Kogarah Town Centre Pty Limited v Valuer General

Land and Environment Court (NSW)|2014-06-18

Judgment 1COMMISSIONERS: We have given two earlier judgments in these proceedings. The first judgment, Kogarah Town Centre Pty Limited v Valuer General [2014] NSWLEC 1085 (the primary judgment) set out our approach to and results of the undertaking of a conventional comparable sales valuation of one (Lot 1) of two allotments comprising the site of the present Kogarah Town Centre (the site). These allotments are adjacent to (Lot 1) and partially over (Lot 2) Kogarah railway station. The matters dealt with in the primary judgment are discussed in more detail below. 2The second judgment, Kogarah Town Centre Pty Limited v Valuer General (No 2) [2014] NSWLEC 1107 resolved arithmetical corrections and need not detain us in further assessment. The mathematical corrections are set out at the relevant point in the judgment but do not alter the conclusion we have reached about the appropriate statutory approach or the orders to be made as a result thereof. 3In the primary judgment, having derived an analysed value per square metre for Lot 1 (for the base date of 1 July 2009), we then determined the basis upon which the value of the second element of the site (Lot 2) should be calculated. This process, although vigorously contested between the parties on various merit elements to be taken into account in the derivation of the analysed land value for Lot 1, was, nonetheless, an unexceptional process of statutory valuation pursuant to s 6A(1) of the Valuation of Land Act 1916 (the Act), a provision in the following terms: 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. 4Similarly, although there was a contest between the parties on the percentage of the determined value for Lot 1 to be utilised in the derivation of an overall valuation of Lot 2, once the percentage rate had been determined by us, this process too, was unexceptional in arithmetical terms. 5Having undertaken these processes, the two values are required by the Act to be added together to give a total valuation for the site because of the effect of s 26(1) of the Act. This provision is in the following terms: 26 Where lands are to be included in one valuation (1) Where several parcels of land adjoin, are owned by the same person, and where no part is leased, they shall be included in one valuation, unless the Valuer-General otherwise directs: Provided that any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation. 6The consequence of these steps is that there is a derived analysed gross value for the whole of the site as it in common ownership. 7However, there is a further step that is mandated because the combined landholding comprising the site straddles the boundaries of two Local Government Areas, Kogarah and Rockdale. Because the Local Government boundary does not follow the allotment boundary between Lots 1 and 2 (a significant portion of Lot 2 as well as the totality of Lot 1 is the Kogarah Local Government Area), s 28 of the Act comes into play to require apportionment of the value of the whole of the site to the elements in each of the Local Government Areas. The statutory provision is in the following terms: 28 Land or stratum in two or more districts (1) If different parts of any land or stratum in respect of which one valuation would otherwise be made under this Act are situated in different districts, the value of the land or stratum is to be apportioned so as to show the value of each part. (2) The value of each part is to bear the same proportion to the value of the whole as the area of each part bears to the area of the whole. 8At this point, it is appropriate to note that the area of Lot 1 is 2958 m² and the area of Lot 2 is 4390 m². However, 1453 m² of Lot 2 is in the Kogarah Local Government Area. This results in the total area of the site that is within the Kogarah Local Government Area being 4421 m² whilst that which is in the Rockdale Local Government Area is 2927 m². 9The result of this is that the proportion of the site that is in the Kogarah Local Government Area is 60.13% whilst that which is in the Rockdale Local Government Area is 39.87%. These proportions have considerable significance in the finalisation of orders of the Court, to be made in our capacity as judicial valuers, to set the statutory land value for the elements of the site within each of the Kogarah and Rockdale Local Government Areas for the 1 July base dates in each of the years 2007 through to 2011. 10The proportions of the site in each of the Local Government Areas are given the title of a Property Identification Descriptor (PID) as the elements do not comprise, as earlier described, the totality of a single formally acknowledged allotment of land. The portion in Kogarah has the PID 1502216 whilst that in Rockdale has the PID 1536207. 11The s 28 process results in a value being derived for each PID - with the Kogarah PID value to be conveyed to Kogarah Council and that of the Rockdale PID value as and when required by s 48(2)(b) of the Act. Both PID values would conveyed annually to the Chief Commissioner of State Revenue as required by s 48(2)(a) of the Act. 12To understand that which follows, it is first necessary to consider the statutory values for each PID set by the Valuer General and conveyed to the owner of the site by the Office of State Revenue in Land Tax Assessment notices for each of the PIDs for each of the base date years between 2007 and 2011. Those statutory valuations and the resultant total statutory valuation for the whole site are set out in the following table: Base date year Total - $ PID 1502216 - $ PID 1536207 - $ 2007 5,400,000 3,850,000 1,550,000 2008 5,600,000 4,000,000 1,600,000 2009 5,600,000 4,000,000 1,600,000 2010 5,600,000 4,000,000 1,600,000 2011 5,600,000 4,000,000 1,600,000

