A & B Management (No. 87) Pty Ltd v The Commissioner of Land Tax [1993] QLC 21 (1992-93) 14 QLCR 453

LAND COURT BRISBANE. 23rd July, 1993. Re: Appeal against Land Tax Assessment No. E4932/88395 A & B Management (No. 87) Pty Ltd v. The Commissioner of Land Tax D E C I S I O N A & B Management (No. 87) Pty Ltd is the owner of land situated at 12 Beverley Crescent, Broadbeach Waters, described as Lot 129 on Registered Plan 120501, Parish of Gilston, containing an area of 731 square metres. Constructed on the land is a three bedroom brick house with pool, retaining walls and other improvements. A & B Management purchased the property on 1st February, 1991 for $230,000. On 18th December, 1992 the Commissioner of Land Tax issued Assessment No. E4932/88395 in respect of the abovedescribed land, based on an unimproved value of $177,500. This assessment was for the land owned at midnight on 30th June, 1992 by the appellant company. The appellant objected against this assessment by letter dated 12th January, 1993, stating the following grounds: "1.That the properties including substantial improvements were purchased in February 1991 for a total of $230,000. That the improvements included substantial drainage, retaining walls, pool, concreting and a three bedroom brick home. 2.That the property was revalued by the Valuer-General's Department on 31 March 1992 to a value of $124,000. The said valuation updated an earlier valuation of $177,500 undertaken on 31 March 1990. [1993] QLC 21 -- 1 of 6 -- 2 This earlier valuation proved to be substantially in excess of the current value of the property and consequently should not be used for the purposes of the current assessment." On 3rd February 1993 the Assistant Commissioner of Land Tax issued a decision disallowing the objection. By letter dated 1st March 1993, the appellant appealed to the Land Court. This letter included grounds of appeal which were somewhat more extensive than those contained in the letter of 12th January, 1993. Under the provisions of Regulation 30 of the Land Tax Regulations 1936, where a taxpayer has objected against an assessment of land tax and is dissatisfied with the decision of the Commissioner on that objection, the taxpayer may appeal to the Land Court, "provided that the grounds of appeal shall be limited to the grounds of objection". The appellant is therefore limited to the grounds that were stated in its letter of objection dated 12th January 1993. However, in the circumstances this did not affect the presentation of the appellant's case, as its argument was encompassed within the second ground of the objection. Mr D J Cranstoun, Managing Director of the appellant company, appeared on its behalf. Mr Cranstoun's argument proceeds as follows: Section 7 of the Land Tax Act 1915 provides that "... land tax shall be levied and paid upon the unimproved value..." Section 25 of the Valuation of Land Act 1944 provides that "The valuation of any land made under this Act shall be - (a)The unimproved value of that land for the purposes of the Land Tax Act..." "Unimproved value" is defined in section 3(1) of the Land Tax Act as"... 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..." -- 2 of 6 -- 3 Section 12 of the Land Tax Act requires that "... land tax shall be charged on land as owned at midnight on thirtieth day of June immediately preceding the financial year in and for which the tax is levied..." The most recent valuation by the Valuer-General prior to 30th June 1992 is that made at 31st March 1992 for $124,000. This valuation of $124,000 is the valuation upon which the Commissioner should assess land tax, not the valuation made as at 31st March 1990. Mr Cranstoun argued further that the 1992 valuation of the subject land issued on 26th October 1992, but the Commissioner would have had access to it before that date, and in any case, the assessment was not made by the Commissioner until December 1992. Counsel for the Commissioner of Land Tax, Mr K Lapthorn, submitted that under section 25 of the Valuation of Land Act 1944, any reference to "unimproved value" or "rateable value" of land refers to the subsisting valuation made under that Act. He referred to the dictionary definition of the word "subsist" which means among other things, "to exist, continue in existence, remain in being". Therefore, he argues, the subsisting valuation was the valuation made as at 31st March 1990, as that is the date fixed by the then Valuer-General as the date of valuation under