Reported Decision: 156 LGERA 186 New South Wales Court of Appeal CITATION: Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 27 November 2007 JUDGMENT DATE: 14 December 2007 JUDGMENT OF: Spigelman CJ at 1; Santow JA at 20; Tobias JA at 23 DECISION: Appeal dismissed with costs. CATCHWORDS: VALUATION – Valuation of Land – Methods of Valuation – Where land subject to heritage restrictions – Valuation of Land Act 1916 ss 6A, 14G - STATUTES – Interpretation – Mischief rule Land Acquisition (Just Terms Compensation) Act 1991 Land and Environment Court Act 1979 LEGISLATION CITED: Valuation of Land Act 1916 Valuation of Land Amendment Act 2000 Valuation of Land and Local Government (Amendment) Act 1959 Barber v Valuer-General (1969) 17 LGRA 408 Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 Commonwealth Custodial Services Limited v Valuer General [2006] NSWLEC 775 Estate of George James v The Valuer General (1942) 15 LGR 110 Illawarra Meat (Developments) Pty Ltd v Valuer-General (Land and Valuation Court, 10 March 1978, unreported) Krisgay Pty Ltd v The Valuer-General [2007] NSWLEC 600 Leichhardt Council v Roads & Traffic Authority of NSW [2006] NSWCA 353; (2006) 149 LGERA 439 Leichhardt Municipal Council v Seatainer Terminals Ltd (1979) 40 LGRA 353 Leichhardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409 Long Reach Capital Pty Ltd v Valuer-General [2007] NSWLEC 721 CASES CITED: Maurici v Chief Commissioner of State Revenue [2001] NSWCA 78; (2001) 51 NSWLR 673 Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111 Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at 432 MMAL Rentals Pty Limited v Bruning [2004] NSWCA 451; (2004) 63 NSWLR 167 Myer (SA) Stores Ltd v Valuer-General (1986) 60 LGRA 158 Ritchie v Valuer-General (1961) 21 LGRA 296 Sheath v Valuer General (1963) 64 SR (NSW) 415 Stubberfield v Valuer-General [1991] 1 Qd R 278 Toohey's Limited v The Valuer General [1925] AC 439 The Trust Company of Australia Limited v Valuer General [2007] NSWCA 181; (2007) 154 LGERA 437 Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 Wunderlich Ltd v Valuer-General (1959) 5 LGRA 50 PARTIES: Commonwealth Custodial Services Limited Valuer General FILE NUMBER(S): CA 40846/06 COUNSEL: A: M Craig QC / R Lancaster R: J A Ayling SC / J Masten SOLICITORS: A: Mallsons Stephen Jaques, Sydney R: Crown Solictiors Office, Sydney LOWER COURT JURISDICTION: Land & Environment Court LOWER COURT FILE NUMBER(S): LEC 30098/04 LOWER COURT JUDICIAL OFFICER: Talbot J LOWER COURT DATE OF DECISION: 8 December 2006 LOWER COURT MEDIUM NEUTRAL CITATION: Commonwealth Custodial Services Ltd v Valuer-General of New South Wales [2006] NSWLEC 775 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40846/06 CA 40016/07 CA 40017/07 SC 30098/04 SC 21371/04 SC 31079/05 SPIGELMAN CJ SANTOW JA TOBIAS JA Friday 14 December 2007 COMMONWEALTH CUSTODIAL SERVICES LIMITED v VALUER GENERAL This matter concerns a valuation made by the Valuer General of the land occupied by the Commonwealth Bank Building on Martin Place, sometimes known as "the Moneybox". The unimproved value of the land on which the building stands was assessed by the Valuer General to be $40,000,000 at each of the relevant base dates, being 1 July in each of 2002, 2003 and 2004. However an expert valuer retained by the appellant assessed the value of the property to be significantly lower at each of those dates. The land in question is in the Sydney Central Business District and, as such, there were no comparable sales of vacant land from which a value of the subject land could be deduced. The valuation was further complicated by heritage restrictions on the land. The appellant's expert valuer, Mr Jackson, was of the opinion that there could not be such a thing as a heritage restricted vacant land sale and could not find a sale of an improved heritage restricted site which he considered to be sufficiently comparable. He was also of the opinion that sales of non-heritage restricted improved sites were not comparable. Therefore, Mr Jackson determined the value of the land by determining the improved value of the property with its existing improvements, deducting the added value of those improvements by reference to their rental returns and replacement costs, which he had depreciated to account for their age, the effect of the heritage restrictions and the significant costs of ongoing maintenance. In short, he determined the unimproved value of the land by subtracting the added value of the improvements from his assessment of its improved value. The issue on appeal was whether this method was, as a matter of law, one that was open to be considered given the prior decisions of the Privy Council in Toohey's Limited v The Valuer General [1925] AC 439 and the High Court in Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160. It was held in each that such a method was impermissible as s 6(1) (now s 6A(1) of the Valuation of Land Act 1916 required the valuation to be determined on the assumption that the improvements to the land to be valued had not been made and, therefore, had never existed. The appellant contended that those authorities were no longer applicable as amendments to the Valuation of Land Act 1916 made in 1959 and 2000 which added s 6(2) (now s 6A(2)) and s 24G required the valuer to assume that the improvements and usage of the land to be valued continued. In particular, it was argued that s 6A(2) and s 14G(1) were inconsistent, in that the former required the valuer to assume that the use of the land at the time of valuation was a possible continuing use and that improvements could be made or maintained to allow the continuation of that use, while the latter required the valuer to assume that, where the land was heritage listed, the use of the land at the time of the valuation was the only allowable use and that no further improvements could be made (beyond continuation and maintenance of those already existing). Held (per Tobias JA, Spigelman CJ and Santow JA agreeing) 1. This Court was bound by the emphatic manner in which the High Court had approved Toohey's in Fenton Nominees Pty Ltd. Toohey's Limited v The Valuer General [1925] AC 439 applied. Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 applied. 2. There was no logical basis for suggesting that the principle articulated in Toohey's was applicable to land which was not heritage restricted but not land which was so restricted. Toohey's Limited v The Valuer General [1925] AC 439 applied. Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 applied. 3. Sections 6A(2) and 14G(1) did not negative the assumption required by s 6A(1) that the improvements upon the land to be valued had not been made. The Trust Company of Australia Limited v Valuer General [2007] NSWCA 181; (2007) 154 LGERA 437 applied. 4. For the purpose of determining land value in accordance with s 6A(1), one either made the relevant assumptions referred to in s 6A(2) or, if the land was heritage restricted, the assumptions referred to in s 14G(1). These assumptions were made only for the purpose of enabling the land to be valued upon the basis, if it be the case, that its highest and best use was the continuation of its existing use as permitted by s 6A(2)(a) and as required by s 14G(1)(a). Krisgay Pty Ltd v The Valuer-General [2007] NSWLEC 600 referred to. Discussion (by Spigelman CJ, Santow JA agreeing and Tobias JA disagreeing) 5. The introduction of ss 6A(2) and 14G(1) meant that the principle founded solely on s 6A(1) that the improvements to the land to be valued must be left entirely out of account as if they had never existed was no longer sustainable. The reasoning in Toohey's was an inadequate foundation for continuing to exclude a rational approach to the valuation of the relevant land which was accepted as permissible and appropriate by expert valuers when analysing sales of improved land. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40846/06 CA 40016/07 CA 40017/07 SC 30098/04 SC 21371/04 SC 31079/05 SPIGELMAN CJ SANTOW JA TOBIAS JA Friday 14 December 2007 COMMONWEALTH CUSTODIAL SERVICES LIMITED v VALUER GENERAL Judgment 1 SPIGELMAN CJ: I have had the benefit of reading the judgment of Tobias JA in draft. His Honour sets out the facts, the issues, the submissions, the statutory provisions and extracts from the relevant judgments. 2 The critical matter to be determined is whether or not the reasoning of the Privy Council in Toohey's Limited v The Valuer General (1925) AC 439 continues to apply, as a matter of statutory interpretation, to a legislative scheme which differs in a pertinent respect. The relevant difference, as Tobias JA points out is the fact that s 6A(1) of the Valuation of Land Act 1916 which is, relevantly, in the same terms as the section under consideration by the Privy Council in the Toohey's case, has now been modified by the addition of s 6A(2) and, of direct relevance but of no different import, by the addition of s 14G. No such provision was contained in the Act under consideration by the Privy Council in Toohey's. 3 The scope and purpose of the Act, within which s 6A(1) must be interpreted, is the valuation of land for the full range of statutory purposes for which such valuation is pertinent. There are a number of different ways in which the task of approaching valuation can be undertaken, each of which is perfectly rational. More than one means may be adopted for the purpose of checking the value arrived at by any other means. This Court should be very slow to interpret legislation so as to exclude a rational mode of valuing land, particularly in view of the difficulties that may attend any single mode of valuation. 4 It is always necessary to start with the statutory scheme. Plainly, when the courts have authoritatively pronounced upon the interpretation of a particular legislative formulation, subject to reconsideration by higher authority, that interpretation should be continued. When, however, a relevant change occurs in the legislative scheme it is appropriate to reconsider the earlier authorities. 5 I repeat my observations in this regard in Leichhardt Council v Roads & Traffic Authority of NSW [2006] NSWCA 353: "[35] Matters of valuation turn in large measure on the precise statutory scheme. These schemes differ from one area of discourse to another. It is always important to commence with the precise words of the statute. There appears to be a tendency to take a judgment about one statutory regime and classify its conclusion as a "valuation principle" which is applied to any process of valuation, no matter how different the statutory regime may be. [36] The need to determine the value of assets arises in many different legal contexts. It is the context which determines the relevant principles of valuation to be applied. An assumption that there is in existence some abstract body of "valuation principles" applicable in all contexts, irrespective of the statutory scheme or contractual provision, is liable to lead to error. Judgments in one context may prove instructive by way of analogy when dealing with another context. Nevertheless, statutory differences must be borne in mind. The ultimate task must always come back to the application of the principles in the particular context …" 6 There are other examples of the courts excluding appropriate approaches to valuation on the basis of authority which, on closer analysis, was clearly based on the interpretation of the particular text under consideration in the foundation authority, but which has been characterised as some sort of "valuation principle" applicable in all contexts, irrespective of statutory differences. So Australian authority has long excluded offers to purchase property from consideration, even the very property which falls to be valued, on the basis of authority which was clearly based only on the specific statute. So far as I am able to determine, Australia is the only jurisdiction where offers of this character are excluded from the valuation, an exclusion which has been variously described as "absurd", "anomalous and unjust". (See MMAL Rentals Pty Limited v Bruning [2004] NSWCA 451; 63 NSWLR 167 at [84]-[102].) 7 In my opinion the reasoning in Toohey's is unconvincing. Indeed, I find it glib. The starting point was the following proposition: "Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed." 8 This proposition can no longer be sustained in the light of the introduction of s 6A(2), and subsequently of s 14G. Read in context, s 6A(1) can no longer be described in this manner. 