Perilya Broken Hill Ltd v Valuer-General

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

1. BATHURST CJ: I agree with the orders proposed by Leeming JA and with his Honour's reasons.
2. MACFARLAN JA: I agree with Leeming JA that the appeal should be dismissed with costs and, subject to the following observations, with his Honour's reasons.
3. I agree with his Honour that the Privy Council's decision in Gollan v Randwick Municipal Council [1961] AC 82; (1960) 6 LGRA 275 requires the conclusion to be reached, contrary to Perilya's submissions, that the hypothetical "fee-simple" to be assumed for the purposes of s 6A(1) of the Valuation of Land Act 1916 (NSW) is not subject to the reservations of minerals to the Crown. I also agree with Leeming JA that Gollan remains authoritative (see [70]-[77] below) and cannot reasonably be distinguished (see [61]-[69] below).
4. Nevertheless, I record my reasons as follows for considering that it is incorrect, at least so far as it determines the result of the present case.
5. Section 6A requires a fee simple to be assumed. This, as Leeming JA points out, is an estate in land and not the land itself. Prior to assuming the existence of this type of estate, being the fullest estate possible, it is necessary to identify the physical thing (that is, the land) to which it relates. If the Crown grant excised a corner of a lot or only granted title (that is, an estate) to a depth of say, 50 feet, any minerals situated in that corner or below that depth would clearly not be part of the land to which the assumed fee simple estate related.
6. Logically, the same conclusion applies where the Crown has retained ownership of minerals by reason of the terms of the Crown grants. The land in which the grantee "owner" holds its estate does not include those minerals. The owner derives no advantage from their presence in or under its land because in order to exploit them through mining it must pay to the Crown royalties at the same rate as would be payable by a third party who acquired from the Crown a mining right in respect of the subject land. The owner would receive compensation if a third party was able to mine its land but such a payment would not profit the landowner. The existence of Crown owned minerals on the land would, at least in the ordinary case, be a negative, rather than a positive, factor.
7. This conclusion is consistent with the policy, referred to in Royal Sydney Golf Club v Federal Commissioner of Taxation [1955] HCA 13; 91 CLR 610 at 623, behind the requirement to assume in this context an unencumbered fee simple. The High Court in that case said: "It seems evident that the fee simple mentioned must be taken as free from encumbrances which, if they impair the value of his estate, nevertheless operated to confer upon some other person or persons an estate or interest in the land. Were it otherwise the taxable value of the land would be diminished but the correlative estate or interest would not come into tax, unless by some chance it were an interest falling under some specific provision imposing liability."
8. Where the owner's estate in land is diminished by encumbrances like mortgages and leases, the possibility exists for the owner to have the encumbrancers contribute to statutory imposts such as rates or land tax. Where the qualification to the owner's title is constituted by a reservation to the Crown of minerals, the possibility of that recoupment does not exist, with the result that, on the basis of the decision in Gollan, the owner must pay the proportion of the statutory impost referable to the Crown owned minerals even though the owner derives no benefit from their presence on its land and has no avenue for recoupment of that portion of the charge.
9. I add that I do not consider that the broad definition of "land" in s 21 of the Interpretation Act 1987 (NSW) is determinative as there remains the need, notwithstanding that definition, to identify for the purposes of s 6A of the Valuation of Land Act, the "land" to which the fee simple to be hypothesised under that section relates. For the reasons I have given, that land does not include the Crown-owned minerals. Likewise, that same need remains notwithstanding that reserved minerals are regarded in other contexts as part of the land within which they are located (Commonwealth v State of New South Wales [1923] HCA 34; 33 CLR 1 at 20, 22).
10. LEEMING JA: Perilya Broken Hill Ltd (Perilya) appeals from what in substance were two interlocutory decisions of the primary judge, whose combined effect was the dismissal of proceedings challenging the respondent Valuer-General's valuation of land as at 1 July 2007 at $20,900,000. The two interlocutory decisions were Perilya Broken Hill Ltd v Valuer-General (No 6) [2015] NSWLEC 43 and Perilya Broken Hill Ltd v Valuer-General (No 8) [2015] NSWLEC 72. In the first (Perilya No 6), the primary judge (Biscoe J) answered a separate question concluding that the land value of land containing publicly owned minerals was to be determined on the assumption that the minerals were privately owned. In the second (Perilya No 8), the primary judge dismissed Perilya's application to adduce further evidence (described as "mining information") as a cost in the methodology to be used in the valuation. The primary judge noted Perilya's concession that, if its application were refused, the resulting valuation would exceed the $20,900,000 for which the Valuer-General contended, such that the appeal would be moot. Accordingly, the primary judge dismissed the proceedings.
11. The proceedings were in Class 3 of the jurisdiction of the Land and Environment Court. Perilya's appeal pursuant to s 57(1) of the Land and Environment Court Act 1979 (NSW) is confined to questions of law. Notwithstanding the interlocutory nature of both decisions, Perilya's appeal is as of right, because it challenges interlocutory orders which affected the final dismissal of Perilya's proceedings: Gerlach v Clifton Bricks Pty Limited [2002] HCA 22; 209 CLR 478 at [6]-[8].
12. The history of the litigation is extensive, a matter regarded by the primary judge as of central relevance to his dismissal of Perilya's motion in Perilya No 8. It will be necessary to bear that history in mind when addressing that aspect of this appeal. However, the principal aspect of this appeal, the challenge to the answer to the separate question in Perilya No 6, does not turn on the factual or procedural complexities which have enveloped this unhappy litigation. To the contrary, it turns upon the longstanding language of the Valuation of Land Act 1916 (NSW) (Valuation Act) and its application to land whose highest and best use is as a mine.
13. For the reasons which follow, I would dismiss all grounds of Perilya's appeal.