the Valuation of Land Act. That valuation then took effect on 30th June 1991 and continued in force until replaced by the next valuation on 30th June 1993. That valuation for $124,000 had not even issued on 30th June 1992 and therefore could not possibly have been in effect at that date. The essential feature of this case is that the appellant company is seeking to have land tax assessed on the lower valuation. This somewhat unusual situation where a later valuation is lower than the earlier one is the result of the property market where property values have fallen in the last two or three years. The -- 3 of 6 -- 4 Valuer-General's assessment of the movement in unimproved values is clearly indicated in Exhibit 5, which is a certified copy of the Department of Lands computer record. This record shows that the subject land is situated in the local authority area of Albert Shire. Immediately prior to 30th June 1991, the then subsisting valuation in force for land tax purposes was $170,000. Although the record does not show it, this valuation presumably had date of valuation as at 31st March 1989, and took effect on 30th June 1990. The Valuer-General fixed the date of valuation for the next annual valuation, as he was required to do under section 16B(2) of the Valuation of Land Act 1944, at 31st March, 1990. The fixing of this date of valuation sets the common date as at which all lands in the local authority area (indeed, in that year, all local authorities in the State) were valued. At that stage, no valuations had been made, the date of valuation simply being the date at which the market level is to be gauged, the common date as at which all lands in the area must be valued. When the process of making the valuations is complete the valuations are "issued" under section 16E of the Act. Then under section 26(1) the Valuer-General (now Chief Executive, Department of Lands) is required "as soon as is reasonably practicable" after the completion of the valuation roll, to provide a copy of such portions thereof as he may require, to the Commissioner of Land Tax. In the case of the 1990 valuation, the date of "issue" was 27th June 1991 and although there is no evidence of the date that the valuation roll was supplied to the Commissioner of Land Tax, it is reasonable to assume that it was very close to the date of "issue". For reasons which were well publicised at the time, there was no -- 4 of 6 -- 5 annual valuation made by the Valuer-General for Albert Shire (or, with the exception of four local authorities, for any local authority area in the State) in 1991. Under the provisions of section 16C, of the Valuation of Land Act 1944, the 1990 valuation took effect on 30th June 1991, and pursuant to section 16D, that valuation continued to have force and effect until the next annual valuation commenced to have force and effect. Then in 1992, the Valuer-General fixed a date of valuation of 31st March 1992 for the next annual valuation. This annual valuation "issued" on 26th October 1992, the subject land being valued at $124,000, and took effect on 30th June 1993. Until 30th June 1993 the valuation of $124,000, although made as at 31st March 1992, had no force and effect. It was prospective only, waiting for midnight on 30th June, 1993 before it was "enlivened" and became effective for land tax purposes. (Although the Valuation of Land Act has been amended substantially since they were decided, the significance of the "date of effect" of a valuation for local authority rating purposes was discussed by the Full Court of the Supreme Court of Queensland in Reinke v. Banana Shire Council (1968) Qd.R. 453 at 457 and by the High Court of Australia in Kilcoy Shire Council v. Brisbane City Council (1970 - 71) L.G.R.A. 300 at 305 - 306.) Therefore, the appeal by the appellant company must fail, as the valuation in force at midnight on 30th June 1992 was for $177,500, the one made as at 31st March 1990 which continued in effect until replaced on 30th June 1993. Under the provisions of section 28(2) of the Land Tax Act 1915, I have no discretion with regard to costs as that subsection is framed in mandatory terms. Accordingly, I order that the appellant pay the respondent's costs of and incidental to this appeal. The amount of such costs shall be ascertained and fixed by the Costs Taxing Officer of the Supreme Court at Brisbane in accordance with the provisions of -- 5 of 6 -- 6 Section 41(9) of the Land Act 1962. MEMBER OF THE LAND COURT. -- 6 of 6 --