9 The inclusion of express reference to improvements, as a relevant matter in the process of valuation, directly undermines the starting point of the reasoning of the Privy Council in Toohey's. It is no longer possible to treat the improvements "not only as non-existent but as if they never had existed". The valuer is now required to accept that the improvements did exist, but to value the land as if they did not. 10 In my opinion, the reasoning in Toohey's is an inadequate foundation for continuing to exclude a rational approach to valuation which is accepted as permissible by expert valuers. This is of particular significance, in a case like the present, by reason of the difficulty involved in valuing land in an urban environment, where unimproved land sales are rare, and even more so in the context of heritage listed property, where removing the improvements is impermissible. 11 As Tobias JA notes, and the High Court has affirmed in Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111, long practice accepts that it is perfectly rational to value unimproved land by valuing a site in its improved state and deducting the value of the improvements. However, on the authority of Toohey's, this rational method for valuing comparable sales is impermissible for valuing the land in issue. 12 As the authorities to which Tobias JA refers indicate, there is a distinction between the two situations because in one case there have been actual sales. That is a distinction but not, in my view, a pertinent distinction for purposes of permissibility, as distinct from weight. No doubt in many situations it will not be the preferable mode of proceeding. No doubt it will itself create a range of difficulties in estimation that are inherent in the artificial process which the statute requires the Court to undertake. All of these matters go to weight. They should not determine whether the technique is permissible at all. 13 I find the reasoning of Roper J in Estate of George James v The Valuer General (1942) 15 LGR 110, set out by Tobias JA, to be entirely convincing as to the validity of the mechanism of valuation in issue, albeit his attempt to distinguish Toohey's case is difficult to sustain. 14 The difficulty for present purposes is whether or not this Court can distinguish the decision of the High Court in the Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 which at 165-166 expressly approved the analysis in Toohey's. Where, as here, there has been a material change in the statutory framework it is open to this Court to address the question afresh, as it did in Leichhardt Council v RTA supra. 15 However, this issue is, in my opinion, determined by the emphatic manner in which the High Court expressed its approval of Toohey's case by asserting that it was "well settled … that it is not permissible" to adopt the means of valuation in issue. 16 As Tobias JA points out and a number of authorities to which he refers have indicated, the purpose of the introduction of the predecessor of s 6A(2) was to overcome a particular problem that had arisen. However, the words chosen are not necessarily limited to that situation. The mischief rule is a valid approach to statutory interpretation so as to ensure that the purpose of the legislature is achieved. It does not necessarily lead to a reading down of general words, so as to confine the legislation to the mischief alone. Merely because a particular problem has been the trigger for a statutory amendment does not lead to the conclusion that the words are incapable of extending beyond the particular matter which caused the amendment. 17 Tobias JA also refers to the observations in the joint judgment of the High Court in Maurici at 120 [16] and Campbell JA in this Court in The Trust Company of Australia Limited v Valuer General [2007] NSWCA 181; 154 LGERA 437 at 446 [33], to what is described as 'steps' to be taken under s 6A, specifically the reference to the fact that "the second step is notionally to remove the improvements from the land". I do not regard the references to 'steps' as requiring a sequence of events. It is a useful metaphor but should not be interpreted as laying down a rigid sequence. The method of valuation in issue in this appeal also 'notionally' removes the improvements from the land. That is the statutory requirement, not the sequence of reasoning. 18 Nevertheless, with some reluctance, I have come to the conclusion that the force of the statement in the High Court's judgment in Fenton is such that, notwithstanding a relevant statutory change, this Court should follow it and leave it to the High Court to reconsider the issue if it wishes to do so. 19 Accordingly, I agree with the orders proposed by Tobias JA. 20 SANTOW JA: Subject to what follows, I agree with Tobias JA's comprehensive analysis of statute and case law and concur in the result. However I would join with the reservations expressed by the Chief Justice, whose additional observations I have had the benefit of reading in draft. I note that the Chief Justice agrees the orders proposed by Tobias JA, as do I. 21 As Tobias JA observes, Roper J in Estate of George James v Valuer General (1942) 15 LGR 110 at 112 addresses the issue of valuation and the logic informing it in these terms: "… Further, if it appears that land is being devoted to its proper use from the point of view of exploiting its value, and that the improvements upon it are necessary and proper for that use, and that there is no element of value involved in the improved value other than the intrinsic value of the land and of the improvements, then there is in my view, no error involved in a valuer forming his opinion of the unimproved value of the land by deducting the value of the improvements from the improved value. Logically that method of valuation is just as supportable as the method which assumes that the land is unimproved, and then theoretically builds on it an imaginary building of precisely the same character as the actual one which has been assumed not to exist, in order to arrive at a valuation. In my opinion there is nothing in the judgment in Toohey's Ltd v Valuer-General which precludes the use of either of those methods. … In this case only two elements are involved, namely, the bare land itself, and the buildings constructed for and appropriate to the purposes for which they are used, which happen to be the purposes for which the land is most suitable. The result of the subtraction of the second ingredient from the total for the whole at least furnishes a guide to the unimproved value in this case." 22 Current High Court authority approving Tooheys Ltd v Valuer General [1925] AC 439, permits only the second of the two methods of valuation identified by Roper J. Yet as Roper J observes, either method is equally logical. Moreover the first method, as the High Court decided in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111, is permissible when taking into account comparable sales of improved sites. But it is not permissible for the purpose of the notional sale mandated by s6A(1) insofar as it requires the assumption of no improvements (other than land improvements). 23 TOBIAS JA: The appellant, Commonwealth Custodial Services Limited, is the owner of land being Lot 120 in DP 882436 within the City of Sydney and known as No.120 Pitt Street, Sydney (the property). For many years there has been erected upon the property a substantial building known as the Commonwealth Bank building or, more colloquially, the "Moneybox" building at the corner of Martin Place and Pitt Street (the Building). 24 Pursuant to s 14A(1) of the Valuation of Land Act 1916 (the Act) the respondent was required to ascertain the value of each parcel of land in New South Wales each year. He therefore determined the value of the property as at 1 July 2002, 1 July 2003 and 1 July 2004 in the sum of $40,000,000 in respect of each date (the base dates). Pursuant to s 29(3A) of the Act the appellant lodged with the respondent a written objection to each valuation upon the ground that the value assigned was in each case too high: see s 34(1)(a). Those objections were disallowed by the respondent as a result of which the appellant appealed to the Land and Environment Court pursuant to s 37(1) of the Act. 25 The appeals were heard by Talbot J before whom the respondent's expert valuer, Mr Hill, determined the land value of the property at each of the base dates in the amount of $37,525,000. The appellant's expert valuer, Mr Jackson, assessed the land value of the property as follows: · $12,430,000 for the 1 July 2002 base date; · $5,170,000 for the 1 July 2003 base date; · $6,270,000 for the 1 July 2004 base date. 26 The primary judge rejected the valuation approach of Mr Jackson and accepted that of Mr Hill. Pursuant to s 40(1)(b) of the Act, his Honour upheld the appeal and determined the land value of the property as at each of the base dates in the sum of $37,525,000: Commonwealth Custodial Services Limited v Valuer General [2006] NSWLEC 775. Pursuant to s 57(1) of the Land and Environment Court Act 1979 (the Court Act) the appellant appeals to this Court against his Honour's decision. That appeal is confined to questions of law. 27 Although involving questions of mixed law and fact, it was common ground that an appeal lay under s 57(1) of the Court Act with respect to a matter of valuation principle: Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 at 432; Leichhardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409 at 434; Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111 at 116 [8]. The parties' respective approaches to the valuation exercise 28 At each relevant base date the property was zoned "City Centre" under Central Sydney Local Environmental Plan 1996. Pursuant to that zoning the highest and best use of the property was for a modern commercial office building. In terms of use, the Building constituted the only improvements upon the property and was at all relevant times used for retail banking (at ground level), commercial office space (over 10 levels) and car parking and storage (over 2 basement levels). 29 The Building was originally constructed between 1913 and 1916 for the Commonwealth Bank and was and is regarded as one of Sydney's finest examples of the "Commercial Palazzo" style of architecture. It would appear that it originally comprised what is now the banking chamber although between 1929 and 1933 it was extended to more than double its original size. It was further developed in 1968 along its Martin Place frontage when a 12 storey commercial office extension was added to the existing structure. It was further extended in 1994 with the addition of a 2 storey office structure to its Rowe Street frontage and was extensively refurbished internally in 1996. 30 Although the Building was at each base date used for its highest and best use in terms of its zoning, it was at all material times listed in Schedule 1 to the Central Sydney Heritage Local Environmental Plan 2000. It was common ground that the property was "heritage restricted" for the purposes of s 14G of the Act. Because the Building was heritage listed it was regarded by Mr Jackson as being materially different from modern office buildings in the Sydney CBD on the basis of its design, height, scale, nature and efficiency of use. On the other hand, Mr Hill considered that the Building was not materially different from typical modern office buildings in the Sydney CBD. Although the foregoing difference between the valuers was relevant to the details of their respective valuations of the property, of itself it is not relevant to the determination of the appeal. 31 The primary judge described Mr Jackson's valuation evidence at [20] to [24] of his judgment and that of Mr Hill at [30] to [39]. Both valuers accepted that the preferable valuation approach was that based on comparable sales. Mr Jackson's view was that as, logically, there could not be heritage restricted vacant land sales, if sales of heritage restricted improved sites were available he would depreciate the existing improvements to arrive at the heritage land value of those sites. However, he could not identify a sale of an improved heritage site that he regarded as sufficiently comparable. He was further of the view that comparison with sales of non-heritage restricted improved site could not be made as that would not be comparing like with like. 32 Accordingly, as there were no comparable sales upon which Mr Jackson considered he could rely, his valuation approach was to determine the improved value of the property with its existing heritage improvements and to then deduct the added value of those improvements to reach its land value. He determined that improved value on the basis of a capitalisation of rent and a discounted cash flow analysis. He then deducted the added value of the existing heritage improvements by reference to the Building's replacement cost assessed by a quantity surveyor engaged by the appellant. He then depreciated that replacement cost by 25% to take account of the age of the Building, the fact that it must be maintained and continued in accordance with the Act, the recent refurbishments, the architectural and heritage significance of the Building and the significant costs of its ongoing maintenance. 