13These values purport to be the values for each PID for each relevant base date derived by the application of the apportionment process mandated by s 28 of the Act to the total aggregated value for the whole of the site. 14It is to be observed that, in mathematical terms, this is, in fact, not the case. Put bluntly, the Valuer General made the same basic calculation mistake in each of these five base date years. 15In each of the relevant base date years, the percentages applied by the Valuer General to the overall value calculated for the whole site is ~ 70% to the portion of the site located in the Kogarah Local Government Area and ~ 30% to the element of the site located in the Rockdale Local Government Area. The correct percentages are set out in (9) above. 16The consequence of these mathematical errors is that, in purely arithmetical terms, each of the statutory valuations issued in the valuation notices by the Valuer General for each PID for each base date year is wrong. Those for the proportion of the site within the Kogarah Local Government Area are overstated and those within the Rockdale Local Government Area are understated. 17Purely to understand this better by showing the extent of the errors, we have undertaken a set of correct basis calculations. Application of the proper apportionment factor to the overall valuation of the site by the Valuer General means that the correct, restated values of each PID in each base date year in the above table would be as follows: Base date year Total PID 1502216 PID 1536207 2007 5,400,000 3,247,020 2,152,980 2008 5,600,000 3,367,280 2,232,720 2009 5,600,000 3,367,280 2,232,720 2010 5,600,000 3,367,280 2,232,720 2011 5,600,000 3,367,280 2,232,720

18PID 1502216 Base date year VG correct % VG wrong % 2007 3,247,020 3,850,000 2008 3,367,280 4,000,000 2009 3,367,280 4,000,000 2010 3,367,280 4,000,000 2011 3,367,280 4,000,000

19PID 1536207 Base date year VG correct % VG wrong % 2007 2,152,980 1,550,000 2008 2,232,720 1,600,000 2009 2,232,720 1,600,000 2010 2,232,720 1,600,000 2011 2,232,720 1,600,000

20We have set this statutory and arithmetical history out at some length because the significant inaccuracy of the Valuer General's application of s 28 of the Act to the overall value of the site in each base date year gives rise to a fundamental conundrum requiring our determination. This conundrum is how or whether or not we are required to square the mandated statutory outcome with the mathematical outcome of the valuation exercise conducted in the primary proceedings. 21This arises because the primary proceedings were based on carrying out a fresh (contested) valuation process for the 2009 base date year using the s 6A -> s 26 -> s 28 step process to derive a value for each PID for that base date year. The expert valuers (Mr Duguid for the applicant and Mr Watt for the Valuer General) had agreed - as discussed in the primary judgment - on an appropriate process to be applied to make adjustments to derive 2007, 2008, 2010 and 2011 values from those arrived at for 2009. 22At the outset, we observe that the inaccuracy of the Valuer General's s 28 apportionment results for each of the base date years was not the subject of submissions on behalf of either party during the course of the proceedings. It was, in effect, an elephant in the room, the presence of which was drawn to the attention of the parties by us in a specific fashion during the course of the proceedings following the primary judgment necessary for dealing with other, lesser matters of mathematical precision dealt with in our second judgment in this matter.

The valuation outcome of the primary proceedings 23The primary judgment led to the determination of an aggregated valuation outcome for the whole of the site for the base date 2009 year [this process and its results were set out in (130) to (132) of the primary judgment]. 24However, in the mathematics in deriving the values for Lot were flawed as pointed out by the Valuer General's representatives. Applying the correct approach to the calculation of a value for Lot 2 (based on site areas for each Lot) leads to the following derived values and their correct apportionment on the ~60%:~40% basis. The corrected derived values are set out in the following three tables: Base date year Lot 1 derived value 2007 $5,495,536 2008 $5,661,998 2009 $4,622,800 2010 $4,808,748 2011 $4,808,748

Base date year Lot 2 derived value 2007 $816,540 2008 $838,490 2009 $684,840 2010 $715,570 2011 $715,570

Base date year Whole site derived value (rounded) 2007 $6,312,000 2008 $6,500,000 2009 $5,308,000 2010 $5,524,000 2011 $5,524,000

25After applying the corrected approach to Lot 2 set out above, through the expert valuers' agreed process, the two PIDs for that year and all four other base date years fell out. The results are shown in the following tables: Base date year Total - $ PID 1502216 - $ PID 1536207 - $ 2007 6,312,000 3,795,406 2,516,594 2008 6,500,000 3,908,450 2,591,550 2009 5,308,000 3,191,700 2,116,300 2010 5,524,000 3,321,581 2,202,419 2011 5,524,000 3,321,581 2,202,419

PID 1502216 Base date year VG value Correct value Correct value lower than VG? 2007 3,850,000 3,795,406 Yes 2008 4,000,000 3,908,450 Yes 2009 4,000,000 3,191,700 Yes 2010 4,000,000 3,321,581 Yes 2011 4,000,000 3,321,581 Yes

PID 1536207 Base date year VG value Correct value Correct value lower than VG? 2007 1,550,000 2,516,594 No 2008 1,600,000 2,591,550 No 2009 1,600,000 2,116,300 No 2010 1,600,000 2,202,419 No 2011 1,600,000 2,202,419 No

