Land and Environment Court New South Wales Medium Neutral Citation: Valuer-General v Kogarah Town Centre Pty Limited [2014] NSWLEC 186 Hearing dates: 18 November 2014 Decision date: 28 November 2014 Jurisdiction: Class 3 Before: Biscoe J Decision: Appeals allowed: orders at [49] Catchwords: VALUATION OF LAND - objections to Valuer-General's valuations determined by Commissioners of the Court - further appeal on questions of law from decision of Commissioners - adjoining lands owned by the same person valued by Valuer-General as one under s 26 Valuation of Land Act 1916 and apportioned approximately 70% and 30% under s 28 (because different parts were situated in different local government areas) for 2007-2011 base dates - Commissioners found s 26 values for each year too high or too low and that the correct apportionment was approximately 60% and 40% - Commissioners upheld appeals re the land where 60% correct apportionment (instead of 70% incorrect apportionment) showed a lower value than Valuer-General's value - but Commissioners dismissed appeals and confirmed valuations re the other land where 40% correct apportionment (instead of 30% incorrect apportionment) showed a higher value, on basis that Court has no power to increase an apportioned value - whether error of law. Legislation Cited: Land and Environment Court Act 1979 s 56A Valuation of Land Act 1916 ss 6A, 26, 28, 29, 34, 35B, 35C, 37, 39, 40 Cases Cited: Falk v Chief Commissioner of State Revenue [1999] NSWLEC 301 Falk v Valuer-General [2005] NSWLEC 141 Kogarah Town Centre Ply Limited v Valuer-General [2014] NSWLEC 1085 Kogarah Town Centre Pty Limited v Valuer-General (No 2) [2014] NSWLEC 1107 Kogarah Town Centre Pty Limited v Valuer-General (No 3) [2014] NSWLEC 1124 Marcus Cornelius Noorbergen v Valuer-General [2004] NSWLEC 243 Roy Morgan Research Centre Pty Limited v Commissioner of State Revenue of the State of Victoria [2001] HCA 49, (2001) 207 CLR 72 Category: Principal judgment Parties: Valuer-General (Applicant) Kogarah Town Centre Pty Limited (Respondent) Representation: COUNSEL: T S Hale SC and M Carpenter (Applicant) Submitting appearance (Respondent) SOLICITORS: Crown Solicitor's Office (Applicant) Gadens (Respondent) File Number(s): 31133-31137/12 Decision under appeal Citation: Kogarah Town Centre Pty Limited v Valuer-General (No 3) [2014] NSWLEC 1124 Date of Decision: 2014-06-18 00:00:00 Before: Moore SC and Brown C Judgment 1Under the Valuation of Land Act 1916 (VLA) the Valuer-General (VG) valued in each of five years two adjoining parcels of land as one as required by s 26, and under s 28 apportioned that value between the two parcels approximately 70% and 30%. Under s 28 the value of each part of the s 26 valuation of the whole must bear the same proportion to the value of the whole as the area of each part bears to the area of the whole. On appeals to this Court, in Class 3 of the Court's jurisdiction, two Commissioners found that the s 26 combined value in two years was higher and in three years was a little lower, and that the correct apportionment was approximately 60% and 40%. The Commissioners allowed the appeals and applied the correct apportionment of 60% instead of 70% to one parcel thereby reducing its value in each year. But in relation to the other parcel where the s 28 correctly apportioned value was higher than the VG's incorrectly apportioned s 28 value in each year, they dismissed the appeals and confirmed the incorrect s 28 apportionment of about 30% because they considered that under the VLA the Court has no power to increase the VG's valuation, except where the appellant contends for a higher value. Thus, the appellant received the benefit of the correct apportionment for one parcel by way of a lower value but avoided the converse increase in the value of the other parcel. 2The VG now appeals on questions of law from the Commissioners' latter decision. In my opinion, for the reasons that follow, they erred in law in not correctly construing and applying the VLA, the appeals should be allowed and orders made applying the correct apportionment to both parcels of land. Background 3Kogarah Town Centre Pty Limited appealed to this Court against the VG's valuations under the VLA of adjoining parcels of land, Lots 1 and 2 in DP 558531, known as the Kogarah Town Centre at Railway Parade and Station Street, Kogarah (subject land) for five base dates: 1 July 2007, 2008, 2009, 2010 and 2011. The Kogarah Town Centre is a shopping centre adjacent to the Kogarah railway station. The appeals were merits reviews in Class 3 of the Court's jurisdiction and were heard and determined by the Senior Commissioner and another Commissioner. They delivered three judgments over time. 4Pursuant to s 56A of the Land and Environment Court Act 1979, the Valuer-General now appeals to a judge against the Commissioners' decision and final orders in their third judgment: Kogarah Town Centre Pty Limited v Valuer-General (No 3) [2014] NSWLEC 1124 (third judgment). Appeals under s 56A are limited to questions of law. In these appeals by the Valuer-General, the respondent (the applicant before the Commissioners), Kogarah Town Centre Pty Limited, has filed submitting appearances save as to costs. Consequently, I have not had the potential benefit of a contradictor's submissions. 