Maurici v Chief Commissioner of State Revenue S155/2001 [2002] HCATrans 86 (5 March 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney Nos S154 and S155 of 2001

B e t w e e n -

ANTHONY PHILLIP MAURICI

Applicant

and

CHIEF COMMISSIONER OF STATE REVENUE

Respondent

Applications for special leave to appeal

McHUGH J

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 5 MARCH 2002 AT 11.08 AM

Copyright in the High Court of Australia

MR A.G. BELL: Your Honours, in that matter MR B.W. WALKER, SC appears for the applicants and I appear with him. Mr Walker is currently on his feet in a special leave application across the corridor and I have been instructed to ask if that matter could stand in the list, as it were. (instructed by Speed & Stracey)

MS J.H.H. BLACKMAN: May it please the Court, I appear for the respondent. I have no objection to Mr Bell's application. (instructed by the Crown Solicitor for the State of New South Wales)

McHUGH J: Where is your leader, Ms Blackman? Where is your leader?

MS BLACKMAN: I do not have a leader.

McHUGH J: You do not have a leader?

MS BLACKMAN: No.

McHUGH J: We had Mr Preston down.

MS BLACKMAN: He had a case that - - -

McHUGH J: Well, Ms Blackman, we are going to refuse the application for an adjournment, but I think we may start by calling on you. Why should we not grant special leave in this particular case?

MS BLACKMAN: In this matter, if the Court pleases, it is my submission that the matter that is to be dealt with, or the submissions that are put forward by the applicant, deal with a dressing up - an appeal on facts as a point of law. The only question before the Court at the moment is what has become known as the scarcity value.

McHUGH J: Yes.

MS BLACKMAN: Now, scarcity value, according to the applicant, means that if you have one block of land or two blocks of land which are vacant, you have to discount that value when you come to doing a valuation of a block of land that has a house on it. In my submission, what the applicant here is seeking to do is to get the Commissioner to deal with a different methodology of valuation, which, of course, is a question of fact. The scarcity value was raised in submissions saying if you have a method of - - -

GUMMOW J: Can I just interrupt you for a minute, Ms Blackman?

MS BLACKMAN: I am sorry, your Honour.

GUMMOW J: There seem to be two applications - this is not immediately your problem - to this Court and I do not understand why. They are both in the same terms.

MS BLACKMAN: Yes, they are. With respect, your Honour, I am not quite sure why there are two applications. Perhaps Mr Bell can help out on that.

GUMMOW J: Yes. Anyhow, you continue.

MS BLACKMAN: Your Honour, I am not quite sure how I should be dealing with that question from your Honour, so I will leave it there.

GUMMOW J: Yes.

MS BLACKMAN: The submission was put to the Commissioner when he was dealing with the question of the valuation of a parcel of land on the question of whether or not the scarcity value comes into play. What he was saying, in effect, because there are so few vacant parcels of land, you should not be using that scarcity value, you should be looking at improved parcels of land, but that was the very thing that the applicant has lost along the way, namely the methodology. That was a factual matter that was the basis of the appeal to Mr Justice Cowdroy and to the Court of Appeal and now they are using this question of scarcity value, which was only a question of submission.

McHUGH J: Well, it was more than a question of submission, was it not, because did not the Commissioner's valuer himself acknowledge that the determined land value included a component for its scarcity factor?

MS BLACKMAN: Yes, your Honour, that is right. When I am referring to the Commissioner, I am sorry, your Honour, it was the Chief Commissioner's witness, with respect. The assessors in the Land Environment Court are now called Commissioners, so it is Commissioner Nott who heard the matter at first instance. I may have been misleading your Honour in talking about the Commissioner.

McHUGH J: Yes.

MS BLACKMAN: He acknowledged, your Honour, that there is a scarcity value, but what he was saying is that the very fact that there is a scarcity of vacant land does not mean that you have to discount it. What he is saying is it is like a diamond, your Honour. It is more valuable than a piece of limestone because it is more scarce. The very thing is that when you use the methodology of looking at unimproved parcels of land as opposed to improved parcels of land, you have scarce something and therefore it is more valuable. The very fact also that it is, in the submissions of the applicant, unfair, that is not something which this Court should be dealing with.

GUMMOW J: In the end it is construing section 6A, is it not?

