Attorney-General v Rodney District Council [2000] NZCA 203; [2000] 3 NZLR 678 (18 September 2000)

Last Updated: 8 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA274/99

	BETWEEN	ATTORNEY-GENERAL
		First Appellant

	AND	VALUER-GENERAL
		Second Appellant

	AND	THE RODNEY DISTRICT COUNCIL
		First Respondent

	AND	THE MANUKAU CITY COUNCIL
		Second Respondent

	AND	THE HUTT CITY COUNCIL
		Third Respondent

AND

NEW ZEALAND LOCAL GOVERNMENT ASSOCIATION INCORPORATED

Fourth Respondent

Hearing:	31 July 2000
Coram:	Richardson P Thomas J Keith J Blanchard J Tipping J
Appearances:	H S Hancock and H M Aikman for the Appellants D A Kirkpatrick and G D Palmer for the Respondents
Judgment:	18 September 2000

JUDGMENT OF THE COURT DELIVERED BY KEITH J

Table of Contents

Paragraph No.

The issue [1]

The main legislative provisions [3]

The particular facts [12]

The High Court declarations [14]

The range of possible fact situations [19]

Summary [23]

The ordinary meaning in context [24]

The significance of occupation [27]

The rating consequences or purposes of valuation [33]

Lesser interests in the land [43]

Sales, other transfers and tenancies during the financial year [47]

The power to apportion [49]

Other features of s8 of the VLA [54]

Would an occupation approach be impractical? [56]

Conclusion on the general issue [57]

Result [59]

The issue

[1] This appeal is about one aspect of the power of local authorities to levy rates and especially to impose certain charges on the occupiers and owners of land within their district. Under s8 of the Valuation of Land Act 1951 (1951 Act or VLA) the Valuer-General prepared district valuation rolls in respect of “each separate property” in the district. The interpretation of that expression is the central issue in the appeal. In addition, the statement of claim challenges the Valuer-General’s application of the provision to specified pieces of land.
[2] As will appear, the 1951 Act has been repealed but the parties see continuing value in any rulings resulting from these proceedings. In the High Court, as in this, the respondents, three local authorities and the New Zealand Local Government Association, adopted what has been referred to as an “occupation approach”, emphasising the facts about the use of the land. The appellants contended to the contrary that for there to be a separate property there had to be an individual certificate of title or something similar (such as a separate strata title). In their view, different segments of land within a single certificate of title could be dealt with by apportionment under ss105 or 202 of the Rating Powers Act 1988 (RPA). Fisher J in broad terms ruled in favour of the plaintiffs (Rodney District Council v Attorney-General [2000] 1 NZLR 101). The defendants appeal and the plaintiffs cross appeal because the declarations made in the High Court did not go as far as they would have wished.

The main legislative provisions

[3] Under s8(1) of the VLA a district valuation roll was to include the following particulars in respect of “each separate property”:

(a) The name of the owner of the land, and the nature of his estate or interest therein, together with the name of the beneficial owner in the case of land held in trust:

(b) The name of the occupier ...:

(c) The situation, description, and area of the land:

(d) The nature and value of the improvements:

(e) The land value of the land:

(f) The capital value of the land:

(ff) Where applicable, the special rateable value or the rates-postponement value of the land:

(g) Such other particulars as are prescribed.

As paras (e) and (f) indicate, the roll was relevant when the basis for rating was land value (until 1970 unimproved value) or capital value.

[4] Where, by contrast, the annual value rating system was in force in any territorial authority the Valuer for that district was to compile an annual value valuation roll. In that case, under s8(1A) (added in 1988) that roll was to include, again for “each separate property,” the following particulars which closely track those in subs (1):

(a) The name of the owner:

(b) The name of the occupier:

(c) The situation and description of the property:

(d) The annual value:

(e) Where applicable, the rates postponement value or the special rateable value, as the case may require:

(f) Such other particulars as may be prescribed.

[5] While valuations have been or may be relevant to land tax, estate duty, gift duty, stamp duty, trustee investments and certain public mortgage advances their primary role is in respect of local authority rates and associated charges. Judge Archer emphasised that primary purpose soon after the 1951 Act became law (Findlay v Valuer-General [1954] NZLR 76, 77 (LVCt)).
[6] The connection between the valuation and rating statutes appears generally from the succession of those statutes enacted over more than a century. It appears in particular ways as well. A primary way is that the district valuation rolls prepared under the VLA became the valuation rolls under the rating legislation; in effect they were the district rating rolls (VLA s28 and RPA s105). The very close connection also appears in the link, stressed by the respondents in these proceedings, between the reference to “the occupier” in s8(1)(b) and (1A)(b) of the VLA and the definition of “occupier” in the RPA. “Occupier” in the former has long had the same meaning as “occupier” in the latter (s2 of the VLA) and it is the “occupier” who is primarily liable to pay rates (RPA s121 and its predecessors).
[7] “Occupier” is defined in s2 of the RPA as meaning,

in relation to any land, ... the owner thereof, except where a person other than the owner has a right to occupy the land by virtue of a tenancy granted for a term of not less than 12 months certain, in which case the term "occupier" means that other person; and includes any person having a right to occupy the land by virtue of a lease, licence, or other authority to which section 4 of this Act applies.

