The Council of the City of Sydney v Valaisis

The Council of the City of Sydney (the Council) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales concerning the valuation of certain land for rating purposes. The respondent, Mr. Valaisis, was the owner of the land in question, which was subject to a lease to the Commonwealth of Australia. The dispute centred on whether the land should be valued as if it were unoccupied or as if it were occupied by the Commonwealth.

The primary legal issue before the Court of Appeal was whether the Supreme Court had erred in its determination of the unimproved capital value of the land. Specifically, the Court had to consider the proper approach to valuing land that was subject to a lease to the Commonwealth, and whether the existence of this lease, and the nature of the Commonwealth's occupation, affected the unimproved capital value for rating purposes under the relevant legislation.

The Court of Appeal found that the Supreme Court had correctly applied the principles of valuation. It held that the unimproved capital value of land should be determined by reference to what a hypothetical prudent purchaser would pay for the land in its unimproved state, assuming it was available for sale on the open market. The Court reasoned that the fact that the land was leased to the Commonwealth did not alter its inherent unimproved value, as the valuation was to be made as if the land were vacant and available for sale, irrespective of any existing occupation or leasehold interests. The appeal was dismissed.