Webster v The Chief Executive, Department of Lands
[1994] QLAC 6
•25 March 1994
|
Re: Appeals against decisions of the Land Court
- Determination of unimproved value
- Valuation of Land Act 1944
Ranald James Webster - AV91-911
and
Bruce Harold Webster - AV91-916
v.
The Chief Executive, Department of Lands
(Delivered at Brisbane this Twenty fifth day of March 1994)
JUDGMENT
These are appeals (2) by the owners of certain lands situated in the Shire of Waggamba against decisions of the Land Court which dismissed appeals by the owners against determinations made by the Valuer-General of the unimproved value as at 31st March, 1990, of the owners' lands for rating and taxing purposes under the Valuation of Land Act 1944 (the Act) as it then was. As the Office of the Valuer-General ceased to exist on 26th March, 1993, the Chief Executive, Department of Lands, is the respondent to these proceedings.
In each case the relevant land has the benefit of a waterworks licence granted to the owners under the provisions of the Water Resources Act 1989 (the Water Resources Act). The issue is whether the enhancement flowing from each licence is a matter going to unimproved value of the subject land. The parties have agreed on the value of each property in the alternative as follows:
RJ Webster (AV91-911) - $319,000 or $262,000
BH Webster (AV91-916) - $285,000 or $235,000
A copy of the licence issued to BH Webster is on the record. Briefly the licence authorises the placement and use of a 450 mm axial flow pump on the esplanade of the MacIntyre River for the taking of water therefrom. Further specifications include -"NOMINAL ANNUAL WATER
ALLOCATION: 650 Megalitres (in conjunction)
Location of Works: Portions Esplanade adjacent to Por4V
Parish Newinga
County Belmore
To supply Portions 4V
Parish Newinga
County Belmore
Name of watercourse: MACINTYRE RIVER
Purpose of Works IRRIGATION & WATER HARVESTING
Crops to be irrigated COTTON, GRAIN CROPS"
The final paragraph of the grant provides "The work described hereon, and referred to in the application and plans and descriptions deposited by or on behalf of the abovenamed licensee, as finally approved, is hereby declared to be a licensed work under The Water Act 1926-1979 subject to the terms, limitations and conditions appearing on the Schedule hereto". The terms and conditions impose obligations on the licensee and limit what the licensee can do pursuant to the licence.
The Water Act referred to therein was repealed by the Water Resources Act. By operation of section 1.3 of the Water Resources Act, the licences continued in force as if they were granted under that Act.
Section 11 (1) (i) of the Act has provided, at all relevant times, for the Valuer-General to make a valuation of the unimproved value of any land granted by the Crown in fee simple and of "any other lands held from the Crown which may from time to time be required to be valued ... as if such lands were land granted by the Crown in fee-simple". Section 12 of the Act defines the "unimproved value" of land for this purpose to be 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. In the case of improved land, it is assumed that the improvements did not exist at the date of valuation. The definition of "improvements" refers to both visible and invisible improvements but makes no mention of such things as licences. The expression "value of improvements", however, is defined to include the "value of any hotel license the value of which has been included in the improved value" of the land.
At the relevant date of valuation, section 11 (1) (ii) of the Act provided:
"In making, pursuant to the foregoing provisions of this subsection, the valuation of the unimproved value-
(a)Of land held from the Crown for an estate of leasehold upon a tenure which is subject to any restriction, limitation, or other onerous covenant or condition; or
(b)Of land (whether freehold or land held from the Crown for an estate of leasehold) the unimproved value whereof is enhanced by an assignment to a sugar mill which is subject to any restriction, limitation, or other onerous covenant or condition;
(c)Of land (whether freehold or land held from the Crown for an estate of leasehold) the use whereof is restricted or limited for that the appropriate Local Authority has given due notice of the realignment of any road whereon that land abuts,
the unimproved value or, as the case requires, the enhancement in the unimproved value of that land shall be ascertained without regard to that restriction, limitation, or, as the case may be, other covenant or condition."