5As the two adjoining parcels of land were owned by the same person, they had to be included in one valuation for each base date: s 26 VLA. However, the subject land straddles the boundary between the Kogarah Local Government Area (LGA) and the Rockdale LGA. As a result, it was necessary to apportion the total land into two parts: s 28 VLA. Under s 28 the value of each part apportioned must bear the same proportion to the value of the whole as the area of each part bears to the area of the whole. 6For this reason, the subject land has two property identifiers (PID): PID 1502216 and PID 1536207. 7PID 1502216 comprises the whole of Lot 1 and part of Lot 2 and has an area of 4,421m2. It lies within the Kogarah LGA (the Kogarah PID). 8PID 1536207 comprises the balance of Lot 2 and has an area of 2,927m2. It lies within the Rockdale LGA (the Rockdale PID). 9In the first of the Commissioners' three judgments, they determined the s 26 combined land values and the apportionment for each of the base dates. They proposed to uphold the appeals and reduce the s 28 apportioned land values for the Kogarah PID, and to dismiss the appeals and confirm the s 28 apportioned land values for the Rockdale PID: Kogarah Town Centre Ply Limited v Valuer-General [2014] NSWLEC 1085 at [125]-[140]. They granted leave to the parties to be further heard on the correctness of their calculations and appropriateness of the proposed orders before making final orders. 10In their second judgment, the Commissioners made arithmetical corrections but did not otherwise alter their conclusion on the orders proposed to be made: Kogarah Town Centre Pty Limited v Valuer-General (No 2) [2014] NSWLEC 1107. 11After the first judgment, as a result of questioning by the Senior Commissioner, it became apparent in respect of each of the base dates that the VG had apportioned the s 26 combined land value 71.43% to the Kogarah PID and 28.57% to the Rockdale PID. 12This was inconsistent with the agreed position reached earlier between the valuers engaged by each of the parties. The valuers had agreed that the correct apportionment was 60.13% to the Kogarah PID and 39.87% to the Rockdale PID. This was because the area of the Kogarah PID (4,421m2) and the Rockdale PID (2,927m2) were respectively those percentages of the combined area of both PIDs (4,421m2 + 2,927m2 =7,348m2). The Commissioners accepted that this agreed apportionment was correct. 13In the third judgment, the Commissioners partly applied the correct apportionment. They applied the correct 60.13% to the Kogarah PID. However, they applied the VG's incorrect 28.57% to the Rockdale PID. A total of 88.74%. They recognised that this was a "mathematical absurdity" but said it was derived by application of the correct statutory process: at [95]. 14The respective s 26 total valuations for the whole of the subject land were (third judgment [12], [25]): VG Commissioners $ $ 2007 5,400,000 6,312,000 2008 5,600,000 6,500,000 2009 5,600,000 5,308,000 2010 5,600,000 5,524,000 2011 5,600,000 5,524,000 15Thus, the Commissioners found that for 2007 and 2008 the s 26 combined land value of the subject land exceeded that determined by the VG. For 2009, 2010 and 2011 they found that the s 26 combined land value of the subject land was a little less than that determined by the VG. 16The respective s 28 apportioned values were (third judgment [18]-[19], [25], [96]-[101]): Kogarah PID VG incorrect apportionment 71.43% Commissioners correct apportionment 60.13% $ $ 2007 3,850,000 3,795,406 2008 4,000,000 3,908,450 2009 4,000,000 3,191,700 2010 4,000,000 3,321,581 2011 4,000,000 3,321,581 Rockdale PID VG incorrect apportionment 28.57% confirmed in Commissioners' orders Correct apportionment 39.87% $ $ 2007 1,550,000 2,516,594 2008 1,600,000 2,591,550 2009 1,600,000 2,116,300 2010 1,600,000 2,202,419 2011 1,600,000 2,202,419 17As the Kogarah PID values for all years based on the correct apportionment were lower than the VG's valuations, the Commissioners upheld all the Kogarah PID appeals and reduced the issued values based on the correct apportionment. 18As the Rockdale PID values for all years based on the correct apportionment were higher than the VG's valuations, and as the Commissioners considered that they had no power to increase the VG's values, the Commissioners dismissed all the Rockdale PID appeals and confirmed the VG's issued values. 