Triguboff v Valuer General

[2009] NSWLEC 9

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(Decision by: Biscoe J)

Triguboff
vValuer General

Court:

Judge:
Biscoe J

Subject References:
Valuation of Land
Whether land on one title but formerly on two titles comprises and should be valued as one parcel or two
Meaning of 'parcel'
Whether unity of title, physical unity and unity of use and occupation

Legislative References:
Land Tax Management Act 1956 (NSW) - The Act
Valuation of Land Act 1916 (NSW) - s 14A(1); s 26(1); s 26A; s 27B; s 37; s 40

Case References:
Attard v Valuer-General (NSW) - [2006] NSWLEC 351; (2006) 146 LGERA 384
Christies Sands Pty Ltd v City of Tea Tree Gully - (1975) 11 SASR 255; (1975) 37 LGRA 325
McMillan v Commissioner of Land Tax - [1972] 1 NSWLR 545

Hearing date: 4 February 2009
Judgment date: 13 February 2009

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Decision by:
Biscoe J

[1] This is an appeal under s 37(1) of the Valuation of Land Act 1916, which provides that:

Any person entitled under Pt 3 to object to a valuation may appeal to the Land and Environment court if the person is dissatisfied with the Valuer-General's determination of any such objection to the valuation concerned (whether or not the person was the objector).

[2] Section 40 of the Act provides:

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.

[3] The applicants, Harry Oscar Triguboff and his wife Rhonda Eileen Triguboff, are owners as joint tenants of the property situated at 62-64 Wentworth Rd, Vaucluse, NSW, described in Folio Identifier 1/1111079 being Lot 1 in Deposited Plan 1111079 (the Property). The Property has an area of 5,217 square metres.

[4] Immediately prior to its consolidation under one title by a plan of consolidation registered in May 2007, the Property comprised adjoining blocks known as 62 Wentworth Rd and 64 Wentworth Rd, Vaucluse. These blocks were respectively described in Certificate of Title Vol 7285 Folio 209 and in Lot 13 of s 2 in Deposited Plan 4527. No 62 comprised approximately 3,952 square metres and No 64 approximately 1,265 square metres. Notwithstanding unification of title, it is convenient in this judgment to describe the former No 62 and the former No 64 simply as No 62 and No 64.

[5] The applicants have owned and lived in the house at No 62 (House 62) since 1984. They have owned and used the house at No 64 (House 64) since 1998. No 62 and No 64 both adjoin Sydney Harbour.

[6] The respondent Valuer General assessed the land value of the Property as at the base date 1 July 2007 on the basis that it comprised two parcels. Records of the valuation notices tendered in evidence described one parcel as "62 Wentworth Rd" and its land value was assessed at $15,000,000. The other was described as "64 Wentworth Rd" and its land value was assessed at $9,700,000. The applicants lodged objections stating as the reason for objection that the "Land Should Be Valued Together". On 13 August 2008 the objections were disallowed. The applicants appealed to the court under s 37 of the Act, contending that they were dissatisfied with the Valuer General's decision to disallow their objection to the Valuer General's determination that the adjoining lands at No 62 and No 64 be included in one valuation.

[7] The applicants say that the Valuer General's valuation of the Property as if it contained two parcels enabled the Commissioner for State Revenue to assess land tax on No 62 (described as exempt from land tax due to it being used as the principal place of residence) and on No 64. Assuming that to be so, it is irrelevant to the dry issues in this appeal, which are not concerned with land tax.

[8] The agreed issues are whether the Property comprises one parcel; and, if it comprises two parcels, whether s 26(1) of the Act applies to require one valuation. If either of those questions is answered in the affirmative, the appeal must be allowed.

[9] The scheme of the Act imposes under s 14A(1) a primary obligation on the Valuer General to value each parcel of land each year. In the present case the Valuer General has valued the Property as if it comprised two parcels.

[10] Sections 14A(1) and 26(1) provide:

14A Valuer-General to ascertain land values

14A

(1)

The land value of each parcel of land in New South Wales, other than:

(a)

lands of the Crown, or

(b)

land that is within the Western Division and is not within the area of a rating or taxing authority,

is to be ascertained each year.

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."

[11] It is common ground that the words "several parcels" in s 26(1) should be construed as two or more parcels and that no direction under s 26(1) has been made.