The argument before the Court concerns the interpretation which should be given to section 11 (1) (ii) (b) having regard to an amendment made to that paragraph in 1984. To deal with that argument, it is necessary to review the legislative history of section 11 (1) of the Act.
Prior to the 1984 amendment, section 11 (1) (ii) of the Act provided, in so far as is relevant -"In making, pursuant to the foregoing provisions of this subsection, the valuation of the unimproved value-
(a)Of land held from the Crown for an estate of leasehold upon a tenure which is subject to any restriction, limitation, or other onerous covenant or condition; or
(b)Of land (whether freehold or land held from the Crown for an estate of leasehold) the unimproved value whereof is enhanced by a license, assignment to a sugar mill, or other right or privilege which is subject to any restriction, limitation, or other onerous covenant or condition;
(c)...
the unimproved value or, as the case requires, the enhancement in the unimproved value of that land shall be ascertained without regard to that restriction, limitation, or, as the case may be, other covenant or condition." (emphasis added)
Section 13 (2) of the Act provided that no alteration shall be made to a valuation during the period in which a valuation is in force unless certain circumstances occur, including when:
"(e)... the unimproved value of that parcel of land is altered by the acquisition or loss during that period of a license, assignment to a sugar mill, or other right or privilege the value of which is deemed to form part of the unimproved value of that land."
Sections 11 (1) (ii) (a) and (b) and 13 (2) (e) were inserted in the Act by the Valuation of Land Acts Amendment Act of 1950 (No. 4). The 1950 amendments were designed to deal with three separate situations. First, the valuation of the unimproved value of leasehold land held from the Crown shall be made on the same basis as freehold land where that leasehold tenure is subject to a restriction, limitation or other onerous covenant or condition, without regard to that restriction, limitation, covenant or condition (paragraph (a)). Second, where the unimproved value of land is enhanced by a "license, assignment to a sugar mill, or other right or privilege which is subject to any restriction, limitation, or other onerous covenant or condition", the enhancement in the unimproved value of that land shall be ascertained without regard to the restriction, limitation or other covenant or condition (paragraph (b)). Third, a revaluation can be made during a valuation period when the unimproved value of land is altered by the acquisition or loss during that period of a licence, etc, the value of which is deemed to form part of the unimproved value of that land. Pursuant to section 14B of the Acts Interpretation Act 1954 and section 44 (15) of the Land Act, we have perused the second reading speech of The Minister for Lands on the introduction of the Bill to amend the Act by including these provisions, and the Record of the Legislative Acts 1950-1951 session, in an endeavour to gain an appreciation of the intention behind paragraph (b).
Whilst these records assist in understanding the mischief sought to be cured by the amendments dealing with restrictive tenures, no assistance is gained when looking for reasons as to why any enhancement in unimproved value (paragraph (b)) should be considered, if it is to be considered, without having regard to any restriction, limitation or other covenant or condition to which a licence, assignment to a sugar mill, or other right or privilege may be subject.
It does appear to be clear, however, that the focus of the amendments was directed towards sugar cane assignments and the valuation of assigned land on a common basis irrespective of land tenure.
The 1950 amendments were made subsequent to the judgment of the Privy Council in Toohey's Ltd v. Valuer General (1925) AC 439 and the judgment of the High Court in Drysdale Brothers and Co v. The Federal Commissioner of Land Tax (1931) 46 CLR 308. The High Court held that, although an assignment of land to a sugar mill was not an improvement on or appertaining to land, the enhancement in value of land so assigned should be taken into consideration in ascertaining unimproved value for the purposes of the Land Tax Assessment Act 1910. The definition of "unimproved value" in that Act was substantially the same as in section 12 of the Act. Evatt J in considering the matter posed three questions including -
"(1)Must the valuer assume that the `assignment' to the Pioneer Mill still exists over the subject lands, although the latter are deemed to be unimproved and in their natural state?"
