Held, answering the questions of law and making consequential consent orders:

• The ordinary meaning should be given to the words of the definition of 'site value'. The telecommunications tower facility falls within the definition of 'buildings and structures' under 'improvements' and is excluded from the calculation of the site value;
• The word 'unencumbered' in the definition of 'site value' does not have a technical meaning. Whether a lease is an encumbrance falls upon the terms of a particular lease and whether the effect of the terms was desirable in the marketplace. As agreed by the parties, the leases are not encumbrances under the definition of 'site value';
• The value of the leases should be accounted for in the site value of the land as the agreed position of the parties that the leases are not encumbrances can be taken to mean that the leases do not have a depreciatory effect on the market value of the land; and
• In light of the answers to the questions of law, it is appropriate to make consequential orders by consent that the site value of the land as at 1 January 2018 should be varied to $240,000.

Administrative Review - Valuation of Land Act 1971 - Decision of a land valuer upon a review - Question of law - Definition of site value

South Australian Civil and Administrative Tribunal Act 2013 s 26

Valuation of Land Act 1971 (SA) ss 5, 22A, 25B, 25C

Statutes Amendment (Valuation of Land) Act 1981 (SA) s 6

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Harry v Valuer-General (1975) 12 SASR 446

Brisbane City Council v Valuer-General (Qld) [1978] HCA 40; (1978) 140 CLR 41

Sherritt Gordon Mines Ltd v FCT [1977] VicRp 42; [1977] VR 342; (1976) 10 ALR 441

Douglas v Tickner [1994] FCA 1066; (1994) 49 FCR 509; 34 ALD 192, 203

Gardner v R [2003] NSWCCA 199; (2003) 39 MVR 308

McDonald v. Deputy Federal Commissioner of Land Tax (N.S.W.) [1915] HCA 54; (1915) 20 CLR 231

Perpetual Trustee Co Ltd v Valuer General; Trust Co of Australia Ltd v Valuer-General (No 2) [2007] SASC 340; (2007) 99 SASR 251

Wallace v Love [1922] ArgusLawRp 91; (1922) 31 CLR 156

Trust Co of Australia Ltd v Valuer-General [2008] SASC 169; (2008) 101 SASR 110

Mr B Hayes QC with T Flaherty instructed by Hilditch Lawyers for the applicant

Mr S O'Flaherty, Crown Solicitor's Officer, for the respondent

Made under the South Australian Civil and Administrative Tribunal Act 2013 s 26

1. This matter concerns a parcel of land in Whyalla Norrie owned by the applicant, Mr Wood.
2. Mr Wood considers that the value attributed to the land by the Valuer-General is incorrect. That value is a determinant of the quantum of Mr Wood's liability to pay land tax in relation to the land.
3. There are two telecommunications facilities on the land. At the heart of this dispute is the effect of these facilities and the associated leases permitting their presence.
4. The parties ascertained between themselves that their dispute can be distilled to a question of law, which this decision determines.

1. The applicant has initiated his application for a review of the Valuer-General's decision pursuant to s 25C of the Valuation of Land Act 1971 (SA) ('the Act'). That section confers jurisdiction on SACAT to determine such a review, within its review jurisdiction which is governed by Division 3 of Part 3 of the South Australian Civil and Administrative Tribunal Act 2013 ('the SACAT Act').
2. The parties agreed that the proceedings were to be heard as a question of law under s 26 of the SACAT Act, and that once the question of law is determined, the Tribunal (constituted by a Presidential member) might then make consequential orders based on agreed facts.
3. The question of law requires consideration of the proper interpretation of the term 'site value' under s 5 of the Act.

1. The parties submitted a statement of agreed facts. They, and other non-contentious propositions, are summarised below.
2. The land that is the subject of these proceedings is located at 61-65 Norrie Avenue, Whyalla Norrie SA 5608 and is contained in Certificate of Title Volume 6086 Folio 731 ('the Land'). The applicant is a joint owner and proprietor of the Land.
3. The land is described in the Value Objection Analysis Report 2018-2019[1] dated 28 September 2018 as follows:[2]

The subject property is located approximately 4 kilometres north west of the Whyalla CBD within the suburb of Whyalla Norrie. The subject property has frontage to Norrie Avenue which is a busy main road which intersects Whyalla from north to south. The corner allotment also has frontage to William Street. Surrounding development comprises a mixture of commercial and residential uses.

The property is zoned Local Centre. The property's current use is considered to be its highest and best use.

The site is a corner allotment, regular in shape with a level contour. The site has dual access to Norrie Avenue. The subject site has mixed use surrounds and has good exposure.

The subject property comprises one title including two allotments.

The improvements on the site include a circa 2013 built workshop/showroom of approximately 746 square metres of iron construction and generally good condition. The property is currently tenanted by MM Electrical who recently renewed their lease commencing 1/4/2018 for 5 years at an annual rental of $55,000.

Other improvements include two telecommunication towers, with one each being owned by Telstra and Optus. Each tower is subject a ground rental with Telstra commencing a 10 year lease in 2010 with a current passing rental of approximately $12,299pa. Optus commenced a 5 year lease in 2015 with a current passing rental of approximately $5,464 pa.

