HOTELS
- STATUTORY VALUATIONS
In
determining the assessed annual value or gross rental value of a
hotel the perennial question arises about whether or not the value of
the licence should be taken into account. However, it is now clear
law that for improved values (which a rental value is), the "licensed
premises" is valued which includes anything attributable to the
licence. The following quotation from Caprel's case shows the
appropriate valuation method:
Section
7 of the Valuation of Land Act defines assessed annual value. For the
purposes of these proceedings I need only refer to subsection (I)
which provides:
7.
(I ) The assessed annual value of land is -
(a)
nine-tenths of the fair average annual value of the land, with the
improvements (if any) thereon; or
(b
) five per centum of the unimproved value of the land,
whichever the greater.
The
parties accept that paragraph (a) provides the relevant measure and
that the meaning of this provision established by existing
authority: see Myerson v. The Valuer General (1933} SR (NSW) 82 and
Tooth & Co Ltd v. The Valuer General (I953) I9 LGR I72.
(and
later)
1.
Should the assessed annual value reflect the enhanced value by virtue
of the subject land comprising hotel premises licensed under the
Liquor Act 1912?
In
answering this question there is no need to refer in a detail to the
evidence concerning the nature of the building layout and facilities
of the Prince of Wales Hotel premises is sufficient to say that at the
base date there existed on the subject land typical suburban
hotel premises Licensed under the Liquor Act 1912. In my opinion the
objector's contention is not supportable by principle or authority
and must be rejected. I hold that in determining the assessed annual
value of land comprising hotel premises licensed under the Liquor Act
1912 (and the position the same under the Liquor Act 1982) the
fact that the premises are licensed under the Liquor Act is to be
taken into account. This conclusion accords with:
(i)
implicit assumptions and in some cases express obiter dicta found in
a number of
Australian
decisions;
(ii)
English decisions on rating legislation based upon the annual value
of rateable land; and
(iii)
New Zealand decisions.
In
appealing to New Zealand cases the objectors have unfortunately
overlooked the important decision of the Court of Appeal in Dunedin
City Corporation v. Hames (948) NZLR 962, a case involving the annual
value of rateable property under the Rating Act I925, where the same
argument that the objector in these proceedings has advanced was
decisively and unanimously rejected. In Dunedin City Corporation,
the argument which was founded on earlier New Zealand decisions,
including In re Gilmer was succinctly stated by O'Leary CJ at 984:
"The
argument was that these cases decide that an hotel licence is not an
interest in land, but some special kind of property. That rateable
value is determined on the rent of
rateable
property - ie lands, tenements or hereditaments and, therefore the
licence not coming within the definition of property, cannot be
rated."
In
expressly rejecting the argument, the Chef Justice held (at 984) that
the earlier cases were decided under different legislation and had no
bearing on the ascertainment of "rateable value" under the
Rating Act (cf. Findlay) at 1001: "The cases on which the
respondent relied have no application") and continued (pp.
984-5):
"The
argument is further answered by this: that, in ascertaining the
hypothetical rent, the Licence is not valued as property. It is no
more valued as such than is, say, the situation of the property in a
particular street. But in appropriate cases this last factor is
taken into
account
as an enhancement of the rental value, so also can the existence of a
Licence and the goodwill attached be considered an enhancement
increasing the rental value, though the licence as such is not itself
valued.
I
have therefore come to the conclusion that there is no difference in
the law applicable in England ad New Zealand.
It
follows that I am of the opinion that, in ascertaining the rateable
value of hotel premises in the City of Dunedin, regard must be had to
the existence of the licence and the goodwill attached thereto."
Of
all the cases either cited in argument or researched by myself, I
have found the decision in Dunedin City Corporation to contain the
most direct, comprehensive and illuminating consideration of the
question raised in these proceedings by the objector's contention. In
my opinion its reasoning is entirely convincing and its conclusion
directly in point to the question raised before me and I would
respectfully adopt it in reaching the conclusion I have expressed.
So
completely does the decision in Dunedin City Corporation answer the
objector's contention that only brief reference need be made to
reported Australian decisions where, except for the decision of
the
NSW District Court in MacMahon v the Valuer GeneraI (1953) 5 LGA 131
(a case involving improved value), the objector's present contention
does not appear to have been previously argued in the context of
determining improved value or assessed annual value .
In
MacMahon it was held, at I32, "that the fact that a person is
licensed to sell Liquor on premises must be taken into consideration
in arriving at the improved value of the land on which the premises
stand.
