Valuation of land - Gross rental value - Aggregation method - Park home estate - Aged persons' housing - Residents own transportable homes placed on land - Residents occupy transportable home sites under lease for life - Residents pay "rent" for occupation and for use of on-site services and facilities - Land historically valued as single entity - Valuation under review determined by aggregating gross rental values of each transportable home site - Whether aggregation method valid and appropriate - Whether evidence enables determination of gross rental value in accordance with aggregation method - Whether Supreme Court decision precludes reliance on aggregation method - Statutory interpretation - Argument from consequences - Reading together of principal Act and amendment - Use of policies to guide exercise of discretion - Words and phrases: "aggregating"

Land Tax Act 1936 (SA), s 2

Land Tax Assessment Act 2002 (WA), s 11

Pay-roll Tax Assessment Act 2002 (WA), s 32

State Administrative Tribunal Act 2004 (WA), s 27(2), s 167(4)(a)

Valuation of Land Act 1978 (WA), s 4, s 4(1), s 18, s 24, s 24(1), s 24(1)(a), s 32(3), s 33, s 33(1), s 35

Valuation of Land Regulations 1979 (WA), reg 3

2. Gross rental value of lot 30 on diagram 94121, No 445 Pinjarra Road, Mandurah, as at 1 August 2001 was $520 000

Archibald v Commissioner of Stamps [1909] HCA 29; (1909) 8 CLR 739

Attorney-General v Lawrence [1999] NZCA 261; (1999) 17 CRNZ 152

Bridges v Minister for Immigration and Multicultural Affairs [2001] FCA 1647; (2001) 114 FCR 456

Challenge Corporation Ltd v Commissioner of Inland Revenue [1986] 2 NZLR 513

Chief Commissioner of State Revenue v Lee (2000) ATC 4600 (NSW, CA)

Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd [1995] HCA 44; (1995) 184 CLR 453

Director of Public Prosecutions v Tregenza [2002] SASC 414; (2002) 84 SASR 346

English Scottish & Australian Bank v Commissioner of Taxes [1941] St R Qd 197 (FC)

Flanigan and Valuer General [2005] WASAT 124

Giris Pty Ltd v Federal Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365

Ingram & Anor v Western Australian Planning Commission [2003] WASCA 77

JB Investments Pty Ltd v The Valuer-General [2004] WASCA 307

JB Investments Pty Ltd v Valuer General [2003] WALVT 2

Re MacTiernan; Ex parte Coogee Coastal Action Coalition Inc [2004] WASC 264

Re Rouss 116 NE 782

Re Sandhu and Secretary, Department of Social Security [1992] AATA 105; (1992) 26 ALD 650

Tsai Mei-Lan Lee v Chief Commissioner of State Revenue (NSW)(1998) 99 ATC 4042

Vanu Pty Ltd v Valuer-General (1993) 11 SR (WA) 80

Western Australian Meat Marketing Cooperative Limited and Valuer General [2005] WASAT 227

Bell Property Trust Ltd v Assessment Committee for the Borough of the Hampstead [1940] 2 KB 543

British Oxygen Co Ltd v Minister of Technology [1970] UKHL 4; [1971] AC 610

Christies Sands Pty Ltd v City of Tea Tree Gully (1975) 37 LGRA 325

Colonial Sugar Refining Co Ltd v Valuer General (1970) 37 QCLLR 176

Drake v Minister for Immigration and Ethnic Affairs (1978) 2 ALD 162

Fremantle Sailing Club v Valuer General (Unreported, Land Valuation Tribunal of Western Australia: No 5 of 2001; 31 January 2003)

Gilbert (Valuation Officer) v Hickinbottom & Sons Ltd [1956] 2 QB 40

PT Ltd v Valuer General (2002) 29 SR (WA) 330

R v Eastleigh Borough Council; Exparte Peachey Property Corporation Ltd [1965] 2 All ER 836

Re Drake and Minister for Immigration and Ethnic Affairs [1979] AATA 179; (1979) 2 ALD 634

Sawyer v Secretary to Department of Primary Industry (1988) 15 ALD 742

The Shell Co of Australia v City of Melbourne [1977] 2 VR 609

1 This case involved a review of the Valuer General's discretion to "aggregate", that is, to group or add parts of land together, for land valuation taxation purposes.

2 The applicant, JB Investments Pty Ltd, owned a park home estate in Mandurah where retirees lived in transportable homes and shared some services and facilities, such as a swimming pool. Residents paid an amount, styled as "rent", but in effect covering both rent and the use of the facilities.

3 For a time, the Valuer General valued the "gross rental value" of the land in the estate in its entirety, that is, as one parcel of land. However, for the financial year 2002­2003, the Valuer General applied an internal written policy which, in effect, required each part of the land (that is, representing each transportable home site) to be valued, and then added together.

4 A statutory discretion was available to the Valuer General which appeared to authorise this course of action. The reason for the change in practice by the Valuer General was linked to certain changes in the law of the State which permitted long term occupation of caravan sites, including transportable home sites.

5 The practical effect of the Valuer General's decision to aggregate the home sites together was that the amount of rates payable to the City of Mandurah tripled in value.

6 The Valuer General's decision was first reviewed in 2003 in the Land Valuation Tribunal (whose functions have now been absorbed by the State Administrative Tribunal) and then, on appeal, to the Supreme Court of Western Australia in 2004. The effect of the Supreme Court's decision appeared to be that aggregation was available to be used as a valuation method.

7 The Supreme Court also commented on the evidence needed to work out what was the "gross rental value" of the land. The amount had to be calculated by reference to what proportion of the "rent" charged was actually related to the occupation of the land and what proportion of the amount charged represented payments for services and facilities.

8 The matter was sent back from the Court to the Land Valuation Tribunal and was then transferred to the State Administrative Tribunal for finalisation in 2005. The parties had different views on the effect of the Court's decision. They each produced experts who, in their fresh evidence, disagreed on the calculation of the "gross rental value". JB Investments' expert thought that aggregation in this case was a flawed method and produced an unfair result. The Tribunal, after analysing both sides of the expert evidence, preferred the evidence of the Valuer General's expert.

9 Further, the Tribunal, after considering the history of aggregation in tax and related statutes, concluded that Parliament must have foreseen the consequences of aggregation, given that, in many cases, taxpayers paid more tax after the aggregation principle was applied to their tax affairs. The Tribunal held that, in this case, aggregation was available to determine the gross rental value.