1. The lease area for the 2 telecommunications companies is 48 square metres.[3] The lease area for MM Electrical is 2,295 square metres.[4]
2. Parts of the Land are subject to three existing leases. The respective lessees are Telstra Corporation Ltd ('the Telstra Lease'), Optus Mobile Pty Ltd ('the Optus Lease'), and Metal Manufactures Ltd ('the Metal Manufactures Lease').
3. On the land subject to the Telstra Lease, a telecommunications facility comprising of a telecommunications equipment shelter and a telecommunications tower has been built ('the TTF'). A diagram of the tower in the lease depicts it as a single pole with a height of approximately 30 metres and antennae at the top.[5] At the base is an equipment shelter which appears to be a room on a concrete pad footing of approximately 6.5 m by 5 metres. A cyclone fence of approximately 2 metres in height with an access gate encircles the base, shelter and tower, presumably to prevent unauthorised access.
4. The equipment shelter described above was erected and co-located with the tower under the authority of the Optus Lease.
5. The Telstra and Optus Leases together yield $17,027 per annum plus GST by way of combined gross rental to the applicant.
6. The Metal Manufactures Lease confers a right to occupy and use improvements that form part of the estate in fee simple land, however this lease is not significant to the present proceedings.
7. Each lessee must remove any construction upon the expiry of their respective lease within a prescribed period.

1. On 1 January 2018, a delegate of the Valuer-General performed a general valuation of the Land under s 11 of the Act and found the site value of the Land to be $260,000. The site value calculated by the Valuer-General incorporated the value of the Telstra Lease and the Optus Lease.
2. 1 January 2018 is the valuation date for the purposes of these proceedings.
3. The applicant sent an application for an objection to the valuation of the site value on 3 August 2018. On 12 November 2018, the Deputy Valuer-General confirmed the valuation of $260,000 and disallowed the objection.
4. On 29 November 2018, the applicant applied for a review of the valuation by an independent valuer pursuant to s 25B of the Act on the basis that the value of the Telstra Lease and the Optus Lease should not have been taken into consideration in the calculation of the site value of the Land. As the objection made by the applicant concerned the interpretation of 'site value' under the Act, the independent valuer declined to perform a valuation as it involved a question of law.[6]
5. The applicant brought these proceedings in SACAT, seeking a review of the Valuer-General's valuation pursuant to s 25C of the Act.
6. The parties agree that the issue for determination is whether the Valuer-General should have taken account of the value of the Telstra Lease and the Optus Lease in determining the 'site value' of the Land.

1. The parties propose that the proceedings require the determination of the following three questions:

(a) Is the Telstra Telecommunications Facility an 'improvement' of the subject land within the meaning of 'site value' under s 5 of the Act?

(b) Are the Telstra Lease and the Optus Lease encumbrances upon the subject land within the meaning of 'site value' under s 5 of the Act?

(c) Should the effect of either or both of the Telstra Lease and the Optus Lease be taken into account when determining the 'site value' in accordance with s 5 of the Act?

1. Before considering the parties' contentions, it is convenient to describe certain aspects of the statutory regime.
2. The Valuer-General is an independent statutory officer who is required to undertake "general valuations of land within areas of the State".[7] To achieve a general valuation, the Valuer-General is required to determine, for each parcel of land, its annual value, capital value, site value and unimproved value so far as those values are required for levying or imposing any rate, tax or impost. General valuations must be made within each area at least once every 5 years.[8]
3. Upon being served with a notice of a valuation that is in force with respect to land, the owner or occupier may object to the valuation by notice to the Valuer-General, who must consider and decide upon the objection.[9]
4. The owner may, if still dissatisfied after determination of the objection, seek a review of the valuation by a valuer appointed to a panel by the Governor for such purpose. The review by the valuer must be confined to questions of fact and must not involve questions of law.[10] On 10 September 2019, the independent valuer informed the Office of the Valuer-General of the following:[11]

Further to the conversation I have had with Anthony and Darren, I believe the owner is disputing the Definition/Interpretation of the Site Value Definition, in particular the definition of "unencumbered".

I will therefore need to return the request for review and await further advice in relation to the above.

1. A Presidential Member of SACAT is empowered to determine questions of law with respect to the jurisdiction it exercises.[12]
2. The task of determining the questions posed by the parties requires consideration of the various definitions in the Act of the types of value that must be ascribed to land, and in particular, the proper meaning of the term 'site value'.
3. The starting point is the definition of the base term 'value'. Section 5(1) of the Act defines 'value' as follows:

value in relation to land means the annual value, the capital value, the site value and the unimproved value of the land or any one or more of those values; to value means to determine or assess those values or any one or more of them; and determination of value or valuation means a determination or assessment of those values or any one or more of them.

1. The definition reveals four species of value under the statutory scheme; that which is relevant to this matter is the 'site value'. They are each defined.
2. The Act defines 'site value' as follows:

the capital amount that an unencumbered estate in fee simple in the land might reasonably be expected to realise upon sale assuming that any improvements on the land, the benefit of which is unexhausted at the time of valuation, had not been made; for the purposes of this definition -

(a) improvements means -

(i) buildings and structures (but not including structures in the nature of site works); and

(ii) wells, dams and reservoirs; and

(iii) the planting of trees for commercial purposes;

1. The definitions of certain other types of value are also relevant because a proper interpretation of 'site value' is achieved when it is understood in its context including by reference to similar, overlapping, or opposing concepts in the same legislation.[13]
2. 'Capital value' is defined as:

the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale, but if the value of the land has been enhanced by trees planted on the land (other than commercial plantations), or trees preserved on the land for the purpose of shelter or ornament, the capital value must be determined as if the value of the land had not been so enhanced;

the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale assuming that any improvements on the land (except, in the case of land not used for primary production, any site improvements), the benefit of which is unexhausted at the time of valuation, had not been made; for the purposes of this definition -