19In my opinion, in relation to the Rockdale PID the Commissioners erred in law in not correctly construing and applying the VLA. Accordingly, I propose to allow the appeals and value the Rockdale PID in accordance with the correct apportionment of 39.87%. The statutory framework 20Section 14A of the VLA requires the land value of each parcel of land in New South Wales to be ascertained in each year. "Land value" is defined in s 6A(1): 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. 21Section 26 provides for adjoining parcels of land owned by the same person to be included in one valuation: 26 Where lands are to be included in one valuation (1) Where several parcels of land adjoin, are owned by the same person, and where no part is leased, they shall be included in one valuation, unless the Valuer-General otherwise directs: Provided that any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation. (2) Where several parcels of land adjoin, are owned by the same person and are all let to one person, they shall be included in one valuation, unless the Valuer-General otherwise directs. ... 22Section 28 provides for notice of valuations and apportionment: 28 Land or stratum in two or more districts (1) If different parts of any land or stratum in respect of which one valuation would otherwise be made under this Act are situated in different districts, the value of the land or stratum is to be apportioned so as to show the value of each part. (2) The value of each part is to bear the same proportion to the value of the whole as the area of each part bears to the area of the whole. 23Section 29 provides for notice of valuations to be given and, in subsection (3A), for objections to valuation: 29 Notice of valuations to owner (1) On furnishing a valuation list to the council of a local government area, the Valuer-General must cause notice of each valuation contained in the list to be given to: (a) the owner of the freehold estate in the land, and (b) any lessee or occupier of the land who, under any Act, is liable to pay any rate or tax to a rating or taxing authority in respect of the land, and (c) any lessee of the land under a written lease for a term exceeding 3 years who, under the lease, is liable to pay the whole or any part of any rate or tax to a rating or taxing authority in respect of the land, and (d) any mortgagee in possession of the land. ... (3A) A person to whom the Valuer-General has given written notice under subsection (1) may lodge with the Valuer-General written objection to any such valuation. ... (3C) In subsections (3A) and (3B), a reference to a valuation includes a reference to an allowance or apportionment factor and to the Valuer-General's refusal to determine an allowance or apportionment factor. ... 24Section 34(1) lists the only grounds upon which objection may be taken: 34 Grounds of objection (1) In relation to land the only grounds upon which objection may be taken under this Act are: (a) that the values assigned are too high or too low, (a1) that the area, dimensions or description of the land are not correctly stated, (b) that the interests held by various persons in the land have not been correctly apportioned, (c) that the apportionment of the valuations is not correct, (d) that lands which should be included in one valuation have been valued separately, (e) that lands which should be valued separately have been included in one valuation, and (f) that the person named in the notice is not the lessee or owner of the land. 25Section 35B(1) requires the VG to consider and either allow or disallow an objection. Section 35C requires the VG to give notice to the objector of the determination of the objection, and in the notice to "give the reasons for disallowing an objection or for allowing an objection in part only". Section 37(1) provides that any person entitled to object under s 29 may appeal to this Court if dissatisfied with the VG's determination of any such objection. Section 39 provides: 39 Grounds of appeal The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection. 26Section 40 sets out the powers of this Court on an appeal, and stipulates that the appellant has the onus of proving its case: 40 Powers of Land and Environment Court on appeal (1) On an appeal, the Land and Environment Court may do any one or more of the following: (a) confirm or revoke the decision to which the appeal relates, (b) make a decision in place of the decision to which the appeal relates, (c) remit the matter to the Valuer-General for determination in accordance with the Court's finding or decision. (2) On an appeal, the appellant has the onus of proving the appellant's case. The appeals determined by the Commissioners 27There were five appeals to this Court under s 37 of the VLA, each relating to one of the five base date years 2007 to 2011. They were in substantially the same terms. The following description in the 2009 base date appeal is illustrative: Appeal against the Respondent's disallowance of the Applicant's objection (dated 18 June 2012) to Land Value Assessment at the base date of 1 July 2009 for the property known as Lots 1 and 2 in Deposited Plan 558531, including the Applicant's claim that both allotments should be included in one valuation and apportioned pursuant to ss 26 and 28 of the Valuation of Land Act 1916. 