Under s4, exclusive occupiers of Crown land under a lease, licence or other authority granted by the Crown for 12 months or more were in general subject to rates. The definition of occupier in the Rating Act 1967 s2 (until 1988 also incorporated by reference into the 1951 Act) was to the same effect. It might be remarked at this stage that those referred to throughout the legislation as “occupiers” will often in fact be the owners. In that event it is the owner who will be liable to pay the rates.

[8] Parliament in 1981 added subs (2) to s8 of the VLA:

(2) For the purposes of this section any land that is capable of separate occupation may, if in the circumstances of the case it is reasonable to do so, be treated as separate property whether or not it is separately occupied.

[9] At the same time Parliament added a similar provision to s25D, a section concerned with special rateable values of single or double unit dwelling houses in areas where values were influenced by demand for multi unit housing (s25D(7)(c); see now s25(4)(c) of the Rating Valuation Act 1998.) Both additions, it might be noted, conferred powers (on the relevant valuer) to treat land as separate property. They did not in their own terms widen the scope of “separate property”. Although in that sense there is a significant difference between subs (1) and subs (2) of s8, the difference would not, as we understand it, have appeared on the face of the rolls : land “treated as” separate property under subs (2) would have appeared listed in the roll along with, and indistinguishable from, land which was separate property under subs (1).
[10] Powers of apportionment were and are provided for in ss105(4) and (5) and 202 of the RPA:

105. Valuation Rolls—

(4) Where land is differentially rated, the Valuer-General or the Valuer shall, from time to time in each case where parts of a separately rateable property are allocated to different types or groups of property, specify in the valuation roll supplied to the local authority—

(a) Where the land is or is proposed to be rated on an area system, the area of the part in each type or group of property as advised by the local authority; or

(b) Where the land is or is proposed to be rated on the land value, or the capital value, or the annual value system, apportion the rateable value of the property among the several portions thereof and supply particulars of that apportionment to the local authority.

(5) Where any valuation is apportioned in terms of subsection 4(b) of this section, the provisions of section 202 of this Act shall apply.

202. Apportionment of rateable values between parts of property—

(1) Where it is necessary to apportion the rateable value of any rateable property between 2 or more portions of the property, the rateable value shall be apportioned in such manner as the Valuer-General, or, as the case may be, the Valuer for the district, thinks fit, so that the rateable value of each portion, when added to the rateable value of the remaining portion or portions of the property shall equal the rateable value of the whole property.

(2) Each such occupier may object to such apportionment as if it were a valuation, and the provisions of the Valuation of Land Act 1951 relating to objections, as far as they are applicable and with the necessary modifications, shall apply accordingly.

(3) Notwithstanding anything in the foregoing provisions of this section, where the occupier of a portion of any rateable property is the lessee or licensee under a lease or licence or has entered into an agreement with the owner, and the lease or licence or agreement specifies the portion of the rates in respect of the whole property that are to be paid by that occupier, the rateable value of that portion of the property shall be the sum which bears to the rateable value of the whole property the same proportion that the portion of the rates payable by the occupier pursuant to the lease or licence or agreement bears to the total amount of the rates payable in respect of the whole property.

(These provisions are in their pre-1998 form.)

[11] What was a “separate property” for the purposes of the VLA? The question is put in the past tense since, as already mentioned, that Act was repealed as from 1 July 1998 by the Rating Valuations Act of that year. The same expression continues to be used in the new Act in its s7 and, as also mentioned, an answer by way of declaratory judgment to the question asked in respect of the earlier Act is said to be of value for the new legislation as well.