33 Mr Hill criticised aspects of Mr Jackson's approach expressing the view that his method relied on the mistaken assumption that replacement cost equated to the added value of the improvements. Further, if Mr Jackson's valuation approach were to be adopted, it would have been more appropriate according to Mr Hill to derive the investment value of the property and the Building from actual returns which would have taken into account the heritage nature of the Building, including its condition, shape and efficiency. Those returns would be expected to be lower than those from a building with similar lettable area but not subject to heritage constraints. 34 Mr Hill's valuation approach proceeded on the assumption that on each of the base dates the primary use of the property was not materially different from that of a typical modern office building in the Sydney CBD. His first step, therefore, was to derive a land value of the property unaffected by the heritage restrictions of $1900m² of net lettable area (NLA) based on comparable sales evidence of similar unaffected sites. 35 Leaving aside as presently irrelevant Mr Jackson's criticisms of Mr Hill's deduced unaffected land value of the property of $1900m² of NLA, his second step was to adjust that figure to take into account the heritage restrictions upon the property including the design and layout inefficiencies of the Building by comparison with modern office buildings. He identified areas of the Building which would not attract the same commercial rentals as other parts of the Building due to heritage restrictions by applying various discounts to various parts of the Building resulting in an average figure of $1749m² of NLA. 36 Mr Hill's third step was then to make an allowance for the design and layout deficiencies of the Building by comparing the differential between the rental actually achieved by the Building and the rental that could be achieved from a hypothetical new building on the property. This resulted in a further discount leading to a land value of $1452m² of NLA of 24,530.3 m² which equated to a land value of the property of $35,617,995 before any allowance was made for what are referred to in the Act as "land improvements". When that allowance was taken into account (and which is not in issue on the appeal), Mr Hill's adopted final valuation figure was increased to $37,525,000 for each of the three base dates. 37 At first blush, there would not seem to be any reason in terms of valuation principle why either of the methods described in the foregoing paragraphs should not be adopted, the primary judge having to choose between the two depending upon his view of the reliability of each valuer's analysis of, and adjustments for, the various elements underpinning each valuer's final assessment: Seatainer Terminals at 437. The method adopted by Mr Jackson was a recognised method of valuing improved land being, in effect, the reverse of the summation method of valuation: cf Rost & Collins "Land Valuation and Compensation in Australia" (1978) at 96. It is also well established, as Callinan J observed in Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at 267 [280], that there is no legal principle that purports to, or could close for all times, the categories of methods of valuation which might be acceptable in a particular case. So in the present case the method adopted by Mr Jackson could only be "closed" if the Act, properly construed, led to that result. 38 The issue before his Honour, however, and which was further agitated on the appeal, was whether Mr Jackson's approach of determining the improved value of the property itself and then deducting the added value of the Building to arrive at its vacant land value was not, as a matter of law as distinct from a matter of judgment, open to his Honour to consider, let alone adopt. 39 Although the appellant accepted that prior to the amendments made to the Act by s 2 of the Valuation of Land and Local Government (Amendment) Act 1959 (the 1959 Act), decisions of the Privy Council and the High Court had outlawed the approach adopted by Mr Jackson, it was submitted that those amendments rendered those decisions no longer applicable. It is appropriate, therefore, to first turn to the history of the relevant statutory provisions. The history of the relevant statutory provisions 40 The two critical provisions of the Act relevant to this appeal are ss 6A(1) and (2) and 14G(1) and (2). They are in the following terms: " 6A Land value (1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made. (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. … 14G Valuation subject to heritage restrictions under EPI (1) Land that is ' heritage restricted ' on the date by reference to which its land value is to be determined is to have its land value determined on the basis of the following assumptions: (a) that the land may be used only for the purpose, if any, for which it was used when the value is determined, (b) that all improvements on that land when the value is determined may be continued and maintained in order that the use of that land as referred to in paragraph (a) may be continued, (c) that no improvements, other than those referred to in paragraph (b), may be made to or on that land. (2) Land is ' heritage restricted ' as at a particular date if the Valuer-General has determined that it would be reasonable to make the assumptions referred to in subsection (1) in respect of the land as at that date because of any provision of a planning instrument concerned with the heritage significance or heritage value of the land or any building, work or other thing on or in the land." 41 Section 6A(2) was inserted into the Act by the 1959 Act. Section 14G was inserted into the Act by the Valuation of Land Amendment Act 2000 (the 2000 Act). The Second Reading Speech with respect to the Valuation of Land Amendment Bill records the intention of the Government of the day to standardise assumptions and approaches to land value for rating and taxing purposes consistent with recommendations made by the Government's independent consultant, Ms Julie Walton, who in October 1999 prepared and published a report entitled Inquiry into Operation of Valuation of Land Act. Recommendation 7 of that report was to: "[s]tandardise the assumptions and approaches to land value for rating and taxing purposes. Take into account all conditions obvious to the valuer, for example heritage orders, in the initial valuation. Any concessions which are deliberately applied to rates but not land tax, or vice versa, should not create different land values." 42 In her report Ms Walton referred to ss 57-62A of the Land Tax Management Act 1956 (the Land Tax Act) observing that for the purpose of valuing land for land tax purposes that Act provided that the value of land that was "heritage restricted" was to be determined on the basis of the same assumptions now contained in s 14G(1) of the Act. As it was proposed to standardise the assumptions and approaches to land value not only for taxing purposes under the land tax legislation but also under the Act for rating purposes, it was recommended that the same assumptions should be inserted into the Act for the purpose of determining the land value of heritage restricted land for rating purposes as applied to the determination of the value of such land for land tax purposes. 43 Hence, Ms Walton observed, in the context of her reference to ss 57-62A of the Land Tax Act, as follows (footnotes omitted): "At the time of valuation certain assumptions about the condition and use of the land are to be made and valuations of specific kinds of land are to be approached in particular ways. Because land is assumed to be vacant and improvements are taken never to have been made , certain restrictions which are attached to particular improvements normally fall away and are not reflected in land values. This effect is however overridden by specific statutory provisions applying to heritage items, as noted below, land in colliery holdings, Crown lease restricted land and rent controlled land." (Emphasis added) 44 It will thus be seen that the legislative purpose of introducing s 14G into the Act was to bring the assessment of the land value of heritage restricted land for the purposes of the Act into line with the determination of the value of such land under other taxing statutes. 45 Of greater significance for present purposes is the provenance of s 6A(2). Prior to the 1959 Act which inserted that provision, land value or, as it was then called, the unimproved value of land, was to be assessed in accordance with the provisions of s 6 of the Act which relevantly was in identical terms to what is now s 6A(1). 46 An appropriate starting point in tracing the reason for the amendment of the Act in 1959 to insert what is now s 6A(2) is the decision of the Privy Council in Toohey's Ltd v The Valuer-General [1925] AC 439. In that case the appellant owned and occupied land upon which was erected a licensed hotel. The site had no special adaptability for the purpose of licensed premises. Its "unimproved value" for the purposes of the s 6 of the Act was assessed in an amount arrived at by deducting the value of the buildings, as appropriate to and suitable for licensed premises, from the amount which would have been realised if the whole property including its improvements had been sold as licensed premises. The Board held that the assessment was made upon a wrong principle since the value arrived at included the enhanced value due to the fact that the premises were licensed and, further, that the valuer should be directed to value the land itself with such advantages as it possessed as bare land but without any consideration of its value as including licensed premises. 47 The advice of their Lordships was delivered by Lord Dunedin who, after referring to s 6 of the Act, stated (at 443): "…Now, what he [the valuer] has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed. It is, therefore, to approach the question from a completely wrong point of view to begin with a valuation which takes in the improvements and then proceed by means of substraction of a sum arrived at by an independent valuation in order to find the required figure. What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvement; what would it fetch in the market? …" 48 Having determined that the methodology adopted by the valuer was not "permitted by the Act", his Lordship nevertheless added (at 444): "…Proceedings are begun by the taking of a figure for the subject as it stands as licensed premises. It is obvious that this figure is composed of three ingredients; first, the bare land itself; second, the buildings themselves constructed for and appropriate for licensed premises; third, the enhanced value due to the fact that the land and buildings in question are not only suitable for licensed premises, but are in fact licensed premises. When, however, the subtraction sum is entered upon it is only item 2 that is subtracted from the total figure; the result being that item 3 is all included in the unimproved value. From this follows the extraordinary result that the land is enhanced by the value of a licence which could only be granted in connection with buildings – for a licence such as this cannot be granted to sell liquor without premises – in a calculation in which you are told to assume that no building is there. …" 49 The construction of the old s 6 adopted by the Privy Council created some anomalies particularly where the land to be valued had the benefit of what are referred to as existing use rights. The problem arose in those cases where the land to be valued was zoned in such a manner that its highest and best use under that zoning produced a land value which was less than the value of the land with its existing use. In such a case the highest and best use of the land for valuation purposes would be its value for the purpose of its existing use rather than its value for a purpose permitted under its zoning. 