10 The Tribunal also found that the policies of the Valuer General were clear in their scope, consistent with the law and produced, when viewed in their context, rational and consistent results. There was no case established for not applying these policies to JB Investments and its affairs, in common with any other taxpayer in the same position as JB Investments.

11 The Tribunal therefore affirmed the decision under review, resulting in a determination on the relevant date of an aggregated gross rental value in the sum of $520 000.

12 These proceedings involve a review under s 33 of the Valuation of Land Act 1978 (WA) (VL Act) of the Valuer General's determination of the gross rental value of a property owned by JB Investments Pty Ltd (JB Investments). The property the subject of the valuation is lot 30 on diagram 94121 and is known as Mandurah Gardens Estate, no 445 Pinjarra Road, Mandurah (land).

13 Section 18 of the VL Act states that:

"For the purposes of a general valuation, the Valuer­General shall determine, or cause to be determined, with respect to rateable land, the gross rental value ... so far as that value is required by a rating or taxing authority for the purpose of assessing any rate or tax ... ".

14 The valuation in question was made in accordance with s 18 of the VL Act as part of a general valuation of land within the City of Mandurah for the 2002/2003 financial year. The date of valuation was 1 August 2001.

15 The following factual background to the proceedings is taken from the judgment of Master Newnes on an appeal from the decision of the former Land Valuation Tribunal (former Tribunal) concerning the valuation (see JB Investments Pty Ltd v The Valuer-General [2004] WASCA 307 at [2] ­ [9]):

"The property in question is known as Mandurah Gardens Estate. It is a park home estate, designed to provide moderate­cost housing for retirees over the age of 55. Residents on the estate live in specifically designed transportable homes which they own. A person who seeks to reside on the estate must select and purchase a park home from a designated range of homes and must enter into a 'Residential Site Agreement' with [JB Investments]. Under the Agreement, the specified residents of the park home are entitled to the exclusive right to occupy the portion of the land on which the home is located and to use the facilities on the estate for the lifetime of the last surviving of those residents, to a maximum term of 99 years. A resident can terminate the Agreement and remove their home, or can sell their home in situ provided the purchaser is approved by [JB Investments]. It is evident that, whilst such a home can be moved, it is not readily movable.

Under the Agreement the home owner must pay to [JB Investments] a monthly amount, described in the Agreement as 'rent'. At the time of the valuation, the rent was $79 per week. Although the sites vary in size from 160 to 260 square metres, the same rent is payable in respect of each. The rent is subject to annual review and each year may be increased by the greater of 5% or the amount of the increase in the Consumer Price Index.

The estate has a total area of 6.7612 hectares and has frontage onto Pinjarra Road near Mandurah. It comprises 158 home park [sic] sites, one of which is occupied by a manager/caretaker provided by [JB Investments]. Each home is equipped with a 24­hour medical/emergency call button. There are various facilities erected on the land for the use of the residents. They include a community hall, which is equipped with a library, a sitting room and an open­plan function hall with attached kitchen and associated facilities. Immediately to the north of the community hall there is an artificial turf bowling rink with floodlighting. To the west of the community hall there is a concrete below­ground swimming pool with adjacent paved and lawn areas which serve as a communal barbecue facility. There is also an extensive barbecue and recreation area centrally located in the estate for the use of residents.

The estate has some 20 paved lockable enclosures to accommodate caravans, boats and trailers owned by residents. A fee of $5 per week is payable by residents who use these facilities. There is also a workshop for use by residents.

The estate itself has a comprehensive bitumen paved and curbed internal road system with low height street lights placed intermittently throughout the estate.

The cost of operating and maintaining the facilities and services on the estate is met by [JB Investments] from the rent received from homeowners. The services and facilities concerned include the provision of a manager/caretaker, the operation and maintenance of the communal facilities, maintenance of the roads, verges and communal lawn areas, and services such as tree lopping, rubbish removal and power and water distribution.

Prior to the valuation in question, the estate had been valued for rating purposes on the basis of the gross rental value of the whole of the land as a single entity. The gross rental value for the financial year 2001/2002 was assessed at $97 760. The rates payable to the City of Mandurah, based on that valuation, were $13 070.45.

The valuation for the financial year 2002/2003 was made by the [Valuer General] on a different basis. In essence, it was made by attributing to each site within the estate a separate rental value related to the rent payable by the homeowner under the Agreement and aggregating those separate rental values. The gross rental value, so assessed, was an amount of $520 000. Based on that valuation, the rates payable to the City of Mandurah for the financial year 2002/2003 were $39 393.35."

16 The term "gross rental value" is defined in s 4(1) of the VL Act to mean:

"The gross annual rental that the land might reasonably be expected to realise if let on a tenancy from year to year upon condition that the landlord were liable for all rates, taxes and other charges thereon and the insurance and other outgoings necessary to maintain the value of the land, provided that ­

(a) where the gross rental value of land cannot reasonably be determined on such basis, the gross rental value shall be the assessed value; ... ".

17 The term "assessed value" of land is defined to mean "such percentage of the capital value thereof as may from time to time be prescribed": VL Act s 4(1). The relevant prescribed percentage is 5%: Valuation of Land Regulations 1979 (WA) reg 3. The term "capital value" of land is defined to mean "the capital amount which an estate of fee simple in the land might reasonably be expected to realise upon sale ... ": VL Act s 4(1). The word "land" is defined to mean "lands, tenements and hereditaments, and any improvements to land, and includes any interest in land": VL Act s 4(1).

18 This review turns on the proper interpretation and application of s 24(1) of the VL Act, read in the context of the other provisions of the Act referred to earlier. Section 24(1) provides materially as follows:

"[T]he Valuer­General may, in his discretion, assign to any land to be valued a valuation obtained ­

(a) by aggregating the valuations he would have assigned to any parts of which the land is comprised had he been separately valuing any such part; or

(b) by apportioning to the land such part as he considers appropriate of the valuation he would have assigned had he been valuing that land conjointly with any other land,

but nothing in this section limits the means by which the Valuer­General may otherwise make a valuation of the land." (Emphasis added.)