The particular facts

[12] The context out of which the proceedings arise appears from the factual situations referred to in the statement of claim. The Valuer-General considered that two dwellings owned by Housing New Zealand Limited on land in Manukau, described in a single certificate of title with each separately occupied by a tenant or tenants of Housing New Zealand, constituted one separate property, and he apportioned the rateable value of that property on a 50/50 basis. By contrast, where similar land and buildings were the subject of registered cross leases, the Valuer-General determined separate valuations for each : there were two separate certificates of title in respect of the undivided one-half share and each of the two particular leasehold estates, one still owned by Housing New Zealand and the other by private occupants. The Valuer-General valued ten flats in Hutt City all situated on a single certificate of title and owned by an owner/occupier flat owning company as a single separate property but, by contrast to the Manukau case, did not apportion the value between the different flats. The other four fact situations before the court related to commercial and shopping premises on single certificates of title or aggregated titles. Again, the Valuer-General did not consider each of the distinct commercial or shopping premises to be a “separate property”. Rather, he determined a single value for each whole complex and made apportionments between the different premises.
[13] According to counsel, the major practical consequence of the Valuer-General’s refusal to consider the various properties as separate arose from a limit on the power to impose uniform annual general charges, a power first conferred in 1982. Such charges can be levied only on “every separately rateable property” – defined as property entered as “a separate property in the district valuation which is rateable property” under the RPA (s19(1) and s2). In this respect, general charges are to be distinguished from uniform annual charges for water and waste collection : those charges do attach to “each separately used or inhabited portion of the property or building”. That separate portion is defined as including any portion of a separately rateable property which any person other than the rateable occupier uses or inhabits and who has a right to use or inhabit that portion by virtue of a tenancy, lease, licence or other agreement (s24).

The High Court declarations

[14] The plaintiffs sought general declarations that the existence or availability of a surveyed area or a separate certificate of title is not a prerequisite to the existence of a “separate property” under s8 of the VLA and that each of the particular identified areas of land was a separate property. Fisher J largely ruled in favour of the plaintiffs on the general issue. He said that he would not however attempt an exhaustive formula :

separate entry in the roll will normally be appropriate where the area concerned is both clearly defined in a formal document and is owned or occupied in one of three ways. The area must [1] be the subject of separate ownership in law as registered in the Land Transfer Office or [2] be the subject of other forms of separate occupation recognised by the Rating Powers Act (broadly a discrete tenancy for 12 months or more or its equivalent) or [3] be capable of separate occupation in circumstances where it would be reasonable to treat it as separate for district valuation roll purposes. ([2000] 1 NZLR 101,114; numbers added)

The second form of ownership or occupancy is drawn, as indicated, from s2 of the RPA (para [6] above) and the third uses the wording of s8(2) of the 1951 Act (and s7(4) of the 1998 Act) (para [8] above). The caution which the Judge expresses in making that general ruling points to a difficulty which sometimes arises from relatively abstract declaratory proceedings; cf Gazley v Attorney-General (1996) 10 PRNZ 47, 54-55.

[15] The Judge also declared that there ought to have been separate entries in the district valuation rolls in respect of each of the different (commercial) premises constituting two of the six sets of properties. He declared in addition that there was no power of apportionment of the rateable value of the whole of those two areas of land under s202 or otherwise. He had made it clear at the outset of his judgment that he had not formed any view about the legal consequences of making such declarations. He no doubt contemplated that there would be difficulties in respect of the occupiers or users of the premises on those two properties were the declarations carried into effect; while they were not parties to the proceedings their right to claim that they ought not to have paid the relevant uniform annual general charge might be prejudiced. The provisions in the valuation and rating legislation placing time and other limits on challenges to valuations and rates might also be relevant (eg ss19 and 20 of the VLA and s138 of the RPA).
[16] The Judge refused to make declarations in respect of the four other properties specified in the statement of claim. The reason for those refusals was that there was evidence that in one case (the Housing New Zealand dwelling houses mentioned at the beginning of para [12] above) the leases were for less than 12 months and in the other three that there was no unequivocal evidence that the leases were for 12 months or more. The reason relates directly to the second element of his non exhaustive statement of the ways in which a property might be characterised as separate (para [14] above). In the Housing New Zealand case the Judge noted that it would be open to the Valuer-General to treat the dwellings as separate under s8(2)

on the basis that each dwelling is capable of separate occupation (in the sense that each could be the subject of a lease or licence for 12 months or more) and that in the circumstances of the case it would be reasonable to do so. On the other hand, this is not one of those cases in which it was mandatory for the Valuer-General to enter the dwellings as separate properties. I did not hear any developed argument demonstrating that his discretion under s8(2) was wrongly exercised. In those circumstances no declaration is warranted. ([2000] 1 NZLR 101, 115)

[17] The respondents in their cross-appeal challenge the refusal to declare that the different premises within the four properties that were not the subject of declarations were separate properties under either s8(1) or s8(2). They also challenge the Judge’s determination that the separate occupation for the purposes of the “occupation approach” to s8(1) is limited to occupation by a separate legal occupier and does not extend to factual occupation.
[18] For the Judge the strongest argument in support of the “occupation approach” and against the competing “certificate of title approach” was the emphasis placed on occupation by both the valuation and rating statutes. He also considered in turn the rating purpose of the roll lesser interests in land, tenancies entered into during the financial year, the power to apportion, other features of s8 and pragmatic requirements. Counsel for the parties also took us to those matters and we too now discuss them. In addition we received written submissions from the Urban Development Institute of New Zealand Inc (UDINZ) which was granted leave for limited joinder or intervention in the appeal. The Institute mentions current High Court proceedings about a different but related situation.