The Valuer General's disavowals 26The conundrum about how to deal with the correct outcomes when compared to the (error infected) Valuer General's figures for each PID for each base date year initially arose because of the express disavowal on behalf of the Valuer General of seeking any increase in a statutory valuation should such an increase follow from the judicial valuation process undertaken in a statutory valuation appeal. 27In our experience in such matters (an experience shared by other members of the Court), the Valuer General has almost always adopted the position that the statutory valuation that has been appealed should be maintained and that an increased valuation should not be imposed. Such a position, adopted as the ethically appropriate approach to be taken by the Valuer General, is also uncontroversial (even if, for the reasons set out later, it can have no practical or legal consequence). 28That approach was confirmed to us, on three separate occasions, in these proceedings. The first was in the written opening submissions made on behalf of the Valuer General. It was in the following terms: 14. The issued land value is supported. The respondent does not press for higher than the issued land values. 29Second, on 2 May, page 169 of the transcript records following exchange (between lines 5 and 26): SENIOR COMMISSIONER: I am assuming that the Valuer General is not proposing that we should increase the statutory value? HALE: Correct. SENIOR COMMISSIONER: It's necessary to get that abundantly clear. WHITE: Mr. Hale said that actually in opening. HALE: Yes. SENIOR COMMISSIONER: No. I know that we didn't get to the aggregated method until day 43 of 45 days or whatever it was. So I'm simply dealing with the aggregated methods now to make sure the same position applies in broad that if Mr. Watt's calculations were to have resulted in an increase it is not pressed. HALE: that's absolutely correct. We rely on the onus. SENIOR COMMISSIONER: But you don't seek an uplift. HALE: We don't. 30Finally, in the closing written submissions on behalf of the Valuer General, there appears the following: 17. The respondent's expert valuation evidence demonstrates that the issued land values are conservative; however, the respondent does not press for higher than the issued land values. 31Such a proposition, reflecting the general policy of the Valuer General, gives rise to no particular controversy with respect to each of the PIDs for that proportion of the site within the Kogarah Local Government Area. 32However, because the statutory values issued by the Valuer General for the proportion of the site within the Rockdale Local Government Area, applying the correct apportioning to the Valuer General's own values, are understated by approximately 25%, required us to have further consideration of these values and this, third judgment has become necessary. 33The disavowals are, however, a distraction, in reality, when the correct statutory analysis is applied. The reasons for this are set out below.

The questions to be addressed 34There are three matters, in our view, that we need to address as a result of the derived results of the calculations earlier set out. These are:

Where the applicant contends for a lower value than the statutory value and fails to establish this case, does the failure to satisfy s 40(2) of the Act operate to require disposal of the proceedings at that point?
If not, does s 28 of the Act mandate the Court on appeal to impose a higher value if that outcome is revealed as the mathematically correct position or is there a discretion to decline to do so?
If the first question is to be answered "no" and the second "yes", do the Valuer General's disavowals act, in effect, as an estoppel to proposing that, in this appeal, we should increase the various erroneously calculated values of PID 1536207? 35There is no dispute that the various erroneously calculated values of PID 1502216 are too high compared to the derived values for this PID as determined in our primary judgment. As a consequent, it is also uncontroversial that, with respect to this PID, our orders should uphold the appeals and utilise the power given to the Court by s 40(1)(b) to adjust the statutory value for this PID downward in each base date year.

The submissions 36Mr White's opening submissions for this aspect of these appeals was of short compass. It can effectively be summarised as proposing that the outcomes that were set out as the proposed orders in our primary judgment were correct - although he accepted that the precise formulation of the orders to give effect to those outcomes required modification to reflect the necessity to deal with orders relating to ten separate PIDs (being two for each base date year). 37Mr Hale submitted to us that we had only two options with respect to the two statutory values for each base date year if we were to meet the requirements of s 28 of the Act concerning apportionment. His proposition was that we either had to confirm the fundamentally flawed mathematical inaccuracy in the present valuations (an apportionment on a 70% and 30% basis) or apply the correct apportionment (an apportionment on a ~ 60% and ~ 40% basis). His fundamental proposition, in this regard, was that s 28 mandated us to undertake an apportionment process so that the two derived values added to 100% of that being apportioned. 38The final paragraph of Mr Hale's closing written submissions in this stage of the proceedings in was in the following terms: Quite independently of the jurisdiction of the Court, the Valuer-General takes the position that the error should be corrected and that he has jurisdiction to do so pursuant to s14A(2) and possibly also s14DD(1)(c), if what has occurred comes within the description of a "clerical error or misdescription". However, as the Court is possessed of his powers by virtue of the appeal (see s39(2) of the Land and Environment Court Act 1979) the most efficacious course is for the Court to do this itself. 39He readily accepted the proposition from the Bench that the words "(if it has the jurisdiction to do so)" should be implied after the word "correct" toward the conclusion of the paragraph. Whilst the Valuer General may have an unfettered power to correct the Register in the fashion outlined in the paragraph, the exercise of that power is a matter for the Valuer General. We do not need to consider whether or not there are any restrictions on its exercise - that is a matter also for the Valuer General. If we do not have the power, through the vehicle of these appeals, to do so for the reasons we have earlier discussed, there is no inherent power in this Court, a statutory court exercising a jurisdiction conferred in express and limited terms by a statute (the Act), to embark on such a course. To do so in response to some implied moral imperative that is without an appropriate statutory foundation would, in our view, constitute appealable error. 40Mr White's submissions in reply ranged modestly widely. The position taken by him with respect the proper statutory process - one leading to his re-endorsement of his opening position - was broadly reflective of that which is set out in our following reasons and thus does not require separate detailed analysis. Because of the wide-ranging nature of his reply to Mr Hale's submissions, we permitted Mr Hale a further opportunity to make some further brief submissions after Mr White's reply.