Procedural background

1. Perilya has title, in one form or another, to some 3,033 hectares of land in and near the city of Broken Hill, in far western New South Wales. Perilya is also the holder of nine consolidated mining leases and two mining leases. It was common ground that the highest and best use of Perilya's land was as a mine for the production of lead, zinc and silver.
2. Following an initial valuation, the Valuer-General valued the land at $20,900,000 as at 1 July 2007. The precise methodology employed by the Valuer-General seems not to have been disclosed by the evidence. (Indeed, given the nature of the appeal, very little of the material going to the parties' competing valuation methodologies was reproduced in the appeal materials. I mention this to explain the necessarily qualified nature of parts of the reasoning which follows.)
3. The Valuer-General dismissed Perilya's objection to the valuation. Perilya appealed, pursuant to s 37 of the Valuation Act. Perilya's originating process sought an order that the land value be determined at $11,000,000. By Perilya's "Outline of Objection to Valuation" filed in June 2011, Perilya contended for a land value of $5,250,000.
4. The trial ran over three days before Lloyd AJ, and was conducted on the basis that the minerals were privately owned. The Valuer-General sought to change his position on the third day of the trial, including by seeking to tender (after the evidence had closed) title documents directed to showing that there was a Crown reservation of minerals. His application was refused.
5. Lloyd AJ allowed Perilya's appeal, revoked the Valuer-General's determination, and determined the value of the property at $4,900,000 as at 1 July 2007: Perilya Broken Hill Ltd v Valuer-General [2012] NSWLEC 235. His Honour's valuation was based on the present value of future cash flows involved in establishing and operating a mine and rehabilitating the site. Both parties had proposed similar methodologies, and his Honour resolved the aspects of the calculation which had been left in issue.
6. The Valuer-General appealed to this Court, and his appeal was allowed: Valuer-General v Perilya Broken Hill Ltd [2013] NSWCA 265; 195 LGERA 416. That appeal turned on the distinction between publicly and privately owned minerals, as does the present appeal.
7. All minerals in New South Wales are either privately owned or publicly owned. Those terms are given meaning by the Mining Act 1992 (NSW). A publicly owned mineral is defined to mean "a mineral that is owned by, or reserved to, the Crown". A privately owned mineral is defined to mean "a mineral that is not owned by, or reserved to, the Crown".
8. The regime established in Pt 14 of the Mining Act imposes a liability upon the holder of a mining lease to pay royalties. The holder of a mining lease is liable to pay royalties to the Minister, at a rate prescribed by regulations. If the holder of a mining lease recovers privately owned minerals, the holder remains liable to pay royalties to the Minister as if the minerals were publicly owned minerals: s 284(1). However, if the Minister receives royalties paid in respect of privately owned minerals, the Minister must pay seven eighths of the amount to the owner of the mineral: subss 284(2) and (2A). It is the right to those payments which is the presently critical distinction between publicly and privately owned minerals.
9. This Court concluded that irrespective of whether the minerals were privately owned or publicly owned, there was an error in the valuation methodology. The methodology employed, while very precisely bringing to account royalty payments to the State, did not bring to account either the portion of royalty payments generated by the mining required to be paid to the owner by s 284(2A) of the Mining Act, or alternatively, the land holder's right to compensation under Pt 13 of that Act: see at [74]-[75]. I described the position at [83]: "In my opinion, there is error on a question of law, in determining the value of the hypothetical fee simple by proceeding on the assumption that the minerals are privately owned, and having regard to the s 284(1) payments but not the s 284(2) receipts. On one view, s 6A requires the valuation to proceed on the basis that the minerals are privately owned, but this Court has been asked not to determine this and I do not do so. If so, then there is the error as above, and the error is undoubtedly material, for the s 284(2) royalty stream enjoyed by the owner would amount to millions of dollars each year of production. Alternatively, if s 6A does not require the valuation to proceed on that basis, and in fact some or all of the minerals are not privately owned, then again in my opinion the decision discloses error of law, because there has not been a finding as to the ownership of the minerals or a valuation of the land on the basis that the minerals are not privately owned, and indeed Perilya has not had an adequate opportunity to be heard on the point."
10. Following the remitter by this Court, it became common ground that all of the minerals were reserved to the Crown. In December 2013, the primary judge delivered a costs judgment in relation to the motion for a separate question, which the Valuer-General "abandoned almost at the last moment in favour of a new and unheralded approach": Perilya Broken Hill Ltd v Valuer-General (No 3) [2013] NSWLEC 215 at [22]. In February 2014, the Valuer-General, without leave, filed and served expert evidence "contending for a totally new owner/operator valuation methodology with vastly increased valuation scenarios" up to $318,000,000: Perilya Broken Hill Ltd v Valuer-General (No 5) [2015] NSWLEC 20 at [3]. While the Valuer-General did not seek an increase of his original valuation of $20,900,000 for the year 2007, it was said that the "significance of the new owner/operator valuation methodology relates to valuations in future years": [2015] NSWLEC 20 at [4].
11. Shortly after the remitter, the primary judge had ordered that facts determined at the first hearing and not disturbed on appeal were not to be reopened without leave of the court. In response to the Valuer-General's proposed new valuation methodology, Perilya applied for leave to reopen a number of findings of fact, including to rely on evidence that "the estimated cost to obtain/reconstruct mining information … to an adequate level of confidence that would allow responsible operation of the Perilya Broken Hill mine is $270,691,000": [2015] NSWLEC 20 at [77]. The primary judge refused leave to permit the Valuer-General to rely upon the proposed new valuation methodology and consequently refused leave to Perilya to rely upon its mining information.
12. More than four years after proceedings had been commenced, the parties agreed to a separate determination of the question of whether the land value was to be determined on the assumption that the minerals were privately owned. The primary judge answered that question affirmatively by Perilya No 6 on 30 March 2015. Grounds 1, 2 and 3 of Perilya's appeal allege errors of law in that judgment.
13. On 1 April 2015, the matter was fixed by consent for final hearing over four days in May 2015. Perilya applied on 21 April 2015 to vacate that hearing. Its application was refused: Perilya Broken Hill Ltd v Valuer-General (No 7) [2015] NSWLEC 67. No challenge is made to that decision.
14. On 5 May 2015, Perilya applied for leave to contend for a variation of the methodology applied by Lloyd AJ at first instance to account for the value of mining information, and to rely upon evidence which had been served almost a year previously (in response to the Valuer-General's application to rely upon a different methodology), together with a further more recent (but short) affidavit. The primary judge refused the application and gave ex tempore reasons in Perilya No 8. Ground 4 of Perilya's appeal alleges error of law in that decision.