UNIFICATION, USE AND OCCUPATION

[12] No 62 and No 64 were united in title prior to the 1 July 2007 base date: see [4] above. The applicants' evidence as to physical unification, use and occupation was not contested by the Valuer General and I have had the advantage of viewing the property with the parties' legal representatives. As at the 1 July 2007 base date, the applicants used and occupied the Property as their sole place of residence, as they still do. They purchased No 64 when it became available because of the extra space it provided. They have over many years regularly hosted or entertained large gatherings of family and friends at their home.

[13] Immediately following their purchase of No 64 in 1998, the applicants undertook extensive renovation works to the existing house located there (House 64) and to the grounds. The renovations were completed by about the beginning of 1999.

[14] The renovations to House 64 were for the applicants' specific purposes and configured to suit their needs in their use and occupation of the Property as a whole. The boundary wall dividing No 62 and No 64 was removed -- but the retaining wall along about 60 percent of the former boundary remains in place because the ground level is higher on one side than the other -- and sandstone steps linking paving leading to House 62 and House 64 were constructed. The gardens of No 62 and No 64 were landscaped to form one continuous garden for the Property and also to incorporate a putting green built on the site of the tennis court on No 64.

[15] The linkages between House 62 and House 64 comprise common landscaped gardens (shrubs, lawn areas and trees) and three interconnected pathways for easy access from one house to the other. At least one of the pathways is wide enough to accommodate two persons walking side by side.

[16] The main driveway to, and the car garaging facilities for, the Property are located at House 62. The double garage located on No 64 is used for the storage of garden tools and to house a large bore-water tank which feeds the watering system installed on the Property.

[17] The renovations to House 64 undertaken in 1998/1999 included:

(a)

conversion of the entire ground floor area (other than the kitchen and powder rooms) into an open entertaining area;

(b)

enlargement of the entrance hall area and addition of a large bar immediately off the entrance, to be used as a drinks area for functions;

(c)

installation of a large fully equipped kitchen, designed for large functions;

(d)

installation of an indoor swimming pool and change room on the lower ground level;

(e)

installation of sophisticated electronic equipment in the entertainment area, including a very large retractable projector screen, for use during functions;

(f)

installation of air-conditioning sufficient to accommodate a large number of people in the entertainment area; and

(g)

installation of two toilets and powder rooms on the ground floor.

[18] In the upstairs level of House 64 are two bedrooms, one with an en-suite. These are used from time to time to accommodate friends and family. A large walk-in wardrobe in the second bedroom is used for storage of tables, chairs and other equipment which the applicants use for functions downstairs. The third upstairs room was converted into a studio or study which Mr Triguboff uses on the weekends. Mr Triguboff also has a small study in House 62 that he usually uses on weekday evenings when he returns from work. However, he prefers to use the study at House 64, especially during daylight hours, because it is lighter and has a better outlook than the study at House 62. He has a television set in his study at House 64 and spends a lot of time there, especially on weekends. There is no television set in the House 62 study. Mr Triguboff exercises in the indoor swimming pool which the applicants installed in House 64, usually two to three times a week. House 62 has no indoor swimming pool.

[19] The applicants entertain on a regular basis a large number of family and friends. At many of the festive occasions that they celebrate annually they can have up to 40 family and friends present for a seated function. House 62 does not accommodate these types of functions. Since at least 1999 the entertainment area in House 64 has been used for their annual large family Passover and Rosh Hashana (Jewish New Year) celebrations. It is also where they host their family Christmas and New Year's Eve celebrations for their non-Jewish friends and relatives, wedding and birthday celebrations and other gatherings for family or friends, and their regular fortnightly Friday evening Sabbath meals for their family and friends.

[20] Over the past ten years or so the applicants have used the entertaining area at No 64 to host a large number of private charitable and communal functions, some of which are annual, for organisations which they support and have some association with. They find it most convenient to hold these private functions at House 64, which is an area that is totally separate from the main house. Tradesmen and caterers can attend the Property days in advance of the function in order to prepare, with little disturbance or upheaval to the applicants' private lives. They can also pack up afterwards with minimal interference to the applicants. Entertainers, guests and other persons who attend the function can go to the function area directly and have no direct access to the applicants' private quarters. For safety, privacy and security reasons they have found this highly beneficial.

[21] If the applicants' state of mind or intentions are relevant, which I doubt, the evidence is that they do not consider House 64 to be a separate residence but as part of their home with separate structures for privacy and entertaining. They have no intention of changing the usage of House 62 and House 64 nor of selling any part of the Property.

