Port of Portland Pty Ltd v Victoria

Port of Portland Pty Ltd v Victoria - [2010] HCA 44 - HCA 2010 case summary — Zoe

[24]

In this Court, the appellant (like the intervener, the Attorney‑General of Western Australia) accepts that: (a) there applies in Victoria the constitutional principles associated with the treatment in England by the Convention Parliament in the Bill of Rights[6] of the endeavours of King James II (in Scotland styled King James VII) to subvert the laws and liberties of the Kingdom by assuming and exercising a power of dispensing with and suspending of laws and the execution of laws without the consent of the Parliament at Westminster; and (b) in particular, there applies in Victoria the prohibition expressed in s 12 of the Bill of Rights that no executive "dispensation by non obstante of or to any statute or any part thereof shall be allowed but that the same shall be held void and of no effect except a dispensation be allowed" of by statute.
The terms in which the Bill of Rights was expressed ("as it [the dispensing power] hath been assumed and exercised of late") may have been adopted to preserve the prerogative to pardon offences after they were committed[7]. They may also have been directed to the misuse by King James II of what previously had been the convenient means provided by the dispensing power of relieving against the operation of outdated, ill‑drawn and ill‑advised statutes. A consequence of the Bill of Rights was that thereafter full responsibility for the drafting of statutes fell to the Parliament[8].
The Convention of Estates of the Kingdom of Scotland had enacted its own Claim of Right Act 1689, c 28[9]. This, whilst declaring that King James VII had forfeited the Crown, in presently relevant respects followed the Bill of Rights[10]. No legislation was passed by the Irish Parliament[11] and the extent to which the constraints imposed by the Bill of Rights (particularly respecting the dispensing power) operated upon the exercise of executive power in Ireland remained unclear[12].
The constitutional rearrangements made by the Convention Parliament had the effect in England, and thereafter in the United Kingdom, of settling the scope of the executive power in various respects. In Australia it was with these limitations upon the executive that the constitutions of the States took their shape[13]. The position in the colonies is considered as follows by Justice McPherson in his work The Reception of English Law Abroad[14]:

[27]

The appellant does not place at the foundation of its case against the State par (a) of cl 11.4, with its reference to the effecting by the legislature of an amendment to the land tax laws. This makes it unnecessary to determine whether Nettle JA was correct in the view that par (a) should be construed as imposing an obligation upon the executive limited to what it could lawfully and effectively do to procure the passage of the legislation to which par (a) refers. The appellant places its case upon par (b) of cl 11.4, and submits that it is sufficient for its case to characterise the failure to legislate as specified in par (a) as no more than the factum for the operation of par (b). This submission should be accepted. It enables the appellant to skirt any issue that par (a) is void as an attempt to fetter by contract the exercise as the State legislature sees fit of the power provided by ss 15 and 16 of the Constitution Act 1975 (Vic). Section 15 vests the legislative power of the State in the Parliament and s 16 identifies that power as one to make laws in and for Victoria in all cases whatsoever.
Upon the factum supplied by failure to legislate as described in par (a), par (b) operates if the appellant is assessed to land tax at the higher rate referred to in par (b), whether this is in respect of an assessment before or after completion. In those circumstances, the difference is to be borne by the State, whether by refunding money paid or by allowance in computation of what is payable but unpaid. The payments are made by way of adjustment in the price for sale of public assets and do not have the character of a dispensation from the operation of the land tax legislation. Further, and in any event, the Authority Act supplied legislative support for the entry by the State into and performance of the obligation in par (b) of cl 11.4.
The Authority was obliged by s 42(2A) of the Authority Act to pay the proceeds of sale received on completion of the Contract to a fund established by that section, but subject to directions given by the Treasurer under sub‑ss (2B) and (2C). Under those provisions the Treasurer was empowered to direct payment of any specified part of the proceeds into the Consolidated Fund established and kept under s 9 of the Financial Management Act 1994 (Vic).
The adjustments for which cl 11.4(b) provided qualified what otherwise would be the operation of the financial arrangements under the Authority Act for the sale of the assets of the Authority at the direction of the Treasurer under s 4A(1) of that statute. The Direction was supported by s 4A(1) and drew the terms of the Contract, including cl 11.4(b), into the operation of the legislative scheme for "privatisation".
The upshot is that the plea by the State based upon constitutional principles emphasising the control by the legislature of the executive, particularly in revenue matters, was effectively confessed and avoided by the appellant. The "statutory backing" to the Contract, to use Windeyer J's words in Placer Development Ltd v The Commonwealth[18], sufficiently supported the obligation of the State under cl 11.4(b). Judgment against the State would be satisfied by the appropriation provided for under s 26 of the Crown Proceedings Act.