The valuation of land containing publicly owned minerals

1. Subsections 6A(1) and (2) of the Valuation Act are as follows: "6A Land Value (1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made. (2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that: (a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and (b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used, but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made." Subsections 6A(3) and (4) are inapplicable. The hyphenated terms "fee-simple" and "bona-fide" were found in the statute as originally enacted, but except where quoting I shall omit the hyphens. The original statute also referred to the "unimproved value" as opposed to the "land value", as did s 3 of the Land Tax Assessment Act 1910 (Cth). It will be necessary when dealing with earlier decisions to be conscious of the change in the defined term.
2. The actual Crown grants now owned by Perilya were not in evidence. It was common ground that the minerals in the land were publicly owned (being the opposite of the agreed position at the trial before Lloyd AJ in 2012). The litigation proceeded on the basis of an assumption that Perilya's title ultimately derived from Crown grants which reserved all "minerals". (For many years, silver, zinc, lead and galena (the principal ore of lead) have been "minerals" for the purposes of Crown lands legislation, and for many years grants of Crown land have excluded minerals.)
3. It is essential to keep firmly in mind four different types of property relevant to this litigation.
4. First, there is the land itself as a physical thing. Perilya owned no part of the 3,033 hectares of land the subject of this appeal. The owner of a fee simple owns an estate in land, but does not own the land itself. The land is held in radical title by the Crown. The owner of an estate in fee simple holds an estate in land as a tenant from the Crown. Of course, an estate in fee simple is "as close as the law gets to ownership of land itself, consonant with the feudal principle of tenure and with modern statutory restrictions on the rights of landowners": P Butt, Land Law (6th ed 2010, Thomson Reuters) at 125. As Professor Gray has said, in a passage endorsed in Yanner v Eaton [1999] HCA 53; 201 CLR 351 at [18]: "Much of our false thinking about property stems from the residual perception that 'property' is itself a thing or resource rather than a legally endorsed concentration of power over things and resources": K Gray, "Property in Thin Air" (1991) 50 Cambridge Law Journal 252 at 299.
5. Commonly it is unnecessary to distinguish between land and the fee simple in land. This appeal is exceptional in that respect (another example may be seen in Esposito v Commonwealth [2015] FCAFC 160 at [53]-[56]).
6. Secondly, there were the estates in the land which Perilya did own. Their details are not entirely clear on the evidence. However, they included various parcels of freehold land and land held under leases under the Western Lands Act 1901 (NSW). Although the Valuer-General's Statement of Facts filed on 13 May 2011 recorded that "[t]he southern operations began in 1884 whilst the northern operations began in 1883", it was common ground that all of those titles excluded all of the valuable minerals (silver, zinc and lead).
7. Thirdly, Perilya was the holder of 11 mining leases (nine consolidated mining leases and two mining leases). It seems that some of the mining leases are underground leases, coextensive with interests in land owned by others. (For example, the first consolidated mining lease, CML 4, is shown on the title map maintained by the Department of Industry, Resources and Energy as occupying 278.4 hectares and extending under Argent St within the city of Broken Hill. I regard the departmental database as a document falling within s 144(1)(b) of the Evidence Act 1995 (NSW).)
8. Those "leases" were creatures of statute, granted under (or deemed to be granted under) ss 63 and 98 of the Mining Act. A mining lease of private land for a publicly owned mineral is not a lease in a conventional sense, but is, as Windeyer J said in Wade v New South Wales Rutile Mining Co Pty Ltd (1969) 121 CLR 177 at 192, "really a sale by the Crown of minerals reserved to the Crown to be taken by the lessee at a price payable over a period of years as royalties". Within the bundle of rights constituting the "lease" are the rights and obligations conferred by the Mining Act, including the obligation to pay compensation to landowners affected by the mining operations, and to rehabilitate the land.
9. Fourthly, there is the hypothetical "fee-simple" of the land which is required to be valued under the Valuation Act. It is established that (a) s 6A presupposes a hypothetical sale on reasonable terms and conditions to a "bona-fide seller", (b) the subject matter of the hypothetical sale is the "fee-simple of the land" and (c) that sale is subject to the counterfactual assumptions in s 6A(1) as to improvements and the factual assumptions in s 6A(2).
10. The hypothetical "fee-simple" is an estate in land, as distinct from the radical title to the land. It is unquestionably not the same estate as is enjoyed by the owner of a lease under the Western Lands Act of the land. A series of decisions on s 6A and its predecessors establishes that it is not necessarily the same estate as is enjoyed by a registered proprietor in fee simple of a parcel of land. It is this latter issue which gave rise to the separate question answered by the primary judge in Perilya No 6.