28The Commissioners expressed the view that there should have been 10 s 37 appeals (not five), each relating to a PID for a particular year; but did not consider that an impediment to proceeding with the case: at [72]-[73]. The VG submits that five appeals were appropriate. It is unnecessary for me to enter into that debate. 29Before the Commissioners the applicant's Amended Grounds of Objection to Valuation identified two s 34 grounds of objection: "the values assigned are too low" (s 34(1)(a)) and "lands which should be included in one valuation have been valued separately" (s 34(1)(d)). After the first judgment, as a result of the matters referred to above at [11]-[12], there was also a s 34(1)(c) ground "that the apportionment of the valuations is not correct". The Commissioners addressed and determined that ground. Grounds of appeal against Commissioners' decision 30In this appeal under s 56A of the Land and Environment Court Act by the Valuer-General against the Commissioners' decision, there are three appeal grounds: 1.Having held that the Valuer-General's statutory land values had incorrectly applied s 28 of the VLA in that they had not properly apportioned the combined value of Lots 1 and 2 Deposited Plan 558531 between the value of that part of it that lay in the Kogarah PID and Rockdale PID, the Commissioners erred in: (a)holding that the respondent had not discharged its onus of proving its case pursuant to s 40(2) of the VLA in respect of the Rockdale PID; (b)not apportioning the land values of the Kogarah PID and the Rockdale PID pursuant to s 28 of the VLA in accordance with their findings; (c)dismissing the appeal in proceedings 31135/12, 31136/12 and 31137/12 in respect of the Rockdale PID and confirming the appellant's statutory valuation for that PID, which by necessary implication the Commissioners had found was incorrect; and (d)not dismissing the appeals in respect of both the Kogarah PID and the Rockdale PID in proceedings 31133/12 and 31134/12. 2.The Commissioners erred in failing to correctly apply ss 6A, 26 and 28 of the VLA in that having determined the value of the respondent's land in one valuation pursuant to s 26, they then failed to apportion that value to the Kogarah PID and the Rockdale PID pursuant to s 28 of the VLA. 3.The Commissioners erred in their construction of s 40 of the VLA in holding that the Court had no power pursuant to s 40(1) based upon the evidence before it unless the respondent had discharged its onus pursuant to s 40(2). Valuer-General's submissions 31As for Grounds 1 and 2, in summary the VG submits: (a)The Commissioners accepted that within the meaning of s 34(1)(c) the apportionment of the valuations was not correct. That necessarily meant that so far as s 34(1)(c) was concerned, the applicant had discharged the s 40(2) onus of proving its case. If the Kogarah PID value was too high due to the apportionment error, the applicant had necessarily established that the value was correspondingly too low for the Rockdale PID. In correcting the apportionment error, the Commissioners were required to reapportion pursuant to s 28 the combined land value found by the Court under s 26. (b)Contrary to s 28(2), the Commissioners did not apply the correct apportionment properties to the value of the whole area. The Commissioners applied a proportion of 60.13% to the Kogarah PID and 28.57% to the Rockdale PID. (c)If the applicant's s 34(1)(d) ground of objection had been established, it would have followed that a redetermination under s 26 was required and a consequential reapportionment under s 28. This was common ground. However, that did not occur in this case. 32As for Ground 3, the VG submits that the Commissioners erred in holding that the Court has no power (jurisdiction) to increase land value unless the objector has appealed seeking an increase in land value for (in summary) the following reasons: (a)The Commissioners misconstrued s 40(1)(b). The VG may either allow an objection or disallow the objection in whole or "in part" only: s 35B(1) read with s 35C(2). Thus, in determining an objection under s 34(1)(a) that the values assigned are too high, the VG may only allow the objection either in part or in whole (that is reduce the value of the land but not as low as sought in the objection) or disallow the