[31]

The State contends that the condition for the operation against it of cl 11.4(b) was not satisfied because an amendment meeting the description in par (a) became law upon the commencement of the State Taxation (Omnibus Amendment) Act 1996 (Vic) ("the Omnibus Amendment Act"). Section 27 of the Omnibus Amendment Act amended the definition of "improvements" in s 2(1) of the Valuation of Land Act 1960 (Vic) ("the Valuation Act") and inserted s 2(2AA). The effect of the amendment was that "[w]orks relating to a port, being buildings, breakwaters, berths, wharfs, aprons, canals or associated works" were improvements within the meaning of the Valuation Act.
The "site value" of land, as defined in s 2(1) of the Valuation Act, was calculated upon the fictitious assumption that any improvements to land had not been made. However, "improvements" was defined so as not to include "work done or material used for the benefit of the land by the Crown or by any statutory public body". By reason of provisions[20] in the Land Tax Act, "the site value", adjusted in accordance with s 3(4) of that Act, was the value of land upon which land tax was assessed. As the law stood at the time of the Contract, the land tax payable was to be calculated by reference to "the site value" which would have included numerous improvements at the Port.
The amendment to the Valuation Act came into force on 25 June 1996[21], being the day on which the Omnibus Amendment Act received Royal Assent[22]. However, by reason of the time scale for the making of periodic valuations of land, the appellant contends that the amendment did not ensure that the value of the works described in cl 11.4(a) were excluded from the value of the land upon which land tax was calculated for the 1997-2001 calendar years.
The submissions of the State in response are that: (a) once the amendments were enacted the contractual obligation was discharged; and (b) if, as the appellant contends, the obligation of the State went further and was to ensure that the amendments had an immediate effect upon land tax liability of the appellant, then they had, or at least were capable of having, that effect. The State seeks to make good that second submission by way of two propositions: the first is that a supplementary valuation for the main port area for the 1997-2001 tax period was made which excluded the works declared to be improvements in s 2(2AA); and the second is that the appellant was entitled to object, pursuant to the Valuation Act, to the valuation of the land it had acquired, and on review the operation of s 2(2AA) would have been a mandatory consideration.
Before further consideration of the competing submissions of the parties, it is convenient to say more regarding the land acquired by the appellant and the structure of the statutory scheme for the imposition of land tax in Victoria.

[32]

Under the Contract, the appellant acquired approximately 115 hectares of unalienated Crown land. The main port area, known as Barton Place and comprising approximately 68 hectares, was largely occupied by the Authority and subsequently the appellant. The balance of the main port area, and the remaining land acquired, was subject to leasehold interests. For ease of reference, all of Barton Place will be referred to in these reasons as "the main port area", that part of the land in the main port area occupied by the Authority and then the appellant shall be referred to as "Barton Place", and that part of the main port area subject to leases, as well as the rest of the acquired land, as "the leased land".
The leased land and approximately 37 hectares of Barton Place were situated in the municipal district of the Shire of Glenelg ("the Shire"). By an Order in Council dated 21 January 1997[23], the municipal district of the Shire was extended to include land from the high water mark to 200 metres seaward, with the effect that, from 24 January 1997, the size of Barton Place within the Shire increased to approximately 49 hectares.
Before acquisition by the appellant, Barton Place, as land vested in a public statutory body and used for public purposes, was land exempt from municipal rates by reason of s 154(2) of the Local Government Act 1989 (Vic) ("the Local Government Act"). Accordingly, Barton Place had never been valued for municipal rating purposes. The significance of this lies in the reliance upon valuations made for municipal rating purposes in the assessment of land tax under the Land Tax Act. Upon the appellant acquiring Barton Place in 1996 the exemption from municipal rates no longer applied. From 24 January 1997 a further 12 hectares, approximately, of Barton Place then also fell within the boundaries of the Shire. It appears that those 12 hectares, being land below the high water mark, were not formerly within any other municipal district and so had not been rateable.