50 Thus in Wunderlich Ltd v Valuer-General (1959) 5 LGRA 50, the land at the relevant date of valuation was used for the purpose of a factory. That use was an existing use as the land was zoned for residential purposes in a manner which prohibited its use for industrial purposes. The Valuer General valued the land on the footing that the hypothetical purchaser would be acquiring the land and continuing to use it for the purpose of a factory, that is, for its existing use rather than for one or more of the purposes permitted under its zoning as "Living Area" under the County of Cumberland Planning Scheme Ordinance, in which industrial use of the land was prohibited. 51 Hardie J referred to Toohey's case as holding that the unimproved capital value of land on which a licensed hotel was erected should be determined without regard to any additional value which the land could be treated as having by virtue of the premises being licensed under the Liquor Act. His Honour considered that the then s 6 of the Act did not permit the land of the appellant to be valued upon the assumption that the hypothetical purchaser would acquire the land with buildings on it which he could continue to use for the purpose for which the appellant had been using them in its business, namely, as a factory. 52 His Honour concluded his reasoning (at 65-66) in the following terms: "It will be apparent from this judgment that the ascertainment of improved capital value and unimproved capital value, particularly the latter, since the commencement of the County of Cumberland Planning Scheme Ordinance involves an artificial and most elusive enquiry. The valuer's role, which before the Ordinance was difficult, is probably now an almost impossible one. He and/or some other expert must now, it would appear, assume the role of a forecaster as at a particular date of the uses to which the responsible authority, or the Court on appeal, would be likely to consent. The making of such forecasts, if limited to a consideration of decision of the Court, would be essentially a matter for a lawyer who was a specialist in the particular field. However, the making of forecasts as to the decisions of a responsible authority whose decision are not reported and whose consents are not appealable, involves problems of even greater difficulty. The ascertainment of unimproved capital value has from time to time been described in the decisions as a most artificial and unreal enquiry… With the advent of the Town Planning provisions of the County of Cumberland Planning Scheme Ordinance and the imminence of local planning schemes the position is, and must become, even more unreal and artificial. Further, the anomalous position is created under which municipal rates and land tax, being assessed on unimproved capital value, are based upon a value determined, not by present user or by likely future user, but on a form of user having no relation to reality. The result is that industrial concerns established in residential areas which the town planning legislation seeks to transfer ultimately to areas reserved for industry would appear to be encouraged to remain in residential areas, because of the favourable basis on which valuations are made and rates and land tax are assessed. The position thus arises that valuation and rating legislation operation in one direction and town planning legislation in the other. "(Emphasis added) 53 At the time of the introduction of the Bill that became the 1959 Act, the Minister for Local Government and Highways, Mr Hills, explained its purpose in his Second Reading Speech as being: "… to remove an anomaly relating to unimproved valuations that has been disclosed by a recent decision of the Land and Valuation Court. In that case, which related to an area of land used for industrial purposes in a living area zone under the County of Cumberland planning scheme, the court held that the unimproved value of the land must be assessed on the basis of its zoning, notwithstanding that the planning scheme gives complete protection to the continued use for industrial purposes of the land and the buildings thereon. The result of this decision is that considerably lower unimproved values must be fixed than at present in respect of all lands occupied by industrial and commercial buildings in living areas or in proclaimed residential districts. It follows that the court's decision will have a disastrous effect upon the determination of the unimproved values of land occupied by service stations, industrial buildings and commercial premises in living areas, and of land occupied by some classes of residential flat buildings. As a result, a very substantial body of ratepayers will be relieved of a great proportion of the rates that they should justly bear, and the burden thereof will necessarily be transferred to the other owners of property, namely, home owners." 54 The "recent decision of the Land and Valuation Court" referred to by Mr Hills was, clearly, the decision in Wunderlich: Maurici v Chief Commissioner of State Revenue [2001] NSWCA 78; (2001) 51 NSWLR 673 at 682 [25]-[26]. The passage from the Second Reading Speech of Mr Hills which I have recorded above, was quoted by Campbell JA, with whom Beazley and Ipp JJA agreed, in Trust Company of Australia Ltd v Valuer-General [2007] NSWCA 181; (2007) 154 LGERA 437 at 455 [79]. It is appropriate in this context that I complete this aspect of the history of s 6A(2) by recording the following further passages from Campbell JA's judgment in that case: "80 Mr Hills quoted the following from "a recent decision of the Privy Council" : '… the physical improvements, with any value which they may attach to the land on which they are situated, (must) be excluded from the valuer's computation. The land will then be valued as land void of buildings but situated in the community with the amenities and facilities which have grown up around it …' (The passage quoted is from Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50 at 56.) 81 Mr Hills explained the mischief at which the introduction of section 6(2) was aimed as being: 'In cases such as that which was before the court, the valuer is faced with the peculiar and anomalous situation that under the law he cannot arrive at the unimproved value by having regard to the best use of the land, which happens to be the purpose for which it is in fact being used and can continue to be used. Instead, he is forced to use as a basis either its value for the purpose for which it can be used without the consent of the responsible authority, or some value arrived at on the supposition that the council might allow its use for one of the permitted uses.' (Hansard, 26 November 1959, page 2389 ff) " 55 In Ritchie v Valuer-General (1961) 21 LGRA 296, Sugerman J, after referring to Wunderlich, observed at 296-297: "The result of s 6(2) … is, in my opinion, that in determining the unimproved value of the subject land it is required to be assumed, looking at the matter as at the valuation date, that the land may be lawfully used or continued to be used for its present purpose … or for any purpose for which it can lawfully be used (meaning thereby anything that properly falls within the words 'alteration, enlargement, rebuilding or extension' in sub-s (2) of s 309. In short, the assumption required to be made in determining the unimproved value is an assumption of continued ability to use the land in such fashion as may be lawful … The difficulty sought to be overcome by inserting sub-s (2) into s 6 of the Valuation of land Act was that illustrated by the decisions to which I have referred. Because of the assumption required by sub-s (1) of s 6 land might be required to be valued on the footing that it was not available to be used for the very purpose for which it was being used, not only in fact but also lawfully pursuant to the authority contained in cl 32 of the County of Cumberland Planning Scheme Ordinance and notwithstanding the restrictions on use appearing elsewhere in the Ordinance. It was to overcome that difficulty and provide in the future for valuation in similar cases on the basis of present and potential lawful use that sub-s (2) was introduced into s 6. In my opinion the subsection, on its true construction, does not go beyond that . …" (Emphasis added) 56 In Illawarra Meat (Developments) Pty Ltd v Valuer-General (Land and Valuation Court, 10 March 1978, unreported), Rath J, after noting that s 6(2) appeared to have been inserted into the Act as a consequence of the decision of Hardie J in Wunderlich, observed (omitting citations): "…In that case it was held that the unimproved value must be determined without taking into account a non-conforming use of the land the continuance of which depended upon there being buildings on the land that might be maintained pursuant to cl 32 of the County of Cumberland Planning Scheme Ordinance. Though the immediate purpose of the Legislature was to deal with this particular state of affairs, I think the plain meaning of the language is that the continuance of an existing use is to be assumed, whether or not in the zone in which the land lies the use is a non-conforming use. As Else-Mitchell J said in Pye v Valuer-General 'the purpose or object of the amendment was to remove the obligation which ensued from s 6(1) to determine the unimproved value on the basis of the land having no potentiality of use for the very purpose for which it was in fact being used at the date of the valuation'. " See also, Sheath v Valuer General (1963) 64 SR (NSW) 415 at 419 per Hardie J. 57 Finally, after considering the authorities to which I have referred, together with the history leading to the insertion of s 6(2) traced by Carter J in Stubberfield v Valuer-General [1991] 1 Qd R 278 at 285-287, Campbell JA in the Trust Company case observed (at 456 [83]) "There has also been judicial recognition that the purpose of the former section 6(2) is to ensure that if land could not be newly developed for its present use under the relevant planning scheme, but can continue to be used for its present use by virtue of an existing use provision in the planning scheme, it can be valued on the basis of its existing use. …" Some further authorities 58 It is appropriate to refer to three further authorities before turning to the decision of the primary judge and the submissions with respect thereto on the appeal. The first is the decision of Roper J in Estate of George James v Valuer-General (1942) 15 LGR 110. That case did not involve any question of existing use as the land to be valued was regarded as a potential site for shops and offices of precisely the same nature as those which in fact were erected upon it as at the relevant date of valuation. After citing the passage from Toohey's which I have recorded in [47] above, Roper J observed as follows (at 111) "It is obvious that the best way to solve the problem propounded in this question [that is, the question posed by Lord Dunedin at the end of the passage from Toohey's referred to] is to ascertain what comparable land is in fact fetching in the market. … The approach to the problem, however, is different when one is dealing with town or city valuations where, as is almost invariably the case, there are no, or no reliable, sales of comparable land in its unimproved state. Sales of land in settled towns and cities are almost always sales of improved land, and an opinion of the unimproved value of the land can generally only be formed by stripping the sale of its improvements: in other words, endeavouring to ascertain how much of the purchase price is attributable to the improvements and the value which they add to the land, and how is much is attributable to the land in its unimproved state. … To get at the value of the unimproved land [in the present case] it is, therefore, a proper method to consider what improvements would be put on the land to put it to its best use, and what those improvements would cost, and what value they add to the land; then to ascertain what return would be derived from the land with its assumed improvements, or what a purchaser would pay for an improved property of the assumed nature facing such a return. The deduction of the value which the assumed improvements add to the land, which in this case is their cost, together with provision and interest for outgoings while the land is being developed, from the price which the purchaser would pay gives a reasonable indication of the unimproved value of the land." 59 It will be apparent from the foregoing that Roper J was postulating that the land to be valued would be assumed to be vacant; the valuer would then consider what improvements would be placed upon the land in order to put it to its highest and best use; he would then ascertain the return which would be derived from the land with its assumed improvements and would then derive the unimproved value by deducting from the value of the land the value which the assumed improvements added to the land which would be their cost. 60 If Mr Jackson had adopted such an approach in the present case it would not have run foul of the decision in Toohey's. The objector's valuer in James did adopt that approach. 