The range of possible fact situations

[19] The UDINZ submissions reminded us of the range of factual situations to which the valuation and associated rating legislation might apply, both within and beyond the situations which this case concerns.
[20] Three relevant variables are the certificates of title, the registered owners, and the use, based on occupancy, to which the land is being or might be put. First, the number of distinct uses (or occupancies) might be greater than the number of titles (as generally in the present proceedings) or fewer (as in the pending UDINZ litigation). Second, one person or more might own the different certificates of title if there is more than one of them.
[21] In terms of the first difference of fact, is it possible that a “separate property” might be composed of land included in more than one title, while within a piece of land covered by a single title there could not be more than one “separate property”? For instance could a single farming unit made up of two or more titles be one separate property? That fact situation is not before us but a more complex version of one aspect of it is : the land in question has two certificates of title owned by the one person, but with six distinct commercial premises.
[22] Further complexity is added when different owners hold the titles, making up for instance a shopping centre. A possible instance is provided by a shopping centre which the Valuer-General entered as a single separate property, and subjected to 50 apportionments. It consisted of 71 separate unit titles apparently held by a number of different owners. By contrast, in the same local authority area a similar centre with 30 separate unit titles was included on the roll as 24 separate properties. Given the relatively abstract nature of this litigation, that difference in treatment was not specifically explained by the Valuer-General.

Summary

[23] For the reasons given in the remainder of the judgment, we conclude that the certificate of title approach is the correct one. That conclusion is based on the ordinary meaning of the expression “separate property” in its land law and statutory context. In particular the LVA and RPA provide many indications that a “separate property” can have more than one occupier, use or user.

The ordinary meaning in context

[24] Before turning to the matters which the Judge and counsel considered in giving meaning to the expression “separate property”, we begin with the expression itself in its context. Part of that context is land law. The ordinary meaning of “separate property” in that context would be the distinct pieces of land identified as such through the land transfer system and in particular by the relevant certificate of title.
[25] Another critical part of the context and the major purpose of the VLA is provided by its long title : it was “an Act for the compilation of enactments relating to the periodical valuation of landed properties”. The identification of each “landed property” or “separate property” was an essential step in the process of valuing it. As the appellants point out in their submissions, the determination of the values (defined in s2) was to be based on the sum that the owner’s interest or estate in the land (unencumbered by any charge) might be expected to realise in a sale on such reasonable terms as a bona fide seller might be expected to impose (and with or without improvements according to the method of valuation). Again, in the generality of cases, it would have been the distinct property identified as such by a certificate of title that would have been the subject of the notional sale.
[26] As the respondents’ expert evidence shows, other interests can be valued, and obviously smaller areas can be the subject of leases or tenancies (to refer in particular to land which is subject to the annual valuation system). But they are the exception. They do not affect the basic point that the “separate property” being listed and valued is that identified, through our land law and in particular the land transfer system, by a distinct certificate of title. At least that is the starting point.

The significance of occupation

[27] As mentioned already, Fisher J emphasised what he saw as the central place of occupation in both the VLA and the RPA:

The strongest argument in support of the occupation approach is the emphasis upon occupation in both the Valuation of Land Act and the Rating Powers Act. While s8(1)(a) of the former requires that the district valuation roll record the name of the owner, s8(1)(b) also requires the name of the occupier. Both are expressed in the singular. [See paras [44]-[45] below.] This suggests that where the land owned and the land occupied are not co-extensive, the “separate property” will be the smaller of the two. If the occupier occupies the land of several owners, or the land in several certificates of title of one owner, there will be several separate properties corresponding to the distinct certificates of title. In those circumstances there would normally be several separate entries in the roll. That would accord with the Valuer-General’s practice. But where the land occupied by the occupier is less than that contained in the owner’s certificate of title, treatment of the smaller area as the “separate property” permits both “the name of the owner” (albeit only a portion of the owner’s land) and also “the name of the occupier” relating to the whole of that separate property. ([2000] 1 NZLR 101, 106-107)