The reasoning of the primary judge in Perilya No 6

1. As reformulated (with the parties' consent) at the hearing, the question determined separately was: "Under s 6A of the Valuation of Land Act is the land value of land containing publicly owned minerals as defined in the Mining Act to be determined on the assumption that the minerals are privately owned?"
2. The primary judge answered that question affirmatively. His Honour employed the following process of reasoning.
3. First, the primary judge commenced with the statutory text, in accordance with Valuer-General v Fivex Pty Ltd [2015] NSWCA 53; 206 LGERA 450 at [26]. His Honour observed that the exercise was "highly artificial" by reason of the counterfactual assumptions in s 6A(1): at [16].
4. Secondly, his Honour considered the notion of "fee-simple of land", by reference to its history in English law and reception in Australia, including the fact that the Crown's radical title enabled it to make grants in fee simple. By reference to Commonwealth v State of New South Wales (1923) 33 CLR 1 at 42, Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 656 and Fejo v Northern Territory of Australia [1998] HCA 58; 195 CLR 96 at [43], his Honour observed that the estate was the most extensive in quantum and the most absolute in terms of rights, which was practically equivalent of full ownership of the land, at least extending sufficiently high as is necessary for the ordinary user of the land, and sufficiently downwards to include minerals: at [19]-[23].
5. Thirdly, the primary judge considered that the fee simple normally excluded the "royal minerals" gold and silver, by reason of a presumption at common law excluding or reserving minerals to the Crown. His Honour relied at [24] on Wade at 186 and Cadia Holdings Pty Ltd v State of New South Wales [2010] HCA 27; 242 CLR 195 at [13]-[26]; see now also New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act [2015] NSWCA 349 at [132]-[136].
6. Fourthly, the primary judge noted at [27]-[31] that since 1861 the grant of Crown land has been subject to a "reservation of any minerals which the land may contain": see Crown Lands Alienation Act 1861 (NSW), s 18, Crown Lands Act 1884 (NSW), s 7, Crown Lands Consolidation Act 1913 (NSW), s 235(3) and Crown Lands Act 1989 (NSW), s 171.
7. (That is not quite so, although nothing turns on this in light of the parties' agreement. However, although s 18 of the Crown Lands Alienation Act 1861 authorised "a grant of the fee simple but with reservation of any minerals which the land may contain" to a conditional purchaser, s 19 (which applied to land which was being mined), authorised "a grant in fee simple … without reservation of minerals other than gold". It is conceivable that grants under s 19 were made, given that the evidence recorded that mining on Perilya's land started in 1883. Moreover, under the Crown Lands Act 1884 provision was made to convert land subject to a reservation of minerals to the Crown into a purchase for mining purposes as if the 1884 Act had not been passed.)
8. As the primary judge observed, the "minerals" which were reserved varied from time to time. Silver and galena were minerals from 1884 while lead and zinc were minerals from 1922: at [28].
9. Fifthly, by reference to Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610 at 623, the primary judge emphasised that the hypothetical fee simple was the highest estate unencumbered and subject to no conditions or reservations: at [34]. It will be necessary to return to this passage.
10. Sixthly, his Honour referred at [36] to the application of Royal Sydney Golf Club to the Valuation Act by Sydney City Council v Valuer-General (1956) 1 LGRA 229, and the approval of these decisions by Gollan v Randwick Municipal Council [1961] AC 82; (1960) 6 LGRA 275 and Valuer-General v New South Wales Golf Club [2012] NSWCA 355; 192 LGERA 105. Those decisions focus upon two key concepts: the hypothetical fee simple which is valued under the Valuation Act unaffected by certain restrictions to title, and the laws of general application to which that hypothetical fee simple is considered to be subject.
11. There followed three dispositive strands within the reasoning of the primary judge. In answer to Perilya's submission that because reserved minerals were excepted from the Crown grant they were not part of the land, his Honour said at [39]: "In my opinion, these authoritative principles are fatal to Perilya's submissions summarised above ... Perilya submitted, first, that as reserved minerals are an exception from a Crown grant, they are treated in law as not physically part of the land granted and therefore, upon the proper construction of s 6A(1), the fee simple of 'the land' does not include minerals that were never part of any grant of 'the land'. I do not accept the submission. In fact, minerals are physically part of land, albeit severable if excluded from the grant of the fee simple estate. 'Land' is defined in s 21 of the Interpretation Act 1987 as including [corporeal] hereditaments, which include minerals. The 'fee simple of the land' in s 6A(1) does not refer to the actual fee simple vested in the owner but to a hypothetical absolute or pure fee simple such as constitutes full ownership in the eye of the law." (Citations omitted, and correcting an obvious typographical error.)
12. In answer to Perilya's submission that what was said in Royal Sydney Golf Club referred only to "fee simple" and not "fee simple of the land", his Honour said at [40]: "I do not read the quoted passage from Royal Sydney Golf Club as being confined in the way Perilya suggested. I cannot see why the High Court would have intended to confine it in that way, nor where it takes the matter; and if the High Court had intended to so confine it, one would expect it to have said so explicitly. In any case, the subsequent decisions in Sydney City Council v Valuer-General and [Gollan] confirm that the legislation is concerned not with the actual title of the owner but with a hypothetical absolute or pure fee simple such as constitutes full ownership in the eye of the law."
13. In answer to Perilya's submission that the Crown lands statutes were laws of general application which had to be taken into account, the primary judge said at [41]: "Under s 6A(1) of the Valuation of Land Act, statutes affecting value by affecting enjoyment or use of land independently of all questions of title or ownership are to be taken into account, but restrictions on title or ownership are not. Planning statutes comprise, or are the prime example of, the former category and therefore have to be taken into account. Planning statutes do not affect title or ownership. In contrast, the Crown lands statutes under discussion affect a restriction on title or ownership. Therefore, in my opinion, regard cannot be had to them under s 6A(1)."
14. The primary judge concluded that the expression "the fee simple of the land" in s 6A(1) includes publicly owned minerals in the land and therefore requires them to be treated as though they are privately owned, and answered the question reserved for separate determination accordingly.