61 However, the Valuer-General approached the determination of the unimproved value of the land in a manner similar to that adopted by Mr Jackson in the present case. Thus he took the actual rental return from the existing improvements which he then capitalised so as to give an improved value. He then valued the improvements as they existed at the date of valuation and arrived at the unimproved value by extracting that figure from the figure arrived at by capitalisation of the actual rental returns. 62 It was argued that by adopting this method the Valuer-General fell into the very error against which the decision in Toohey's presented "an emphatic warning". 63 Roper J addressed this issue in the following manner (at 112) (omitting citations): "… Further, if it appears that land is being devoted to its proper use from the point of view of exploiting its value, and that the improvements upon it are necessary and proper for that use, and that there is no element of value involved in the improved value other than the intrinsic value of the land and of the improvements, then there is in my view, no error involved in a valuer forming his opinion of the unimproved value of the land by deducting the value of the improvements from the improved value. Logically that method of valuation is just as supportable as the method which assumes that the land is unimproved, and then theoretically builds on it an imaginary building of precisely the same character as the actual one which has been assumed not to exist, in order to arrive at a valuation. In my opinion there is nothing in the judgment in Toohey's Ltd v Valuer-General which precludes the use of either of those methods. … In this case only two elements are involved, namely, the bare land itself, and the buildings constructed for and appropriate to the purposes for which they are used, which happen to be the purposes for which the land is most suitable. The result of the subtraction of the second ingredient from the total for the whole at least furnishes a guide to the unimproved value in this case." 64 The difficulty with Roper J's attempt to distinguish the decision in Toohey's is that his Honour fails to acknowledge the point made by Lord Dunedin in the second paragraph of the passage from his judgment which I have recorded in [48] above and which for convenience I repeat: "When, however, the subtraction sum is entered upon it is only item 2 that is subtracted from the total figure the result being that item 3 is all included in the unimproved value. From this follows the extraordinary result that the land is enhanced by the value of a licence which could only be granted in connection with buildings – for a licence such as this cannot be granted to sell liquor without premises – in a calculation in which you are told to assume that no building is there . …" (Emphasis added) 65 As a matter of principle, their Lordships in Toohey's made it clear that the requirement that the land was to be valued upon the assumption that it was bare land without any improvements was equally applicable to the position in James where the Valuer-General had adopted a valuation approach whereby he determined the improved value of the land by taking the actual rental return from the existing building and then deducting what he considered those improvements were worth. On the other hand, the objector's valuer in James had assumed bare land, had notionally constructed an appropriate building upon it and then determined its improved value by capitalising net rentals and then, in order to obtain an unimproved value, deducted the cost of constructing the improvements. 66 In James, the objector's valuer had abided by the requirement of s 6 and emphasised in Toohey's that it is to be assumed that there is nothing on the land to be valued in the way of improvements. On the other hand, the Valuer-General did precisely the opposite, namely, valued the land with its improvements in place. In other words, the starting point of each of the valuers was different: the objector started with bare land whereas the Valuer-General started with the land as actually improved. 67 In any event, the decision in Toohey's was affirmed by the High Court in The Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160. The case concerned s 5 of The Valuation of Land Act 1971 (S.A.), which was relevantly in the same terms as s 6A(1) of the Act. After referring to that provision the Court, in a joint judgment, said (at 165): "It follows from the terms of this definition [in s 5] that the unimproved value of the respondent's land … was to be ascertained by reference to the capital amount that an unencumbered estate in fee simple might reasonably expect it to realise upon sale, on the assumption that the improvements then existing on the land … had not been made. It is well settled that in establishing what that capital amount might be it is necessary to enquire what the hypothetical purchaser would pay for the land in a notional condition shorn of its improvements and that it is not permissible to arrive at the figure by identifying the value of the site in its improved state and then subtracting the value of the improvements. ( Toohey's Ltd v The Valuer-General )" 68 Their Honours continued in these terms (at 166): "It [ Toohey's ] tells us that it is the subject land in its unimproved state that is to be valued. It does not deny that sales of improved property in the vicinity may be relevant material for the purpose of valuing the subject land in its unimproved state when the improved property has been acquired so that its higher potential as vacant land may be realised, the cost of demolition of improvements being an additional element to what the purchaser is prepared to pay in order to acquire vacant land." 69 The third authority to which reference should be made is that of the High Court in Maurici. The issue in that case was different to that in the present notwithstanding that the landowner argued that the appropriate method of valuation required that an estimation be made of the value of the improvements upon the land to be valued and that that estimate be deducted from the notional selling price of the property in its fully improved state to derive its land value. Rather, the issue was whether, there being an absence of sales of comparable vacant sites, it was permissible to take sales of improved sites and to then deduct the value of the improvements from the sale price in order to arrive at an unimproved value of the sale properties which could then be applied, with or without adjustments, to the land to be valued. 70 In a joint judgment the Court referred to s 6A(1) and (2) of the Act and then continued (at 120 [16]) "The first step to be taken under s 6A is to identify what is capable of being regarded as improvements, 'other than land improvements'. The second step is notionally to remove the improvements from the land. It is at the third point that difficulties arise, how is the land in its notionally unimproved state to be valued? The traditional, and usually unexceptional method is to seek out relatively contemporaneous sales of comparable properties between parties at arms length unaffected by special circumstances … and to use those sales as a yardstick for the valuation of the relevant land." 71 At 121 [18] the Court observed that s 6A did not dictate that the valuation exercise to be undertaken required sales of improved land as distinct from sales of vacant land to be ignored if otherwise comparable. This is particularly so where sales of vacant land are scarce. 72 Accordingly, their Honours concluded (at 121 [19]) that "(i)mproved sales are used daily for the purposes of statutory evaluations under provisions similar to s 6A(1) of the Valuation of Land Act , by subtracting the added value of the improvements to them from their sale prices to derive unimproved values … Such sales, particularly in the case of a scarcity of vacant land cannot be disregarded. The contrary approach is required by the Act." The decision of the primary judge 73 It was submitted on behalf of the appellant to the primary judge that s 14G of the Act required consideration not only of the existence and continuance of the improvements on the land to be valued but also the assumption that only those improvements may be made to that land. This was said to be the antithesis of the assumption in s 6A(1) where the valuer is required to assume that the improvements (other than land improvements) had not been made. 74 Accordingly, as a consequence of this reversal of the assumption, the existing improvements and the use of them on the land to be valued directs the determination of its land value. Accordingly a valuation based on those improvements is the only available method of valuation. That process must, therefore, commence with a determination of the improved value of the land to be valued. 75 The appellant further submitted that Toohey's was distinguishable on the basis that it only represented the law when s 6A(1) was the only relevant provision in contrast to s 6(A)(2) or s 14G(1) where the relevant assumptions do not require confinement of use and the continuance of improvements in existence at the date of the valuation to be ignored. 76 After referring to a passage from the judgment of Roper J in James, part of which I have recorded in [63] above, his Honour continued in the following terms "13 Mr Craig submits that it is appropriate to apply this passage in the circumstances of s 14G. The Moneybox site is unique. Relying on the evidence of Mr Jackson he says there are no comparable sales and there can be none. The site is devoted to its proper use from the point of view of exploiting its value and the improvements are necessary and proper for the use. In Toohey's , the subject property also had an element of value in addition to the intrinsic value of the land and of the improvements, i.e. the hotelier's licence. I agree with Mr Ayling that there is no reason to distinguish Toohey's . James v Valuer-General was decided before Toohey's was adopted in Australia (in Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 at 165)." 77 It was submitted on behalf of the respondent that s 15G could not operate as a stand-alone provision. Accordingly, the phrase "land value" in s 14G(1) was an unambiguous reference to its definition in s 6A(1) of the Act. That provision tells the Valuer-General what to value i.e. the land without its improvements except land improvements. Section 14G(1) also describes how to value the land without its improvements but on assumptions different to those in s 6A(2). The two sections stand together and are to be given full effect except to the extent that the methodology is to be modified to superimpose the assumptions in s 14G(1) rather than those in s 6A(2) upon the exercise called for by s 6A(1). 