(a) improvements means houses and buildings, fixtures and other building improvements of any kind whatsoever, fences, bridges, roads, tanks, wells, dams, fruit trees, bushes, shrubs and other plants planted or sown, whether for trade or other purposes, draining of land, ringbarking, clearing of timber or scrub and any other actual improvements;

(B) site improvements means reclamation of land by draining or filling, and any retaining walls or other structures or works ancillary to that reclamation, the excavation, grading or levelling of land, the removal of rocks, stone, sand or soil, and the clearing of timber, scrub or other vegetation;

1. The 'annual value' is significantly dissimilar to the other three types of value as its assessment requires a consideration of the rent that might be reasonably realised if the land were leased upon particular conditions.[14] No further consideration of it is required at this stage.
2. Under the Act, the Valuer-General is tasked with providing general valuations of land which entail determining 'the annual value, the capital value, the site value and the unimproved value of the land so far as those values are required for the purpose of levying or imposing any rate, tax or impost'.[15] Therefore, the purpose of ascertaining one or more of these four types of value is to facilitate with the determination of a form of State or council-based taxation of the land that may be imposed.[16]
3. As described above, each of the capital value, the site value and the unimproved value outline particular amenities and features on the land that are to be excluded from consideration in the valuation task.
4. The capital value is assessed disregarding only enhancements to the land's value caused by trees planted or preserved on the land for shelter or ornament (other than commercial plantations).[17]
5. The site value is assessed disregarding buildings, structures (not including structures for site works), wells, dams, reservoirs and trees that have been planted for commercial purposes.
6. The unimproved value is assessed in a manner that excludes 'fruit trees, bushes, shrubs and other plants planted or sown, whether for trade or other purposes', 'buildings, fixtures and other building improvements of any kind whatsoever', and 'wells [and] dams'.[18] It also requires that anything else that can be regarded as an 'actual improvement' be excluded from the assessment. The unimproved value therefore appears to be directed at valuing the land itself without any features or amenities that may have been planted on, affixed to or installed on the land which have improved the land's market value.
7. Against that general background, consideration can be given to the questions posed by the parties and their submissions as to the appropriate answers.

1. The Applicant submitted that the Valuer-General ought to have disregarded the value of the TTF and the leases when assessing the site value of the land.
2. This conclusion follows from a finding that the TTF is an improvement, and that as such is required to be disregarded in the calculation of site value. The TTF is an improvement by virtue of being a "building or structure". The applicant submitted that upon a finding that the TTF is a building or structure, no further consideration of whether the TTF actually improved the value of the land was required or permitted.[19] Though not required to meet the definition, it was contended that the TTF benefits the land by creating an income stream of rent to the owner, and that benefit was at the relevant time, unexhausted.
3. With respect to the leases, it was submitted that the leases are to be disregarded by virtue of the requirement that site value be calculated by reference to the unencumbered estate, being the estate in fee simple.
4. It is the applicant's case that the leases must be understood by reference to the TTF and that as the two are inextricably linked, the leases should be understood as providing a benefit and not encumbering the estate, and disregarded in any valuation. The applicant submitted that to take such an approach would be consistent with that taken in Harry v The Valuer-General.[20]
5. The approach taken by the Valuer-General, it was submitted, entailed the assignment of a differential site value across portions of the estate in fee simple, whereby the portion over which the lease was granted attracted a vastly higher site value than the remainder of the estate by virtue of the income derived from the operation of those leases. This, it was argued, was an erroneous application of the relevant provisions of the Act to the circumstances.
6. The applicant's position was that the questions should be answered as follows:

(a) As to whether the Telstra Telecommunications Facility an 'improvement' of the subject land within the meaning of 'site value' under s 5 of the Act?: Yes.

(b) Whether the Telstra Lease and the Optus Lease are encumbrances upon the subject land within the meaning of 'site value' under s 5 of the Act?: No.

(c) Whether the effect of either or both of the Telstra Lease and the Optus Lease should be taken into account when determining the 'site value' in accordance with s 5 of the Act?: Neither should be taken into account.

1. Counsel for the Valuer-General, Mr O'Flaherty, contended that the Telstra Telecommunications Facility is not an "improvement" for the purposes of s 5, and in particular was not a "building or structure (but not including structures in the nature of site works)". The Valuer-General argued that what was intended to be disregarded by this phrase is things that have a permanence to their connection to the land that is lacking in the present case.
2. It was argued that the phrase "buildings and structures", properly understood, connote that which is 'appurtenant' or appertaining to the subject land, such as being a fixture to the land.[21] The TTF, it was submitted, did not have the requisite characteristic of being appurtenant to the land to meet the definition. It was not in dispute that under the terms of the leases, the lessees are subject to obligations to remove the things constructed on the site within a relatively short period at the conclusion of the lease and that anything erected remains the property of the lessees.
3. The Valuer-General submitted that it was evident that a proper construction was one that conferred on the term 'building or structure' the meaning it carries within property law and that speaks, in part, to the relationship of the item to the land on which it is situated.
4. It was submitted that to give it an ordinary and broader meaning of anything erected or built would have the effect that any insignificant structure that is on the land, including a portable and temporary structure, would come within the definition.
5. The Valuer-General referred the Tribunal to various authorities in support of his propositions as to what the phrase conveyed at common law, and how it, or similar provisions, had been construed by other courts and tribunals.[22]
6. It was the Valuer-General's view that to the extent to which the TTF is affixed to the Land, it is done so merely for the more effective use of the facility rather than for the better enjoyment of the Land generally.
7. It was submitted that the TTF is expressly described as the property of the lessee under the Telstra Lease, and this is implicitly acknowledged as being so under the Optus Lease as well.[23] Both lessees are required to remove, at their own expense and within a short period of time, any items erected upon the Land at the expiry of their respective leases, and to compensate for any damage caused from its removal.[24] According to the Valuer-General, these factors indicate that the TTF is not affixed to the Land or an incident to the ownership of the fee simple of the Land. It follows, on the meaning of the phrase contended for by the Respondent, that the TTF is not a "building or structure", and therefore not an improvement to be disregarded in ascertaining the site value.
8. As to the leases, the Valuer-General submitted (in agreement with the applicant) that the leases do not encumber the land.
9. The Valuer-General's position was the questions posed for the Tribunal's determination should be answered as follows:

(a) As to whether the Telstra Telecommunications Facility an 'improvement' of the subject land within the meaning of 'site value' under s 5 of the Act?: No.