ONE PARCEL OR TWO?

[22] The first issue is whether the Property was one parcel of land or two as at the 1 July 2007 base date. The expression "parcel of land" appears throughout, but is not defined in, the Act. The Act distinguishes parcels from lots (eg ss 26A and 27B). In Attard v Valuer-General (NSW) [ 2006] NSWLEC 351 ; (2006) 146 LGERA 384 at [41]-[42] Jagot J held:

[41] ... I have already noted that s 14A uses the word 'parcel', whereas s 27B refers to 'lot'. The word 'parcel' is well known to the law. There are a number of decisions which deal with the concept, many of which are conveniently summarised in Alan Hyam, The Law Affecting Valuation of Land in Australia, 3rd edition, at pp 18-20. In Colonial Sugar Refining Co Ltd v The Valuer-General ( 1939) 5 The Valuer 472 at 473, cited by Hyam, Roper J said that the question of whether land is one or more parcels for the purposes of the Valuation of Land Act is a question of fact. Roper J said that:

Unity of title and the purpose for which the land is held, are elements to be considered; but the principal consideration is, I think, the degree of separation effected by the owner in using the land. Where the owner cuts the land into portions and devotes those portions permanently and indefinitely to separate uses each portion is in my opinion a parcel for the purposes of the Act.

[42] In Christies Sands Pty Ltd v Tea Tree Gully, City of ( 1975) 11 SASR 255 at 266; 37 LGRA 325 at 336 Wells J said:

It seems to me, therefore, to be clear beyond argument that the expression 'any parcel of land' means what it says according to common understanding and to the understanding of the conveyancer and historian. It means, in my opinion, a specified and reasonably well defined area of land. That area may be defined by general description, by reference to a map or plan, by clearly established usage, or by a combination of all three (or one or two of them) with landmarks, fences, walls, tracks, watercourses or natural boundaries or signs on or in the land of any kind whatever. It is essential to the creation of a parcel, in this sense, that its limits should be ascertainable with reasonable precision.'

[23] The expression "parcel of land" can therefore include part of the land identified in a certificate of title : Christies Sands Pty Ltd v City of Tea Tree Gully ( 1975) 11 SASR 255 ; (1975) 37 LGRA 325 at 335-336.

[24] Unity of title and absence of separation by physical severance, use or occupation indicate that adjoining portions of land are one parcel : McMillan v Commissioner of Land Tax [ 1972] 1 NSWLR 545. In that case Isaacs J held that two allotments shown as a deposited plan were "not separated by physical severance nor in title nor by use nor by occupation" and hence were one parcel of land for the purposes of the Land Tax Management Act 1956 (at 556). His Honour applied the substratum of decisions under cognate legislation, which he reviewed as follows (at 554-555):

In Patullo v Municipality of Condobolin ( 1918) 18 SR (NSW) 297; 35 WN 100, the owner of land in the municipality effected a private subdivision, laid out streets, marked out allotments for sale and deposited a plan in the Land Titles Office. Certain lots were sold. The unsold lots in each section were contiguous, vacant and undivided. The council valuing the land for rating purposes treated every individual unsold allotment as a separate parcel. It was held that the principle of valuation adopted by the council was wrong in that the contiguous unsold lots in each section should be treated as one parcel separately held.

The Chief Justice, Sir William Cullen, with whom Gordon and Sly JJ, concurred, after setting out s 136 of the Local Government Act, 1906, said (1918) 18 SR (NSW) 297, at p 301; 35 WN 100, at p 101:

It is contended on behalf of the Council that the effect of the subdivision of the land although it had not been effectuated by actual sale in regard to these particular lots, still, as it was defined by marking out lots and showing them on a deposited plan coupled with the intention of the owners to dispose of them in separate lots, was to make each of them a separate parcel or a parcel separately held within the meaning of s 136. Now, to begin with I cannot see how the intention to sell can affect the matter ... If the purchaser bought several contiguous lots and either left them as they stood or enclosed them in a ring fence and held them so, it seems to me impossible to say that he would hold three separate parcels. The parcels would not be separated in title, they would not be separated by physical severance nor by use nor by occupation.