[28] That approach, said the Judge, was reinforced by the definition of “occupier” in the LVA by reference to the RPA. One consequence was that the district roll had to include the name of any person with a right to occupy the land under a tenancy for 12 months or more. Further, under s121 the occupier, and not the owner, was primarily responsible for the rates, and under s139 any person actually in occupation of the land could also be liable. The central role of occupation was reinforced by s8(2). The respondents essentially adopt that reasoning. The appellants contend to the contrary that the Judge overlooked a number of considerations, especially relating to the valuations to be included in the roll, valuations fixed by reference to the owner’s interest. The respondents reply that those considerations relate not to the first stage of identifying the “separate property” but the second one of valuation.
[29] We return to the Judge’s reasoning and the emphasis that he saw the legislation placing on occupation and occupier. The owner, we emphasise, also had a central place both as the likely occupier and otherwise:

(1) the name of the owner was also to be listed in the roll and was indeed to be listed first (s8(1)(a) and (1A)(a), paras [3] and [4] above)

(2) a primary element of the definition of the occupier is the owner (RPA s2, paras [6] to [7] above)

(3) it follows that the owner will often have the primary responsibility for rates under s121

(4) the rates constitute a charge on the land – thereby primarily affecting the owner’s interest and not, directly at least, a distinct occupier (s136)

(5) if the occupier is in default, the local authority can recover from the owner, or from any person owning an interest (including a first mortgagee) as well as from any person actually in occupation (s139); again that last person may be a convenient person from whom to collect in fact; the legislature, in identifying that person, contemplates an occupier distinct from the defined occupier and perhaps comparable to the respondents’ understanding of a person in physical or actual occupation

(6) some provisions of the VLA treated the owner and occupier equally or closely linked them (eg ss18, 19 and 20 (objection provisions as enacted in 1988), 25A, 25C, 25D, 25E, 25F, 25G (special values provisions originally enacted in 1988) and 28)

(7) section 8(2) does not support a wider definition of “separate property” because it confers a power “to treat” property (which it must be assumed is not separate property) as separate property if it is reasonable to do so in the circumstances and whether it is separately occupied or not; the relevant valuer has a choice, which is no doubt subject to limits, but which is to be contrasted with the decision which must be made in terms of in subs (1).

[30] In terms of the point made at the end of (5) above, Fisher J did of course not go as far as the respondents wished, limiting, it seems, “occupation” by non owners to occupation as of right under a lease or other agreement for 12 months or more, in conformity with that element of the definition of “occupier” in s2.
[31] It follows that we do not see the references to occupier and occupation in the legislation as having the significance accorded by the Judge and, even more, by the respondents, as supporting an “occupation approach” to the meaning of “separate property”. Indeed some of the provisions, especially those mentioned in para [29](4), (5) and (7), support the ordinary, certificate of title meaning.
[32] So too does s202 of the RPA about apportionment (para [10] above). Although it is the subject of more extensive discussion later (paras [49]-[53]) it is relevant to mention it here. Subsection (3) of that provision deals with the situation where “the occupier of a portion of any rateable property is the lessee or licensee under a lease or licence or has entered into an agreement with the owner, and the lease or licence or agreement specifies the portion of the rates in respect of the whole property which are to be paid by that occupier”. In that situation the rateable value of that portion is determined by the agreed proportion. That is an exception to the power of apportionment otherwise exercisable by the Valuer-General or Valuer in terms of subs (1). The significance of subs (3) in the present context is of course its recognition that part of a single separate property may be occupied by an occupier under lease, licence or agreement with the owner; and that that part’s rateable value is fixed by that agreement. It is not necessarily a separate property, although under s8(2) the Valuer-General may have been able to treat it as one.

The rating consequences or purpose of valuation

[33] The respondents emphasise that a unit of land which in a physical sense is being separately occupied and used as a discrete entity receives separately the benefit of the range of services provided by the local authority. The ideals of a fair taxation (or here rating) system such as equity, transparency and consistency, they say, are best achieved by an approach which has factual occupation at its centre. It would follow on this argument that the length of tenure cannot by itself be determinative of separate occupancy. A tenancy for 364 days would be no less an occupation than one of 365 days.
[34] Fisher J related this argument to the situation in which a particular charge or rate can be levied only on a “separate property” rather than on distinct premises within it:

[The occupation] approach would also seem to accord with the implied objectives of the Rating Powers Act. There is an inherent anomaly in exacting six uniform rates or charges from six households occupying the land in six separate certificates of title, but only one uniform rate or charge for the land contained in one certificate of title notwithstanding occupation by six otherwise identical households. Occupation as the criterion of separateness, in other words, would provide a more equitable base for the assessment and levying of rates. The implication of such a purpose might be thought to indirectly flow through to the Valuation of Land Act by means of the adoption of a rating definition of “occupier” in s8(1)(b) of that Act. ([2000] 1 NZLR 101, 108)