(b) Whether the Telstra Lease and the Optus Lease are encumbrances upon the subject land within the meaning of 'site value' under s 5 of the Act?: No.

(c) Whether the effect of either or both of the Telstra Lease and the Optus Lease should be taken into account when determining the 'site value' in accordance with s 5 of the Act?: Yes, both.

Is the Telstra Telecommunications Facility ('TTF') an 'improvement' within the meaning of site value under s 5 of the Act?

1. It seems hardly arguable that the TTF and the accompanying shelter is a "structure" within the ordinary meaning of the word. The TTF is a pole erected to host antennae at its top, and at its base is a "shelter" which on an ordinary use of the word "building" might otherwise be described as such; it has walls, a roof and a doorway and it holds equipment and is connected to the tower by a gantry.
2. Thus, on the applicant's case it is a simple conclusion to draw that the TTF comes within the phrase "buildings and structures". Accordingly, the TTF is therefore an "improvement" that is to be disregarded in the assessment of site value.
3. As has been seen, however, the respondent submits that the phrase, properly construed in the context of the Act, refers only to that which is affixed to the land rather than understood by reference to its plain, literal meaning outside of the context of the law of property.
4. I was not directed to any authority, and nor did I identify one, that considers the construction of the phrase situated within this particular legislation. It is therefore necessary to start from first principles.
5. The definition of "improvement" is expressed in a manner that, by reference to orthodox statutory interpretation rules, is exhaustive, namely "improvement means...." rather than "improvement includes...".[25] Accordingly, caution should be exercised before attaching a different or expanded meaning to the word. I was directed to various authorities that consider the meaning of "improvement" or similar terms or phrases in other legislation.
6. In Brisbane City Council v Valuer-General (Qld)[26] the High Court was required to determine an appeal from the Full Court of Queensland in respect of the value of parcels of land over which a dam had been constructed. A question arose as to whether the dam structure or the water over the lands constituted an improvement to the land. In the relevant legislation, the following definition operated:[27]

'Improvements' means in relation to land, improvements thereon or appertaining thereto, whether visible or invisible, and made or acquired by the owner or his predecessor in title ...

1. In construing that provision, Gibbs J (as he was then known) said,

These provisions make it necessary to determine for valuation purposes, whether the land in question is improved or unimproved. They also indicate what tests should be applied in deciding what is an improvement for the purposes of the valuation. In the first place, an improvement in relation to land must be "thereon or appertaining thereto". This means that the improvements, if not on the land, must be "such as are in the strict legal sense 'appurtenant' to the property and incident to its ownership" (McDonald v. Deputy Federal Commissioner of Land Tax (N.S.W.) [1915] HCA 54; (1915) 20 CLR 231, at pp 234-235). Secondly, something done on or appertaining to land which reduces rather than enhances its value is not an improvement for the purposes of the Act, any more than it would be in the ordinary sense of the word. In Morrison v. Federal Commissioner of Land Tax [1914] HCA 10; (1914) 17 CLR 498, at p 503, Griffith C.J. said, in a passage which has frequently been cited: "Any operation of man on land which has the effect of enhancing its value comes within the definition of 'improvement'. [28]

1. This analysis is of limited assistance in the present case. The Court in Brisbane City Council was considering the nature of "improvement" in circumstances where the term was not defined. The Court concluded that an improvement in relation to land must be "thereon or appertaining thereto". However, some three years later when the current definition of "site value", incorporating as it does a definition of "improvements", was inserted into the South Australian Act, no step was taken to align the definition with this consideration.[29] Rather, the exhaustive definition was inserted, making no reference to "improvements" being that which is appurtenant to the land or incidental to ownership.
2. Further, the amendments to the Valuation of Land Act in 1981 had the effect of confining the more expansive definition of "improvements" that had previously existed in the Act. The iteration of the Valuation of Land Act that had been passed in 1971 defined "improvements" under site value as follows:[30]

"improvements" means houses and buildings, fixtures and other building improvements of any kind whatsoever, fences, bridges, roads, tanks, wells, dams, fruit trees, bushes, shrubs and other plants planted or sown, whether for trade or other purposes, draining of land, ringbarking, clearing of timber or scrub and any other actual improvements;

1. The Statutes Amendment (Valuation of Land) Act 1981 then subsequently changed the definition of improvements to the exhaustive definition that remains in the present version of the Act:[31]

"improvements" means -

(i) buildings and structures (but not including structures in the nature of site works);

(ii) wells, dams and reservoirs; and

(iii) the planting of trees for commercial purposes;