78 It was submitted, therefore, that by the combined operation of ss 6A(1) and 14G(1) the assumptions to be made for the purpose of the relevant valuation exercise were as follows: "(a) In accordance with section 6A(1) of the Act, the land is to be considered to be, at the moment at which its valuation is determined, in the notional condition of being devoid of improvements (other than land improvements). (b) Sales of the subject land must be assumed to have occurred on the base dates between willing but not anxious parties. (c) The 'purpose for which the land was used' on the respective dates must be identified. (d) Identification of the purpose for which the land was used on those dates is to be determined at a suitable level of generality. (e) The purpose for which the land was used on the relevant dates in the present case was that of a commercial office building with retail banking at ground floor level, storage and car parking in basement levels. (f) Section 14G requires there to be assumed no legal or other impediment to the continuation and maintenance of the improvement actually on the land at the base dates. However, these issues only attain relevance insofar as they bear upon the capacity of the improvements to continue to be used for their purpose. (g) Any potential for adding to, replacing or altering the improvements on the land at the base dates must be disregarded under section 14G." (Emphasis added) 79 The primary judge accepted the foregoing assumptions as correctly reflecting the combined operation of s 6A(1) as construed in Toohey's supplemented by the assumptions required to be applied in determining the heritage restricted land value of the property referred to in s 14G(1). His Honour continued in these terms: "18. …Upon a cursory reading, the reference [in s 14G(1)(b)] to existing improvements appears to be contrary to the assumption that the land is vacant. However, the reference to existing improvements does not require the valuer of the land to consider the improvements to physically exist except for the purpose of defining the extent and impact of heritage restrictions on the land value within the meaning of s 6A. The improvements and their use are simply a means of identifying an assumption for the purpose of s 6A. 19 The additional assumptions required by s 14G impose an implied restriction or constraint on the use of the land and strictly limit the identity of improvements that can be placed on it. Section 14G says nothing about the reality of the state of the land except by reference to what is there for the purpose of identifying the terms of the restricted use that impacts upon value." 80 The primary judged concluded with respect to the present issue (at [26]) that " Toohey's cannot be distinguished from the present case. Mr Jackson's approach to valuation is to subtract the value of the improvements from the improved value of the site, a method not available to me since Toohey's was adopted in Fenton ." The submissions on the appeal 81 The appellant commenced its submissions by observing that the two valuers had agreed upon the following: (a) the "approach to value is in accordance with Section 6A(1) and Section 14G of the Valuation of Land Act 1916 "; (b) under s 6A(1), "the valuer is to consider the land as vacant , i.e. the valuer must assume the improvements had not been made as at the relevant Base Dates"; (c) "With regard to the heritage restrictions under the Environmental Planning Instrument the valuer must take into account additional assumptions in valuing the subject land as contained within Section 14G"; (d) "The use of the land as at the date of valuation comprised commercial office accommodation, retail banking with storage and car parking uses to the basements levels"; (e) "The use of the land as at the Base Dates are similar to those usages permitted elsewhere within the commercial core area of the Sydney CBD for properties zoned City Centre under the Central Sydney Local Environmental Plan 1996 ". 82 It was submitted that neither the Privy Council in Toohey's nor the High Court in Fenton Nominees were called upon to consider the meaning and effect of s 6A(2) of the Act, let alone s 14G(1). The primary judge erroneously regarded the question of statutory construction as closed notwithstanding that the words appearing in s 6A(1) had been supplemented and qualified in material respects by the assumptions required to be made in determining land value under s 6A(1) by s 6A(2) and/or s 14G(1). It was further submitted that the primary judge had misunderstood the effect and the application of the passages in Maurici, which I have recorded in [70] and [72] above. His Honour had erroneously considered that the High Court had made a distinction between on the one hand making adjustments to a comparable (improved) sale by deducting the value of the improvements to derive a land value which was permissible and, on the other, by deducting the value of the existing improvements on the land to be valued in order to deduce its unimproved value which was impermissible. 83 It was contended that no such distinction was warranted either in principle or arising from the reasons for the decision of the High Court in Maurici. As a matter of principle, if it was permissible to examine a comparable, improved sale of land and deduct the value of the improvements thereon to obtain a land value normally expressed as a rate per m², how could it be impermissible to undertake the same methodology to arrive at a rate per m² in respect of the land to be valued? 84 Furthermore, s 14G(1) refers to and requires the determination of the "land value" of land that is "heritage restricted". The latter expression and the assumptions which are required to be made with respect to land so restricted requires the valuer to apply his or her expertise to determine the land value of the land to be valued on those assumptions and to disregard the assumptions referred to in s 6A(2). There is no doubt that that submission is correct. As I see it, if the land to be valued is "heritage restricted' then, in effect, the applicable statutory provisions are s 6A(1) supplemented by the provisions of s 14G(1). As the reference in the latter provision to "land value" is a reference to the same expression in s 6A(1), all that is required is that the assumptions in s 14G(1) are substituted for those in s 6A(2) for the purpose of the valuation exercise. 85 Nevertheless, the appellant sought to draw a distinction between the assumptions required to be made under s 6A(2) in their impact upon the construction of s 6A(1) compared to the assumptions in s 14G and their impact upon s 6A(1). That submission was couched in the following terms in the appellant's written submissions on the appeal: "43. Subsection 6A(2) is concerned with assumptions about the use of the land in the ordinary case of valuation of land value. … The task of the valuer under s 6A(2) is to determine what the (highest and best) actual or potential use is and then to value the land on that basis. That is not inconsistent with the requirement in subs 6A(1) to disregard the value of improvements in determining land value. 44. The assumptions in s 6A(2) recognise that the improvements actually on the site may have no value to a bona fide purchaser and may not be reflected in the purchase price. It is natural then that the unimproved value of land (speaking here of land that is not heritage restricted) should be assessed by reference to the amount that a hypothetical purchaser would be willing to pay for land suitable for an appropriate (that is, lawful) purpose and that no part of the land value should reflect a value placed by a bona fide purchaser on the improvements actually on the land when the value is determined (see Valuer General v Fenton (1982) 150 CLR 160 at 165-166). It is natural too that the valuer should be permitted to look to the prices paid for comparable land in determining land value. Given the reality that a purchaser may acquire land in order to convert it, in establishing what the capital amount is, it is unsurprising that the figure should not be arrived at by identifying the value of the site in its improved state and then subtracting the value of the improvements. This would not necessarily reflect what the hypothetical purchaser would pay for the land in a notional condition shorn of its improvements. 45. The same cannot be said of heritage restricted land. Viewed from the standpoint of both vendor and purchaser, s 14G recognises that the price which is obtained will reflect the diminution in value to them of being restricted to use of the existing improvements in accordance with the applicable heritage restrictions. That reality is reflected in the language of s 14G. 46. Properly construed, in circumstances concerning heritage restricted land, the specific provision in s 14G(1) is inconsistent with and displaces the general provision in s 6A(2). The trial judge should have concluded that a valuation of heritage restricted land was required to be prepared by assessing the land value of land (s 6A(1)) on the basis of the assumptions set out in s 14G(1) and not otherwise." 86 I have no quarrel with the contents of paras 43, 44 and 46 of those submissions although it does not necessarily follow where the land is to be valued on the basis of its existing use including the existing use of a building, the height and floor space ratio of which would otherwise be prohibited were it not for that existing use that the existing improvements are to be ignored. However, I cannot accept the submission in para 45 that s 14G(1) permits, for heritage restricted land, a valuation approach which is impermissible, notwithstanding s 6A(2), for land that is not so restricted. In my opinion, there is no relevant distinction between ss 6A(2) and 14G(1) in terms of their relationship to s 6A(1), and so much was ultimately conceded by the appellant in oral argument. 87 In my view there is no logical basis for suggesting that the principle articulated in Toohey's is applicable to land which is not heritage restricted but not where it is so restricted. His Honour was in my opinion correct to find that there was no inconsistency between the provisions of s 6A(2) and 14G(1) in that the assumptions in the former applied where the land was not heritage restricted whereas the assumptions in the latter applied where it was. 88 In other words, for the purpose of determining land value in accordance with s 6A(1), one either made the relevant assumptions referred to in s 6A(2) or, if the land was heritage restricted, the assumptions referred to in s 14G(1). 89 Accordingly, the respondent submitted that the primary judge was correct to hold (at [18]) that the reference in s 14G of the Act to existing improvements did not permit the valuer of the relevant land to consider the improvements as physically existing except for the confined purpose of defining the extent and impact of the heritage restrictions on the highest and best use of the land for the purpose of determining its "land value". Accordingly, consideration of the actual improvements and their use was simply a means of providing the parameters of an assumption for the purpose of determining land value pursuant to s 6A(1). Both sets of provisions therefore operated harmoniously. 90 Finally, some attempt was made by the appellant to fasten on the reference in s 14G(1)(b) to the assumption that all improvements on the land to be valued "may be continued". A similar expression is to be found in s 6A(2)(b). However in both provisions the purpose of the assumption that improvements may be continued is, in the case of s 6A(2)(b) "in order to enable the land to continue to be" used for the purpose for which it was being used at the date to which the valuation relates and, in the case of s 14G(1)(b) "in order that the use of the heritage restricted land may be continued, being the purpose for which it was being used when its value was determined'. Any difference between those provisions is purely semantic. In substance they have the same effect. The assumption that the improvements "may be continued" does not mean that the land may be valued in its improved state. The appellant's submissions should be rejected 91 I am conscious of the point made by Campbell JA in the Trust Company case at 443-444 [18] that the starting place for construing a particular statutory provision is the meaning of the words of that provision assisted by consideration of the context in which the statutory expression occurs and the history and purpose of that provision. I further accept his Honour's observation (at 444 [19]) that the words of the statute in question, in their context and with their history and purpose, have primacy. 92 Bearing in mind those principles, and as the speech of Lord Dunedin in Toohey's as confirmed by the High Court in Fenton Nominees established, the clear words of s 6A(1) require the exercise of determining land value to be approached upon the assumption that improvements, other than land improvements, "had not been made". The issue in the present case is whether the insertion of s 6A(2) on the one hand and s 14G(1) on the other, given the history and purpose of those provisions, require a different construction to be placed upon the assumption referred to in s 6A(1). Accepting, as does the appellant, that there is no relevant difference between ss 6A(2) and 14G(1) for this purpose, the question raised by the appellant's submissions is whether the assumptions referred to in those provisions have the effect of replacing the assumption in s 6A(1). I say this because the effect of Toohey's as confirmed in Fenton Nominees is to render impermissible the determination of land value by a method which, as a first step, assesses the improved value of the relevant land and, as a second step, deduces its "land value" by deducting the added value of the improvements from that improved value. 