Perilya's appeal from Perilya No 6

1. Perilya challenged each of the three dispositive strands of the reasoning of the primary judge in Perilya No 6. It will be seen that what had been decided in Royal Sydney Golf Club and Gollan was critical to his Honour's reasons. On appeal, submissions were closely directed to both cases, especially Royal Sydney Golf Club. The convenient course is to start with what was, and what was not, established by those cases.

Royal Sydney Golf Club

1. Although it was at the forefront of the parties' submissions, I do not consider that the outcome of this appeal is determined by Royal Sydney Golf Club.
2. First, Royal Sydney Golf Club concerned the construction of "unimproved value" in a federal law, the Land Tax Assessment Act 1910 (Cth). True it is that the definition was derived from the colonial Land and Income Tax Assessment Act 1895 (NSW), as Sugerman J observed in Sydney City Council v Valuer-General at 233. However, it is quite plain that the High Court's analysis in Royal Sydney Golf Club was closely attuned to the provisions in the federal law as a whole and the "general policy" those provisions disclosed. At 622-623, the High Court referred to ss 25, 31, 33, 26 and 27(4). By reference to the first three of those sections, the joint judgment stated: "[T]he sections which have been mentioned suffice to show that the general policy of the Act was to impose the tax on the owner of the first estate of freehold in possession and to make him liable independently of the rights of any reversioner, mortgagee or holder of security in respect of the unimproved value of the land": at 622.
3. The fourth and fifth sections were used to support a construction which referred not to the fee simple which has been granted but instead to: "the fee simple as the highest estate unencumbered and subject to no conditions": at 623.
4. Were there doubt about the High Court's reasoning being closely tied to the provisions of the particular federal statute, it was dispelled by the following passage at 623: "The general policy was reflected in a general rule. The interpretation of the Act which seems best to accord with the policy appearing from its provisions and also to flow from its language is that in assessing the unimproved value an estate in fee simple must be taken as the hypothesis unencumbered and subject to no condition restricting the use or enjoyment of the land."
5. Secondly, the federal taxing Act in question in Royal Sydney Golf Club was drafted with an eye to constitutional restrictions, such as those in s 114 of the Constitution. It expressly excluded as exempt from taxation "all land owned by a State, or by a municipal, local or other public authority of a State": s 13(a). It also made provision (in ss 27 and 28) for assessing leasehold estates, but subject to an important proviso in s 29: "Provided that in the assessment of the unimproved value of a lease the value of any metals or minerals or other rights reserved to the Crown shall be excluded."
6. Thirdly, "[c]ases are only authority for what they decide", as McHugh J said in Coleman v Power [2004] HCA 39; 220 CLR 1 at [79]. The High Court's decision in Royal Sydney Golf Club on the legal meaning of the words "unimproved value of land" in a federal taxing act does not of itself prescribe the legal meaning of the same words in the Valuation Act. That follows because the reasoning was closely tied to the "general policy" of the Act, and that Act unambiguously discloses a policy of not including minerals reserved to the Crown in the valuation of the hypothetical fee simple.
7. Most importantly for present purposes, the reference to "the fee simple as the highest estate unencumbered and subject to no conditions" cannot soundly be applied to deal with land with a minerals reservation, given ss 13(a) and 29.
8. By the same token, what was said in Royal Sydney Golf Club as to "laws of the State which affect the value of the land" which were required to be taken into consideration (such as the County of Cumberland Scheme), does not necessarily extend to the provisions of the Crown Lands Acts which reserved minerals from Crown grants. Specific provisions in the federal Act produced the result that minerals reserved to the Crown were not included in the valuation of the hypothetical fee simple.