objection. In contrast, s 40(1)(a) and (b) permits the Court to confirm or revoke the decision of the VG, and if the Court revokes that decision it may "make a decision in place of the decision to which the appeal relates". There are no words of limitation in the power under s 40(1)(b). The Court's power under s 40(1)(b) is wider than the VG's power in determining an objection under ss 35B(1) and 35C(2). The Commissioners misconstrued s 40(1)(b) so that the Court has no greater power or discretion on appeal than the VG has in determining an objection under s 35B(1). (b)The narrow construction adopted by the Commissioners is also inconsistent with s 39 which provides: "The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection". Both parties may rely on any other of the grounds of objection in s 34(1) as part of their cases on appeal. Thus, the VG's case on appeal may rely on a ground under s 34(1)(a), that the values assigned are too low. The VG is also entitled to rely upon the ground in s 34(1)(c) that the apportionment of the valuations is not correct. (c)Section 40(2) is a procedural provision. It is not jurisdictional. Section 40(2) does not deny the Court jurisdiction unless the requirements of s 40(2) are met. The words do not limit the Court's exercise of power. Notwithstanding the terms of s 39, s 40(2) makes no reference to any onus with respect to the respondent's case on appeal. In an appeal to the Court pursuant to s 37, the VG needs to prove nothing. If the appellant is unable to discharge its onus, the appeal is to be dismissed. However, this in no way limits the VG's case on appeal, and the grounds upon which the VG may rely in his case on appeal. The Commissioners' third judgment 33In summary (so far as is now relevant), the Commissioners in their third judgment : (a)Reiterated their assessed s 26 combined valuations for the subject land for the five base dates, which for 2007 and 2008 were higher, and for 2009 to 2011 a little lower, than the VG's s 26 valuations: at [25]. I have set out the s 26 valuations above at [14]. (b)Accepted that the correct s 28 apportionment of land value was, as agreed by the parties' valuers, 60.13% for the Kogarah PID and 39.87% for the Rockdale PID, and that the VG's apportionment of 71.43% and 28.57% was erroneous: at [9], [15]. (c)Showed in dollar terms at [25] (as I have set out above at [16]): (i)that in the case of the Kogarah PID the correct apportioned values (based on 60.13%) were lower than the VG's apportioned values (based on 71.43%); and (ii)that in the case of the Rockdale PID the correct apportioned values (based on 39.87%) was higher than the VG's apportioned values (based on 28.57%); (d)Noted that the VG adopted the "ethical" position, in accordance with his usual practice in such cases, that the statutory valuation should not be increased: at [27]-[31]. I accept the VG's submission that once the VG's incorrect apportionment emerged after the first judgment, this "disavowal" (as the Commissioners described it) was intended by the VG to be referable to the s 26 combined valuations, not to the individual valuations derived from the s 28 apportionment. That was said expressly to the Commissioners before their third judgment in the VG's final written submissions dated 10 June 2014 at [15]-[16] and in the BG's subsequent oral submissions to the Commissioners (transcript 214-215). This displaced a VG disavowal referable to the PID values in submissions prior to the first judgment before the incorrect apportionment emerged (referred to in the third judgment at [28] and [30]). (e)But held in strong terms that the VG's position "almost ritual" disavowal was a "distraction", "hollow, irrelevant and incapable of having any effect", and "fundamentally hollow" (at [33], [75], [84]) because, on the proper construction of s 40(1), the Court has no power to increase any statutory valuation, except where an applicant contends that the VG's values are too low under s 34(1)(a): at [84]. (f)Held that the statute mandates the Commissioners to reach positions that are "mathematically absurd" in the sense that "the resultant totals post apportionment and application of the correct statutory approach will only total 90% of the derived aggregated value for the PID values for the whole of the site": at [94]. The "foundational cause" of this is the "fundamentally flawed and mathematically inaccurate apportionment calculations undertaken by the Valuer-General in each of the five relevant base years": at [95]. As I understand it, the Commissioners were indicating that the correct apportionment of about 60% for the Kogarah PID should be applied because its application would decrease the VG's erroneous apportionment of about 70%; but that the VG's erroneous apportionment of about 30% for the Rockdale PID had to be applied rather