[33]

Land tax was assessed by reference to the "site value" of land as at the "relevant date"[24]. For the purposes of assessing and levying land tax, the Commissioner of State Revenue[25] was permitted to use valuations made by a rating authority within the meaning of the Valuation Act[26]. Section 2(1) of the Valuation Act provided that a "council" within the meaning of the Local Government Act was a rating authority, the relevant rating authority here being the Shire. Section 157(1) of the Local Government Act permitted a council, such as the Shire, to use the site value system of valuation. That is one of the valuation systems used by the Shire and was relevant to the assessment of land tax.
Section 3(2A) of the Land Tax Act provided that, for land within the municipal district of a municipal council, the "relevant date" for valuation was generally the date as at which the land was valued for the purposes of the last "general valuation" returned to the municipal council before 1 January in the year immediately preceding the year for or in which land tax was being assessed. The term "general valuation" was not defined in the Land Tax Act but, given the definition of "supplementary valuation" in s 3(6) and the interrelation between the two Acts, it clearly referred to a "general valuation" as defined in s 2(1) of the Valuation Act; namely, "a valuation of all the rateable land in the area of a rating authority or in any one or more subdivisions of such an area".
Prior to amendments made in 1998[27], s 13DC(5)(b) of the Valuation Act required a valuation of rateable land within a council's municipal district to be made and returned every six years. Despite the absence of the term "general valuation" in s 13DC(5)(b), it was clearly contemplated under the statutory regime that councils such as the Shire would conduct a general valuation every six years, and that in the intervening periods supplementary valuations could be carried out under s 13DF of the Valuation Act in certain circumstances[28]. Both s 13DC and s 13DF appeared in Pt 2, Div 3A of the Valuation Act, which was headed "Valuations for Local Government Act 1989". Division 3A was inserted in 1989[29], the year the Local Government Act was enacted.
The date of the last general valuation for land within the Shire before the making of the Contract was 30 June 1993. Most of the leased land had been valued as at, or near to, that date. Barton Place was valued, for the first time, by Mr McDonald, the valuer for the Shire, in his supplementary valuation of 7 March 1997. He valued the site value of Barton Place as at 30 June 1993 as $2,050,500. By reason of a change in the size of Barton Place, a further supplementary valuation was returned on 28 June 2000 assigning a site value of $2,044,800. These two figures for site value were used as the basis for calculating the land tax payable by the appellant on Barton Place for the years 1997-2001. The State contended, and the appellant accepted, that no supplementary valuation was carried out for the leased land, but it appears that some of the leased land had supplementary valuations. If that is so, the reasons below concerning the effect of any supplementary valuations of Barton Place on cl 11.4 are equally applicable to any supplementary valuations of parts of the leased land.
The amendments to the Valuation Act in 1998 meant that the next general valuation did not take place until a valuation was made as at 1 January 2000, and would thereafter be made at two-year intervals. Mr McDonald returned a site value for Barton Place of $2,044,800 as at 1 January 2000. After an objection was lodged by the appellant, that figure was significantly reduced by Mr McDonald to $221,000 and subsequently confirmed by the Valuer-General. The appellant's contention, disputed by the State, is that the reduction in value was due to the proper exclusion of the s 2(2AA) improvements to arrive at the latter figure.
But in this Court the question to be resolved is whether Mr McDonald's supplementary valuation in March 1997, or indeed any other supplementary valuations, could have excluded from the site value of Barton Place, or parts of the leased land, the improvements referred to in s 2(2AA) of the Valuation Act as amended from 25 June 1996. If it could not have done so, then no change to the law was made which ensured that those improvements, on the assumption they correlated with what was required by cl 11.4(a), were excluded from the site value. It would then follow that the State was in breach of its obligation under cl 11.4(b) of the Contract.

[37]