19 The method of valuation referred to in s 24(1)(a) is known as the "aggregation method". The aggregation method has been consistently applied by the Valuer General since 1979 in relation to the valuation of land containing identifiable parts capable of separate long­term occupation, which the Valuer General's officers apparently refer to as "hereditaments". Examples of land valued by the Valuer General in this way include retirement villages, non­strata titled flats, shopping centres, stalls within markets and boat mooring pens.

20 The most recent general valuation of the land by the Valuer General prior to the valuation the subject of these proceedings was undertaken on 1 August 1997 for the purposes of the 1998/1999 financial year. As noted by Master Newnes, gross rental value prior to the subject valuation was determined for the whole of the land as a single entity, that is, on a head tenancy basis. Shortly before the 1997 valuation was carried out, the Caravan Parks and Camping Grounds Act 1995 (WA) and corresponding regulations commenced and permitted long­term occupation of caravan sites, including transportable home sites. According to the evidence of Mr David Dumas, the valuer who carried out the valuation the subject of the review, this legislative change was of great significance in relation to the way he approached valuation of the land and the way in which the Valuer General has approached valuation of similar properties. In particular, it made it appropriate to value the land according to the aggregation method.

21 According to Mr Dumas, the legislative change which permitted long­term occupation of caravan sites led to the formulation and adoption of Valuer General's Office Policy 3.108 - Valuation of Caravan Parks ­ Fixtures v Chattels (Policy 3.108) and Valuer General's Office Policy 3.214 ­ Valuation of Caravan Parks ­ Fixtures v Chattels (Policy 3.214). Both policies contain the following provision:

"For the determination of [gross rental value] for Caravan Parks, each site capable of occupation on a year to year basis (Long Stay and Park Homes sites) shall be valued separately and the total of those aggregated with the [gross rental value] of the balance of the Caravan Park determined on a head tenancy basis."

22 Mr Dumas determined the gross rental value of the land as at 1 August 2001 at $520 000 on the basis of the aggregation method in s 24(1)(a) of the VL Act and Policies 3.108 and 3.214. He valued each transportable home site on the land by multiplying the weekly "rent" of $79 paid by residents by 52 weeks. He then "aggregated" 155 of these individual valuations to determine the gross rental value of the land as a whole. Although it is common ground that all 157 sites were leased at the relevant date, Mr Dumas conservatively assumed slightly less than full occupancy. It is to be noted that the valuation was premised on the assumption that the whole of the "rent" paid by residents for occupation of a site and for use of the on­site services and facilities provided by JB Investments constituted "rental" for the purposes of the definition of "gross rental value" in the VL Act. Although it is apparent that Mr Dumas applied a discount to arrive at the valuation in question, the basis on which he did so is unclear on the evidence.

23 JB Investments objected to the valuation pursuant to s 32(3) of the VL Act on the ground that it is not fair or is unjust, inequitable or incorrect. The Valuer General disallowed the objection. JB Investments then appealed against the valuation to the former Tribunal pursuant to s 33 of the VL Act.

24 The former Tribunal considered that the Valuer General had applied Policies 3.108 and 3.214 without consideration as to whether aggregation was the most appropriate method of valuation in relation to the land: see JB Investments Pty Ltd v Valuer General [2003] WALVT 2 at [16]. The former Tribunal determined that "in our view the aggregation method was inappropriate for the subject property": at [29]. Nevertheless, it considered that the "rent" paid by residents "can truly be described as gross in the sense that the landlord does pay rates, taxes and other charges, insurance and other outgoing [sic] necessary to maintain the value of the land" and that the nature of the operation of the land as a business indicates that that amount constitutes gross rental for each site: at [38] and [41]. The former Tribunal, therefore, accepted "the end result determined by the Valuer General" and confirmed gross rental value of $520 000: at [43].

25 JB Investments appealed to the Supreme Court pursuant to s 35 of the VL Act from the decision of the former Tribunal. It submitted on appeal that in treating the total amount paid by way of "rent" as gross rental value, the Tribunal erred in that it failed to have regard to, and to exclude, the component of the rent payment which was for services and facilities rather than for occupation. In Master Newnes' words, JB Investments "submitted that, in the circumstances of this case, the aggregation of the total rent by the homeowners was an inappropriate and impermissible method of valuation": at [28].

26 At [48], Master Newnes determined that, whereas the methodology in s 24 of the VL Act requires an assessment of the value of the individual sites, "the rent actually paid by the individual homeowners was not decisive as to that". At [49], the Master stated as follows:

"On the evidence, part of the rent payable by the homeowner was in respect of separate services and facilities provided by [JB Investments], rather than for occupation of the site of the park home. The evidence of Mr Dawson was that there was no basis upon which a proper assessment could be made of the respective amounts of such rent to be attributed to occupation of the site, and to the services and facilities. Certainly, there was no evidence of any basis upon which such an assessment could properly be made. There was therefore no basis upon which the Tribunal could determine the value of each site so as to apply the methodology specified in s 24."

27 Earlier in his judgment, at [39], Master Newnes observed that, although it was "unnecessary for present purposes to attempt to list all of the services and facilities" provided and maintained by JB Investments which are not integral to the occupation of the sites by the homeowners, "plain examples" are the swimming pool, the bowling rink and the community hall.

28 Master Newnes held that the former Tribunal erred in law "in simply treating the aggregate of the rent paid by the homeowners under the Agreement as the gross rental value of the land": at [39]. He upheld the appeal, set aside the order of the former Tribunal and remitted the matter to that Tribunal "to be determined in accordance with law": at [51].

29 The former Tribunal was abolished shortly after the proceedings were remitted to it. On 1 January 2005, the proceedings were transferred to this Tribunal: State Administrative Tribunal Act 2004 (WA) (SAT Act) s 167(4)(a). It is to be noted that, under s 33(1) of the VL Act, the Tribunal has jurisdiction to review "the valuation". It is also to be noted that, under s 27(2) of the SAT Act, the purpose of the review is "to produce the correct and preferable decision at the time of the decision upon the review".

30 The parties agreed that the issues for determination in the proceedings are as follows:

(1) The annual turnover of JB Investments' business is the aggregate amount it receives from the park home occupants. Could the land be reasonably expected to realise as its gross annual rental, if let on a tenancy from year to year, the whole of the turnover of the business?

(2) Does the aggregation method used by the Valuer General result in a determination of the gross rental value of the land?

(3) Is the Valuer General precluded from using the aggregation method under s 24 by the decision of the Supreme Court?