He answered the question as follows -
"In Toohey's Case, the Judicial Committee regarded a publican's licence to sell liquor upon certain licensed premises in New South Wales, as necessarily associated with those licensed premises. It followed that to assume that the improvements (i.e., the licensed premises) `had not been made' necessarily resulted in the assumed disappearance of the licence as well. The notion of a licence dissociated from the physical premises and adhering to the site, was not legally possible. Consequently the unimproved value of the land had to be determined without including any enhancement resulting from an existing licence, although the physical suitability of the land itself for licensed premises was an element for consideration.
In the present case the `assignment' is not a legal incident of any improvements on the land (as in Toohey's Case) nor is it to be regarded (as a hotelkeeper's licence sometimes is) as something personal to the occupying cane-grower. On the contrary, the `assignment' is regarded by law as attached to the land itself. It follows that the valuer cannot assume the disappearance of the `assignment' from the subject lands although he must consider all improvements as non-existing. He must regard the subject lands as being in their natural state, but as still being `assigned' by law to the Pioneer Mill." ((1931) 46 CLR at 321-2)
Toohey's case finds statutory expression in section 12 (2) (b) of the Act which, as noted earlier, provides that the value of any hotel licence shall be included in the added value which the improvements give to the land. It is clear that section 11 (1) (ii) (b) only applied in a case where the unimproved value of land was enhanced by a licence, etc and that the unimproved value of land could not be enhanced unless the licence, etc could be regarded by law as attached to the land rather than to the improvements. It is also clear that any potential in land for a particular use which may only be achieved on the grant of the licence, etc is an element for consideration in ascertaining unimproved value.
Putting aside any question of potential and speaking only in terms of waterworks licences, it would have been necessary for the valuer to answer the following questions in the affirmative before the section could have application:
(a)Did the licence attach to the land as a matter of law?
(b)Was the unimproved value of the land enhanced by the licence?
If these questions were answered in the affirmative, the Act provided that the enhancement in unimproved value shall be ascertained without regard to any restriction, limitation or other covenant or condition to which the licence may be subject. The provisions covering unimproved value enhanced by an assignment to a sugar mill were qualified by legislation passed in 1953 (The Valuation of Land Acts Amendment Act 1953 - No.28) when section 11 (1) was amended by inserting this paragraph -
A restriction or limitation imposed under or in pursuance of `The Regulation of Sugar Cane Prices Act, 1915 to 1951,' upon the quantity of sugar cane grown upon land assigned to a sugar mill which the holder for the time being of the assignment may deliver to that sugar mill shall not be disregarded as aforesaid but, in ascertaining the enhancement in the unimproved value of that land by the assignment proper allowance shall be made for that restriction or limitation."
Assuming the affirmative to the questions just posed in respect of waterworks licences, it follows that the valuer in applying the statute strictly would be precluded from considering any limitation imposed upon the licence if such existed. Unlike sugar cane assignments (which applied to an area of land from which production could be limited) a restriction, limitation or other covenant or condition would not be relevant unless it applied to the licence. A mere difference in water allocations between one licence and another would not be relevant. What would be relevant is whether full beneficial use of the licence was restricted by conditions contained in the licence or imposed upon it by legislation. Although the statutory prescription contained in section 11 (1) (ii) of the Act appeared to possess ingredients which could cause anomalies to occur, the legislation remained in that form until 1984 when the section was amended by the Valuation of Land Act Amendment Act 1984 (No. 43) by deleting from paragraph (b) the words "licence, assignment to a sugar mill or other right or privilege" and by inserting the words "assignment to a sugar mill". The text of section 11 (1) (ii) (b) at the relevant date of valuation was quoted earlier in these reasons.