The mandated statutory outcome 41Whilst, in logic, the position advanced by Mr Hale has the superficial attraction of mathematical symmetry, we do not consider that that is what the statute mandates us to do in the present circumstances - quite the contrary for the reasons that follow. 42Mr Hale's submission that we have a broad discretionary power arising from the terms of s 40(1)(b) of the Act to increase any of these statutory valuations even in circumstances where the appellant has not discharged the onus mandated by s 40(2) would, for the reasons that follow, similarly be an appealable error.

The statutory framework and role of the Court on appeal 43We have earlier set out the statutory elements with which we were required to engage for the purposes of the primary judgment. Although we do not propose to repeat those statutory provisions earlier set out, it is necessary to provide, in some greater detail, the relevant elements of the statutory framework required for consideration of what should be the final orders in each of the proceedings we are now considering. 44First, there is a statutory obligation placed on the Valuer General to provide a valuation list to the Chief Commissioner of State Revenue annually. A list is also to be provided to local government authorities on a four yearly basis (subject to a possible exception not relevant in those proceedings. Those requirements are embodied in s 48(2) of the Acts. 45In each of these five matters, the relevant values appear to have been conveyed not by a notice of valuation but by the forwarding of a land tax assessment document from the Office of State Revenue. It would appear to be reasonable to assume that these documents were generated from the list provided, with respect to each relevant base date year, to the Chief Commissioner of State Revenue as required by s 48(2)(a) of the Act. Each of those Land Tax Assessment notices contains, on the fourth page of each document, what amounts to a schedule of values showing separate and distinct values for each PID. 46The mandating of provision of these statutory valuations triggers, by s 48(2)(a) the obligation of the Valuer General to undertake valuations of land on the basis set out in s 6A(1) that we have earlier set out. The Act specifically requires that the value of each parcel of land in the State (other than irrelevant exceptions) is to be ascertained each year, a requirement of s 14A(1). Each value ascertained by the Valuer General through the statutory processes is required to be entered into the Register of Land Values. This requirement is contained in s 14A(5). 47As earlier discussed, adjoining lands that are in common ownership (and where no part of the land is leased to some other person) are required to be included in a single valuation. This requirement is embodied in s 26(1) of the Act, a provision also set out earlier. This aggregated position applies to the two parcels of land, Lots 1 and 2 in Deposited Plan 104973, that form the site the subject of these appeals. 48As earlier noted, because the land that is the subject of the valuation pursuant to s 26 (Lots 1 and 2 in combination) is land that is situated in two different districts (relevantly a district being, for these purposes, a Local Government Area), s 28 of the Act mandates that the overall valuation is to be apportioned on the basis of the ratio of the areas in each Local Government Area "to show the value of each part". 49We observe that it seems to us that the words "the value of each part" necessarily create separate values/valuations for the purposes of other relevant matters in the statute. Any entry on the Kogarah list is a separate value/valuation as is such an entry on the Rockdale list. 50The Act then mandates the establishment of a Register of Land Values. It does so through the operation of s 14CC of the Act. The matters that are required to be included in the Register are set out in s 14CC(2), a provision that is in the following terms: (2) The Register is to contain such of the following kinds of information in relation to land as is within the knowledge of the Valuer-General: (a) information as to the ownership of the land, (b) information as to the occupation of the land, (c) information as to the value of the land, (d) information as to the title of the land, (e) information as to the location or description of the land, (f) information as to the area of the land, (g) such other kinds of information as is permitted or required by this Act or the regulations to be entered in the Register. 51Following on from this is a provision that establishes the status of the material that has been entered into the Register. This provision, s 14 CC(3) is in the following terms: (3) An entry in the Register as to a land value, allowance or apportionment factor ascertained under this Part is conclusive evidence of the ascertaining of the value, allowance or factor on the date shown in the entry. 52The effect of this provision, assuming the relevant entries are in the registrar (as would appear logical in the circumstances), is to legitimise the apportionment factors and values for each PID for each base date year. This legitimisation does not restrict or otherwise impact on our functions or powers on appeal. 53Any person to whom a notice of valuation was given (relevantly in this case, the owner of the site) has the right to make a written objection to that valuation. In these instances, as earlier noted, the notice of valuation was contained in land tax assessments. This right is contained in s 29(3A). It is the making of an objection to the valuation pursuant to this provision that commences the statutory chain that can result in this Court acting as a judicial valuer to determine what should be the final outcome of such an objection. 54The objection is mandated to be in a particular form specified by the Valuer General and to be lodged within a specified time period after receipt of notice of the valuation. 55It is reasonable to infer, in our opinion, from the range of documents contained in Exhibit A relating to the objections and the letters of determination (by rejection) that what was lodged (pursuant to s 29(3A) of the Act, on the form required by s 33 of the Act), was, in each instance, an objection to a single PID. This fortifies our view that, in reality, there were ten individual objections and there should have been ten separate appeals commenced. Mr White conceded that this should have been the position. 