(4) In the absence of some method of reasonably determining the gross rental value of the land, should the determination be the assessed value?

31 Issue (1) essentially reflects an argument put by JB Investments in relation to issue (2).

32 In opening, Mr JD Allanson, counsel for JB Investments, conceded that the decision of the Supreme Court does not preclude reliance on the aggregation method. This concession is properly made. It is apparent from [49] of Master Newnes' decision, which is set out at [26] above, that the Court did not hold that the aggregation method is incapable of application in this case. Rather, the Master determined that the evidence before the former Tribunal did not reasonably allow reliance on this method, because there was no evidence of what proportion of the "rent" paid by a resident was for occupation of the transportable home site, rather than for use of the on­site facilities and services provided by JB Investments. However, the evidence presented by the Valuer General to this Tribunal demonstrates that it is possible to reasonably determine what part of the "rent" is attributable to occupation.

33 In these reasons, the Tribunal will at first summarise the valuation evidence presented, before turning to the critical issue of whether the aggregation method is appropriate for the valuation in question. For reasons set out below, the Tribunal considers that the aggregation method results in a valid and appropriate determination of gross rental value of the land, and that the evidence presented enables the determination of gross rental value in accordance with this method. In particular, it is possible, on the evidence, to determine what part of the "rent" of $79 per week a hypothetical resident would reasonably be expected to pay to a hypothetical landlord for occupation of a transportable home site on the land as opposed to the use of on-site services and facilities provided by JB Investments.

34 The Tribunal is satisfied that the gross rental value of the land as at 1 August 2001 was no less than the amount determined by the Valuer General in the original valuation, namely $520 000. Issue (4) does not, therefore, arise for determination.

35 Mr Dumas undertook a fresh valuation of the land as at 1 August 2001 in light of Master Newnes' decision. As it was unclear to him whether that decision or the Tribunal's application of s 24(1)(a) requires the deduction from "rent" of a sinking fund allowance for replacement of capital infrastructure, he determined gross rental value on each of two approaches.

36 Approach 1 involves deduction from "rent" for swimming pool chemicals and maintenance, gardening in common areas, maintenance and cleaning of the community hall, electricity, sorting of residents' mail and rubbish removal. On this approach, $6.11 should be deducted from the actual site tariff of $79 per week as at 1 August 2001. Mr Dumas rounded this figure up to $7 per week, resulting in a gross rental of $72 per site per week and a gross annual rental value of $3 744. Applying the aggregation methodology in s 24(1)(a) of the VL Act, the annual gross rental value of the land, assuming 155 sites, is $580 320, that is, $60 320 more than the valuation under review.

37 Approach 2 involves a further deduction from the gross rental calculated under approach 1 for each site for contribution to a sinking fund for replacement of the pool, community hall and bowling rink. The total analysed weekly rental after deduction for these facilities is $66.79 per site, which Mr Dumas has rounded down to $66 per site per week, or $3 432 annually. The aggregation of 155 individual annual site rentals at that amount discloses a gross rental value of $531 960, that is, $11 960 more than the valuation under review.

38 Mr Dumas considers that the correct approach to the valuation of the land is approach 1, not approach 2. He gave evidence that most of the tourist caravan parks that operate with mixed tenancies struggle to achieve greater than 50% occupancy over a full year, whereas park home estates generally operate with occupancy levels above 90%. As noted earlier, the land was fully occupied as at 1 August 2001. Mr Dumas considers that the high occupancy rate in park home estates "to some extent is accomplished by the provision of a good standard of communal facilities". He reasons that, "given the communal facilities in this approach are integral to the individual site value, it is not necessary to give allowance to a capital cost of infrastructure replacement such as a sinking fund". Although ultimately nothing turns on it in this review, the Tribunal agrees that approach 1, rather than approach 2, is correct for valuation of the land. Provision for the replacement of capital infrastructure is relevantly an "outgoing ... necessary to maintain the value of the land" and is, therefore, excluded from the definition of "gross rental value" in s 4(1) of the VL Act.

39 Mr Dumas also considers that it is appropriate to give weight to comparable evidence of the actual rental and "analysed" rental (determined in accordance with his approach 1) obtained at seven other caravan parks in the City of Mandurah/Shire of Murray locality. Mr Dumas considers that the most comparable property to the land is the Riverglades Resort which comprises 199 sites and is located approximately 500 metres to the east. The Riverglades Resort has a similar level of common facilities to the land, although Mr Dumas considers the Riverglades Resort facilities to be inferior, because they are older. The Riverglades Resort is strata titled and largely owner­occupied. However, Mr Kerry Brooks owns and leases out 50 of the sites, generally on weekly tenancies although more recently, in some cases, on the basis of a residential tenancy agreement of six or 12 months' duration. As at 1 August 2001, Mr Brooks' 50 sites were leased for $80 each per week, that is, $1 more than the "rent" paid in relation to the land. Mr Dumas calculates that Mr Brooks received an "analysed" rental per site of $74 on the basis of approach 1, that is, $2 more than the "analysed" rental in relation to the land.

40 Mr Dumas emphasised that the other six caravan parks in the City of Mandurah/Shire of Murray locality had no or minimal communal facilities, but nevertheless commanded an actual rental of between $68 and $80 and an "analysed" rental of between $63 and $75 per site per week. In his joint expert witness report with Mr Duncan Cameron, a valuer called on behalf of JB Investments, Mr Dumas considered that this evidence demonstrates that "effectively, regardless of communal facilities, there exists what I would describe as a 'rack rate' for long-term sites that generally does not fall below $60 per week". He also gave the following oral evidence:

"So if personal services is a large amount we would see basic caravan parks renting long­term site rentals well below $60 per week. Why don't we see that? The reason is clear. The reason is that there is [a] rack rate, a very tight market, regardless of the significance of personal services. Amounts for permanent occupation are being paid in a very tight range and that range is, as a consequence of [gross rental value], very fairly and reasonably considered within that range."

41 Mr Dumas explained that "it may be that personal services are being offered, but what is a tangible amount that can be attributed to those personal services could be merely by way of an inducement to get them into a property". He referred, by way of analogy, to the practice of offering internet services within new subdivisions and said "it is not necessarily the case that extra money is being gained on the sale of those blocks", rather it "is an inducement and it is ... a fast tracking of rolling out the subdivision and sales rates per month that would be lifted ... ".