Gollan

1. The critical case for present purposes is not Royal Sydney Golf Club but Gollan. That appeal was argued over four days by leading counsel (Wilberforce QC and Bowen QC) on appeal from the Full Court of the Supreme Court of NSW (reported as Rutledge v Randwick Municipal Council (1957) 3 LGRA 9) on a stated case from the Land and Valuation Court.
2. Gollan concerned Randwick Racecourse in Sydney. Land had been granted to trustees in fee simple in 1863, subject to a pepper-corn quit rent, but on condition that it be used for various purposes mostly associated with horse racing and subject to a reservation to the Crown of the right to resume part of it for public roads and to take stone, gravel and timber from it. Should the land be used for any purpose other than those allowed by the grant, the trusts should cease and the land be forfeited, reverting to the Crown. See [1961] AC 82 at 93; (1960) 6 LGRA 275 at 277 where, most relevantly to the present appeal, the effect of the 1863 grant was summarised as follows: "... (c) There was a reservation to the Crown of the right to resume any part of the lands that might be required for public roads or ways and of the right to take stone, gravel and timber, as well as of a general right to resume any part of the land for public purposes. ...".
3. The report of the Full Court of the Supreme Court frames the reservation slightly differently: "The grant also confirmed a reservation of any land required for public roads and also stone gravel and indigenous timber required for construction and repair of roads or for naval purposes": (1957) 3 LGRA 9 at 15.
4. Nothing presently turns on the precise nature of the reservation. It is sufficient to observe that the trustees were granted a fee simple in land, subject to conditions and to a reservation in respect of stone, gravel and timber.
5. The stakes were very high for the three trustees, Messrs Rutledge, Gollan and Point. The Valuer-General had determined an unimproved value of the land of £385,400; the Council contended that the unimproved value was £574,246. The trustees submitted that by reason of the conditions and reservations upon the grant, the value should be nil: see (1957) 3 LGRA 9 at 11-12.
6. In Gollan the appellant contended that Royal Sydney Golf Club was wrongly decided "in so far as it decided that not all restrictions were to be considered": [1961] AC 82 at 89. The questions for the Judicial Committee were whether Royal Sydney Golf Club was correct, and, if so, whether the same construction applied to the Valuation Act: see [1961] AC 82 at 99; (1960) 6 LGRA 275 at 281.
7. The advice of the Judicial Committee was given by Lord Radcliffe, who answered both questions affirmatively. The "fee simple of the land" in the Valuation Act did "not refer to the actual title vested in the owner at the relevant date but to an absolute or pure title such as constitutes full ownership in the eyes of the law": [1961] AC 82 at 101; (1960) 6 LGRA 275 at 282.
8. It followed that the unimproved fee simple valued for the purpose of assessing rates on the land owned by the trustees of Randwick Racecourse disregarded the fact that their actual estate was qualified by conditions and a reservation to the Crown of a right to resume any part for the purpose of roads and a right to take stone, gravel and timber from it.
9. Gollan therefore holds that a reservation to the Crown in the grant is disregarded for the purposes of the hypothetical fee simple valued under the Valuation Act. Gollan was confirmed in Broken Hill Proprietary Co Ltd v Valuer-General [1970] AC 627; (1969) 16 LGRA 334, another appeal from the New South Wales Court of Appeal.
10. Perilya did not submit that this Court should not follow Gollan. Although there may be some uncertainty as to the precise precedential status of Australian appeals to the Privy Council, I consider that Perilya was correct to proceed on that basis.
11. Gollan (and Broken Hill Proprietary Co Ltd v Valuer-General) were appeals directly from the Supreme Court of New South Wales to the Privy Council. Such appeals no longer lie. I can see force in the proposition that, just as the High Court is no longer bound by the Privy Council, by the same reasoning this Court is likewise no longer bound. That proposition found favour with McHugh JA in Hawkins v Clayton trading as Clayton Utz & Co (1986) 5 NSWLR 109 at 136-137. However, with great respect, I do not think that it applies to Gollan, bearing in mind three matters.
12. The first is that I think the position is different in the case of a Privy Council appeal from the High Court of Australia. Obviously, if the appeal is dismissed, the High Court's decision will continue to bind all Australian courts, irrespective of the cessation of Privy Council appeals. But take for example the Privy Council's decision in Commissioner of Stamp Duties v Bone [1977] AC 511, allowing an appeal from the unanimous decision of the High Court in Bone v Commissioner of Stamp Duties (1974) 132 CLR 38 (and restoring the decision of this Court constituted by Jacobs P, Hope and Reynolds JJA). The Privy Council's view of the effect of a testamentary release of a debt when the will appointed the debtor as the executor undoubtedly bound all Australian courts, including the High Court, after 1977. I cannot presently see why the position of Australian courts below the High Court was any different after appeals ceased to lie to the Privy Council. In point of principle, I think it is for the High Court, and the High Court alone, to determine that a decision of the court which formerly was at the apex of the Australian legal system in matters of private law ceases to bind.
13. Secondly, that accords with what Heydon J said (dissenting, but not on this point) in Barclay v Penberthy [2012] HCA 40; 246 CLR 258 at [103]: "Nothing in Cook v Cook (1986) 162 CLR 376 at 389-390 undercuts the present status as authorities in Australian courts of Privy Council decisions before 1986, until they are overruled by this Court."
14. It may in fact be that Cook v Cook (1986) 162 CLR 376 is to be read as confirmatory of the ongoing binding effect of decisions in Privy Council appeals. The relevant passage in Cook v Cook is in the joint reasons of Mason, Wilson, Deane and Dawson JJ. It was directed to the question whether the South Australian Supreme Court should follow a decision of the English Court of Appeal or dicta from two Justices of the High Court. After confirming the continued utility of obtaining assistance and guidance from United Kingdom courts, the joint judgment said at 390: "Subject, perhaps, to the special position of decisions of the House of Lords given in the period in which appeals lay from this country to the Privy Council, the precedents of other legal systems are not binding and are useful only to the degree of the persuasiveness of their reasoning."
15. That statement is, in terms, directed to the fact that decisions in other legal systems are not binding. However, it may be read as also confirming the converse position, that Privy Council decisions given when appeals lay to that body from Australia (and thus formed part of the Australian legal system) continue to bind, in the manner stated above. The fact that their Honours reserved the position of decisions of the House of Lords during that period as a potential special case tends to confirm this (for if the joint judgment was saying nothing about decisions which were binding, the first half of the sentence is otiose). That is contrary to the view expressed by McHugh JA, but his Honour's statement predated Cook v Cook. (The fact that the principal aspect of Cook v Cook was overturned by Imbree v McNeilly [2008] HCA 40; 236 CLR 510 does not alter the status of the passage of present relevance.)
16. Thirdly, and in any event, Malcolm CJ, with whom Pidgeon and Nicholson JJ agreed, took that approach in Rockwell Graphic Systems Ltd v Fremantle Terminals Ltd (1991) 106 FLR 294 at 301, stating that it was for the High Court and the High Court alone to determine whether to depart from a Privy Council decision which itself overturned a decision of the High Court. I see no compelling reason for this Court to depart from that approach.
17. I return to Gollan. Gollan was an appeal directly from this Court to the Privy Council, but in issue was the correctness of the decision of the High Court of Australia in Royal Sydney Golf Club on a different, but materially identically worded, statute. Gollan confirmed the correctness of the High Court's decision. I consider that it follows that it is to be treated as if it were an appeal from the High Court, such that it is for the High Court, and the High Court alone, not to follow the construction applied by it. Accordingly, Perilya was correct to proceed on the basis that Gollan continues to bind this Court.