This decision was followed by the Full court in Halloran & Co v Municipality of Queanbeyan ( 1926) 26 SR (NSW) 50 ; 43 WN 33, where an owner likewise subdivided an area into several blocks with streets, marked out allotments for sale in each block and lodged a deposited plan with the Land Titles Office. Some lots were sold, but unsold lots were left vacant, untenanted, contiguous and physically undivided. The council rated each unsold lot separately and the Valuation court had held that each allotment was a separate parcel of land. On appeal to the Full court it was argued that the new s 139 (3) compelled the separate valuation of each allotment. Street CJ (later Sir Phillip St) with whom Harvey CJ in Eq and Campbell J concurred, held that there was no substantial difference between the two sections, and that, although the words were not the same, each section meant the same thing, and they applied Patullo's case with special reference to the above-quoted passage in the judgment of Cullen CJ.

[25] The Valuer General submits that the Property comprised two parcels for the following reasons:

(a)

the applicants in their affidavit evidence by general description refer to the various portions (to adopt a neutral term) of their land as Nos 62 and 64 Wentworth Rd and that distinction is plainly apparent;

(b)

there is separate direct street access from each portion;

(c)

there is no internal traffic connection between the two portions;

(d)

there is a separate residence on each portion with each having all facilities that would be expected in a separate dwelling (including kitchen, bathrooms, bedrooms and garage);

(e)

that the kitchen in No 64 might be seen as "commercial" is irrelevant -- it is functional, up to date and clearly workable;

(f)

there is no dividing fence between the two residences but there is a retaining wall which follows approximately the same line as the former title boundary. I do not accept that proposition without qualification: the retaining wall follows only approximately 60 percent of the former title boundary;

(g)

there are two or three internal footpaths (one of which is very narrow) connecting the two portions but the garden does not flow across from one to the other. I reject the last proposition: it is clear from my view of the Property that the garden flows across a substantial part of the former boundary;

(h)

the design of each of the buildings does not "naturally" connect the buildings so as to relate one to the other;

(i)

each is capable of being occupied as a dwelling independently of the other -- that is, No 64 does not depend on No 62 for day to day use, and vice versa.

[26] The question whether the Property is one parcel or two parcels is a question of fact. No 62 and No 64 are united in title, physically united and united by use and occupation. There are no distinguishing structural or geographical features that would indicate that there has been any degree of separation effected by the owners in using the Property. To the contrary, the owners have taken steps to physically unify No 62 and No 64. The whole Property is fenced as a single entity. The owners have removed the fence between No 62 and No 64 and have connected them by pathways, steps and a common garden area. Neither by established usage nor by regard to whether there is a reasonably well defined area of land nor by use of any current plan or map can it be said that there is more than one parcel. Because there is no dividing fence or other physical severance of No 62 and No 64, and paths and, in substantial part, the garden, flow across the former boundary, there is difficulty in determining with reasonable precision whether there is any boundary between them and, if so, where it is. That uncertainty is reflected in the Valuer General's submission that the boundary is either the outside of the path running along the southern side of House 64 or the retaining wall between No 62 and No 64 extended by a notional line running to the Harbour.

[27] The whole Property was and still is used for domestic purposes. At No 64 the applicants converted the ground floor of House 64 into a large open entertaining area with related facilities; built an indoor swimming pool and putting green; and installed a large bore-water tank in what used to be the garage to feed the Property's watering system. The garage on No 62 is used as the garage for No 64. House 64 is regularly used for entertaining and guest accommodation and its indoor pool and study are also regularly used. It is a small point, but no privacy is maintained between House 62 and House 64 in that the windows in House 64 facing House 62 have no curtains or blinds, in contrast to the windows on the other side of House 64 facing a neighbouring property.

[28] The use of No 64 in various ways, whether viewed singly or as a totality, is not a separate and independent use, occupation or enjoyment divorced, or for a purpose that differs, from the use of No 62. No 64 and its facilities, including those created and changed by the applicants, are an integral part of the domestic use and enjoyment of the Property as a whole for domestic purposes by the applicants, their family, friends and guests. They are incidental to the use of No 62. It makes no difference if the Property had all originally been purchased as one or whether (as occurred) No 64 was subsequently added to the adjoining No 62 for the purpose of enjoyment of its amenities.

[29] In my opinion, for these reasons, the Property was a single parcel of land as at the 1 July 2007 base date. Consequently, the second issue under s 26(1) of the Act (referred to at [8] above) does not arise. The appeal must be allowed.