42 In September 2003, Mr Cameron was instructed by JB Investments to prepare "a valuation based on the acquisition of a lease of the land with the existing parkhomes estate business on it". Mr Cameron's valuation, based on the approach required by his instructions, was evidence before the former Tribunal and was also evidence in the review before this Tribunal. In his valuation report, Mr Cameron gave the following evidence:

"It is our opinion that the Valuer General's valuation methodology is fundamentally flawed, grossly unfair and totally inequitable to the proprietor. The Valuer General simply has treated the gross income or turnover derived from the property as the gross rental value and had no regard to the fact that the proprietor must maintain all the communal facilities, and landscaped gardens associated with the village/estate for the benefit of the residents pursuant to its obligations under the site tenancy agreement. Further these operating expenses incorporate items that are largely business expenses (ie telephone, advertising, bank charges, entertainment, motor vehicle expenses, printing and stationery, postage, superannuation, wages, insurances, etc) that do not relate to property variable outgoings, that form a component of the gross rental value.

It is our view that this approach is analogous to treating say a tavern, hotel or motel's turnover as its gross rental value."

43 Mr Cameron considers that the Valuer General's approach "does not represent the amount that a prudent Lessee or prudent Lessor would negotiate as to a fair level of rental equitable to both parties recognising the liability on the estate operator to meet all operational expenses associated with the estate and business". In his opinion, "a prudent, commercially minded Lessee would not enter into any lease arrangement at [the level of rental determined in the valuation] on the grounds that it is financially imprudent".

44 Mr Cameron considers that there is insufficient evidence to form a definitive conclusion as to appropriate rental level by direct comparison. In the absence of directly comparable market evidence, Mr Cameron determined gross rental value by capitalising potential net operating profit and applying the prescribed 5% assessed value, resulting in a gross rental value of $257 250 per annum.

45 Mr Cameron was instructed to comment on Mr Dumas' fresh valuation prepared after Master Newnes' decision. Mr Cameron confirmed his earlier valuation and maintained his opinion that it is inappropriate to apply the aggregation method in the circumstances of this case. In particular, he maintains that "the aggregated level of rental reflected by the Valuer General effectively equates to turnover of the Mandurah Gardens Estate business and does not represent rent" (original emphasis). In striking a level of rental, the lessee would need to ensure "sufficient profit remains after all the financial obligations attaching to the operation of the business (ie business and property outgoings expenses) are met [including] rent".

46 However, Mr Cameron did not undertake an analysis, such as that carried out by Mr Dumas, of what services and facilities are provided by JB Investments on site and what part of the "rent" is reasonably attributable to those services and facilities, as distinct from occupation. Mr Cameron did not provide any critique of Mr Dumas' calculations in this regard in either his report in response or in the experts' joint witness statement.

47 In response to questions from the Tribunal, Mr Cameron explained that he considers that "you couldn't definitively say what proportion of rent was attaching to a particular site because there were all these other issues like the services that were being provided by the operator that led to the lifestyle that was being marketed ... ". He considers that this task "was particularly difficult and left a degree of subjectivity".

48 However, after preparing his written evidence and the joint witness statement, Mr Cameron "tried to perform a similar exercise", although he did not conduct inquiries or investigations at other caravan parks to try to assess what rents were being paid there and what services and facilities might have been "bundled up" in such a payment. He agreed with the characterisation that he "had a rough go" at a similar exercise to that undertaken by Mr Dumas.

49 On the basis of this exercise, Mr Cameron suggested that an additional $5.50 should be deducted from Mr Dumas' calculation of $72 for entertainment, such as the annual Christmas party and social functions provided at the operator's expense, accounting services and insurance. Mr Dumas responded by saying that entertainment, such as a Christmas party, "may simply be an inducement to keep the park as a successful park" and would be a small amount in any case when divided among 155 sites. He considers accounting services to be part of the owner's administration costs and not a service or facility provided to the residents. Similarly, insurance is "an item necessary to maintain the value of the land" which Mr Dumas has consistently included in gross rental value.

50 The Tribunal accepts the validity of each of Mr Dumas' responses to Mr Cameron's proposed additional categories for deduction. Further, the definition of "gross rental value" in the VL Act expressly states that the contemplated "rental" is to be calculated on condition that the landlord is liable for "insurance". Moreover, in significant contrast to Mr Dumas' considered analysis in relation to this question, Mr Cameron's evidence does not appear to have been the subject of detailed investigation and analysis. The Tribunal, therefore, accepts Mr Dumas' evidence as to the correct categories and amounts of deduction from "rent" to take into account on­site services and facilities provided by JB Investments as distinct from occupation of sites.

51 In their joint witness statement, Mr Cameron and Mr Dumas agree that each transportable home site on the land is an identifiable site. Mr Dumas considers that as "each site is capable of a permanent exclusive long term occupation and comes within a defined fixed location", it constitutes an "hereditament" within the meaning of the VL Act, such that s 24(1)(a) appropriately applies. Mr Cameron does not agree that the sites are "hereditaments" within the meaning of the VL Act and notes that that term is not defined. He disagrees with Mr Dumas that s 24(1)(a) is an appropriate basis to determine gross rental value. He also considers that the effect of Master Newnes' decision is that s 24(1)(a) "cannot be applied". He, therefore, maintains that gross rental value should be determined on the basis of capitalised assessed value.

52 Finally, we note that it emerged during cross-examination of Mr Dumas by Mr Allanson that the sites at the seven caravan parks referred to by Mr Dumas were occupied on the basis of weekly tenancies (other than some of Mr Brooks' tenants at the Riverglades Resort), rather than tenancies for life as is the case in relation to the land. Mr Allanson suggested to Mr Dumas, and subsequently submitted, that this difference made reference to actual or "assessed" rents at the other properties inappropriate. Mr Dumas responded that the nature of the caravan park industry is that occupation of sites is generally long-term, even where the formal terms of the occupation are week to week. He explained that "what we found is these sites were long­term occupation, be it that they had informal lease structures, or weekly tenancies, they were in actual fact, by mode of occupation and by historical evidence, in practicality, they were long­term occupation of sites".

53 Mr Dumas also emphasised that the fact that Mr Brooks received a similar amount on a weekly tenancy to the "rent" received in relation to tenancies for life on the land indicates that the nature of the market is such that the payment made by residents and the gross rental attributable to a site is not affected by whether the occupation is on a weekly or life tenancy basis. Mr Cameron did not give evidence on this point.