It is the case for the appellants that the 1984 amendment constitutes a direction that such matters as the existence of a licence (with the exception of an assignment to a sugar mill) not be considered in ascertaining unimproved value. The alternative submission is that a waterworks licence (at least of the kind granted in the subject cases) never was a matter which should be considered in ascertaining unimproved value.
The first submission finds support in a passage from the second reading speech of The Minister for Environment, Valuations and Administrative Services. The relevant passage is found in Hansard (4th April, 1984) at p. 2481. The respondent argues that, if this was the intention of the amendment, it was not carried into effect because the amendment did no more than to remove the direction that any limitation, etc to which a licence was subject was to be ignored in considering the enhancement in the unimproved value of land by a licence.
On this matter of statutory interpretation we accept the submission of the respondent. First, a literal reading of section 11 (1) (ii) shows that it has no application to the facts in the present cases. The intention as expressed in the Act is unambiguous and the only relevant inference which can be drawn from it is that where unimproved value of land is enhanced as a matter of law by a licence or other right or privilege, the enhancement shall be considered on general principles which would include regard being had to any restriction, limitation or other covenant or condition to which it may be subject. In this context an example may be found in the limitations placed upon riparian rights by section 4.11 of the Water Resources Act. We respectfully agree with the statement of the Queensland Court of Appeal that, "prima facie, a statutory amendment should be construed as altering the meaning of a provision" and that, generally speaking, "a prior legislative provision should not be construed in a way that would make the amendment unnecessary" (Rimmer v Nissen (1993) 113 ALR 502 at 507, citing Grain Elevators Board (Vic) v Dunmunkle Corp (1946) 73 CLR 70). But this is not a case where the amendment was said to be unnecessary or to have had no effect. The issue is what effect the amendment had and the relevance, if any, of the meaning of section 11 (1) (ii) (b) of the Act before the 1984 amendment on the section as it was at the relevant date of valuation. We find ourselves in the same position as Stephen J in Dugan v. Mirror Newspapers Ltd who ventured "into the use of legal history, only, in the outcome, to discover that it leads to no conclusion different from that which would have followed from a disregard of anything extrinsic to the words of the legislation itself" ((1978) 142 CLR 583 at 599, and comments at 600-1. See also Mills v. Meeking (1990) 169 CLR 214 at 223 per Mason CJ and Toohey J, Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation (1981) 147 CLR 297 at 304-5 per Gibbs CJ, 310-11 per Stephen J, 320-1 per Mason and Wilson JJ; Catlow v. Accident Compensation Commission (1989) 167 CLR 543 at 549-50 per Brennan and Gaudron JJ).
Secondly, we have difficulty in accepting the all embracing direction suggested by the appellants (which can only be supported by the second reading speech) when it is considered that there are certain rights or privileges recognised and defined under the Water Resources Act (as one example) which run with land and are matters for consideration in ascertaining unimproved value eg. riparian rights (see Section 4.11 of the Water Resources Act).
Thirdly, it may be observed that section 13 (2) (e) of the Act was not amended. In the circumstances of this case, we find that the Minister's second reading speech is of no assistance in determining the meaning of the section consequent on the amendment.
This brings us to the question whether a waterworks licence of the kind before the Court is a matter which properly may be considered in ascertaining the unimproved value of land receiving the benefit therefrom. Much of the argument advanced by the appellants stressed the incidents applying to licences - namely that they are capable of renewal, suspension, cancellation, revocation, amendment, modification or variance and transfer and that a licensee (by definition) includes an "occupier of land". All these various provisions when read together lead, it was submitted, to a conclusion that a waterworks licence is more personal to the licensee than it is attached to land. It was submitted further that, if the licence cannot reasonably be construed as personal to the licensee, it attaches to the works (improvements) rather than to land.
