Valuation of Land Act 1916
6A Land Value
(1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made.
(2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that -
(a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and
(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used,
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made.
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40 Powers of Land and Environment Court on appeal
(1) On an appeal, the Land and Environment Court may do any one or more of the following -
(a) confirm or revoke the decision to which the appeal relates,
(b) make a decision in place of the decision to which the appeal relates,
(c) remit the matter to the Valuer-General for determination in accordance with the Court's finding or decision.
(2) On an appeal, the appellant has the onus of proving the appellant's case.
- Pursuant to s 40(2) of the VL Act, the Applicant bears the onus of proving its case. This is said to mean that the Applicant must establish that the issued land value is too high. [9]
- The Court acts as a judicial valuer. [10]
- If I, as judicial valuer, determine that the relevant land has a land value of less than the amount determined by the Valuer-General, this onus will be discharged. If the Applicant does not discharge its onus, the appeal must be dismissed and the issued Land Value for 2021 and 2021 stands. [11]
- The Court is not confined to accepting the case of one party or the other party and may use the evidence adduced in the proceedings or draw on the experience of the Court to make its own assessment. [12]
- In the absence of available market evidence, the Court must use its best endeavours in light of the evidence and its experience, and make the best guess. [13]
- The task under s 6A of the VL Act is to determine the land value of the fee simple in its unimproved state by assuming improvements (other than land improvements) have not been made. In the present case, the Land has no improvements.
- Section 6A(1) also requires the postulation of a notional sale which is assumed to take place in a market and the seller would conclude the sale for the highest price it could obtain in that market. [14]
- For the purposes of that notional sale, value is determined by [15] :
1. Forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value;
2. Supposing both the seller and the purchaser to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property; and
3. Assuming an efficient market in which buyers and sellers have access to all currently available information that affects the property.
- The value of the land is to be determined on the basis of the highest and best use of the land. [16]
- There is no explicit recognition in the VL Act of the highest and best use of the land concept, but the Australian Property Institute considers it to be "the use of the property that maximizes its potential which is physically possible, legally permissible, and financially feasible". [17]
- The Court should approach the task by determining what was the 'most profitable potential use' of the land [18] having regard to planning and all other relevant factors affecting its present and future potential. [19]
- The value of the land is determined by ascertaining what a willing purchaser would pay and what a not unwilling vendor would receive for the property. [20]
- The parties to the hypothetical sale are assumed to be "fully informed" and to make "all proper enquiries". [21]
- The land must be valued at the relevant date in its existing condition with all its potentialities as potentialities. [22]
1. In considering the potentialities of the relevant land, the valuer may take into account not only the present use to which the land is applied but any more beneficial use to which it may reasonably be applied. [23] This exercise is underpinned by concepts of feasibility, realism, practicality and reasonableness reviewed in the context of all the 'circumstances' of the land. [24] However, consideration must only be given to 'realistic options' [25] , and remote and speculative possibilities are to be disregarded. [26]
2. Any future beneficial use must be assessed as follows:
1. The onus is on:
"the person or authority seeking to establish a value based upon some different use from that which is authorised by the restrictions the burden of showing the practicability or reasonableness of the land being devoted to some such use: and needless to say, this extends to showing the probability of some relaxation or variation of the scheme and the means by which that is likely to be achieved" (Parramatta City Council v Valuer-General and Another (1965) 10 LGRA 160, Else-Mitchell J at 168-169).
1. In Kelliher v Commissioner for Main Roads (No 2) [2015] WASC 478 (Kelliher) Pritchard J held at [105] that the concept of highest and best use requires that the valuation take into account the potential of the land to be used for that more profitable use (after necessary planning approval); and at [106] in the context of a question about the prospects, at the date of valuation, of future planning permission being given for a particular (more profitable) use, it is well established that the question is to be approached objectively, by reference to orderly and proper planning, not subjectively by reference to the likelihood of particular decision-makers approving the contemplated future use: McKay v Commissioner of Main Roads (No 7) [2011] WASC 233 at [307] (Beech J), citing Trandos v Western Australian Planning Commission (2001) 117 LGERA 256; [2001] WASCA 346 at [73] (Anderson J, Wheeler J & Einfeld AJ agreeing); see also De Ieso v Commissioner of Highways (1981) 47 LGRA 412; (1981) 27 SASR 248 at [253] (Wells J).
2. In Secretary to the Department of Economic Development, Jobs, Transport & Resources v Manor Lakes (Werribee) Pty Ltd (2017) 224 LGERA 195; [2017] VSCA 114, the Victorian Court of Appeal observed at [40] that:
"In the event that the potential requires the implementation under a planning scheme of regulatory change or the construction of public services such as a main sewer, urban water supply or road link, it will be necessary for the valuer to take into account the risks and contingencies affecting the realisation of the potential which gives the land its market value."
1. In Limina, Sheahan J held that the 'real world' complications with the site overwhelmed the Valuer-General's opinion and hypothesis in that case. [27]
1. It is well established that, if comparable sales are available, the direct comparison of sales evidence approach is the conventional method of valuation. [28]
2. In using the comparable sales method, the valuer must explain which of the sales is the most important comparable sale and why, and what adjustments have been made to reach a conclusion about the value of the relevant land. The direct comparison method may involve four steps:
1. First, accumulation of a pool of potentially comparable sales.
2. Secondly, analysis to convert them to a common basis of measurement such as a unitary rate (for example, per m2) improved or unimproved (through allowance for existence or absence of improvements).
3. Thirdly, adjustment to reflect identified differences between them and the subject property (eg size, location, use, and date). Too much adjustment may make it unsafe to use a sale.
4. Fourthly, application of the adjusted unitary rates of the potentially comparable sales to the subject property in order to determine its value. This may involve attributing differing weight to the different comparable sales according to their degree of comparability (for example, direct, indirect or limited). [29]
1. Whether a sale is sufficiently comparable is a question of fact and degree and, although some adjustment is always necessary, too much adjustment will render it unsafe to use. [30]
2. In the absence of directly comparable sales, the methodology to be applied was explained by Justice Biscoe in Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 that where there are no sales which are directly comparable, a 'top down' or 'bottom up' methodology is commonly used. [31]
3. That said, it is not satisfactory for a valuer who values land using the comparable sales method to list a number of comparable sales, each one suggesting a different value for the subject land and each of which requires some adjustment, and then simply to state an opinion about the value of the subject land: Arcus Shopfitters Pty Ltd v Western Australian Planning Commissioner [2002] WASC 174; (2002) 125 LGERA 180, at [78].