56The scope of the matters able to be encompassed within an objection is wide ranging. They are set out in s 34(1) of the Act for objections to valuations of land. These are in the following terms: (1) In relation to land the only grounds upon which objection may be taken under this Act are: (a) that the values assigned are too high or too low, (a1) that the area, dimensions or description of the land are not correctly stated, (b) that the interests held by various persons in the land have not been correctly apportioned, (c) that the apportionment of the valuations is not correct, (d) that lands which should be included in one valuation have been valued separately, (e) that lands which should be valued separately have been included in one valuation, and (f) that the person named in the notice is not the lessee or owner of the land. 57The Valuer General is then obliged to consider the terms of the objection and make a determination as to the outcome of that objection. There is also a provision that, for the purpose of triggering appeal rights, an objection not determined within 90 days of its lodgement is deemed to be disallowed. These determination provisions are contained in s 35C of the Act. 58A right of appeal against the Valuer General's actual or deemed determination of the objection is provided to this Court. The right of appeal is not confined to the person who made the objection subject to the appeal. The jurisdiction vested in the Court is an exclusive one. The provisions relating to appeal rights are contained in s 37 of the Act. 37 Right of appeal (1)Any person entitled under Part 3 to object to a valuation may appeal to the Land and Environment Court if the person is dissatisfied with the Valuer-General's determination of any such objection to the valuation concerned (whether or not the person was the objector). (2)An appeal may not be made on the ground that the objection is taken to have been disallowed, as referred to in section 35C (4), unless written notice of the objector's intention to appeal on that ground has been given to the Valuer-General at least 14 days before the appeal is made. (3)No person or body has jurisdiction or power to conduct a review or hear an appeal in respect of the determination of an objection except as provided by this Part. 59When the appeal is considered by the Court, neither the appellant nor the Valuer General is constrained by the terms of the original objection but can range freely (subject, obviously, to relevance) during the course of the appeal proceedings. This freedom is provided for in s 39 of the Act. This provision is in the following terms: 39 Grounds of appeal The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection. 60However, in our view, nothing in the wide-ranging power given to each party to the proceedings by s 39 of the Act permits them to go beyond the functional effect of an appeal founded on one or more of the elements in s 34(1) of the Act. For instance, the power is not so broad as to enable an appeal to be expanded to encompass a valuation in a base date year that was not the subject of the objection founding the appeal. On the other hand, there is nothing to prevent an applicant or a respondent raising other matters arising under s 34(1) or ranging far and wide (as is not unusually the case) in the search for comparable sales from which to derive a correct value for the purposes of the particular appeal (when the appeal is an appeal as to quantum) or in other fashions if the appeal is against some other element or combination of elements in s 34(1). 61Indeed, in these proceedings, the breadth of freedom allowed by s 39 permitted both parties to engage in forensic examination of quantity surveying evidence and town planning evidence, broad areas of expertise not readily apparently having been engaged, in the intellectual sense, in the various objections or Valuer General's responses to them. 62Finally, in setting out this process, the powers of the Court in disposing of and an appeal pursuant to s 37 are contained in s 40(1) of the Act. The powers are wide ranging and, prima facie, embody at least some element of discretion not only as to which of the outcome options ought be adopted but also with respect to determination of a new valuation amount if the Court were minded to substitute its own judicially determined value (or apportionment factor or any other mathematical element) for that which had been adopted by the Valuer General. The terms of s 40(1) are: 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. 63It has been the practice, in general valuation theory and, specifically in valuation determinations made in Class 3 proceedings in the Court (whether in statutory valuation appeals or in resumption compensation cases) to round valuations to the nearest whole number, ten, hundred or thousand or larger multiple zero number depending on the size of the valuation being considered. This is customarily done in acknowledgement of the fact that, although valuation processes usually lead to an answer defined to the dollar or cent, valuation is more akin to an art then to a precise science. This is permitted by s 40(1)(b). 64Finally, it is important to note, particularly in the context of what we have determined to be the outcome of these proceedings, that s 40(2) of the Act specifically places the burden of proof on the appellant in any appeal pursuant to s 37 of the Act. The terms of the subsection are as follows: (2) On an appeal, the appellant has the onus of proving the appellant's case. 65For completeness, we note that there are Regulations made under the Act and that the Regulations that were operable for each of the relevant valuation base dates the subject of these appeals were the Valuation of Land Regulation 2006. That regulation was repealed and replaced by the Valuation of Land Regulation 2012, a regulation that remains current. However, the only obviously relevant provision in either Regulation is that contained in cl 5 of each of the versions of the Regulations. There is, for the purposes of these proceedings, no relevant difference between the provisions and nothing arising from them that warrants detailed consideration.