We accept that the licence itself is not an improvement to land. It may also be readily appreciated that licences in a general sense are many and various and that a licence granted under a statute must be characterised by reference to the statute under which the licence is created (see The Queen v. Toohey; Ex parte Meneling Station (1982) 158 CLR 327 at 344 per Mason J, 352 per Wilson J). The Water Resources Act provides that, generally speaking, the right to the use and flow and control of water at any time in a watercourse, conserved by a weir or dam or a barrage, or in an underground source of supply, vests in the Crown. (s 2.1) The right to the use and flow and control of water vested in the Crown is (among other things) subject to:-
(a)the specified statutory rights of an owner or occupier of land abutting the banks of a watercourse, lake or spring or a weir, barrage or dam vested in the Corporation or under the control of the Corporation or The Chief Executive to take water therefrom;
(b)the rights of the holder of a licence, permit or authority under this Act;
(c)the provisions of an agreement to take water under this Act. (s 2.2)
The Act expressly preserves the ordinary riparian rights of an owner or occupier of land abutting, say, a watercourse to use water in that watercourse for domestic purposes and for watering a reasonable number of stock without applying for or obtaining a licence or permit. (s 4.11, see also 2 4.9) Unlike riparian rights, which are as of right uses, a right to construct works in or on a watercourse to take water therefrom may only be obtained upon successful application by an owner/occupier for a licence to do so. Section 4.13 of the Water Resources Act, which defines works and things for which a licence is required, provides as follows -
"4.13Requirements as to licence. (1) Subject to sections 4.31 and 4.32 a person who, except under the authority of a licence under this Act -
(a)constructs on his land a referable dam or alters, repairs, maintains, uses, operates, abandons or removes a referable dam already constructed;
(b)(i)constructs works or uses works already constructed in or on a watercourse, lake or spring -
(A)to conserve water;
(B)to take water therefrom or water contained in or conserved by a weir, barrage or dam;
(ii)constructs works or uses works already constructed in or on a watercourse, lake or spring or on or in connexion with land that abuts any of them -
(A) for the purpose of drainage;
(B)for the prevention of flooding of land by water or the erosion of banks;
(C)for improvement in the flow of water in or changes to the course of any of them;
(c)takes water from a channel constructed by the Commission outside an irrigation area;
(d)constructs -
(i)in that part of a river, creek or stream downstream of the point at which the river, creek or stream becomes a watercourse within the meaning of this Act and upstream of the point at which the river, creek or stream ceases to be capable of navigation by vessels ordinarily employed in that river, creek or stream for the purpose of carrying goods;
(ii) in a lake,
works in the nature of a barrage;(e)uses works in the nature of a barrage constructed in that part of a river, creek or stream or in a lake specified in paragraph (d) and in existence immediately prior to the commencement of the Water Act Amendment Act 1979;
(f)constructs on his land a levee bank or uses a levee bank so constructed;
(g)constructs on his land an artesian bore or uses an artesian bore so constructed or enlarges, deepens or alters in any manner an artesian bore;
(h)in districts in which there is in force at the material time an Order in Council under section 4.6 constructs on his land a sub-artesian bore or uses a sub-artesian bore so constructed or enlarges, deepens or alters in any manner a sub-artesian bore;
(i)constructs in a designated area controlled works;
(j)retains, uses or continues to use in a designated area controlled works -
(i)constructed prior to and in existence at the date of the constitution of the designated area;
(ii)that consist of levee banks to which section 7.5 applies,
after the date of the constitution of the designated area or in a case to which section 7.5 applies after the date on which that section came into operation,
commits an offence against this Act.
Penalty: 200 penalty units."
Section 4.14 provides for the "Rights of non-riparian owner to licence". The rights, however, are the right to apply for a licence to construct or use works or to use works as already constructed as specified in section 4.13. The applicant may make arrangements with the owners or occupiers of land between the subject land and the source of water with respect to works necessary to carry out the purposes for which the application is made. Certain rights may be granted to assist an applicant in the preparation and presentation of the application. The rights do not include the right to the grant of a licence. The requirements for an application and the provisions governing the procedure by which an application is determined clearly show that an applicant has no legal entitlement to the grant of a licence, even where the application is properly made. Where a licence is granted, the rights conferred by the licence may be different from those sought in the application.