[35] The rather general argument based on equity has to meet the wide range of powers which local authorities have, first, to determine the rating base (capital value or others); second, to fix general rates and separate rates including separate rates for sewerage, storm water drainage and water purposes on serviced properties only; third, to impose uniform annual general charges, separate uniform charges, and charges for water, sewerage and waste management related to the quantity or facilities involved; and, fourth, to employ differential rating. The range of ways is conveniently indicated by the public notice of the making of rates to be given by local authorities. The notice is to include:

(b) The revenue sought from the intended rate and the purpose or purposes for which that revenue is to be applied; and

(c) The amount or amounts —

(i) In the dollar on the rateable values; or

(ii) Per hectare; or

(iii) Per separately rateable property; or

(iv) Per separately used or inhabited portion of a property or building; or

(v) Per unit of water supplied or consumed; or

(vi) Per water closet or urinal connected; or

(vii) Per container of waste

as the case may be, of the intended rate; (RPA s110(2))

[36] The range of powers conferred by Parliament leaves the local authority with ample discretion to make its own assessment of the demands of equity and consistency and in particular the weight to be given to the services received by individual ratepayers, as this Court emphasised in Wellington City Council v Woolworths New Zealand Ltd (No.2) [1996] 2 NZLR 537. The Court also emphasised the controls on those decision making powers through consultation processes and accountability systems, as well as through the statutory limits on the extent to which different methods could be used. The Court’s conclusion returned to the close link, claimed in that case, between the rates and other charges imposed and the benefits obtained:

Rating is essentially a matter for decision by elected representatives following the statutory process and exercising the choices available to them. The breadth and generality of the empowering provisions applying to territorial authorities and affecting the general rate and differential rating (in contrast with user charges and special purposes authorities), make it clear that rating was not intended to be a calculation of benefits and allocation of the incidence of rates by reference to the outcome. The very complexity and inherent subjectivity of any benefit allocation for these specified outputs points away from using relative benefit as a definitive criterion. The relative interdependence of the commercial and residential sectors suggests a degree of artificiality in any such exercise. ([1996] 2 NZLR 537, 552)

[37] The broad argument based on equity must also face the particular powers which Parliament has conferred on local authorities to distinguish between different parts of a single “separate property” when making rating and charging decisions. We mention three such powers.
[38] First, a local authority can levy a separate uniform annual charge for the ordinary supply of water or waste collection in respect of each “separately used or inhabited portion of a property or building” – defined as including any part of a separately rateable property used or inhabited by any person, other than the rateable occupier, having a right to use or inhabit that portion by virtue of a tenancy, lease, licence or other agreement. Such charges are not however the responsibility of that person. Rather, they are included in the rates assessment delivered to the occupier of the whole separately rateable property (s24). That provision is to be contrasted with another provision which deems two or more separately rateable properties which (a) are occupied by the same ratepayer, (b) are used jointly as a single property and (c) are contiguous, to be one property for the purpose of uniform charges (s23). The power in respect of separately used portions is to be related to the power mentioned earlier to fix charges by reference to the quantity of water consumed (ss26-29), the number of water closets or urinals connected to the public sewerage system (s30), or the number of containers of waste removed (s31) – all charges which closely match the service to the charge and which are not tied to a particular “separate property”.
[39] Secondly, the provisions relating to differential rating recognise that different parts of a single separately rateable property might be placed for the purposes of that rating in different types of groups of property by reference to the uses to which they are put and the activities allowed in respect of them under the Resource Management Act 1991 (s81). Any such distinction is to be specified in the valuation roll (s105(4), para [10] above).
[40] Thirdly, the power or duty to remit rates fully or in part or to postpone their payment in respect of certain uses of land (such as for reserves or libraries) is similarly to be limited to that part of a separately rateable property which is used for that purpose (s179).
[41] In all the three situations mentioned different parts of a single separate property are being used, occupied or inhabited in distinct ways with different rating and charging consequences for the different parts. The property still remains a single separate property – for instance in respect of the uniform annual general charge.
[42] The particular answer to the “anomaly” argument relating to uniform annual general charges is that given by the appellants in this case and has already been indicated : Parliament does allow for special charges to be tied to separately used and inhabited parts of a separate property, and in particular circumstances it does provide for a closer match of actual use and payment (if that is the relevant understanding of equity), but by contrast Parliament allows general charges to be levied only on a single separate property. While the expression “separate property” must still be given a meaning, the legislation certainly does not dictate that every piece of land capable of or even subject to separate use or habitation is “separate property”. On the contrary, it expressly recognises the opposite.