than the correct apportionment of about 40% because application of the latter would increase the VG's apportioned value for the Rockdale PID which the statute did not permit. (g)Upheld all the Kogarah PID appeals because they showed reduced values resulting from the correct s 26 values and the correct s 28 apportionment, and dismissed all the Rockdale PID appeals because they did not. Consideration 34The Commissioners' reasoning in reaching the conclusion at [33(e)] above that the Court has no power to increase the statutory valuation except where an applicant contends that the VG's values are too low under s 34(1)(a), may be reorganised as follows: (a)As the VG has no right of cross-claim, if the applicant fails to discharge its onus of proving its case under s 40(2), the mandated consequence under s 40(1)(a) is that the appeal must be dismissed and the statutory valuation confirmed: at [79], [81], [85]-[87]. (b)It is only if the applicant discharges its onus of proof under s 40(2), that it is necessary to consider which of the options available to the Court in s 40(1) should be engaged and in what fashion: at [78]. (c)If the applicant discharges its s 40(2) onus of proof, there is at least a presumption (if not an obligation) on the judicial valuer to make some appropriately responsive order of the nature envisaged by s 40(1)(a)-(c): at [80], [82], [84]. (d)Therefore, there can never be resultant order that substitutes a higher statutory valuation for that contained in the VG's determination, except in a "very rare" case where the applicant seeks a higher valuation under s 34(1)(a): at [82]-[87]. 35I generally agree with this reasoning except for step (d), which is critical to the outcome of the appeals. A preliminary comment may be made that the onus of proving that the VG's valuation is wrong was established prior to its express enactment in s 40(2) of the VLA: Flack v The Valuer-General (1952) 18 LGR 157 at 158 (Sugerman J). Usually, the burden is one of establishing that the valuation objected to is too high. However, the burden may be one of proving any of the grounds of objection in s 34(1). Cases where an applicant seeks a higher valuation under s 34(1)(a) typically arise in the not uncommon context of rent review provisions in leases where increases in rent are geared to increases in the VG's valuations. 36On the Commissioners' construction step (d) at [34] above, s 40(1)(b) does not empower the Court to increase land value except where the applicant contends under s 34(1)(a) that the VG's value is too low. The implicit premise appears to be that the applicant's "case" to be proved under s 40(2) can only be that the value assigned by the VG is too high or that it is too low - leading to the Commissioners' conclusion that if it is contended and proved to be too low then it cannot be increased. I disagree with the premise. The applicant's "case" under s 40(2) may concern any of the eight grounds of objection listed in s 34(1). One of those grounds is that the VG's value is too high: s 34(1)(1). Another ground is that it is too low: that ground also appears in s 34(1)(a). Another ground is that the apportionment of valuations is not correct: s 34(1)(c). This incorrect apportionment ground is referable to ss 26 and 28. An applicant's apportionment case arises where there is a s 26 combined valuation of adjoining parcels of land, a s 28 apportionment between the two, and the applicant contends under s 34(1)(c) that the apportionment is not correct. The correct apportionment is merely a mechanical, arithmetical task to reflect the proportion that the area of each part bears to the area of the whole: s 28(2). If the VG errs in that apportionment, it is likely due to a clerical error in the course of carrying out that task. 37Where the applicant proves its case that the apportionment is not correct, the consequence under s 28(2) is that the value of one parcel of land in the combined s 26 valuation (of adjoining parcels of land) decreases and the value of the other parcel increases. Construed harmoniously in context, s 40(1)(b) then empowers the Court to responsively give full effect to the correct apportionment in order to heed the command in s 28(2) that: "The value of each part is to bear the same proportion of the value of the whole as the area of each part bears to the area of the whole". Particularly given the mandatory terms of s 28(2), in an apportionment case the Court is not only empowered but required to give full effect to the apportionment. If I am in error as to it being "required" to do so, then in my view the only reasonable discretionary response under s 40(1)(b) is to do so. 38This construction is reinforced by three further considerations. First, it is reinforced by s 40(1)(c), which empowers the Court "to remit the matter to the Valuer-General for determination in accordance with the Court's finding or decision". If, as I think it does, s 40(1)(c) empowers the Court in an apportionment case to remit the matter to the VG for determination in accordance with the Court's decision as to the correct apportionment, it would be decidedly odd if the Court could not itself make that determination under s 40(1)(b). 