93 Although the question of construction with which this appeal is concerned was not directly in issue in the decision of this Court in the Trust Company case, nevertheless there are passages in the judgment of Campbell JA which support the construction of the primary judge. Thus, his Honour observed (at 446 [33]): "It is particularly important, for present purposes, that there is a particular order of operations that section 6A requires to occur in ascertaining the 'land value'. In carrying out the thought-task that section 6A(1) calls for, first, the ' improvements' other than land improvements are notionally removed. Only then does the notional sale occur. And it is by reference to that notional sale that the highest and best use is determined. Thus, it is necessary to determine the identity of the improvements that are to be removed before the highest and best use can be ascertained." At [34] his Honour noted that support for that view of s 6A(1) could be derived from the speech of Lord Dunedin in Toohey's at 443: see [47]. He then noted (at 447 [35]) that he could see no relevant difference between the original s 6 that Lord Dunedin construed and the present s 6A(1) "so far as the order of operations that the section requires to be notionally performed is concerned." 94 Campbell JA then rejected a submission that the identity of the improvements upon the land to be valued was ascertained by reference to what is the highest and best use, which required that use to be known before the identity of the improvements was ascertained. This was because "the temporal sequence of events that s 6A requires simply does not enable that to occur." 95 His Honour then considered the provisions of s 6A(2). At 449 [49] his Honour said: "The opening words of section 6A(2), and the history of section 6A(2) that is considered at para [78] ff below, both provide support for the subsection being read as an exception to section 6A(1). However, it is an exception in that it provides, for land that has the benefit of existing use rights, a method of valuation different to the method that is provided by section 6A(1). …" I have already referred in [53] and [54] above to his Honour's consideration of the history of s 6A(2). 96 Campbell JA considered the effect of s 14G(1). In particular, at 451 [56] he noted that s 14G(1)(b) contemplated those improvements enabling the existing use of the land to be maintained, regardless of what was the highest and best use of that land. He then continued at 451 [58] in these terms: "Section 14G(1) is in some ways the converse of section 6A(2). Both of them provide a different method for valuation of land to that which is provided by section 6A(1). Section 6A(2) is concerned with ensuring that land is not undervalued when an existing use of the land is more valuable than any use to which the land could be put if the improvements on it had not been made, while section 14G(1) is concerned with ensuring that land is not overvalued when heritage restrictions on the land have the effect that continuing its existing use is less valuable than any use to which the land could be put if the improvements on it had not been made. …" 97 Finally, his Honour considered the decision of the High Court in Fenton Nominees. Having set out at 446 [102] the passage from Fenton Nominees at 165 which I have recorded in [67] above, his Honour concluded (at 460 [103]) that that passage was consistent with the conclusion at which he had arrived namely, that the word "improvements" in s 6A(1) of the Act means any human operations on the land that have the effect, as at the date of valuation, of enhancing the land's value compared with its natural state. 98 Although not referred to by Campbell JA in the Trust Company case, the passage from the joint judgment of the High Court in Maurici at 120 [116] (which I have recorded in [70] above) supports his Honour's construction of s 6A(1) in [33] of his judgment which I have set out in [93] above, namely, that in carrying out the task that s 6A(1) calls for, first, the "improvements" other than land improvements are notionally removed and, second, only then does the notional sale occur. This is consistent with the second and third steps referred to by the High Court in Maurici at 120 [16] where, for convenience, I repeat what their Honours said: "The first step to be taken under s 6A is to identify what is capable of being regarded as improvements … The second step is notionally to remove the improvements from the land. It is at the third point that difficulties arise. How is the land in its notionally unimproved state to be valued?" 99 Two recent decisions in the Land and Environment Court are of significance. The first is that of Biscoe J in Krisgay Pty Ltd v The Valuer-General [2007] NSWLEC 600. Although the issue in the appeal in that case concerned the proper construction of the definition of "heritage valuation" in s 123 of the Heritage Act 1977 (NSW), his Honour examined the effect of s 14G(1) on the determination of "land value" as defined in s 6A(1) of the Act as the assumptions in s 14G(1) were identical to those required to be made in determining a "heritage valuation" for the purposes of s 123 of the Heritage Act. 100 The land to be valued in Krisgay comprised land upon which an 1880's three storey hotel building had been constructed with Victorian parapets and verandas. As the relevant land was zoned only for medium density residential development, and hotels were a prohibited use, the existing hotel had the benefit of existing use rights. 101 The applicant's valuer had adopted as one of his valuation approaches deducting the value of the improvements upon the relevant land from its current improved value in order to ascertain its heritage value. It was submitted that that method was either in accordance with the decision of the Privy Council in Toohey's as approved by the High Court in Fenton Nominees or that Toohey's was distinguishable. The Valuer-General submitted that that method of valuation was contrary to the statutory requirements of s 6A(1) which did not depend upon the improvements upon the land to be valued except to inform the relevant heritage assumptions. 102 After setting out the relevant statutory provisions and referring to the passages from Toohey's and Fenton Nominees which I have recorded in [47] and [67] above respectively, Biscoe J said (at [25]): "…There is no relevant difference between the original s 6 construed in Toohey's and the present s 6A(1) so far as concerns the order of operations that the section requires to be notionally performed: Trust Company at [35]. Section 6A(2) is not a reason for distinguishing Toohey's . The former s 6(2), which was in the same terms as the current s 6A(2), was introduced in 1959 to remove an anomaly arising from a court decision that the unimproved value of land must be assessed on the basis of its zoning notwithstanding that the planning scheme protected existing uses: Trust Company at [78] - [83]." 103 His Honour then referred to [16] and [19] at 120-121 of the High Court's judgment in Maurici noting (at [27]) that their Honours did not refer to either Toohey's or Fenton Nominees in which they approved Toohey's. 104 Given that it was a common technique when determining the unimproved value of a comparable sale of improved land to make a deduction of the value of the improvements from the improved value, being its sale price, the question arose as to whether, as that approach was not permitted when applied to the land to be valued itself, that was anomalous. Biscoe J then referred to the affirmative answer to that question by Jacobs J in Myer (SA) Stores Ltd v Valuer-General (1986) 60 LGRA 158 at 163 and to the similar misgivings expressed by Roper J in James at 112 to which I have referred in [63] above. 105 However, in Biscoe J's view (at [28]), Toohey's was indistinguishable in James and was indistinguishable in the current context of s 6A(1) as confirmed by this Court in the Trust Company case. 106 At [30] his Honour posed the question: Can Fenton/Toohey's and Maurici be rationalised? He illustrated the question in the following manner: "…Suppose there are two identical buildings on adjoining lots A and B. Lot A is to be valued for its ' land value ' as at a certain base date under s 6A of the V of L Act . Lot B was sold shortly before the base date and is a comparable sale to which regard should be had when determining the land value of Lot A. Under Fenton/Toohey's the land value of Lot A cannot be determined by taking the improved value of Lot A and deducting the improvements. However, under Maurici the unimproved value of Lot B can be determined by that method for the purpose of utilising it as a comparable sale. If this is capable of being rationalised, it may be on two bases. First, as a matter of construction, the V of L Act simply mandates that improvements (other than ' land improvements ' as defined) must be kept entirely out of view. It is only then that the notional sale occurs. Second, there has been no actual sale of Lot A whereas Lot B has actually been sold. Where there is a sale, the sale price is a reliable indicator of value; and the value of improvements is in view, even if not expressly identified and segregated in the sale contract from the unimproved value. Where there has been no sale, the value of improvements is not in view, at least not in the same way." 107 Having determined (at [33]) that notwithstanding that s 123 of the Heritage Act speaks of a "heritage valuation" whereas s 14G of the Act does not, it was nevertheless convenient to refer to a s 14G valuation as a "heritage valuation" for "that is what it is". His Honour continued: "…Both sections, in my opinion, are to the same effect: a heritage valuation is the unimproved value of land (except for land improvements as defined) assuming that it can only be used for its existing purpose and with the existing improvements (and no other improvements). To that extent, both sections displace s 6A of the V of L Act which requires an assessment of the unimproved value of land (except for land improvements as defined) assuming that it can be used for its highest and best use." 108 With respect, I cannot agree that s 14G displaces s 6A if his Honour intended that the whole of that provision was so displaced. No doubt s 123 displaces s 6A but that is not the case with s 14G. It only displaces s 6A(2) in those cases to which it applies. 109 His Honour then continued in these terms (at [36]): "36 The two steps under s 123 are: (i) a valuation under s 6A of the V of L Act less; (ii) an allowance determined as a consequence of assuming that the land may be used only for the purpose for which it was used at the relevant date and that only the improvements on the land as at that date (and no other improvements) may be continued and maintained in order that the use of that land may be continued. Section 14G of the V of L Act does not expressly spell out those two steps but simply provides that land value is to be determined on the basis of the same assumptions. No heritage hotel sale could capture all those assumptions because in the real world such a sale is not as restricted as the heritage assumptions require. That tends to suggest to that it is implicit in s 14G of the V of L Act that the same two steps are necessary." 110 Accordingly, and consistent with the methodology adopted by Mr Hill in the present case, his Honour (at [38]) determined that step one was to assess the s 6A land value unaffected by heritage restrictions (by which I understand his Honour to mean a s 6A(1) land value) and that step two was to discount the value determined in step one to reflect the s 14G heritage assumption that the only improvements that may be made are those on the land to be valued. 