Lesser interests in the land

[43] Under the VLA s8(1)(a) the name of the owner of the land and the nature of the owner’s estate or interest in the land is to be included in the district valuation roll. (Section 8(1A) refers only to the owner.) Under s2 “owner” means “the person who, whether jointly or separately, is seized or possessed of, or entitled to any estate or interest in land”. That definition, which applies unless the context otherwise requires, appears very broad in the context of s8, given its separate reference to “occupier”. The definition is also difficult to apply (a) to the definitions of “capital value” and “land value” which appear to contemplate full ownership, “unencumbered by any mortgage or any charge”; and (b) to the provisions about the primary and other responsibilities to pay the rates in ss121 and 139 (para [28] above).
[44] For the Judge, the separate recognition under the VLA of lesser interests (as in Valuer-General v Radford & Co Ltd [1993] 3 NZLR 721, 725-727 and Telecom Auckland Ltd v Auckland City Council [1995] 3 NZLR 489, 496 and 501) created the potential for land areas defined by means other than certificates of title to be recognised as separate property. He continued

In some cases land held on lease or other lesser tenure will be co-extensive with the land contained in a certificate of title but in others they will be smaller. It will be noted, too, that in s8(1) “the name of the owner”, “the situation, description and area of the land” and “the land value of the land” are all described in the singular. Mr Parker [for the Valuer-General] submitted that notwithstanding the use of the singular there could still be reference to more than one “owner”, presumably with a breakdown into smaller areas or values, entered on the district valuation roll record for one separate property. While that interpretation of s8(1) is possible, it would certainly make for a complicated and cumbersome record. The more natural interpretation, I would have thought, would be to have a separate record for each form of legal interest so that each could be given the value and other particulars peculiar to it. ([2000] 1 NZLR 101, 109)

[45] That reasoning is not carried through into the general ruling on the meaning of “separate property” and the respondents do not emphasise this matter. In their view the valuation roll is primarily a list of separate properties and not of interests in land. The “more natural interpretation” suggested by the Judge would appear to have required a separate listing, for instance, of all mortgages. That appears to be contrary to the structure and purpose of the roll. We would also note that the comments in this context, as earlier in the judgment (para [27] above), about the use of the singular do not appear to take account of the provisions of the Interpretation Act 1999 s33.
[46] We do not see this matter as having a significant bearing on the meaning of “separate property”.

Sales, other transfers and tenancies during the financial year

[47] Under s106(6) of the RPA an owner or occupier of rateable property who sold, transferred or leased for 12 months or more part of the property or surrendered a tenancy of such a part was deemed to be the owner or occupier of the part for the purposes of recovery of rates for the balance of the financial year unless either the rateable value was apportioned under s120 or the Valuer or the Valuer-General authorised the amendment of the roll to record the part as a separately rateable property.
[48] Under that provision, as Fisher J says, the grant or surrender of a tenancy of part only of a separate property can be the trigger for the creation of a separately rateable property. As the respondents point out, the use of the first option – apportionment under s120 - is limited in time since it must be exercised before the rate is struck for the year. Further, the provision deals with the responsibility of the previous owner or lessee only for the balance of the year. It accordingly proceeds on the basis that the new owner or lessee of what was a part of a separate property will be responsible for the rates in the following year. For the Judge, “the point of s106(6) for present purposes is that it appears to contemplate the creation of new separate property by subdividing the old one through the creation of a mere tenancy of 12 months or more”. The provision does not however automatically result in separate property. Rather it contemplates the exercise of a power to create new separate property – possibly the powers to alter the roll (s12 of the VLA) or conferred by s8(2) (para [8] above). Any sale (as opposed to lease) of the part of the land would of course be generally followed by new certificates of title. The provision is a practical one, recognising that part of a single separate property will frequently be the subject of a sale or a lease during the currency of a district valuation roll with the consequence of itself being treated as a separate property. We do not however see it as supporting an occupation based meaning of the expression “separate property” in s8(1).

The power to apportion

[49] Fisher J introduced this matter in this way:

An important argument for the Valuer-General is that although rating may require distinctions between different occupiers within one certificate of title, that can be catered for by apportioning the rateable value under s202 of the Rating Powers Act; it does not require division into separate properties in the district valuation roll itself. By that means one will be able to identify those rates for which each occupier will be liable pursuant to s121 of the Rating Powers Act. ([2000] 1 NZLR 101, 110)

[50] The respondents replied in the High Court as here that s202 (para [10] above) confers no independent power of apportionment. The only situation in which apportionment between two or more portions of the property is “necessary” in terms of the section are the four specified in the Act : when part of the (Crown) property is non rateable and part rateable (ss4 and 6); where different differential rates apply to different parts of a property (s105, para [10] above); and when part is subject to remission or postponement of rates (s179, para [40] above). We might recall the point made earlier that ss105 and 179 indicate that one separate property can accommodate more than one use or user or occupier. So too indeed does s202 itself (para [32] above).
[51] Fisher J concluded that taken overall s202 was not decisive of the issue but tended to favour the Valuer-General. The respondents cross appeal against the Judge’s decision:

(a) to determine that section 202 of the Rating Powers Act 1988 favours the “certificate of title approach” rather than the “occupation approach” to identification of separate properties;

(b) not to determine the issue whether the Valuer-General had the power to carry out apportionments under s202 of the RPA in the case of each of the examples contained in the statement of claim.