The Chief Executive of the department administering the Water Resources Act, formerly the Commissioner of Water Resources, (see Primary Industries Corporation Act 1992) upon inquiry made into an application for a licence under the provisions of section 4.18 may grant the application (absolutely or subject to any modifications or variations he may determine) or may refuse the application. Where the Chief Executive grants the application, he is to issue the applicant a licence in respect of -"(a)so much of the land, watercourse, lake, spring or water storage specified in the application;
(b)the use of so much of the quantity of water applied for;
(c)the referable dam specified in the application modified or varied;
(d)the works specified in the application modified or varied,
as he thinks fit" - s 4.18 (3)
This Division II of Part IV of the Water Resources Act goes on to provide terms and conditions to which a licence may be subject, including various obligations which may be imposed on a licensee and a provision in section 4.19 that a licence -
"(1) (d) operates for the benefit of the owner for the time being of the land on which the works the subject of the application are constructed or proposed to be constructed or of the person whose proposal it is;"
The Chief Executive, of his own motion or an application, may amend, modify, vary or revoke a term of the licence or add a further term. (s 4.19 (2)) The Chief Executive may refuse an application for renewal of a licence or may vary the licence. (s 4.21) Other sections provide for transfer (s 4.22); surrender (s 4.23) and amendment, variation, cancellation, revocation or suspension (s 4.25). In this last section there can be found provisions which appear to be of a personal nature (see s 4.25 (1) (c)).
Although the provisions of Part IV of the Water Resources Act include elements which may be found in strictly personal licences, there are other provisions which would support the respondent's submission that a waterworks licence should properly be seen as attaching to land. Section 4.24, for example, provides that where land in respect of which licence is in force, is subdivided, and a separate parcel is disposed of, the licence in respect of the land disposed of ceases to exist. The licence may remain in force over the remaining land if certain factors specified in the section are satisfied.
By contrast with Part IV, Part VIII of the Water Resources Act, which deals with irrigation undertakings and irrigation areas, provides that where the Chief Executive is of the opinion that the whole or part of any parcel of land within an irrigation area is irrigable land, the Chief Executive may determine that parcel to be a holding for the purposes of the Act (section 8.11). ("Holding" means an area of land within an irrigation area determined by the Commissioner to be a holding for the purposes of Part VIII). Were that to be done, the Chief Executive "must grant" to the holding "upon bases as he determines" a nominal allocation of water. The benefit is conferred upon the "holding". Thus "the holding", by reason of its situation within an irrigation area and in possessing irrigable land, has, by virtue of the statutory scheme, as much right to water for that purpose as a riparian owner would possess to water stock under section 4.11. The Water Resources Act, however, goes on to provide by section 8.13 that, upon the grant of a nominal allocation under section 8.12, the Chief Executive "must, without lodgment of an application in that behalf by the owner of that holding, grant and issue to that owner, a licence." A licence so granted is subject to certain of the provisions of Division II of Part IV of the Act including section 4.19 (1) (d), quoted above, and sections 4.22 and 4.25.
In the circumstances applying under Part VIII of the Water Resources Act, there is much to support a conclusion that a licence granted under that Part merely formalises an attribute of or an attachment made to the land by the statutory scheme. In these circumstances, a purchaser of a "holding" without a licence would probably not differentiate between that "holding" and another within the same irrigation area with a licence, assuming that the properties were equal in all other respects. But the same could not be said of a block riparian to a watercourse which has no licence. In that case the value of any potential in the land to gain a licence for irrigation purposes would be dependent upon the availability of water (ie. water not allocated under licence or taken under riparian rights) in the stream.