54 Although ultimately nothing turns on it, given that Mr Dumas' reference to a "rack rate" is essentially only corroborative of his approach 1, the Tribunal accepts his evidence in relation to the characteristics of the relevant market and finds that reference to receipts and "assessed" rents at other properties is not inappropriate by way of corroboration. Mr Dumas is an experienced valuer whose evidence, on this point, was not contradicted by Mr Cameron. Moreover, the evidence in relation to the payments made by Mr Brooks' tenants at the Riverglades Resort provides objective confirmation of Mr Dumas' analysis of the market. It appears, therefore, that there is something approaching a "rack rate" for occupation of a caravan or transportable home site and that the provision of high-quality services and facilities such as those offered by JB Investments does not command a significant proportion of "rent". Rather, as Mr Dumas contends, it might contribute to the very high occupancy rate on the land.

The concept of aggregation in taxation matters

55 "Aggregating" has as its ordinary meaning, the "[c]ollection into a mass; gathering, grouping": Oxford English Dictionary (2nd ed). The Encyclopaedic Australian Legal Dictionary defines "cumulative" to include "[g]rowing in quantity, strength or effect by successive additions or aggregation". (Emphasis added.) As will be seen below, insofar as "aggregating" may be regarded as a term of art in taxation matters, the second definition (with its emphasis on cumulative growth in effect tending to favour the accumulation of revenue) more aptly captures its essence in that field.

56 Nearly a century ago, in Archibald v Commissioner of Stamps [1909] HCA 29; (1909) 8 CLR 739, the High Court confirmed the practice of the State Revenue, in respect of the levying of a duty, that "the total value of all the successions passing on the death of the predecessor must be aggregated together, and that the rate of duty payable by each successor in respect of his own succession is dependent upon the amount of the aggregate, and not upon the amount of the value of his own succession.": at 743 (Griffith CJ). (Emphasis added.) (On the history of aggregation in relation to estate duty see, for example, Halsbury's Laws of England (2nd ed) vol 13 at [261] referring to the Finance Act 1894 (Eng) which expressly provides for aggregation of dutiable property into one "estate"; that statute has been influential in Australian jurisdictions).

57 This early case suggests that aggregation as a taxing or assessment practice is longstanding, is neither unusual nor unwarranted and perhaps was often thought necessary to protect or assist the Revenue. Cf Challenge Corporation Ltd v Commissioner of Inland Revenue [1986] 2 NZLR 513 at 553: "[The Report of the (New Zealand) Taxation Review Committee (1967)] concluded that [one] principal [benefit that] would accrue from a group assessment procedure applying to a parent and its wholly-owned subsidiaries: ... [was] that aggregation of income would preclude tax avoidance which might result from company tax at differing rates if applied to each company separately ... ". (Emphasis added.)

58 Here, we hasten to add, there is no suggestion of any tax avoidance or any other impropriety on the part of JB Investments, and such matters are not issues in this review and are not relevant except to demonstrate that aggregation has a longstanding conceptual employment in revenue matters, not only to stem tax avoidance, but also to provide maximum accrual for the Revenue. Thus, that aggregation might "produce draconian results but for [an express statutory] discretion" given to the Commissioner, in respect of certain NSW legislation (then in force), was acknowledged in Tsai Mei-Lan Lee v Chief Commissioner of State Revenue (NSW) (1998) 99 ATC 4042 at 4052 (reversed on other grounds in Chief Commissioner of State Revenue v Lee (2000) ATC 4600 (NSWCA)).

59 Other examples may be cited. Under the Land Tax Assessment Act 2002 (WA), aggregation is authorised in respect of the assessing of land tax on two or more lots with the same ownership (s 11). The Land Tax Act 1936 (SA) contains the following definition: "[the] 'aggregation principle' means the principle under which the taxable value of all land owned by the same taxpayer is aggregated for the calculation of land tax" (s 2). Then there are the broadly analogous "grouping" of commonly controlled businesses that is permitted under the Pay-roll Tax Assessment Act 2002 (WA), s 32.

60 Importantly, that aggregation by the Revenue, even as an administrative practice (if consistent with the statute), might in many ­ perhaps nearly all ­ cases result in the exposure of the taxpayer to a greater liability than might otherwise be the case is, we think, implicitly acknowledged and accepted by the courts and must inform the drafting of taxation and related statutes.

61 And, there is no reason why such principles should not similarly apply to statutory mechanisms for valuation, as here, for taxation and related purposes. The express adoption by the Parliament of the word "aggregating" in this context seems to invite that course, once the history of such provisions is explained, as we have endeavoured to do above. In any event, so much appears to have been properly conceded by the applicant.

62 It is true that what is being aggregated here is the "sum of the parts" (to use Mr Allanson's phrasing) where previously the Valuer General did not exercise the discretion to aggregate parts. But, as the statute both contemplates the separate valuation of parts of any land (" ... had [the Valuer General] been separately valuing each such part") and their aggregation, without temporal or other relevant limitation, we think the point that we have made about the conceptual impact of the express selection by the Parliament of a process of aggregation remains valid. Moreover, "part" ordinarily means "[a]n integral portion, something essentially belonging to a larger whole; that which together with another or others makes up a whole": Black's Law Dictionary (6th ed, 1991) 1117. Consistent with these observations, we should add that we see no reason to disagree with the view of a single member of this Tribunal in Flanigan and Valuer General [2005] WASAT 124 (at [19]) that:

"[s]ection 24(1)(a) [of the VL Act], therefore seems to allow the valuation of each 'part' of the 'land' to be added to together. The Act does not provide a definition of the term 'part'. It would appear however, from s 24(1)(a) that the Valuer General, and therefore the Tribunal could value separately 'parts' of the same land, where it was possible to separate (either by use, topography, cadastral boundaries, or in some other way) different 'parts' of the same land."