1. What can be seen from this history is that 'fixtures' was removed from the definition and 'structures' came in. The phrase "other building improvements" was also left out. Neither of those changes supports the proposition that "buildings and structures" should be understood to connote appurtenance to the land.
2. It is true that the phrase in the definition of "site value" is "improvements on the land" and the sub-definition is only of one part of that phrase, namely "improvements". It might be argued that the definition of "improvements" requires no reference to the relationship of the improvement with the land or with ownership because it would be redundant to do so because of the words "on the land". The difficulty with that argument is that "on the land" is not equivalent to "appurtenant", and the latter term is used elsewhere in the Act.[32] This suggests that the phrase "on the land" means exactly that, and if it had been meant to include appurtenance, the drafter would have included, or kept, a reference to that term.
3. For those reasons, I do not consider that the Brisbane City Council authority sheds light upon the statutory construction task required in relation to the definition of "site value" in the Act.
4. Further, there is no reason to assume that the words in the context of this Act have acquired a technical meaning. In Harry v The Valuer-General,[33] the Court was required to consider the meaning of the term "unencumbered" within the definition of "capital value" in the Act. Wells J said,

... Except when it is used in the Real Property Act 1886 (as amended) and Acts in pari materia, the word 'encumbrance' - and the same applies to 'encumber' - has not acquired the sort of technical meaning that one associates with such words as "demise" or "seisin"; it is not yet a true term of art. I regard it rather as a protean word that takes its precise meaning from the particular context in which it appears.[34]

1. By analogy, the phrases "on the land" and "improvements" should not be assumed to embody real property concepts other than those apparent from the text in which they are situated.
2. It is my view that the ordinary meaning should be given to the words of the definition of "site value". The task entails, in this case, considering whether the item under consideration is an "improvement on the land", by reference to whether it comes within the ordinary meaning of the words in the sub-definition of "improvements" and whether it is "on the land".
3. The TTF is evidently a structure, namely a physical item of multiple parts (one of which at least may be a building) put together by human effort.[35] It is also evident that it is not in the nature of site works. It is also evidently "on the land".
4. It might be thought that the definition captures an array of small and temporary buildings or structures that could not possibly have been intended to be caught by the definition. Children's play equipment, portable toilets, clothes lines and the like all meet the definition. However, by reference to the definition as a whole it can be seen that structures are only engaged in the calculation of site value where their presence might affect the capital amount that the land might reasonably be expected to realise upon sale. Therefore insignificant buildings or structures may come within the definition without being incorporated into the calculation of value because of their lack of capacity to affect value.
5. The question posed by the parties as to whether the TTF is an improvement is answered in the affirmative.
6. It is a separate question as to whether the benefit of the TTF was unexhausted at the time of the valuation. The parties did not disagree on this. The benefit of the TTF arises indirectly, from the rental derived from the leases which enable the TTF to be erected and maintained at the site. That benefit endures during the term of the leases, neither of which had expired at the time of the valuation. Therefore the benefit was, at the relevant time, unexhausted.

Are the Telstra Lease and the Optus Lease each encumbrances within the meaning of s 5 of the Act relating to site value?

1. Site value is determined by reference to the capital amount that an "unencumbered estate in fee simple" might reasonably be expected to realise on sale. This gives rise to the question as to whether the Leases encumber the land.
2. The parties each submitted that neither the Telstra Lease nor the Optus Lease were encumbrances within the definition of site value under the Act.
3. As to whether a lease is an 'encumbrance' was considered by Debelle J in Perpetual Trustee Co Ltd v Valuer General; Trust Co of Australia Ltd v Valuer-General (No 2)[36] in relation to the definition of capital value under the Act. Importantly, the phrase "an unencumbered estate in fee simple" occurs in both the definition of "capital value" and "site value".[37]
4. His Honour said,

The next question is what is meant by the epithet "unencumbered" in the expression "unencumbered estate of fee simple in the land". In ordinary usage the word "encumbrance" signifies that which encumbers something: see the Oxford English Dictionary and Macquarie Dictionary. So, when used in a legal context, it means a burden on property. The Oxford English Dictionary picks up the definition in Wharton's Law Lexicon which defines an encumbrance as "a claim, lien, liability attached to property; as a mortgage etc". In Wallace v Love [1922] ArgusLawRp 91; (1922) 31 CLR 156 at 164 Knox CJ and Starke J said:

The word "encumbrances," in its ordinary connotation, means that a person or estate is burdened with debts, obligations or responsibilities. True, the word is in law especially used to indicate a burden on property, a claim, lien or liability attached to property (see Oxford Dictionary, under title "Encumbrance"). But when we remember that the whole estate of the testator is liable in the hands of his executor for payment of debts and the expense of administering his estate, it is not an extravagant use of language to say that his "whole estate is not free from encumbrances" until those debts and expenses are paid. The estate would, in fact, be burdened with those debts, and no technical use of the word "encumbrance" can alter that result.

Thus, a charge or mortgage is commonly regarded as an encumbrance.

Except when used in legislation relating to real property, the word "encumbrance" is not a term of art. It has not acquired a technical meaning but is a protean word taking its meaning from its context: Harry v Valuer-General (1975) 12 SASR 446 at 450. Other forms of encumbrance include a restrictive covenant or an easement. However, it is necessary to examine all the circumstances before treating either as an encumbrance. For example, where an easement is combined with other easements over other land which together provide the only form of access to land, it might not be regarded as an encumbrance.

