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29 of 2001
(1) Rodney District Council
(2) Manukau City Council
(3) Hutt City Council and
(4) New Zealand Local Government Association
Incorporated
Appellants
v.
(1) The Attorney-General and
(2) The Valuer-General
Respondents
FROM
10. The Court of Appeal said when it decided to grant leave that the
question of law as to the meaning of the expression separate
property was important not only for the past but also for the future.
This is because the system of valuation described by the Rating
Valuations Act 1998, which repealed and replaced that laid down by
VLA 1951 with effect from 1 July 1998, was also based on separate
property: see section 7 of the 1998 Act. But sections 14 and 17 of
and Schedule 2 to the Local Government (Rating) Act 2002 have
introduced an entirely new system for defining categories of rateable
land. So the focus of attention in this appeal has been throughout on
the meaning which must be given to this expression in the context of
the now repealed legislation.
11. The complexity of that legislation is such that the question
which has been raised in this case is far from easy. The Board are
also conscious of the fact that it must be answered in the light of the
role which is given to a certificate of title under the Torrens system
in New Zealand, and that there are important differences between the
legislation which gives power to local authorities to levy rates and
charges in New Zealand and the legislation in the United Kingdom
with which they are familiar. This is a highly technical field of law,
and their Lordships task has been greatly assisted by the careful
judgment of the Court of Appeal delivered by Keith J to which they
wish to pay particular tribute.
Historical background
12. Although the Board is concerned in this case with the meaning
of the expression separate property in section 8 of VLA 1951, it is
of some importance by way of introduction to examine the historical
background. The significance of land as a source of taxation had
been recognised both in England and in Scotland from the earliest
times. Originally it was the principal source from which the Crown
derived its revenue. The Domesday Book was a valuation roll:
OKeefe, The Legal Concept and Principles of Land Value
(Butterworths, Wellington, 1974), para 2.1. This can be attributed to
the fact that land was the most significant element in the national
economy. It later became the basis for the assessment of a wide
variety of taxes for local and municipal purposes such as relief of the
poor. No doubt this was because it was easier to impose these
burdens on the value of land rather than the value of other kinds of
property. But the system grew up in a haphazard fashion. The
various public bodies charged with the imposition of rates for local
and municipal purposes each had to make up their own valuation roll,
and these were often prepared from insufficient data and on different
principles. Radical reform was needed, and it came in the nineteenth
century.
13. The foundation of the modern system of land valuation for
rating in Scotland, whose system has always been separate from that
in England and Wales, was laid by the Lands Valuation (Scotland)
Act 1854. It established a uniform system for the valuation of lands
and heritages in Scotland according to their yearly rent or value by
means of which all local assessments could be collected. It also
required details to be given in the valuation roll of the nature of the
subjects and the names of their proprietors, tenants and occupiers.
As a result there was produced a reliable inventory of the heritable
property in each local authority area. This became available for use
for other purposes such as the voters roll, as at that time the right to
vote was dependent on the ownership of land. But its principal
purpose was to provide the basis for obtaining revenue by means of
rates levied on the value of the property.
14. The basic principles which that Act established remained
unaltered until the system was revised and brought more closely into
line with that of England by the Valuation and Rating (Scotland) Act
1956. Liability for rates, which had previously been charged partly
on owners and partly on occupiers, was transferred by that Act
entirely to occupiers. The actual rents passing were no longer to be
conclusive as to annual value, which is the basis upon which the
rateable value of property is assessed under the Act except in cases
where it is determined by means of a statutory formula. Annual
value was to be assessed instead on the basis of a hypothetical rent,
with a view to ensuring that the same level of value was used for all
comparable properties in the same valuation area. As the entire
liability for the payment of rates was transferred by the statute to the
occupier, it came to be recognised in practice that the unit of
property which was to be valued and entered in the valuation roll
was to be measured by the unit of occupation and not by the unit of
ownership. But, following the position which had long been
established in England, occupation had to have the character of
permanence for it to be rateable: R v The Assessment Committee of
St Pancras (1877) LR 2 QB 581, per Lush J at p 588; Westminster
Council v Southern Railway and Others [1936] AC 511, per Lord
Russell of Killowen at pp529-530; John Laing and Son Limited v
Assessment Committee for Kingswood Assessment Area [1949] 1
KB 344.