The scope of the appeals 66Each of the appeals is in Class 3 of the Court's jurisdiction and is commenced by an application on the prescribed form. In each appeal, the application requires the setting out of the scope of the appeal. In in each of these matters, the scope of the appeal is in similar terms with the only difference being the descriptor of the relevant base date year against which the appeal is made. As the determination in the 2009 base date appeal provided the calculational basis for determination of all the other appeals (as discussed in the primary judgment), we set out the description of the scope of that appeal as illustrative of all appeals. The description is in the following terms: Appeal against the Respondent's disallowance of the Applicant's objection (dated 18 June 2012) to Land Value Assessment at the base date of 1 July 2009 for the property known as Lots 1 and 2 in Deposited Plan 558531, including the Applicant's claim that both allotments should be included in one valuation and apportioned, pursuant to sections 26 and 28 of the Valuation of Land Act 1916.

A practical approach taken in the primary proceedings 67It is clear, from the supporting documents that were initially filed with the Applications Class 3 initiating each of these proceedings (based on an objection to the valuation ascribed to PID122216) and the supplementary filing of what were described as "Application Papers", some six weeks later, (these papers relating to PID 1333217 for the base date in each of the relevant years) that the intention of each initiated proceedings was to appeal against the valuation given to each PID in each of the base date years between 2007 and 2011 inclusive. 68It was certainly on this basis that the entirety of the primary proceedings was conducted. 69However, as we drew to the attention of the parties' legal representatives, not only was the description of the appeal in each proceedings an inaccurate one but, in effect, each application Class 3 sought to commence not a single valuation appeal but two, separate valuation appeals, they being distinct appeals against the value given by the Valuer General to each of the two PIDs in each of the base date years. 70It is clear, from the statutory trail that has earlier been set out, the clear statutory intention is that each challenged valuation should be the subject of a separate appeal - no matter what the nature of the element or elements from within the menu contained in s 34(1) of the Act that founded the original objection and were dealt with in the objection disallowance determination. 71The subsequent appeal processes leading to us acting as judicial valuer should have been for separate Applications Class 3 confined to a single PID in each proceedings. 72As a consequence, the correct theoretical framework within which the matter is determined in our primary judgement should have been based on the lodging of ten Applications Class 3 (one for each PID in each base date year) rather than the conflating of the two appeals in each base date year into a single Application Class 3 for that year. 73As a matter of reality, as we also observed to the representatives of the parties, this conflating of two effective appeals into a single Application Class 3 for each of the base date years had no practical effect on any element of the evidence, submissions or conclusions considered in or arising from the process leading to our primary judgement. There was certainly, in our view, no prejudice to either party from the manner in which the primary proceedings were conducted. 74Indeed, in passing, we observe that there are probably only two practical effects of folding these appeals into five Applications Class 3 rather than ten such applications. First, those who drafted the applications have, in effect, saved the applicant five filing fees that would otherwise have been required to be paid. The flipside of this position is the second effect, namely that the five filing fees foregone would have adversely impacted on the fee revenue expectations of the Acting Registrar for the 2012/13 financial year!