The next question is whether a lease is an encumbrance. Although there is very little authority on this question, the reported decisions suggest that it is context which again determines the issue. It is necessary to examine the facts and circumstances of each case to determine whether a lease is an encumbrance.[38]

1. Debelle J articulated the relevant considerations to be made when assessing the facts and circumstances of a lease as follows: [39]

A lease is not necessarily an encumbrance in the sense that it will cause a reduction in the value of the fee simple. Generally speaking, a lease is a benefit to the holder of the estate in fee simple in that it provides a profitable source of income. However, a long lease at a rental below market rental may impair the enjoyment of the fee simple because the rent is considerably lower than market rents or because the length of the term of the lease may cause the market value of the land to be significantly less than the market value of comparable land without a lease. In that latter case, the question whether the lease impairs value might depend on the purpose for which a purchaser might acquire the land. If a lease does impair the value of land, the lease will be ignored as an encumbrance so that the market value will be the same as the market value of land not encumbered by a lease. In that way the value of the land is not diminished by the lease. If, however, the lease is not an encumbrance in that it does not impair the value of the estate in fee simple, it will not be ignored.

1. This assessment of the cases was later affirmed by the Full Court of the Supreme Court of South Australia in Perpetual Trustee Co Ltd v Valuer-General; Trust Co of Australia Ltd v Valuer-General[40] in which Bleby J (with Duggan and Anderson JJ concurring) said of the word 'unencumbered' in the definition of "capital value": [41]

What the cases show is that the word does not have a technical meaning. It is doubtful whether it adds anything to the expression "estate of fee simple in the land". What it does emphasise is that anything that is a burden or liability on the estate and which therefore lessens its value is to be ignored in assessing the market value of the estate of fee simple. ...There are cases which decide, in various contexts, that a lease does not necessarily constitute an encumbrance, and therefore need not encumber the estate in fee simple, and that there is a distinction between a lease and encumbrance. That is a distinction also to be found in legislation in this State affecting interests in real property.

.....Whether a lease encumbers the land, and must therefore be ignored for the purpose of the definition, will depend on whether it constitutes a burden in the sense of having a depreciatory effect on the value and enjoyment of the estate of fee simple.

1. Accordingly, whether a lease may be considered an encumbrance falls upon the terms of a particular lease and whether the effect of the terms was desirable in the marketplace. In most cases, to establish whether a lease impairs the value of a piece of land will require some evidence to be given in relation to the perceptions of potential buyers about the terms of the particular lease and the tenants of the particular lease.
2. I am satisfied on the submissions of the parties and on the agreed facts and the materials before the Tribunal that neither of the Leases is an encumbrance within the meaning of that term for the purposes of 'site value'.
3. The second question posed by the parties is answered in the negative.

Should the effect of either or both of the Telstra Lease and the Optus Lease be taken into account when determining the 'site value' in accordance with s 5 of the Act?

1. There were two bases advanced by the applicant as to why a proper approach entails the Leases being disregarded from the calculation of site value. The first is that the Leases are inextricably linked to the TTF, which is an improvement and as such to be disregarded. So too, the Leases must be disregarded.
2. The second basis for excluding the Leases from consideration in a calculation of site value of the land is that the task entails consideration only of the pure or notional fee simple estate in the Land. The correct approach, it was submitted, was to value the whole of the land but to disregard the value of the Leases.
3. The respondent rejects both of these arguments and submits that the Valuer-General correctly incorporated into the assessment the value of the land as enhanced by the benefits flowing to the land owner by virtue of the Leases.
4. The first of the applicant's arguments can be disposed of briefly.
5. The assertion that the Leases are so inextricably linked to the TTF that they must be disregarded entails examining the issue from the wrong angle. The Leases owe nothing to the TTF for their existence, but the TTF is entirely dependent upon the Leases for their existence. Accordingly, the disregarding of the TTF as an improvement on the land entails nothing as to the inclusion of the Leases in the valuation of the land's site value.
6. The primary argument requires a more detailed examination.
7. The applicant submits that the Valuer-General should have only valued the notional or pure fee simple estate in the Land which would include the area of the Land that is subject to the leases but disregard the value of the leases themselves.
8. In support of the applicant's contention, Mr Hayes QC referred in particular to the following statements of Wells J in Harry v Valuer-General:[42]

I hold that the passage "an unencumbered estate of fee simple in the land" has reference to the particular facts and circumstances under consideration only to the extent that the physical area of land is the subject matter of the estate referred to in that passage, but that otherwise what is to be valued is the notional or pure fee simple estate in that land.

1. Counsel for the respondent submitted that the effect of the leases must be accounted for in the determination of the site value because it is beneficial to the value of the Land as it generates rent for the joint proprietors of the Land. He argued that the leases should be taken into account because they do not have a burdensome or depreciatory effect on the value of the Land. He referred to the cases of Perpetual Trustee Co Ltd v Valuer General; Trust Co of Australia Ltd v Valuer-General (No 2)[43] and Trust Co of Australia Ltd v Valuer-General; Perpetual Trustee Co Ltd v Valuer-General[44] in support of his arguments.
2. In Perpetual Trustee Co Ltd v Valuer General; Trust Co of Australia Ltd v Valuer-General (No 2)[45] Debelle J was required to construe the phrase 'the capital amount that an unencumbered estate of fee simple in land might reasonably be expected to realise upon sale'. In relation to the within phrase 'fee simple in the land', Debelle J said,

It is convenient first to examine what is meant by the expression "fee simple in the land".