39Secondly, the construction adopted by the Commissioners prevents the Court from giving full effect to the correct apportionment and results in what they described as a "mathematical absurdity. It is a well-known principle of statutory interpretation that constructions leading to absurd results are to be avoided, if possible: Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) [2001] HCA 49, (2001) 207 CLR 72 at [17]. It is not unduly flattering to the legislature to say that it is unlikely to have intended a mathematical absurdity. 40Thirdly, in principle, determination that the VG's apportionment is incorrect should carry with it power to give full effect to the corrected apportionment - not just one side of the apportionment benefitting the objector by reducing the value of one part of the whole land the subject of the s 26 combined valuation. 41Take a simple hypothetical appeal where the correctness of the s 28 apportionment to two adjoining parcels of land of a s 26 combined valuation is the only ground of objection, and the s 26 combined valuation is $100,000. If under s 28 the VG incorrectly apportions 70% and 30% but the Court finds that the correct apportionment is 60% and 40%, then the value of one part of the whole decreases from $70,000 to $60,000 and the value of the other part of the whole increases from $30,000 to $40,000. The applicant has discharged its s 40(2) onus of proving its apportionment case. On the Commissioners' construction - which I do not accept - as applied to this hypothetical, the appeal in relation to the first part will be allowed because its value decreases as a result of the correct apportionment, but the appeal in relation to the other part must be dismissed because there is no power in the Court to increase the value of that part and therefore the VG's $30,000 valuation must be confirmed. In my opinion, appropriately responsive orders under s 40(1)(b) would give full effect to the apportionment by decreasing the value of one part and increasing the value of the other. 42The present appeals are no different in principle from the one I have hypothesised, notwithstanding that it was also part of the applicant's case that the s 26 combined valuations were too high. The correct apportionment issue under s 34(1)(c) became part of the applicant's case, at least during the hearing when it emerged that the VG had made an incorrect apportionment. The Commissioners squarely addressed and accepted that apportionment case. They made partially responsive orders under s 40(1)(b) based on the correct apportionment, by reducing the annual values of the Kogarah PID. In my opinion, they fell into error in not doing the same in respect of the Rockdale PID. 43The VG makes the sweeping submission that in an appeal by a person entitled to object, the VG can always contend for a higher valuation than that to which the appeal relates. The submission is contrary to the view that I have earlier expressed and also contrary to the view of the Commissioners. The submission is largely based on s 39 which provides that: "The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection". I construe the "respondent's" case as meaning the VG's defensive case in opposing the appellant's case based on any of the grounds in s 34(1), given that the VG has no right of cross-appeal and there is no provision equivalent to s 40(2) requiring the VG to prove its case. For example, if an appellant's only case is that the VG's value is too high, it is not open to the VG to contend in the appeal that it should be higher. 44This is contrary to the assumption made, without any reasoning, by commissioners of the Court in three earlier cases. However, I do not attach significant weight to them because they contain little if any reasoning to support the assumption. In each the applicant objected to the VG's value on the ground that it was too high and the commissioner assumed that the Court may on appeal increase the land value. They are not apportionment cases. In Falk v Chief Commissioner of State Revenue [1999] NSWLEC 301 Nott C made a brief comment that it appeared to be open to the Court (although it was not required to do so) to determine a particular land value in excess of that to which objection was taken: at [24]. However, as the objection was that the land value was too high, he considered it appropriate to simply disallow the objection: at [26]. In Marcus Cornelius Noorbergen v Valuer-General [2004] NSWLEC 243 at [1], [29]-[30] Watt C decided that the value was higher than that determined by the VG and, without any discussion, valued it at that higher figure. In Falk v Valuer-General [2005] NSWLEC 141 at [65]-[66] Moore C (as he then was) commented that if the VG proposed to contend for a higher value than that to which objection is taken, the onus to establish a higher value shifts to the VG. However, he did not consider it appropriate to impose a higher value in the circumstances of that case: at [71]. 