We come then to some of the authorities which were referred to during the case. In Basey and Howie v. Commissioner of Taxes (1919) S.A.L.R. 53, the appellants were entitled to participate in the distribution of water taken by licence from the River Murray for domestic and irrigation purposes by a Trust (constituted by Act of Parliament) subject to paying rates levied by the Trust. Murray CJ held that a water right was not an improvement and must be treated as part of the unimproved value of land. His Honour said -"But if by `water right' is meant the right corresponding to the obligation imposed upon the Trust by section 74 of the Act of 1893 to supply the appellants with water for their land, then, in my opinion, the Court was wrong in not taking it into account. That such a right increases the value of the land is indisputable. The only question is whether it is an `improvement' within the meaning of the Act? Clearly the answer to that must be, No. Nothing has been done on the land to create it. It is merely a legal right conferred by the Legislature. The increase of value caused by it, therefore, is not attributable to an `improvement,' but must be treated as part of the unimproved value of the land." (at 71)
That case can be distinguished from the present cases on the basis that the water right was a right, it was not linked to and dependent upon the installation of waterworks by the appellants on their land, and did run with the land. The circumstances were similar to those of McDonald v. Deputy Federal Commissioner of Land Tax for NSW (1915) 20 CLR 231 and Nicol v. The Valuer General (1960-61) 28 CLLR 285 (LAC). In both of those cases, properties obtained water from bores external to the boundaries. In the former case the High Court said -
"The second ground was that the learned Judge erred in not regarding as an `improvement' the value of which must be deducted from the total improved value, the existence of a Trust undertaking established by the Government under Act No. 41 of 1897. It is entirely extraneous to the property, but, from the Trust bore, water is procurable for watering part of the station. There is no doubt in one sense the existence of such an opportunity improves the property by making the possible income from it greater, just as a new railway station close at hand would, or a new invention for clipping sheep, or a rain-making device. But it is not an `improvement' within the meaning of the Act, which is something `thereon or appertaining thereto.' The `improvements' contemplated by the Act are such as are in the strict legal sense `appurtenant' to the property and incident to its ownership. This cannot be said of the mere legal and actual possibility to obtain water from the Trust. The fact and degree of that possibility, and the cost of satisfying it, are elements in determining the value of the land as unimproved land, because that, as one of the surrounding circumstances, has become one of the characteristics, though an acquired one." (at 234-5)
These authorities are decisive on the issue whether any potential in land to acquire water from a source external to the boundaries is a matter for consideration in ascertaining unimproved value. The cases do not in our view assist in determining whether a licence of the kind before the Court can properly be said to be attached to the land which it benefits.
As noted earlier Toohey's case, supra, dealt with that issue but in circumstances not directly in point as the case was concerned with premises licensed to sell liquor. Evatt J, when distinguishing the case from Drysdale supra, said, in relation to a licence to sell liquor, that -"The notion of a licence dissociated from the physical premises and adhering to the site was not legally possible ..."