The State submits that sub-s (1) provided a general power for a supplementary valuation to be made and that pars (a) to (o) of sub-s (2) did not limit the exercise of that power to the circumstances there listed. The State contends that if sub-s (2) was an exhaustive list of circumstances in which a supplementary valuation could be made, then sub-s (1) would have no work to do.
Section 13DA(1) provided that a council "may appoint" persons to make "valuations under this Act for the purposes of the [Local Government Act]" (emphasis added). That provision meant that, at least as the Valuation Act then stood, a supplementary valuation was to be carried out by the same class of valuers entitled to carry out a general valuation in accordance with s 13DC. However, the work performed by s 13DF(1) was to stipulate that a supplementary valuation could be made without the need to undertake a general valuation of all rateable land within the area of a rating authority. It could be made despite any prohibition or restriction on the making of supplementary valuations that might have existed (but does not then appear to have existed) in the Local Government Act or any other Act, but only in the circumstances found in sub-s (2).
The interpretation of sub-s (2) as providing an exhaustive set of circumstances should be accepted. It is supported by the terms of sub-ss (4) and (5) of s 13DF. These subsections dealt with the adjustment of any rate payable in relation to the land consequent on the making of a supplementary valuation. Sub-section (4) provided that where a supplementary valuation was made in any of the circumstances in sub-s (2), other than par (o), the rate was to be adjusted from the day after the supplementary valuation had been returned. Where par (o) applied, sub-s (5) provided the different result that the rate may be adjusted by the council retrospectively for any period it considered just. If a general power could also be exercised under sub-s (1), how then, temporally, would the rate of land tax be adjusted in consequence?
An alternative argument by the State was that, in the circumstances, either par (e) or par (n) of s 13DF(2) was engaged. Paragraph (e) allowed the making of a supplementary valuation "if any land has become rateable since the return of the existing valuation". That certainly enabled a supplementary valuation to be made in the present case as 37 hectares of Barton Place only became rateable upon the appellant's acquisition of the land under the Contract and the loss of the exemption enjoyed by the Authority. A further 12 hectares became rateable only upon the Order in Council extending the Shire boundary. Thus, in two separate stages, the approximately 49 hectares of Barton Place within the Shire had become rateable since the return of the "existing valuation", being the last general valuation for the Shire. Whether par (n) was engaged is a matter of dispute to which it will be necessary to return below.

[51]

Section 220Q of the Local Government Act empowered the making of the Order in Council, published in the Government Gazette on 23 January 1997, that extended the boundaries of the Shire so as to include a larger portion of Barton Place. The point made by the State is that the source of power to make the Order in Council was located in the Local Government Act and that it was unnecessary to rely upon a power to do so implied by the terms of par (n) of s 13DF(2) of the Valuation Act. The State notes that the Order in Council specified the area which now fell within the Shire boundary; approximately 49 hectares of Barton Place was land in that area, and its site value was or was likely to have been materially altered as a consequence of an Act, namely, the Omnibus Amendment Act. If par (n) was engaged then the valuer was required under s 13DF(6)(b) to have regard to the amendment made by the Omnibus Amendment Act, this being the circumstance enlivening the power to make the supplementary valuation.
As stated above[31], par (e) contained the "reason" why the power to make a supplementary valuation in relation to Barton Place became exercisable, but that was not a reason why the site value was or was likely to have been materially altered. The introductory words of par (n) appear to be directed at excluding from its scope matters to which one of pars (b), (g), (i) or (l) would already apply. Those paragraphs applied to alterations to value linked to the operation of particular Victorian statutes[32].
The Victorian Parliament might have chosen in s 13DF(2) to provide that any amendment to the law with a consequential effect on land value was a circumstance engaging the power to make a supplementary valuation. However, the evident legislative purpose in sub-s (2) is that not all changes in land value consequent on a change in, or the operation of, the law will enable a valuation outside of the periodic cycle of general valuations. Changes in value as a consequence of the operation of the particular statutes identified in pars (b), (g), (i) or (l) will enliven the power to make a supplementary valuation. Changes in value as a consequence of the operation of any other statute, proclamation or subordinate instrument are then dealt with in the residual category in par (n). But the requirement for an Order in Council performs a limiting function. Paragraph (n) does not provide that changes in consequence of any statute, proclamation or subordinate instrument will suffice. The land must be specified in an Order in Council, or must be in an area specified in an Order in Council. The power to make such Orders in Council for the purposes of par (n) is impliedly conferred by that paragraph itself[33]. If an Order in Council is made pursuant to par (n) of s 13DF(2) of the Valuation Act there can be no dispute that par (n) applies, but a bare reference in any Order in Council to an area of land, or a specification of an area of land for some purpose unconnected with par (n), will not suffice.
There are good reasons why this is so. The inclusion in par (n) of sub-pars (i) and (ii) clearly contemplates that the executive retains a discretion to decide which changes in the statute law and delegated legislation will engage the power to make a supplementary valuation. It would be an odd and somewhat arbitrary criterion which provided that whenever there was, by coincidence or otherwise, a reference to an area in an Order in Council published in the Gazette the power in par (n) would be engaged with respect to land within that area, but that, absent such an adventitious reference, the power would not be engaged. The introductory words of par (n) are of importance; they confirm that changes in value consequent on the operation of laws specified by the legislature in other paragraphs of s 13DF(2) need not satisfy the additional Order in Council requirement in par (n).
Moreover, there are many and varied ways in which land or an area of land may come to be "specified" in an Order in Council published in the Gazette. The description of municipal boundaries is but one example and demonstrates the ease with which a vast amount of "land in any area" might come to be specified in an Order in Council. If no element of purpose were required, and given that no temporal limit is imposed, many Orders in Council made without s 13DF(2)(n) being in view nonetheless would have an impact upon the operation of the paragraph.
It follows that upon its proper construction par (n) only applies where: (i) the capital improved value, net annual value or site value is or is likely to have been materially altered; (ii) the reason for that alteration is not found in pars (a) to (m); (iii) the alteration is as a consequence of any Act, proclamation, Order in Council, regulation, by-law or local law; (iv) an Order in Council has been made specifying the relevant land or specifying an area in which the relevant land is located; and (v) that Order in Council was made pursuant to, or for the purposes of, par (n).
Thus the State's argument that par (n) was engaged fails at point (v). The Order in Council extending the boundaries of the Shire was made pursuant to powers conferred by s 220Q of the Local Government Act and not pursuant to par (n) as a requisite to enliven the power to make a supplementary valuation. There was no sufficient statutory nexus or connection between the extension of the Shire boundary (to include a further 12 hectares of Barton Place) from 24 January 1997 and the coming into force of the Omnibus Amendment Act on 25 June 1996.
Given that no supplementary valuation of Barton Place could have taken the Omnibus Amendment Act into account, it is unnecessary to consider the appellant's further submission that Mr McDonald's valuation was invalid for want of compliance with the prescription of the powers and duties of valuers which is made by s 13DH of the Valuation Act.
It follows that, in relation to Barton Place (or, applying the same reasoning, in relation to any part of the leased land the subject of a supplementary valuation), the State did not ensure that the legislative amendments excluded the improvements described in cl 11.4(a). The amendments could not be taken into account in any supplementary valuation. No different result would obtain on an objection or review of the supplementary valuation for the reasons outlined below. The position with respect to the balance of the land acquired by the appellant is the next issue for determination.