An assessment of the value of an unencumbered estate in fee simple is an assessment of the value of the largest estate in land known to the law: Harry v Valuer-General (1975) 12 SASR 446 at 450. An estate in fee simple is the most ample estate which can exist in land, to use the words of Megarry and Wade, The Law of Real Property (5th ed, 1984) at 59, which in turn is based on Coke on Littleton (19th ed) at 11 and Williams on Real Property (23rd ed) at 6. As Wells J said in Harry v Valuer-General (at 454):

One starts with this: that what is to be valued is not the inanimate, tangible thing, land, but rights in land. The Act directs the Valuer-General to value an estate in fee simple in the land, but the purpose of a direction in that esoteric form is, in my view, to ensure that what the Valuer-General values is a congeries of the most ample proprietary rights recognized by law "protected along the plane of time" (Pollock and Maitland, History of English Law (2nd ed) vol 2, p 10); one must still ask, "What is the full range of proprietary rights in land, and what makes them valuable?" Traditionally, the amplitude of rights vested in the tenant in fee simple has been equated with the fullest ultimate rights, subject to any restrictions imposed ab extra, of use, enjoyment, destruction and alienation known to the common law. (Compare the dominium of the civilians - see Buckland, Textbook of Roman Law, p. 187).

Putting aside, then, the niceties of the theory of estates, what the Valuer-General is to value (to use Pollock's definition of "ownership" - see Jurisprudence and Legal Essays, p. 97) is the entirety of powers, allowed by law, of the use and disposal of a given parcel of land.

The entirety of powers to which Wells J referred in the second of those quoted paragraphs includes the power to lease land to the profit and advantage of the holder of the estate in fee simple, that is to say, the owner of the land."[46]

1. Debelle J proceeded to comprehensively assess various academic and judicial authorities that have contemplated the meaning of the expression 'fee simple in possession' and concluded:[47]

It is, therefore, well established that the expression "fee simple in possession" refers both to the situation where the holder of the estate in fee simple is in physical occupation and possession of the land and to the situation where the holder of the estate in fee simple has leased the land for a term of years and is entitled to receive the rents from the land.

1. After proceeding to discuss further authorities that reflect upon the meaning of an 'encumbrance' for the purposes of interpreting the phrase (as referred to earlier in this decision), Debelle J summarised the relevance of a lease to a valuation as follows:[48]

Shortly put, the definition of "capital value" as it operates in the circumstances of this case can be expressed in this way. The expression "unencumbered estate in fee simple" means the unencumbered estate in fee simple in possession. A person will hold an estate in fee simple in possession if that person is in physical possession of the land or if that person has leased the land for a term of years and is entitled to the rents derived from that lease. The term "unencumbered" requires a valuer to determine whether or not a lease is a burden. If it is a burden, the valuer must ignore the lease when assessing capital value. If it is not, the valuer must have regard to the lease and to the rental income when determining the capital value, which will be market value in the sense discussed in Spencer's case. This is a result consistent with the evidence of both valuers that the market value of the property the subject of each appeal depends to a large extent on the leases, the rents derived therefrom, the length of the individual leases, and the quality of the tenants. In each of these appeals the holder of the estate in fee simple has leased the subject land in the exercise of the entirety of powers which that estate brings and is profiting from the rents derived from that land so that the lease is not an encumbrance.

1. On appeal, the Full Court in Trust Co of Australia Ltd v Valuer-General; Perpetual Trustee Co Ltd v Valuer-General[49] concurred with this analysis. Relevantly, Bleby J (with Duggan and Anderson JJ agreeing) said,

Before turning to consider any qualification in the definition of capital value by the word "unencumbered", it is convenient to state a number of relevant propositions which seem to arise from the cases considered so far:

• An estate of fee simple in land is the most extensive interest in land known to the law.
• For the purposes of assessing the capital value on the market of such an estate for rating or similar purposes, one ignores other interests in or restrictions on use of the land which are depreciatory of its value other than restrictions imposed by virtue of generally applicable legislation such as planning legislation.
• The letting of land by the owner of an estate in fee simple does not necessarily have any depreciatory effect on the value of that estate.
• While an estate of fee simple is an estate in possession of a set of proprietary rights, the expression "fee simple in possession" does not mean that the owner of the estate of fee simple must necessarily have or be able to exercise physical possession of the land to the exclusion of all others.

It would follow that, unless there are other qualifying considerations, the only leases that need to be ignored for the purpose of assessing the capital value of land are those that have the effect of depreciating the value or full enjoyment of the estate of fee simple.[50]

...

It is clear from what I have said so far that, for the purpose of establishing the market value of an estate of fee simple in the land, and thus of establishing the capital value of the land, one is to ignore a burdensome or depreciatory tenancy or one which has a depreciatory effect on the full enjoyment, and hence the value, of an estate of fee simple in the land.[51]

1. Senior Counsel for the applicant in his submissions in reply contested the respondent's propositions on the basis that the authorities relied upon by the respondent were distinguishable as they were assessments of the capital value of land, not its site value.
2. Although the Court in both of these cases were concerned with a calculation of the capital value of land, I consider that the principles described are equally applicable to an assessment of the site value insofar as a decision-maker is determining 'the capital amount that an unencumbered estate of fee simple in land might reasonably be expected to realise upon sale'. What differs as between the valuations is consideration of what is excluded from the task.
3. What may be drawn from these authorities, which I consider to be binding on the Tribunal and in any event I see no reason to depart from it, is that a lease will be taken into account in determining the capital amount that an estate in fee simple in the land might reasonably be expected to realise upon its sale, and therefore the site value of the land, unless the lease has a depreciatory effect on the market value of the land.
4. In the present case, no evidence was led by either of the parties as to whether the Telstra Lease or the Optus Lease have a depreciatory effect on the market value of the Land. I take the agreed position of the parties that the Leases are not encumbrances as an agreement that they do not have a depreciatory effect.
5. In my view, it is evident that the Leases inform the task of assessing site value. They are not excluded and they are relevant to the determination of what the land might reasonably be expected to realise upon sale. Accordingly, the question of whether the Telstra Lease and the Optus Lease should be accounted for in the determination of the land's site value is answered in the affirmative.