45In the present case, the only s 26 VG combined valuations of the whole that the Commissioners increased were for the 2007 and 2008 base dates. Given the VG's position that it does not seek to increase s 26 VG combined valuations (discussed earlier), and as the VG submits, the VG's s 26 combined valuations for those base dates should not be increased but the correct s 28 apportionment of 60.13% and 39.87% should be applied to them. 46In the case of the 2009, 2010 and 2011 base dates, the correct apportionment should be applied to the Commissioners' lower s 26 valuations for those years. 47Since the VG's incorrect apportionment was approximately 70% for the Kogarah PID and 30% for the Rockdale PID, whereas the correct apportionment was found to be approximately 60% and 40%, the result for all years is that the value of the Kogarah PID decreases and the value of the Rockdale PID increases: see [16] above. In accordance with the construction that I have adopted, the correct apportionment will be fully reflected in the orders of the Court not only by decreasing for each year the value of the Kogarah PID but also by increasing the value of the Rockdale PID. Orders 48In the result, the appeals from the Commissioners' decisions and orders are allowed. I set out below the orders that I will make. Unusually, orders 2-6 are in tracked form so that the changes I make to the Commissioners' orders can be readily seen. It is clearer and convenient to repeat the unchallenged orders made by the Commissioners in respect of the Kogarah PID. 49The orders of the Court are as follows: 1.The appeals are allowed. 2.In Matter No 31133 of 2012: (1)The orders in the appeal against the value of PID 1502216 (Kogarah PID) for the base date of 1 July 2007 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2007, the value of PID 1502216 is $3,795,406 3,247,020. (2)The orders in the appeal against the value of PID 1536207 (Rockdale PID) for the base date of 1 July 2007 are: (a)The appeal is dismissed upheld; (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2007, the issued value for of PID 1536207 is confirmed $2,152,980. 3.In Matter No 31134 of 2012: (1)The orders in the appeal against the value of PID 1502216 (Kogarah PID) for the base date of 1 July 2008 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2008, the value of PID 1502216 is $3,908,450 $3,367,280. (2)The orders in the appeal against the value of PID 1536207 (Rockdale PID) for the base date of 1 July 2008 are: (a)The appeal is dismissed upheld; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2008, the issued value for of PID 1536207 is confirmed $2,232,720. 4.In Matter No 31135 of 2012: (1)The orders in the appeal against the value of PID 1502216 (Kogarah PID) for the base date of 1 July 2009 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2009, the value of PID 1502216 is $3,191,700. (2)The orders in the appeal against the value of PID 1536207 (Rockdale PID) for the base date of 1 July 2009 are: (a)The appeal is dismissed upheld; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2009, the issued value for of PID 1536207 is confirmed $2,116,300. 5.In Matter No 31136 of 2012: (1)The orders in the appeal against the value of PID 1502216 (Kogarah PID) for the base date of 1 July 2010 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2010, the value of PID 1502216 is $3,321,581. (2)The orders in the appeal against the value of PID 1536207 (Rockdale PID) for the base date of 1 July 2010 are: (a)The appeal is dismissed upheld; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2010, the issued value for of PID 1536207 is confirmed $2,202,419. 6.In Matter No 31137 of 2012: (1)The orders in the appeal against the value of PID 1502216 (Kogarah PID) for the base date of 1 July 2011 are: (a)The appeal is upheld; and (b)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, for the base date of 1 July 2011, the value of PID 1502216 is $3,321,581. (2)The orders in the appeal against the value of PID 1536207 (Rockdale PID) for the base date of 1 July 2011 are: (a)The appeal is dismissed upheld; and (b)Pursuant to s 40(1)(a) of the Valuation of Land Act 1916, for the base date of 1 July 2011, the issued value for of PID 1536207 is confirmed $2,202,419. 7.The exhibits may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 December 2014