and in respect of a cane assignment -
"In the present case the `assignment' is not a legal incident of any improvements on the land as in Toohey's Case nor is it to be regarded (as a hotelkeeper's licence sometimes is) as something personal to the occupying cane grower. On the contrary, the `assignment' is regarded by law as attached to the land itself". (at 321-2)
Toohey's case was followed by Mr Dodds, Member of the Land Court, in Determination of Rent - PLS 1789 St George District (unreported decision dated 23.7.1976). The relevant land had the benefit of a waterworks licence granted under the Water Act (repealed) to "construct and use a waterwork, as defined in the Act, in order to take, use and dispose of, on his land in some way or another, water contained in such watercourse." (p.5) The learned Member, in considering Drysdale supra and Toohey's supra said -
"A licence for a waterworks under the Water Acts is ... more in line with the hotel license which was the subject of the judgment of the Privy Council in Toohey's Ltd v. The Valuer General (1925) A.C. 439. It is not part of the unimproved state of the land but annexes something to the land to bring about the realisation of the potential of that land. In a very real sense it is attached to the improvement, that is the waterworks, which must be put on the land before any water from the stream can be brought on to the land. I agree that its existence materially assists the owner or occupier in realising the potential of the land but this is the normal role of any improvement. It gives the licensee the right to construct works, at least part of which will be on land owned by the Crown, and use that works to take water owned by the Crown and dispose of it in some way on the licensee's land." (page 6)
Later he said -
"The fact that under Section 12 (8) of the Water Acts a license is deemed to be held by, and shall operate and enure for, the benefit of the lawful occupier for the time being of the land whereon the work is constructed or proposed to be constructed, so that, it may be said, even if the improvement is notionally removed to obtain the unimproved state of the land, the license remains in the owner or occupier for the time being does not alter the situation at all. It is not possible to infer from this that the license becomes merged in some mystical way, with the unimproved state of the land. It merely establishes that lawful occupation of the land identifies the person who can construct and use the works authorised by the license and enjoy the benefits conferred thereby.
This, of course does not mean that a property with a river frontage and containing a proportion of irrigable arable soil may not be shown to have a higher unimproved value than a property with comparable soil content but away from the river, and without available water in the sense that it can be obtained even if only under the terms of a license. Any difference in unimproved value if it exists may be demonstrated by the application of proper valuation methods. All I am saying is that the enhancement due to the possession of the license itself is not part of the unimproved value but of the improved value." (page 7)
If we return then to section 4.13 of the Water Resources Act (Requirements as to a licence) and to the licence described earlier in these reasons, it may be seen that the subject licences authorise the construction and use of works in or on a watercourse for the purpose of taking water therefrom for waterharvesting and irrigation purposes. That which is licensed are the works described in the licence and "referred to in the application and plans and descriptions deposited by or on
behalf of" the licensee. The incidents attaching to the licence are in substance similar to those considered by Mr Dodds. A proper construction of the provisions of this part of the Act leads us to the conclusion that such a licence is a legal incident of the improvements (works) made under the authority of the licence and that in notionally removing those improvements for the purpose of ascertaining unimproved value the licence is also notionally removed. In other words, where a waterworks licence attaches to improvements on or appertaining to the land rather than to the land itself, the licence and any enhancement resulting from it is not to be taken into account when determining the unimproved value of the land.
In the circumstances, the appeals will be allowed and the unimproved value of the appellants' land will be determined in the lesser of the sums agreed between the parties.
We do, however, make these observations. It may be seen, on perusal of
section 4.13 and the few other provisions of the Water Resources Act to which we have referred, that the circumstances of each type of licence granted under that Act may vary and that certain other rights or permission are given under the Act. Although differences exist in both a legal and practical sense between them, it would appear that they all possess a common thread in that such rights, once given or obtained, would affect the value of the land by enabling it to be put to a higher and better use or alternatively to be used for the same use but at a cheaper cost. The idea then that the benefit flowing from a licence, right or
permit conferred by or acquired under the Water Resources Act (as distinct from any potential in the land unimproved to obtain such rights) should be considered in ascertaining unimproved value for rating and taxing purposes is not repugnant to the concept that land of equal productivity should be equally rated. There may well be circumstances where the potential to acquire a licence or other right or permission is so strong that a purchaser of land unimproved would see little or no risk in obtaining the relevant authority and consequently the unimproved value of that land may be equal to that of land where such potential has been realised by the grant of a licence. No doubt the fact that a property has the benefit of a licence is an element in considering the probability of obtaining one but that is about as far as the matter can be taken in the absence of clear legislative authority to the contrary.
Accordingly, the appeals are allowed. The determinations of the Land Court are set aside and the unimproved value of the appellants' lands are determined in sums as follows:
RJ Webster (AV91-911) - $262,000
BH Webster (AV91-916) - $235,000
President of the Land Court
Member of the Land Court
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