[52] The first matter may relate to the reasoning rather than the result and may be better treated as a notice supporting the result on another ground. The second at first appears difficult to square with the declarations actually made by the Judge that the Valuer-General had no power under s202 or otherwise to make apportionments in respect of the premises comprising the two properties which the Judge declared to be separate properties (para [15] above). Those declarations may well however have arisen directly from the conclusion that if each of the various premises was already a separate property there was no possibility of an apportionment whether s202 conferred a power to apportion or was exercisable only in relation to the particular situations identified in the legislation.
[53] We return to the question whether s202 confers a separate power to apportion. As the respondents submit, the provision is confined by a test of necessity : the rateable value can be apportioned only when that is “necessary”. But the power is not tied in any particular way to the specific sections which mention s202. That section does itself appear to confer a power – the rateable value shall be apportioned by the Valuer-General or Valuer as they think fit – provided only that the test of necessity is satisfied. It is not presented as an ancillary power. And, although this is anticipating the result on the main issue, if there can be a number of occupiers of one “separate property”, as s202(3) itself accepts, then a power of apportionment would appear to be necessary for instance to cover situations of leases for 12 months or more of a part where there is no agreement about apportionment of rates. Otherwise, as Fisher J suggests, how would the basic rate collection provision of s121 operate effectively? Accordingly, we conclude that the power of apportionment in s202 can operate generally and independently of the particular provisions that refer to it.

Other features of s8 of the VLA

[54] Fisher J did not see any clear pointers in the other features of s8. The respondents do not challenge that conclusion but they do challenge a submission by the appellants that s8(2) should not be used as a springboard for multiplying the imposition of uniform annual general charges by local authorities on ratepayers. A taxing power, they say, referring to s22(a) of the Constitution Act 1986, needs clear legislative authority. The short answer to that contention is that if, under s8(2), part of a separate property were treated as separate property because in the circumstances it was reasonable to do that, it then became subject to the imposition of those charges under the plain wording of s20 of the RPA. Like Fisher J, we do not see the other features of s8 helping one way or the other. This is however a convenient point to consider an issue relating to s8(2).
[55] Counsel for the appellants questioned whether this provision could be used in respect of a single separate property – that is in a disaggregating way, as well as in an aggregating way which counsel agreed was available. On its face the subsection is not limited in that sense. Many provisions of the legislation contemplate the separate occupation of a part of a separate property. And the related amendment made in the same amending statute in 1981 to s24D(6) appears to be capable of operating only in that disaggregating way in the context of that provision.

Would an occupation approach be impractical?

[56] While counsel for the appellants mentioned problems for the valuation process if areas smaller than those defined by certificates of title were considered as separate property, the matter does not appear to have real significance. As Fisher J says, such a valuation process for properties with many premises does not appear to differ except in degree (if that) from the process of apportionment. He mentions the example of a large shopping centre (para [22] above) consisting of 71 unit titles and apportioned into 50 different premises with valuations ranging from $25,000 to $835,000. In any event, as the Judge also said, the ultimate test is the meaning of the statute rather than the convenience of those administering it.

Conclusion on the general issue

[57] In our opinion the expression “separate property” in s8(1) of the VLA meant a property as defined by a certificate of title. That follows from the plain meaning of the words in their particular statutory context and from their wider land law context and the valuation purpose of the expression. Of major importance in support of that conclusion are the many indications in the RPA that a “separate property” can have more than one occupier, use or user.
[58] We should add that it was possible for land to be treated, under s8(2), as a separate property if that was reasonable in the circumstances. Because of the relatively abstract way in which this case has proceeded however we, like Fisher J, have no basis for questioning the decisions, if any, which the Valuer-General made under that provision relating to the particular properties in issue in this case.

Result

[59] The appeal is accordingly allowed and the cross appeal dismissed. The declarations made in the High Court are set aside. Neither side sought costs in that Court and we assume that no costs order is sought in this Court.

Solicitors:
Crown Law Office, Wellington for the Appellants
Simpson Grierson, Auckland for the Respondents