[53]

Section 24A of the Land Tax Act provided the taxpayer with a right to lodge with the Commissioner of State Revenue an objection to an assessment of land tax, but no objection lay under that section relating to the site value of land where the assessment was based on a valuation made under the Valuation Act. Part 3, Div 4 of the Valuation Act provided for a separate regime whereby a written objection could be lodged with the rating authority, here the Shire. The objection regime was replaced in 1998[34], but for present purposes both regimes were, at a general level, to the same effect. References here are to the provisions as they stood prior to the 1998 amendments.
Section 36 provided that one of the grounds on which a valuation could be challenged was that the value assigned was too high. Section 37(3)(b) provided for the time within which an objection could be lodged, depending on whether the valuation appeared for the first time, or had appeared in a notice previously given by the Shire. Section 48 applied if for any reason a notice of valuation of land had not been given to the appellant under s 37. In such a case, the appellant would have had an opportunity within two months of receipt of its first notice of assessment to land tax for the leased land to object to the valuation of the land on any of the grounds in s 36 (s 48(1)). The provisions in Pt 3, Div 4 would then have applied as if an objection had been made under that Division (s 48(3)).
The appellant referred to what was said by Nettle JA in Melbourne City Council v Port of Melbourne Corporation[35]. This was a case concerning the equivalent provision to s 48 after the 1998 amendments. But what his Honour said there is entirely consistent with the proposition that if the appellant had not been given a notice of valuation of the leased land, then upon it receiving a notice of assessment to land tax, including land tax payable on the leased land, the appellant had a fresh time period in which to challenge the valuation of the leased land[36]. Nettle JA held that such a challenge would be limited to only those valuations of land of which the taxpayer had no notice and could not extend to other valuations of land the subject of the same notice of assessment, for which the taxpayer had already been given notice[37].
Accordingly the appellant enjoyed a right of objection against the valuation of the leased land that would have been governed by Pt 3, Div 4 of the Valuation Act. In the event, however, the appellant did not so object, and the time limit for doing so has long expired.

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