In
Any other cases, eg Tooth and Co Ltd v. The Valuer General (I953) 19
LGR 172; R. v Municipality of Devonport; Ex-Parte Ferrall (1949) Tas
SR I65; and Cooper v. City of Perth (1960) 7 LGRA 396, various
superior courts, in determining the assessed annual value of land
comprising premises licensed under the relevant Liquor Act, have
implicitly assumed that such value would reflect any enhancement due
to the fact that the premises were licensed to see liquor. Obviously
these decisions do not directly reject the objector's present
contention because they did not encounter any similar contention.
However, they certainly demonstrate a long history of judicial
decisions in Australia
which
are entirely inconsistent with the objector's contention and which,
if the objector's contention be correct, must be regarded as having
been decided per incuriam.
Additionally
I would briefly refer to cases where obiter dicta are to be found
expressing the opinion that in determining the improved value of land
where that land comprises premises licensed under the Liquor Act, the
effect on value of the licence is to be taken into account: see In re
Land Tax Acts-, Wilson's case 392 VLR 399 at 404; Barsby v. The
Valuer-General (I937) 13 LGR173 and Tooheys Limited v. The Housing
Commission of NSW (I952) 20 LGR 236 at 255. Reference might also
be
made to the decision of Knox J in Daniell v. The Federal Commissioner
of Taxation (I928) 42 CLR 296
Finally
I would refer to the English decision annotated in Ryde on Rating,
13th Edn pp. 598-6I2 applying the principle that the
valuation must be "rebus sic stantibus" in holding that the
Liquor Licence applying to premises must be taken into account in
determining the annual value of rateable property. The objector
sought to avoid this long-established line of authority by asserting
that the English rating system was relevantly different ho the
Australian rating system. The New Zealand Court of Appeal in Dunedin
City Corporation decisively rejected a similar argument in relation
to the New Zealand rating system for the detailed reasoning set forth
in their judgements which in my
respectful
opinion is convincing and correct. In my opinion that reasoning is
similarly applicable here and I would reject the objector's argument
and hold that the reasoning of the English decisions in relation to
the annual value of licensed premises is applicable to the
determination under the Valuation and Act of the assessed annual
value of land comprising licensed hotel premises.
As
with the reasoning in Dunedin City Corporation, I likewise find the
reasoning of the English decisions entirely convincing and
respectfully adopt it.
Additional
support for the conclusion I have reached on this question to be
found in a source not addressed in the course of argument. The
additional support (which is entirely separate from the reasons that
have led to my conclusion) is found in the presence in the Valuation
of Land Act of section 58AA inserted by the Valuation of Land
Amendment) Act I984 (Act No 120). That section provides for
"allowances for hoteliers" to be made in the assessed
annual value of land including land "to which a publican's
Licence related" as at relevant base dates occurring before 1
July 1983 (subsection (2)). The allowance provided by subsection (2)
equal to:
(a)
the licence fee last payable before the base date in respect of the
granting or renewal as the case may require of the publican's
licence; or
(b)
20 per cent of the assessed annual value.
whichever
is the lesser.
Subsection
(9) provides as follows:
Notwithstanding
anything contained in this or any other Act, a rating or taxing
authority referred to in section 47 in levying rates or taxes on the
assessed annual value shay levy rates or taxes as the case may be
upon the amount of that value after deducting therefrom the amount of
any allowance referred to in subsection (2) (3) (4) or (5) and
ascertained in respect of that value.
It is obvious that the scheme of
section 58AA based upon the implicit
assumption that the assessed annual value of land (to which a
publican's licence under the Liquor Act 1912 related as at
the
relevant base dates) reflect the enhanced value of the land by virtue
of it comprising hotel premises licensed under the Liquor Act 1912.
Since the legislature is not to be presumed to have
legislated
in vain the enactment of section 58AA strongly promotes the
construction of section 7(I) that the assessed annual value of
licensed premises is properly to reflect any enhancement in value
due to the existence of the licence. In the present state of the law,
where the question raised by the
objector's
contention appears not to have been authoritatively pronounced upon
by the courts in Australia, the court, in encountering the contention
for the first time should not interpret section 7(1) in a manner that
ignores the legislature's understanding of section 7(3) or defeats
the clear purpose of section 58AA: cf. Statutory Interpretation in
Australia, 3rd edn by Pearce and Geddes, paragraphs 3.25 and 3.26.
Accordingly,
for all the foregoing reasons I answer the first question by holding
that the assessed annual value of the subject premises should reflect
the enhanced value attributable to the fact that the land comprised
as at the relevant valuation base date, hotel premises Licensed under
the Liquor Act 1912.
It
follows that I must reject M R's' valuation of 454,168 which ignores
the fact that the subject land comprises hotel premises licensed
under the Liquor Act 1912.
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