The proper decision-making questions to be addressed 75Following, step by step, the proper statutorily laid down process for determining each of what are in effect ten appeals arising in these proceedings (and we think, in any appeal pursuant to s 37 of the Act where the applicant challenges a statutory valuation on the basis that it is too high) renders disavowals by the Valuer General of seeking any order pursuant to s 40(1)(b) for a higher valuation are hollow, irrelevant and incapable of having any effect, whatsoever, in these or any other such proceedings. 76We put that proposition, in strong terms, because a deal of distraction arose (to be fair to the advocates, triggered by questioning from the Bench) concerning the three disavowals on behalf of the Valuer General set out in (26) to (28) above. 77The reason that we have come to this conclusion arises from the terms of the two subsections to s 40 of the Act. For the purposes of establishing a decision-making process, the sections are, in their practical effect, in the wrong order, in our view. Viewed properly, the first matter that is to be determined by a judicial valuer can be put as follows: Has the applicant in the appeal discharged the onus of proof and demonstrated that the aspect of the Valuer General's determination, with respect to which some remedy is sought, is incorrect in the way asserted by the applicant in the proceedings? 78If (and only if) that question is answered in the affirmative is it then necessary to consider which of the options available to the Court in s 40(1) of the Act should be engaged and in what fashion. 79If the answer to the question that must necessarily be addressed as a consequence of s 40(2) is answered in the negative, the mandated consequence of that must be that the appeal is dismissed. There is no other option because the satisfaction of meeting the onus of proof by the applicant has not been achieved. 80If the applicant meets the requirements of s 40(2) on whatever are the basis advanced as being the defects, errors or inadequacies of the Valuer General's determination or deemed determination to the original objection (together with any other matters that may have been agitated by the applicant given the wide discretion is arising from s 39 of the Act that do not confine the matters on appeal to those contained in the original objection), it necessarily follows that there is at least the presumption (if not the obligation) on the judicial valuer to make some responsive order of the nature envisaged by the provision of section 40(1)(a), (b) or (c). 81Whether or not, in doing so, there is some implied broader discretion than merely the rounding discretion discussed earlier in (61) is a matter that does not arise for our consideration in these proceedings and it would be entirely inappropriate to offer some gratuitous, speculative opinion on it. We have, however, concluded that if the applicant in these proceedings fails the s 40(2) test with respect to the appeal against any one or more of the PIDs, the necessary consequence of that must be the dismissal of that appeal and the confirmation of the statutory valuation attaching to the relevant PID in the relevant base date year. The order confirming the Valuer General's statutory valuation is to be founded on the power given the Court in section 40(1)(a). 82If we are correct in this reasoning, the only possible outcomes in a statutory valuation appeal are either that some relief appropriately responsive to the nature of the matters raised against the statutory valuation process should be granted if the applicant has satisfied s 40(2) or the appeal should be dismissed and the statutory valuation confirmed. If this be the correct approach to the statute, taking the subsections of s 40 in reverse order, in effect, there can never be an instance when it would be appropriate to substitute a higher statutory valuation for that contained in the Valuer General's determination (unless the case was one of the very rare ones when, in fact, a higher valuation was sought as the outcome of the appeal). 83The necessary extrapolation of this narrow position concerning statutory values would apply, in our view, to the derivation of the broad principle that there will never be a basis in a statutory valuation appeal of any nature when the outcome of the appeal can be less favourable to the position in which the applicant was placed by the original process and determination prior to the appeal. It will not matter what might have been selected from the menu in s 34(1) of the Act to found the original objection nor will it matter what matters are finally pleaded by the applicant before the judicial valuer - there can never be resultant orders that place the applicant in a position disadvantageous to that which applied prior to the commencement of the proceedings. 84What has become an almost ritual disavowal by the Valuer General of any increase in a statutory valuation, if our analysis is correct, is a fundamentally hollow position. Any suggestion of increasing a statutory valuation (except, as earlier noted, in the rare instances where an increase is the relief sought by an applicant) can never occur. This is because the only circumstances under which a higher value could theoretically be contemplated in an appeal where an applicant is seeking a lower value will be when the applicant has failed at the s 40(2) test. 85As there is no right of cross claim given to the Valuer General by the Act (no such right is specifically provided nor is there any basis upon which such a right could be inferred from the removal of evidentiary limitations on the parties conferred by s 39 of the Act), if the applicant's case falls at the s 40(2) hurdle, the only element of s 40(1) to be invoked is the first option in sub-section (a) - namely to confirm...the decision to which the appeal relates. 86As a consequence, the form of the orders in such an instance can only effect the dismissal of the appeal and the confirmation of the existing statutory value 87There is no scope flowing from the applicant's failure to discharge the s 40(2) onus then to proceed to what would, in effect, be a punitive outcome of increasing an existing statutory value absent any right of cross-appeal being given to the Valuer General.

The Civil Procedure Act 2005 88In the context of the reality of ten appeals, we have considered whether or not we might have any power under the Civil Procedure Act 2005 to correct this position by splitting in two (as it were) each of the present five Applications Class 3 so that there would be, if such a result were to be achieved, a separate Application Class 3 for each of the effective appeals. Despite the fact that there are very wide ranging powers (able to be exercised on a discretionary basis) provided for the amendment and/or correction of documents contained in ss 64 and 65 of the this Act, we do not think that they are so broad and unfettered as to permit us to split the applications in the manner discussed above. 89However, if we be wrong in reaching this conclusion and some power to do so does exist, we are satisfied that, despite the obvious attraction of doing so and requiring that a representative of the applicant attend upon the Acting Registrar to pay the additional filing fees, there would, in reality, be no utility in doing so. 90We have reached this conclusion because the proceedings have, in effect, been heard throughout on the functional basis that what we were dealing with were ten appeals - appeals against each of the statutory valuations determined by the Valuer General as appropriate for each PID. These contests have been the subject of all necessary and relevant expert evidence, whether written or oral, and comprehensive submissions by the advocates for the parties. 91We do not see that there could be any conceivable prejudice to either the applicant or the respondent in us disposing of each of the Applications Class 3 by making what, in effect, are two sets of orders for each application, one set of orders in each matter dealing with the PID applicable to the portion of the site on the Kogarah side of the municipal boundary and a second dealing with the portion of the site on the Rockdale side of the municipal boundary. 92Indeed, doing so, in our view, is appropriately responsive to the overriding objective of civil litigation set out in s 56 of the Civil Procedure Act 2005 to effect the just, quick and cheap resolution of the issues that are genuinely in dispute between the parties. To prefer, for some reason, form over substance when questions of form were not advanced to us during the substantive proceedings and where there is no prejudice to either party in us adopting the course we propose to follow would be antithetical to that objective.

