.[80]
[80]Raja [1939] AC 302, 312–13, cited in Brisbane City Council v Valuer-General (Qld) (1978) 140 CLR 41, 59.
That is exactly what occurred.
Ground 4: denial of procedural fairness
The submissions in support of this ground fell into two parts. First, it was said that his Honour had given ‘little notice’ of his intention to carry out ‘his own valuation’ of the land, rather than proceeding upon the evidence of the expert valuers. For the reasons given under the previous ground, that submission proceeds from a false premise and must be rejected.
The second submission was that the judge had relied, without notice, on the report prepared by Mr Webb for the Valuer-General. As can be seen, from the extract set out above, his Honour referred to Mr Webb’s opinion immediately before stating his own conclusion.[81]
[81]See [80] above.
It was common ground that, although the report of Mr Webb was in the materials before the Tribunal, the Commissioner had not relied on it in his defence of the assessments. On ordinary principles, therefore, his Honour would have been required to give notice to the applicants if, notwithstanding the Commissioner’s disavowal of the report, he proposed to rely on it.
In the event, however, there is no suggestion in the reasons that his Honour did rely on the Webb report. His Honour stated clearly, at the outset of his reasons, that the Commissioner was relying on Mr Torr and Ms Murone, and that Mr Webb had not given evidence.[82] His Honour analysed separately, and in detail, the valuations of each of the four experts on whom the parties were relying, giving his reasons for adopting — or not adopting — their respective approaches. Unsurprisingly, there is no reference to Mr Webb in that part of his reasons.
[82]Reasons [16].
Nor is there any reference to Mr Webb in the lengthy section of the reasons in which his Honour describes why he adopted the comparable sales method and why he considered it necessary to make adjustments to Mr Torr’s figures. There is, accordingly, no foundation for the assertion that his Honour relied on Mr Webb’s opinion in arriving at his conclusion. It would appear that his Honour was merely noting that the assessment at which he had arrived coincided with that of Mr Webb.
Ground 5: failure to draw the proper inference
Under this ground, the applicants contended that:
To take out of context nearby CBD properties or fringe properties having different uses and being materially different in size to justify a valuation without express consideration of the planning controls ignores that all experts agreed the Subject Land was unviable to develop in accordance with the Incorporated Document absent the inclusion of the Core Services Payment. The inference of fact to be drawn required an acknowledgment of the effect of the distinguishing features of the properties and their planning controls. None was undertaken.
As can be seen, this ground advances essentially the same arguments as have already been considered — and rejected — under other grounds. For the reasons already given, there was no error of the kind asserted.
Conclusion
For these reasons, we would grant leave to appeal but dismiss the appeal.
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