63 Further, as the Valuer General points out, and as appears earlier in these reasons, under the VL Act, "land" is defined, in s 4(1), to include "hereditaments". These are the traditional "unit[s] of assessment for rating" in the United Kingdom (see Halsbury's Laws of England [4th ed] vol 39(1) at [634]). "Hereditaments" are defined, in the rating context, as "property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list": Halsbury's at [634]. The valuation list is not replicated in the law in this State, but under English law it apparently includes "Caravan sites & pitches". According to Halsbury's (at [634], internal citations omitted, emphasis added):

"A single property is not necessarily rateable as a whole: where parts of a building are separately occupied, the parts form separate hereditaments. Structural severance of the parts is not essential. However, property in one occupation may in some circumstances form more than one hereditament. Where parts of the property are not within the same curtilage, or are not contiguous to one another, or are capable of separate letting, or are used for entirely different purposes, the parts may form separate hereditaments. Where premises in one occupation are divided by a highway they will form separate hereditaments unless they are so essential in use to one another that they should be regarded as a single hereditament."

64 Whatever is the precise scope of an hereditament under the law of this State when used in this context (which it is unnecessary to resolve in this review), such an approach to the rating of separate parts of land is consistent with the notion of aggregation discussed in these reasons. It is also consistent with the longstanding practice of the Valuer General (cf Western Australian Meat Marketing Cooperative Limited and Valuer General [2005] WASAT 227 at [44] of ensuring in "the public interest that [a] consistent valuation methodology and approach is employed") and the position reached in previous tribunal decisions: see, for example, Vanu Pty Ltd v Valuer-General (1993) 11 SR (WA) 80 (aggregation of permanent market stalls).

65 When JB Investments draws attention to aggregation "result[ing] in a rates increase of several hundred percent" and a "[tripling of] the applicant's rates payable to the City of Mandurah" it is arguing, at least in part, from consequences. That is, JB Investments seeks to demonstrate that the Valuer General's view of the statutory provisions must be in error as Parliament could not have intended such consequences for JB Investments.

66 However, Cardozo J observed in Re Rouss 116 NE 782 at 785 (1917) "[c]onsequences cannot alter statutes, but may help to fix their meaning." Here, we think that the consequences for the taxpayer when aggregation is employed in relation to its taxation affairs is often, as we have indicated, the payment of more (and sometimes substantially more), and not less, tax.

67 Generally speaking, a court or, for that matter, an administrative body will fall into error if it fetters its discretion by, say, making undue reference to the need for "caution" in light of the possible consequences of the exercise of a power, because usually the statute (one at any rate providing a general discretion) will not so restrict or limit the exercise of that discretion: see Director of Public Prosecutions v Tregenza [2002] SASC 414; (2002) 84 SASR 346 at 360: "Once the discretion has been enlivened the section does not restrict or limit the exercise of the discretion. [The] suggested approach [to be "very cautious"] would fetter the statutory discretion." (Gray J). This position is entirely consistent with the principle that where "parliament intended the terms [of a provision] to limit the scope of the power conferred by [it], it would have been easy to say so": Bridges v Minister for Immigration and Multicultural Affairs [2001] FCA 1647; (2001) 114 FCR 456 at 463 (FC). Thus, if consequences are drawn to the decision­maker's attention, such matters might well be a relevant consideration; but such a consideration cannot relevantly fetter the exercise of a discretion.

68 It follows that the greatest of hurdles must face an argument, as JB Investments here advances, founded upon either the undesirability or inevitability of such consequences of aggregation for the taxpayer as implicitly limiting the scope of the use by the Valuer General of that device in relation to that taxpayer, when it is clear that Parliament has made such a course expressly available to the Valuer General, and thus to this Tribunal on review.

69 We have no doubt that one of the premises which the Parliament of the State proceeded upon when it enacted s 24 of the VL Act in its present form in 1984, was that a taxpayer's affairs might be valued and subsequently assessed or taxed in a way that exposed them to rather more tax than if they had been engaged in, or were regarded as being engaged in, separate transactions, units or parts of commerce, trade, business, use or ownership. The same would apply, as here, where a corresponding division into or recognition of those parts for the subsequent aggregation of them is, in effect, permitted. We should note, however, that Mr Sefton, for the Valuer General, suggested ­ perhaps optimistically ­ that it was "not necessarily [the case] that by using [s 24] you will get a higher value. You may well, but it also may have the effect that you will get a lower value ... ".

70 This discussion on the consequences of aggregation forms a useful backdrop as we turn to deal with JB Investments' more fundamental arguments on the scope of the Valuer General's discretion.

Can the aggregation method as applied here lead to a determination of gross rental value?

71 The first of these arguments is that "[w]here the 'aggregation method' in s 24(1)(a) does not lead to a determination of gross rental value, it is not a sound exercise of the discretion in that section to use that method".

72 The reasoning of Mr Allanson on this point is essentially that, as the gross rental value is specifically defined in terms of the (hypothetical) letting from year to year of the whole of the subject land (see the definition of "gross rental value" set out at [16]), it follows that there must be some "true" relationship with that hypothetical sum if and when aggregation is employed to obtain the gross rental value. If there is no such relationship, as is evident here, then the exercise of the discretion in s 24(1)(a) of the VL Act effectively miscarries.

73 In reply, Mr Sefton says that s 24 "specifically expands the way in which [the Valuer General] can determine [the] gross rental value so as to effectively remove any limitation that otherwise arguably might arise".

74 It will be immediately apparent from our discussion above of the history, purpose and scope of aggregation provisions that it would seem unlikely that Parliament, when it amended s 24 in 1984, intended such an implicit relational position as is advanced by JB Investments. Moreover, as the High Court has observed:

"[T]he Act which is amended and the amending Act are to be read together as a combined statement of the will of the legislature. Thus the effect of the amending Act may be to alter the meaning which remaining provisions of the amended Act bore before the amendment.": Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd [1995] HCA 44; (1995) 184 CLR 453 at 463 (emphasis added).

75 To utilise the words of Barwick CJ in Giris Pty Ltd v Federal Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365at 372, "the two sections must be read together and so read they do exhibit a cohesive scheme on the part of the legislature". Here, that "cohesive scheme" is plainly the availability to the Valuer General, and thus to this Tribunal, of an alternative, expanded or supplementary method of ascertaining the gross rental value of the land, which if and when applied on a proper basis has certain well-established consequences for the taxpayer. Section 24 (as amended) is not somehow to be isolated, read down or otherwise construed in such a way that its evident purpose is frustrated or defeated.

76 Thus, JB Investments' argument, when boiled down, is, with respect, reminiscent of a submission unanimously rejected by the New Zealand Court of Appeal in Attorney-General v Lawrence [1999] NZCA 261; (1999) 17 CRNZ 152where their Honours said (at 157): "[The statutory term's] well accepted meaning involves the very thing which [counsel] suggested Parliament cannot have intended".