111 In my opinion, two critical conclusions can be drawn from the authorities. First, that s 6A(2) or, in the case of heritage restricted land, s 14G(1), do not negative the assumption in s 6A(1) that the improvements upon the land to be valued "had not been made". It is a consequence of this proposition, as Campbell JA noted in the Trust Company case at [33], that it is only once the improvements are notionally removed from the land to be valued that the notional sale of that land as called for by s 6A(1) can occur. Second, as the assumptions in ss 6A(2) or 14G(1) do not replace the assumption in s 6A(1) for the purpose of determining the capital sum which the fee simple of the relevant land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, the improvements upon that land are to be ignored as if they had never been made. It follows, as Jagot J noted in Long Reach Capital Pty Ltd v Valuer-General [2007] NSWLEC 721 at [39], that the assumption in s 6A(2)(b) or the similar assumption in s 14G(1)(b) refers to the continuance of the improvements existing upon the land as at the date of valuation only for the purpose of enabling the land to be valued upon the basis, if it be the case, that its highest and best use is the continuation of its existing use as permitted by s 6A(2)(a) and as required by s 14G(1)(a). 112 The foregoing propositions are not only supported by the dicta of Campbell JA in the Trust Company case but also by the observations of Sugerman J in Ritchie at 297 that s 6A(2) was introduced into the Act to overcome the difficulty illustrated by the decision of Hardie J in Wunderlich that the assumption required to be made by s 6(1) as to the absence of existing improvements could result in the land being valued on the footing that it was not available to be used for the very purpose for which it was in fact being used where that use, where it was an existing use, was its highest and best use. As Sugerman J observed in Ritchie and I repeat, "It was to overcome that difficulty and provide in the future for valuation and similar cases on the basis of present and potential lawful use that sub-s.(2) was introduced into s 6. In my opinion the subsection on its true construction, does not go beyond that ." (Emphasis added) 113 In other words, it was clearly the view of his Honour that the assumption referred to in the then s 6(2)(b) was not intended to negative or replace the assumption in s 6(1) that the relevant land be valued upon the assumption that improvements other than land improvements had not been made. 114 If further confirmation of the object or purpose of the insertion of s 6(2) be required, then it is clear from the Second Reading Speech of Mr Hills, which I have set out in [53] above, that it was only to remove the anomaly whereby land which had the benefit of an existing use which was a higher and better use than that otherwise permissible under the relevant zoning instruments upon the assumption that the land was shorn of improvements, resulted in a considerably lower unimproved value being fixed than was otherwise justified given the ability of the land to continue to be used for its existing use. 115 Furthermore, in my view, there is nothing anomalous in permitting the use of comparable sales of improved land to be used for the purpose of deducing therefrom an unimproved value of the same land which is then applied, with or without adjustments, to the land to be valued but outlawing the use of that method with respect to the land to be valued by valuing it in its improved state and then deducting, in order to obtain its land value, the added value of its existing improvements where the statute as a matter of construction mandates that result. This is so not only for the reasons suggested by Biscoe J in Krisgay at [30] which I have recorded in [106] above and with which I respectfully agree, but also because the history, the objective and the text of ss 6A(2)(b) and 14G(1)(b) and (c) cannot, as I have already noted, be construed in a manner which has the effect of impliedly repealing of that part of s 6A(1) which requires land value to be determined upon the express assumption that the improvements upon the land at the date of valuation had never been made. 116 In the present case, it was therefore impermissible to approach the valuation task with respect to the property in the manner adopted by Mr Jackson which was the very antithesis of the assumption which s 6A(1) required to be made before the valuation exercise was commenced. That is not to say that the particular improvements upon the property were to be ignored for all purposes. In the context of the present case it required the valuers to value the property as vacant land (other than for land improvements) upon the basis first, that it would only be used for the purpose for which it was being used at the date of valuation; and, second, that the only building in which that use could be continued was the existing building upon the land with all its perceived benefits as a heritage building on the one hand and its perceived deficiencies in terms of its design, internal layout etc., on the other. 117 The valuation of the property upon those assumptions neither required nor mandated that the property be valued in accordance with Mr Jackson's methodology, which had been rejected as an available methodology by the Privy Council in Toohey's, by the High Court in Fenton Nominees and by this Court in the Trust Company case. Reservations as to the reasoning in Toohey's 118 Since writing my judgment in this matter I have had the benefit of reading in draft the judgments of Spigelman CJ and Santow JA. The latter agrees with the reservations expressed by the former so it is only necessary for me to comment on those observations of the Chief Justice with which I respectfully disagree. 119 I preface my remarks by observing that the concept of "land value" under the Act is, to say the least, artificial. It was so described by Else-Mitchell J in Barber v Valuer-General (1969) 17 LGRA 408 at 410. Nevertheless, it must be determined as it is the basis of all rating and taxing in this State by ascertaining a figure which conforms to the statutory specification mandated by s 6A. That task has also been described as a "mental exercise in unreality", "unique" and "novel": Leichhardt Municipal Council v Seatainer Terminals (1979) 40 LGRA 353 at 361 per Ash J at first instance. 120 The valuation exercise required to be undertaken under the Act may be contrasted with the determination of compensation for the compulsory acquisition of land under the Land Acquisition (Just Terms Compensation) Act 1991 which requires the land taken to be valued in its existing state and condition without any relevant artificial constraints. 121 A common course which is followed for the purpose of determining land value under the Act was described by Else-Mitchell J in Barber at 410-411 as the taking of sales of improved land and then to make deductions from the purchase price for any improvements which contributed to the sale price which will then indicate the value of the sale land in its unimproved state. That methodology was confirmed by the High Court in Maurici. 122 However, the difficulty of ascertaining the unimproved value stems, as his Honour said in Barber at 415 "…from the fact that, as the Privy Council has said [in Toohey's ], the statutory formula requires the assumptions to be made, first, that the improvements in fact on the land have never been made, that is, that the land is in its original condition as it was when the first white settlers came here, and, secondly, that all the surrounding land other than that being valued is in the same condition as it is found at the present time." 123 His Honour continued (at 416) "It is nevertheless the task of the valuers and the Court to do the best they can with the available material and in the absence of sales of similar land in an unimproved condition the ascertainment of the unimproved value must proceed from an analysis of sales of improved land and by allowing deductions for the value which those improvements have added to the land." 124 I am unaware of any case not involving a determination of unimproved land value under the Act or its equivalent in other States before or after Toohey's where the valuation method adopted in this case by Mr Jackson has been accepted by a specialist valuation court in preference to the comparable sales method where such sales, improved or unimproved, are available. 125 In the foregoing circumstances I cannot, with respect, agree with the Chief Justice (at [7]) that the reasoning of the Judicial Committee in Toohey's was either glib or unconvincing. At least prior to the insertion into the Act of s 6(2) by the 1959 Act the decision and the reasoning which supported it was, in my view, the inevitable result of the clear words of the statute. 126 Nor can I accept the observation of his Honour at [8] of his judgment that read in the context of s 6A(2), s 6A(1) can no longer be described as showing "that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed." 127 Furthermore, I cannot accept his Honour's observations (at [9] and [16] respectively) that the effect of s 14G(1)(b) is that "removing the improvements is impermissible" or that the valuer is "now required to accept that the improvements did exist, but to value the land as if they did not". The statutory assumption in s 6A(1) remains: the improvements on the land to be valued are to be removed and the land valued as if they had never existed. 128 However, this does not mean that the improvements which in fact exist are to be ignored. Their continuance under both ss 6A(2)(b) and 14G(1)(b) is to be assumed but only for the limited statutory purpose of ascertaining highest and best use to which the land may be put in determining its value. Contrary to the view of the Chief Justice, the text of the provisions referred to are incapable of extending beyond that consideration. Sugerman J so held in Ritchie (see [33] above) and he was one of the most experienced judges in this area of the law whose views are entitled to considerable respect. 129 Although I accept that the notional removal of the improvements from the land to be valued is a requirement of the statute, that notional removal is to take place before the land is valued. This is because, as a matter of logic, the land cannot be valued until that assumption is made. Only then does the valuer know exactly what it is that he is to value. 130 It follows from the foregoing in my view that the current text of the Act logically stands in the way of valuing the relevant land in its improved state in the manner adopted by Mr Jackson as his primary method of valuation and then deducing its unimproved value by deducting from its improved value the added value of the improvements. In my opinion this is contrary to what I still regard, notwithstanding the additions of ss 6A(2) and 14G(1), as the clear requirements of s 6A(1). 131 Although such a result may be regarded as artificial or lacking in reality or even as rendering impermissible a method of valuation which is said to be rational (though in my view inherently unreliable), nevertheless that is what the statute requires. The fact that a similar method is used in deducing an unimproved land value from the sales of improved land is beside the point. However, as Biscoe J points out in Krisgay in the passage recorded by me in [106] above, the use of such sales is far more reliable than directly valuing the relevant land as improved land and this is so for two reasons. 132 The first is that with sales, the improved value of the sale land has actually been determined by the market. Only one exercise is then required: the deduction of the added value of the improvements to arrive at the bare land component of the sale price. The second is that Mr Jackson's method requires the additional and primary exercise of determining the improved land value without reference to the market generally or to market sales of comparable land in particular. The weakness of this method is that this primary exercise of determining the improved value of the relevant land has not been tested in, let alone determined by, the market and for that reason alone is more likely to give rise to greater problems of unreliability. 133 Accordingly, for the foregoing reasons I am unable, with respect, to share the reservations voiced by the Chief Justice and Santow JA. Conclusion 134 For the foregoing reasons in my opinion, the primary judge correctly concluded that notwithstanding the provisions of s 14G(1)(b) and (c), the decision in Toohey's as confirmed by the High Court in Fenton Nominees was still applicable to the determination of the land value of the property. 135 Accordingly, I would propose that the appeal be dismissed with costs. ********** 29/01/2008 - Amendment to cross reference - Paragraph(s) 131 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.