MS BLACKMAN: Yes, your Honour, but section 6A merely says that you have a look at seeing what is in that section and what the section says, that you look at the parcel of land - it is set out at page 66 of the application book, your Honours. You have to look at the parcel of land and exclude improvements and the very fact that you do not have a large number of sales to compare does not necessarily mean that you have to take a different methodology. With respect, your Honours, the whole point of section 6A is that you look at a parcel of land to see what it will produce on the market if it has no improvements on it, and those improvements are listed and - - -

GUMMOW J: So it is a hypothetical exercise.

MS BLACKMAN: It is a hypothetical exercise and it always will be a hypothetical exercise where you do have a house.

McHUGH J: What happens if there is a heritage order on the property? Do you take into account the scarcity factor then?

MS BLACKMAN: With respect, your Honour, we are looking at perhaps a house and we have to pretend the house is not there and the access - pretend the house is not there and that is, in effect, what the Act says. So that it may be that with the - and the house with the heritage order is an improvement, so you have to ignore it. It may be unfair, your Honour, but that is what the Act says.

GUMMOW J: It does not say very much.

McHUGH J: It does not say very much and the question is as to whether or not a factor has been taken into account which should not have been taken into account. I mean, the Commissioner conceded before the Court of Appeal that this method of valuation increases the value of the land.

MS BLACKMAN: Yes, your Honour. Well, so be it. Your Honour, the question is, if you are looking to compare like with like, it is no difficulty, but where you have a parcel which does have a house on it and you have to pretend it does not have a house on it in order to get value and you look to see, "Where can I find a comparable sale?", you look to see where is the comparable sale of a parcel of land with no house on it. In this case there were only four parcels of land that the valuer could look at and that is what the Commissioner was faced with: a methodology which said use those four vacant parcels of land or use the methodology which the applicant before the Land Environment Court Commissioner was wanting to put forward, and the Land Environment Court Commissioner said, "Well, I prefer to use the one where you've only got a few parcels of land to compare it to."

Diamonds, yes, your Honour, because there are so few of them, but the whole application before this Court is on the question of whether or not you have to say that very few parcels of land and therefore they are more valuable. That is what the valuer said before Commissioner Nott, yes.

McHUGH J: But does that not really raise the whole question: why is not the correct question that you value the land on the basis that every one of the blocks of land in Hunters Hill in the relevant area was a vacant block?

MS BLACKMAN: One by one, your Honour.

McHUGH J: What the Commissioner wanted to do is say, "Well, we will just take the sales in respect of the four actual blocks and we will just ignore the realities of what people will pay for developed blocks."

MS BLACKMAN: Yes, your Honour, in order to get to a way of looking at an unimproved parcel of land, according to the Act, you have to take a different method of coming to the question of a value. Either you use the sales of four vacant parcels of land - that is one matter - or you can take it the other way of looking at the other vastly more sales where there are sales of improved land. If you do that - - -

McHUGH J: But what you have to value under 6A is this land:

The land value of land is the capital sum which the fee-simple of the land might be expected to realised if offered for sale . . . assuming that -

there were no improvements on it.

MS BLACKMAN: Yes.

McHUGH J: Well, the method here used was to value land with a house on it as though it was undeveloped land.

MS BLACKMAN: The subject land, yes, your Honour, but that is what the Act says you have to do.

McHUGH J: I know it does, but the question is: how do you go about doing it?

MS BLACKMAN: There were three methods put forward before the Land Environment Court Commissioner Nott: one - we have assumed that this subject land is vacant - you can take sales of vacant parcels of land which are scarce - they are like hens teeth. You can take an improved parcel of land, a sale of an improved parcel of land - a lot more of those sales, but if you do that, you have to look at parcel A which has been sold and therefore we have to get a value of that and we come to the conclusion that if the parcel A had not had a house on it it would have been worth X and therefore - - -

McHUGH J: You deduct the value of the improvements.

MS BLACKMAN: Yes.

McHUGH J: A simple method and, prima facie, one would have thought that was what the Act was on about.

MS BLACKMAN: Your Honour, the only problem with that for the applicant here is that that was a methodology that was propounded by the valuer called for the applicant and a methodology which was rejected by Commissioner Nott because he made the value judgment that this is the best way of - - -

GUMMOW J: That is right. Now, when you say made a value judgment, how does the Act permit that?

McHUGH J: That is the question.

GUMMOW J: And you say there are a number of possibilities as to how this task can be approached and the legally correct one and the mandatory one is the one that favours your client.