77 We therefore reject JB Investments' contentions on this point. Section 24(1)(a) is, on its proper interpretation, available to be used by the Tribunal in this review.

78 Next, JB Investments argues, in effect, that if s 24(1)(a) is available, then on the Valuer General's case it can never be deployed on any proper basis by either the Valuer General or the Tribunal. One argument concerns the dangers of "blind obedience" in the application of Policy 3.108 and Policy 3.214 (policies); the other argument relates to the methodology of valuation arising by the application of the policies and the alleged difficulties in valuing those separate parts.

79 To some extent, these arguments are commingled and premised upon JB Investments' contention that "it [that is, both the application of the policies and, it seems, s 24(1)(a)] does not result in a true value". JB Investments says, in a variation of what appears above: "But for the policy, the valuation would not be done in that way and clearly would result in a vastly different figure". It is, of course, to some degree difficult to deal with arguments thus premised, as the Tribunal has now held that, on its face, s 24(1)(a) may be utilised in valuing "parts" of JB Investments' land and aggregating those values. That conclusion involved the rejection of those arguments advanced in another form. Further, the Tribunal has also accepted expert valuation evidence consistent with the position of the Valuer General on these matters, evidence which Master Newnes' decision contemplated might be given on the remittal. With these caveats in mind, we proceed to consider these arguments.

80 The relevant effect of the policies is described above in these reasons at [21].

81 The policies thus purport to guide, albeit using mandatory language ("shall be valued separately"), the discretion given to the decision­maker under s 24(1)(a), a discretion which "though broadly expressed, is neither arbitrary nor completely unlimited. Its proper limits are to be found by looking at the [VL] Act and by considering its scope and object in conferring the discretion upon the [Valuer] General", adapting the well­established principle expressed in Re Sandhu and Secretary, Department of Social Security [1992] AATA 105; (1992) 26 ALD 650 at 655 (AAT). To a large extent, that scope and object are identified by Parliament's use of the word "aggregating" as we have discussed at length above.

82 It is of course "well recognised that most discretionary powers can be at least 'guided' by a predetermined rule, provided, of course, that the guidance rule conforms to the Act's subject matter, scope, purpose and detail. An in-house rule or policy must be lawful.": Aronson, Dyer and Groves, Judicial Review of Administrative Action (3rd ed, 2004) at 280.

83 The duty of the decision­maker exercising the discretion under s 24(1)(a) is to "give proper, genuine and realistic consideration to the merits of the case and be ready in a proper case to depart from any applicable policy.": Khan v Minister for Immigration and Ethnic Affairs noted at [1987] FCA 457; (1987) 14 ALD 291 at 292 (Gummow J), a case discussed in Aronson, above, at 282 and followed by the courts in this State: see, for example, Re MacTiernan; Ex parte Coogee Coastal Action Coalition Inc [2004] WASC 264 at [62] (Wheeler J).

84 However, that duty is also to be exercised in the particular knowledge that the creation, publication and use of such policies "serves to promote consistent and rational decision-making.": Ingram & Anor v Western Australian Planning Commission [2003] WASCA 77 at [14] (Barker J).

85 On its face, therefore, given our views on both aggregation and s 24(1)(a) expressed above, the Valuer General was authorised to both issue and use the policies, and this Tribunal ought also to follow and apply them, unless a "proper case" is shown for departure from them.

86 There is no suggestion here that the policies in their own terms are unlawful or that they are not relevant to the exercise of the decision-maker's discretion in this case or that if they are to be applied, they would be applied other than in good faith. Nor, as we understand it, is there any suggestion that in their terms they have been inconsistently applied to date, that they lack transparency or that they are uncertain in either their scope or operation. Rather, as indicated above, it seems to be suggested that there has been a failure (which should not be repeated in the Tribunal) to exercise the discretion having regard to the "merits of the case". As we understand it, those "merits" require us to accept the following contention:

"The method adopted by the Valuer General does not assess the gross annual rental that the land might reasonably be expected to realize if let on a tenancy from year to year. In particular, it would not permit a lessee of the land to derive any profit from the business and no prudent, commercially minded lessee would enter a lease at that level of rent."

87 This position reflects Mr Cameron's evidence (see [42] above: "The Valuer General's valuation methodology is fundamentally flawed, grossly unfair and totally inequitable to the proprietor."). Thus, the contention appears to be that, in pursuit of a policy requiring separate valuations, a methodology must be adopted which leads to a result satisfactory to JB Investments, as indicated above. Alternatively, it seems that the policies are not to be applied if a result is reached inconsistent with JB Investments' position.

88 We are unable to accept these contentions. First, as appears above, we have accepted expert valuation evidence which is to the opposite effect of what is contended for: see [33] above summarising the Tribunal's position. Secondly, the acceptance of such evidence in context tends to confirm that the policies, so premised or applied, are promoting "consistent and rational decision­making" by the Valuer General and other decision­makers. Thus, no "proper case" (that is, one of any relevance or substance) has been advanced by JB Investments to show why it should not be treated by the Valuer General or this Tribunal on a basis similar to other taxpayers in the class provided for, using an acceptable methodology adopted in pursuit of proper policies.

89 The related and similar argument of the applicant is that the parts chosen (that is, transportable home sites), and the methodology chosen for their valuation, are incapable of producing a figure for the true gross rental value. Again, for reasons similar to those just advanced, this argument must also be rejected.

90 For these reasons the Tribunal has decided to affirm the Valuer General's decision under review.

91 The Tribunal makes the following orders:

1. The application for review of the Valuer General's valuation in relation to the gross rental value of the land in lot 30 on diagram 94121, being the whole of the land comprised in certificate of title volume 2169 folio 949 and known as Mandurah Gardens Estate, no 445 Pinjarra Road, Mandurah is dismissed.

2. The gross rental value of the land in lot 30 on diagram 94121, being the whole of the land comprised in Certificate of Title volume 2169 folio 949 and known as Mandurah Gardens Estate, no 445 Pinjarra Road, Mandurah under the Valuation of Land Act 1978 (WA) is $520 000 as at 1 August 2001.

I certify that this and the preceding [91] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

JUSTICE M L BARKER, PRESIDENT