Perilya's submissions and their response

1. Perilya's submissions on appeal substantially repeated those advanced before the primary judge. Grounds 2(a), 2(b) and (3) advanced separate points. Ground 1 was, in effect, the ultimate conclusion for which Perilya contended, and does not require separate attention.
2. In ground 2(a), Perilya contended that because minerals were reserved from the Crown grant, they remained in the possession of the Crown, and so were not included in "the land" in the expression "the fee-simple in the land" (in s 6A(1) of the Valuation Act). Perilya challenged the reliance by the primary judge on the definition of "land" in s 21 of the Interpretation Act 1987 (NSW). Perilya said that the Interpretation Act definition did not require the conclusion that minerals were included in the hypothetical fee simple of the land contemplated by the Valuation Act. Whether or not that is so, it is not to the point, in my view. His Honour's essential reasoning was that the Valuation Act requires a valuation of a hypothetical absolute or pure fee simple, disregarding reservations to the Crown (see the sentence immediately following the reference to the Interpretation Act definition reproduced at [48] above). That reasoning is, with respect, unimpeachable, in light of what was established by Gollan, and unaffected by the defined meaning of "land".
3. Ground 2(b) of Perilya's appeal contended that "a mineral reservation is an exception to the Crown grant, distinct from a 'reservation' in the other senses of that word". Perilya relied on the distinction explained by Windeyer J in Wade at 194 between an exception and a reservation: "in a strict legal sense reservations are not equivalent to exceptions". However, Perilya's submission acknowledged that Windeyer J had immediately gone on to say that: "But the words 'reservation', 'reserving' etc. are often used to mean a keeping back of a physical part of a thing otherwise granted: and so they are to be understood and have long been understood in the Australian law of real property".
4. Perilya submitted that Royal Sydney Golf Club did not address mineral reservations; its submissions were based on what was said in Royal Sydney Golf Club concerning the need to disregard encumbrances on the land, and emphasised that that said nothing about disregarding minerals. All this may be accepted, and, as will be apparent from the foregoing, I do not disagree with the proposition that Royal Sydney Golf Club does not determine this appeal. However, that is no answer to the dispositive decision, which is Gollan. Gollan goes further, and requires disregarding a reservation for the taking of gravel and stone.
5. I accept that there is a difference between a grant in fee simple subject to a reservation of minerals to a Crown grant, such that title to the minerals is never obtained by the grantee, and a grant in fee simple subject to a reservation permitting the taking of gravel or stone. But that is not to the point when it is observed that s 6A requires a valuation of the hypothetical fee simple. Gollan establishes that that hypothetical fee simple disregards conditions amounting to reservations in the strict sense, and also conditions attaching to the grant. Accepting Perilya's submission while at the same time applying Gollan would create what I would regard as an extraordinarily fine distinction: the hypothetical fee simple in s 6A would be taken not to be subject to a reservation of gravel on the actual title, but would be subject to a reservation of minerals if there was one on the actual title. Very clear language or compelling considerations would be required to achieve that unlikely outcome, and neither is present in s 6A. To the contrary, and especially in light of the long-familiar use, in grants and in Crown lands statutes, of "reservation of minerals", it is natural to conclude that the hypothetical fee simple is one which excludes a reservation of minerals.
6. Perilya submitted that: "[T]itle to or interest in land may exist outside the tenure and title of the Crown or other owner of the fee-simple in land, and outside the tenure and title of a registered proprietor of Torrens land in New South Wales - including, depending upon the circumstances in a particular case, (i) native title, (ii) the Crown's radical title, (iii) any subsisting prerogative rights of the Crown in respect of royal minerals, treasure trove and escheat, and, it is submitted (iv) the Crown's continuing title to minerals excepted from the Crown grant."
7. As much may be accepted for present purposes. But for many decades in New South Wales a fee simple has been capable of including minerals. Indeed, until 1884, the estate ordinarily did include non-royal minerals. As I mentioned in the earlier appeal at [28], from 1919 the Minister was empowered to grant a mining lease whose holder could mine privately owned minerals on land. Windeyer J described this in Wade at 195: "The means adopted involve a further, and quite radical, interference with the common law rights of a landowner. Even when he owns the minerals in his land he must suffer them to be mined unless he be active in mining them himself."
8. The fact that title to minerals may exist outside the estate of the owner of the fee simple in land does not, to my mind, detract from what is to be valued when the hypothetical fee simple contemplated by s 6A is considered. Consistently with Gollan, that hypothetical fee simple is an "absolute or pure title" which includes ownership of minerals.
9. Finally, Perilya submitted, in ground 3 of its appeal, that the Crown Lands Act 1989 (NSW) and its predecessors were laws of general application affecting the value of the land, which therefore were required to be taken into account in accordance with Royal Sydney Golf Club and recently confirmed by Valuer-General v New South Wales Golf Club at [36].
10. In support of this, Perilya relied on two earlier statements made by me, in order to submit that there was error in the primary judge stating that "[p]lanning statutes comprise, or are the prime example of" statutes affecting value by affecting enjoyment or use of land independently of all questions of title and ownership. In the Valuer-General's earlier appeal in this litigation, I said at [23] that "the Mining Act is a State law of general application to which regard must be had in considering the hypothetical fee simple defined in s 6A". More recently, in Valuer-General v Fivex Pty Ltd, I said at [15]: "It is clear that the provisions in the LEP which imposed maximum floor space ratios of 2.5:1 and 3:1 are public laws of general application, to which regard may be had in determining land value, even though they in fact apply to a very small part of New South Wales: Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610 at 624."
11. The general principle that the determination of land value (formerly, unimproved value) is subject to laws of general application is not in doubt. In order to apply that principle, it is necessary to distinguish between the actual title vested in the land owner, and laws of general application. The hypothetical fee simple contemplated by s 6A disregards limitations in the former, but has regard to limitations from the latter. I do not agree that planning statutes are the only example of generally applicable statutes to which regard must be had. But the reasons of the primary judge, fairly read, make it plain that his Honour regarded planning statutes as the prime example of, and not exhaustive of, this category of statutes of general application. I see no error in that statement.
12. In any event, the short answer to this submission is that although the reason for the reservation of minerals in the grants of land owned by Perilya is the Crown Lands Act and its predecessors, it is the reservations themselves, which are particular to Perilya's title, which are to be disregarded for the purpose of the hypothetical fee simple.
13. I conclude that Perilya's challenge to Perilya No 6 is not made out.