MS BLACKMAN: No, with respect, your Honour, I do not say that it is the mandatory one. I say that it was the one chosen by the valuer who was accepted by Commissioner Nott. It is one method of valuing and what I am saying is that it was a legitimate method of valuing - - -

GUMMOW J: Why legitimate in terms of the Act?

MS BLACKMAN: Because in order to come to - your Honour, the question was dealt with, for example, in the case of Tetzner, which is referred to - - -

GUMMOW J: I know there are various cases but they are not particular cogent when it comes to reasoning.

MS BLACKMAN: No, your Honour. I hear what your Honour says. The question is - - -

GUMMOW J: There is a lot of mystique in this area.

McHUGH J: Head starts and all.

GUMMOW J: Yes, exactly.

MS BLACKMAN: Your Honour, the question of looking at the subject parcel of land and working out what its value is is something that you pretend the improvements are not there and in order to compare the notional parcel of land without its house on it, you have to see that block of land without its house on it.

McHUGH J: Yes, I know but in determining land values the cases have all sorts of general principles that have to be taken into account and it may be, and it may not be, that this principle of the scarcity factor should not be taken into account, or should be taken into account, or can be taken into account. Your opponent says that it cannot be taken into account. If that is right, he will succeed. You say it is an available method. It is just a question of fact. If you are right, you succeed.

MS BLACKMAN: With respect, your Honour, the scarcity value was taken into account by the valuer, who was accepted.

McHUGH J: Yes, I know that. Yes, I appreciate that, but your opponent says it was not a legitimate factor to take into account in valuing the fee simple of this land.

MS BLACKMAN: Yes, your Honour.

McHUGH J: I mean, that is the question. It has important consequences, I would have thought, not only here in this particular case and not only in New South Wales, but probably throughout the whole of Australia, because if you can take into account scarcity value in similar situations, then it would obviously have nationwide repercussions.

MS BLACKMAN: Your Honour, I think I have said all I can.

McHUGH J: Yes.

MS BLACKMAN: What my submission really is is that it is in this instance, whether it is unfair or not, it is seeking to use words to change the methodology which was used by the valuer. So that I do not think I can say anything more, your Honour.

McHUGH J: Thank you very much, Ms Blackman. Now, Mr Walker, we are a little troubled by - there are two appeals here. What - are they - - -

MR WALKER: It would appear, your Honour, that certainly what I understand to be the capacity to lodge a cross-appeal in the Court of Appeal was not availed of, no doubt because of the leave approach, the leave requirement. One finds in the application book at page 42 and page 81 respectively what might be called originating process in the Court of Appeal.

GUMMOW J: Yes.

McHUGH J: Yes.

MR WALKER: You find them coming from the opposite party.

McHUGH J: I know.

MR WALKER: And for some reason that bifurcation has been preserved.

GUMMOW J: Why?

McHUGH J: But why?

GUMMOW J: Why do we need two appeals?

MR WALKER: There is no sensible answer to your Honour's question.

GUMMOW J: Well, you had better elect.

MR WALKER: There should only be one.

GUMMOW J: Which one?

MR WALKER: I cannot help but hear my junior's suggestion it does not matter, your Honour, but - - -

MS BLACKMAN: Just dismiss them both, your Honour.

MR WALKER: No, no. It is, your Honour - - -

McHUGH J: It is probably 15 - - -

MR WALKER: Yes, it is 15 - - -

MS BLACKMAN: With respect, your Honour, the question of scarcity value was the one that we lost in front of Mr Justice Cowdroy and lost again in the Court of Appeal. So therefore it is probably our appeal.

MR WALKER: You won in the Court of Appeal.

MS BLACKMAN: We won in the Court of Appeal.

McHUGH J: Yes.

MR WALKER: In the Court of Appeal at page 81 40069 of 2000 in the Court of Appeal was the one to which my learned friend has just referred.

MS BLACKMAN: Which we won.

MR WALKER: The appeal from that is the 155 in this Court.

McHUGH J: Yes, that is right.

GUMMOW J: And that is the one you want.

MR WALKER: And it is that for which I should elect.

McHUGH J: Yes.

MS BLACKMAN: ....., your Honour.

McHUGH J: Very well. In this matter there will be a grant of special leave to appeal in matter S155 of 2001; application S154 of 2001 is dismissed with no order as to costs.

MR WALKER: If it please the Court.

McHUGH J: Yes, the Court will now adjourn to reconstitute.

AT 11.26 AM THE MATTERS WERE CONCLUDED