1. The parties agreed that $70 per square metre was the correct value to be assigned as the site value for that portion of the land other than that over which the leases operate. The applicant's contention is that this figure is also applicable to the land in respect of which the leases operate. The parties agreed that, if correct, this has the result that the whole of the land is valued at $164,000.
2. The Valuer-General contends that the land over which the leases operate is correctly valued by taking into account the value of the leases in terms of the income they supply to the owner. The parties agree that if this is correct, the site value of the whole of the land is $240,000.
3. As the parties' submissions did not advance particular ancillary or consequential orders associated with the answers that have been reached, the parties shall have liberty to apply for any ancillary order that may follow from the answers to the questions of law.

1. The Tribunal answers the questions of law raised by the parties as follows:

1.1 Is the Telstra Telecommunications Facility an 'improvement' within the meaning of site value under s 5 of the Act? - Yes.

1.2 Are the Telstra Lease and the Optus Lease an encumbrance within the meaning of s 5 of the Act relating to site value? - No, neither is an encumbrance.

1.3 Should the effect of either or both of the Telstra Lease and the Optus Lease be taken into account when determining the 'site value' in accordance with s 5 of the Act? - Yes, both should be taken into account.

1. The parties have liberty to apply for ancillary or consequential orders, which may be made without a hearing if agreed.

Consequential orders of the Tribunal dated 1 April 2021

1. The Tribunal made the following consequential orders with the consent of the parties:
   1. The decision of the Valuer-General dated 12 November 2018 in relation to valuation number 854226500* is varied by consent of the parties as follows:
      • 1.1. The site value of the land comprised in Certificate of Title Volume 6086 Folio 731 as at 1 January 2018 is $240,000.

[3] Objection Letter of Richard Wood dated 28 October 2019, in the Book of Documents at page 19.

[5] Memorandum of Lease with Telstra Corporation Ltd dated 30 August 2011, in the Question of Law document at page 32.

[6] Valuation of Land Act 1971 (SA) s 25B(3).

[7] Ibid s 11.

[8] Ibid s 14.

[9] Ibid s 24.

[10] Ibid s 25B(6).

[11] Email of J Oster, Knight Frank Valuations (SA), dated 10 September 2019, in the Book of Document at page 37.

[12] South Australian Civil and Administrative Tribunal Act 2013 (SA) s 26.

[13] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]-[71] (McHugh, Gummow, Kirby and Hayne JJ).

[14] Valuation of Land Act 1971 (SA) s 5(1).

[15] Ibid s 11.

[16] Also see, Harry v Valuer-General (1975) 12 SASR 446, 450 (Wells J).

[17] Valuation of Land Act 1971 (SA) s 5.

[19] Applicant's Outline of Argument in Reply filed on 22 July 2020 at [11]. The applicant had originally submitted in its Outline that the correct approach for the ascertainment of site value follows that taken by Wells J in Goode v The Valuer-General. This entails identifying that which might be an improvement and, upon confirming that it comes within the legislative definition of "improvement", to then determine whether it in fact operates to improve the land, having regard to the relevant market. The Outline in Reply eschewed this approach.

[20] (1975) 12 SASR 446.

[21] Respondent's Outline of Argument filed on 17 July 2020 at [17].

[22] See, for example, Brisbane City Council v Valuer-General (Qld) [1978] HCA 40; (1978) 140 CLR 41.

[23] Respondent's Outline of Argument filed on 17 July 2020 at [18].

[25] Sherritt Gordon Mines Ltd v FCT [1977] VicRp 42; [1977] VR 342, 353; [1977] VicRp 42; (1976) 10 ALR 441, 455 (McInerney J); Douglas v Tickner (1994) 49 FCR 509, 519; [1994] FCA 1066; 34 ALD 192, 203 (Carr J); Gardner v R [2003] NSWCCA 199; (2003) 39 MVR 308 (Sheller JA, James and O'Keefe JJ).

[26] [1978] HCA 40; (1978) 140 CLR 41.

[29] See, Statutes Amendment (Valuation of Land) Act 1981 (SA).

[30] Valuation of Land Act (No 113 of 1971) s 5.

[31] Statutes Amendment (Valuation of Land) Act 1981 (SA) s 6.

[32] Valuation of Land Act 1971 (SA) s 22A(1)(b)(ii)(A).

[33] (1975) 12 SASR 446.

[34] Harry v The Valuer-General (1975) 12 SASR 446, 450.

[35] Macquarie Dictionary (online at 1 February 2021) 'structure".

[36] [2007] SASC 340; (2007) 99 SASR 251.

[37] With one minor difference any significance of which is unclear and was not the subject of submissions; the phrase in the definition of "capital value" is "the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale" and the equivalent phrase in the definition of "site value" is "the capital amount that an unencumbered estate in fee simple in the land might reasonably be expected to realise upon sale".

[38] Ibid at [26]-[28] (Debelle J).

[40] [2008] SASC 169; (2008) 101 SASR 110.

[42] (1975) 12 SASR 446, 450 (Wells J).

[43] [2007] SASC 340; (2007) 99 SASR 251.

[44] [2008] SASC 169; (2008) 101 SASR 110

[45] [2007] SASC 340; (2007) 99 SASR 251.

[46] Ibid at [19]-[20] (Debelle J).

[49] [2008] SASC 169; (2008) 101 SASR 110.