The draft orders proposed in the primary judgment 93In our primary judgement, having reached the conclusion that derived a grossed up value for the whole site as at the base date 1 July 2009 and applying the agreed process settled by the expert valuers to derive the grossed up value for each of the other four relevant base date years, we undertook apportioning in the fashion agreed by the experts (by using the appropriate worksheet in the relevant Excel spread sheet that had been provided to us during the primary hearing). Based on those results, we set out a draft of the orders that we considered followed from those conclusions. Those draft orders were in the following terms: 136 In Matter No 31133 of 2012, the proposed orders are: (i) The appeal is upheld; and (ii) For the base date of 1 July 2007, the value of PID 1502216 is $3,748,591 and the statutory valuation for PID 1536207 of the Valuer General is confirmed. 137 In Matter No 31134 of 2012, the proposed orders are: (i) The appeal is upheld; and (ii) For the base date of 1 July 2008, the value of PID 1502216 is $3,862,914 and the statutory valuation for PID 1536207 of the Valuer General is confirmed. 138 In Matter No 31135 of 2012, the proposed orders are: (i) The appeal is upheld; and (ii) For the base date of 1 July 2009, the value of PID 1502216 is $3,152,908 and the statutory valuation for PID 1536207 of the Valuer General is confirmed. 139 In Matter No 31136 of 2012, the proposed orders are: (i) The appeal is upheld; and (ii) For the base date of 1 July 2010, the value of PID 1502216 is $3,279,265 and the statutory valuation for PID 1536207 of the Valuer General is confirmed. 140 In Matter No 31137 of 2012, the proposed orders are: (i) The appeal is upheld; and (ii) For the base date of 1 July 2011, the value of PID 1502216 is $3,279,265 and the statutory valuation for PID 1536207 of the Valuer General is confirmed.

Conclusion 94In our view, the statute mandates us to reach positions that are mathematically absurd (in the sense that the resultant totals post apportionment and application of the correct statutory approach will only total 90% of the derived aggregated value for the PID values for the whole of the site). 95That mathematical absurdity, although derived by application of the correct statutory process, has as its foundational cause the fundamentally flawed and mathematically inaccurate apportionment calculations undertaken by the Valuer General in each of the five relevant base date years. To the extent that there is some image in the looking glass (in the sense of Through the Looking-Glass, and What Alice Found There (1871) Lewis Carroll's sequel to Alice in Wonderland (1865) element to this result), it is that of the Valuer General rather than of the legislature that enacted the provisions mandating the outcome of these appeals.

Orders 96Having considered the further submissions that have been made to us, revision of the draft orders in the primary judgment necessarily follow both to provide proper form to give effect to our conclusion and to reflect the corrected calculations set out at (25) above. Those revised orders are set out below. 97In Matter No 31133 of 2012: (1)The orders in the appeal against the value of PID 1502216 for the base date of 1 July 2007 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2007, the value of PID 1502216 is $3,795,406. (2)The orders in the appeal against the value of PID 1536207 for the base date of 1 July 2007 are: (a)The appeal is dismissed; (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2007, the issued value for PID 1536207 is confirmed; and (3)The Exhibits are returned. 98In Matter No 31134 of 2012: (1)The orders in the appeal against the value of PID 1502216 for the base date of 1 July 2008 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2008, the value of PID 1502216 is $3,908,450. (2)The orders in the appeal against the value of PID 1536207 for the base date of 1 July 2008 are: (a)The appeal is dismissed; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2008, the issued value for PID 1536207 is confirmed. 99In Matter No 31135 of 2012: (1)The orders in the appeal against the value of PID 1502216 for the base date of 1 July 2009 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2009, the value of PID 1502216 is $3,191,700. (2)The orders in the appeal against the value of PID 1536207 for the base date of 1 July 2009 are: (a)The appeal is dismissed; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2009, the issued value for PID 1536207 is confirmed. 100In Matter No 31136 of 2012: (1)The orders in the appeal against the value of PID 1502216 for the base date of 1 July 2010 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2010, the value of PID 1502216 is $3,321,581. (2)The orders in the appeal against the value of PID 1536207 for the base date of 1 July 2010 are: (a)The appeal is dismissed; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2010, the issued value for PID 1536207 is confirmed. 101In Matter No 31137 of 2012: (1)The orders in the appeal against the value of PID 1502216 for the base date of 1 July 2011 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2011, the value of PID 1502216 is $3,321,581. (2)The orders in the appeal against the value of PID 1536207 for the base date of 1 July 2011 are: (a)The appeal is dismissed; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2011, the issued value for PID 1536207 is confirmed. Tim Moore Senior Commissioner Graham Brown Commissioner of the Court DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 June 2014

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