Ground 4 - the challenge to Perilya No 8

1. It will be recalled that the primary judge refused leave in Perilya No 8 to permit Perilya to rely on further evidence, constituted by the cost of "mining information", in the discounted cash flow methodology which would yield the valuation.
2. His Honour referred to the principles of finality and the court's statutory duty of expedition. The first reflected the limited nature of this Court's appellate jurisdiction in Class 3 proceedings, confined to questions of law. Although the proceedings were remitted by this Court in 2013, in the ordinary course findings of fact stand and ordinarily there is no basis to admit additional evidence unless the errors of law found on appeal otherwise require. In relation to the second, in addition to the obligations under s 56 of the Civil Procedure Act 2005 (NSW), s 38 of the Land and Environment Court Act requires proceedings in Class 3 to be conducted "with as much expedition" as statutory requirements and the proper administration of matters before the court permit. His Honour said, unsurprisingly in light of the procedural history, "These important principles have been under siege from both parties in the present case": at [36].
3. The primary judge relied upon several considerations weighing against Perilya's motions. The first was that it sought leave to contend for a large and contentious variation of the methodology, which was wholly outside of the matters raised by this Court in 2013. The second was that Perilya had already been refused leave to rely on the same evidence. True it is, as his Honour observed, that Perilya had been refused leave as a consequence of the Valuer-General being refused leave to change his methodology. Even so, his Honour was of the view that it would not be even handed to grant Perilya's motion without allowing the Valuer-General the further opportunity to seek to rely upon his methodology. His Honour observed that "that would substantially take the case back to where it started - after four years": at [39].
4. The third was that the application was made a little more than a week prior to the hearing, which had been allocated by consent. His Honour was of the view that it was "almost certain" that the hearing dates would have to be vacated if Perilya's motion was granted. His Honour expressly had regard to a costs order in favour of the Valuer-General, and concluded that it would not be an adequate answer.
5. No challenge at all was made by Perilya to any of those three considerations relied upon by the primary judge.
6. The primary judge observed, as a fifth matter, that the only question at stake at the hearing was the Valuer-General's original 2007 assessment. His Honour observed that the Valuer-General's proposed new owner/operator methodology (contending for a valuation of in excess of $300 million) and Perilya's proposed mining information evidence (contending for a cost of mining information of almost $300 million) could be ventilated in relation to the valuation years after 2007. Even so, his Honour accepted that the 2007 assessment had substantial financial consequences for Perilya, because of its impact upon council rates. This consideration was favourable to Perilya. Again, it was not impugned on appeal.
7. The only aspect of his Honour's decision to dismiss Perilya's motion which was the subject of challenge on appeal was the fourth consideration. His Honour expressed that matter as follows at [41]: "Fourthly, I do not accept Perilya's submission that it would be an error of law under s 6A of the Valuation of Land Act not to take account of its new mining information evidence. This submission is contrary to its implicit stance until very recently, which was that it only sought leave to rely on mining information evidence in response to the Valuer-General's new methodology, thus signifying it was not required by law to be taken into account generally. In any event, in my opinion it is no part of the interpretation of s 6A that it is mandatory to consider the proposed mining information evidence. It is purely a matter of evidence and not of law. In effect, Perilya is seeking to introduce a new costs item in the spreadsheet attached to Lloyd AJ's judgment."
8. Perilya contended that there was error of law in the statement that: "It is no part of the interpretation of s 6A that it is mandatory to consider the proposed mining information evidence."
9. This is not an appeal by way of rehearing. In order to succeed in its appeal confined to a question of law, Perilya must show vitiating or operative error of law in the primary judge's dismissal of its motion on 5 May 2015: see Sydney Water Corporation v Caruso [2009] NSWCA 391; 170 LGERA 298 at [8]-[27] and [108]-[112] and Workers Compensation Nominal Insurer v Adnan Al Othmani [2012] NSWCA 45 at [92]-[96]. The sentence to which Perilya's submissions were directed was included in one of five paragraphs relied upon to make a discretionary decision relating to the case management of litigation with an unusually protracted history. Moreover, the sentence impugned by Perilya was, on its face, supplementary. It commenced "in any event". No challenge was made, nor could a challenge be made, to the observation that for more than a year beforehand, Perilya had only sought leave to rely upon the mining information defensively, which was expressed to be the principal consideration in this paragraph.
10. However, what is ultimately dispositive is that, as the primary judge expressly stated, Perilya No 8 was a rejection of Perilya's application to adduce further evidence. It is not to the point to submit that, had such evidence been admitted, there may have been an error of law in disregarding it. The decision was a product of the particular and unfortunate procedural history of this litigation, and prevented the evidence being tendered. It does not disclose any error of law.

Orders

1. For those reasons, I propose that the appeal be dismissed, with costs.

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