17. It should be noted that the basic elements of this system were in
place some years before the introduction into New Zealand of the
land transfer system adopted by the Land Transfer Act 1870.
Moreover the introduction of that system did not result in a
reconstruction of the system for making up the valuation roll. There
is no sign in the legislation of this period that it was the intention that
these two systems should be linked to each other. That would not, of
course, have been practicable at the outset. As late as 1923 it was
estimated that about one-fifth of the land in New Zealand was still
held under the Deeds system: Butterworths Land Law in New
Zealand (1997), para 2.026. It was not until 1951 that the task of
bringing all Deeds system titles under the Land Transfer Act was
officially regarded as complete.
18. The system which was laid down by the Municipal
Corporations Act 1867 was amended from time to time by
subsequent enactments, but the essential features remained the same.
Section 2 of the Rating Act 1882 defined the expression rateable
property as meaning, with certain exceptions, all lands, tenements
or hereditaments in the colony. Section 4 of that Act provided that
the valuation roll was to state for all rateable property in the district
belonging to each separate owner, or occupied by each separate
occupier the rateable value of the same, with the names,
occupations and addresses of the owners or occupiers. Section 28
provided that the occupier was to be primarily liable for all rates.
The expression occupier was defined in section 2 as meaning the
person by whom or on whose behalf any rateable property is actually
occupied, if such person is in occupation by virtue of a tenancy
which was for not less than six months certain or, in other cases, the
owner. This gave statutory recognition to the principle that a degree
of permanence was necessary for occupation to be rateable. From
now on, only occupiers as so defined were to be treated as in rateable
occupation of the property.
19. The Rating Act 1894 retained the system by which the occupier
was primarily liable and section 2 of the Act included the same
definition of the expression occupier. But it was more explicit as
to the treatment which was to be adopted where a property was
occupied by more than one person with different degrees of interest
in the property. Section 11 provided that in that event a separate
valuation shall be made of the interest of each such occupier, and his
name entered in the column of occupiers in the valuation-list. Here
again there is a clear indication that the unit of valuation was not to
exceed the unit of occupation as defined by the Act. Where two or
more persons were found to be in separate occupation of a property,
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 on trust:
(b)
(c)
(d)
(e)
(f)
(ff)
(g)
(b)
(c)
(d)
(e)
(f)
(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.
26. The following expressions which appear in that section were
defined:
(a)
(b)
(c)
(d)
(e)
(b)
(c)
(e)
(b)
45. Section 202(3) of RPA 1988 dealt with the situation where the
occupier of a portion of any rateable property had entered into a
lease or licence or any other agreement with the owner which
specified the portion of the rates that were to be paid by that occupier.
In that situation the apportionment was to be determined by the
agreement with the owner and not by the Valuer-General. Fisher J
said at p 12 of his judgment that it seemed to him to be implicit in
section 202(3) that a given rateable property might have more than
one occupier. At first sight this is difficult to reconcile with an
approach based on the unit of occupation under which each separate
property would have its own occupier. But the word occupier
appears to have been used here in a more general sense than that
indicated by the definition of this expression in section 2 of RPA
1988. This is because it is not confined to occupiers under a tenancy
for a term of not less than 12 months certain, but includes an
occupier under a lease of whatever term and an occupier under a
licence. For this reason the better view is that section 202(3) does
not cast any useful light on the meaning which is to be given to the
expression separate property.
Practical considerations
46. As the Court of Appeal pointed out in paras [19]-[22] of their
judgment, there are a variety of different fact situations that could
arise under the provisions of section 8 of LVA 1951. There were
three relevant variables. The number of occupancies within any
given property might be greater than the number of certificates of
title. Or the number of certificates of title might be greater than the
number of occupancies. Or one person or more might own different
certificates of title if there was more than one of them. Various
situations within these variables might be envisaged which are of
greater or lesser complexity.
47. It would, of course, be highly significant if there was evidence
that an approach based on one or other of the competing
interpretations of the expression separate property would have
resulted in a system that was impractical. But all of these situations
would appear to have been capable of being dealt with satisfactorily
once the unit that was to be adopted as separate property had been
identified. If it was to be measured by the unit of ownership, the
number of distinct uses or occupancies could be disregarded for the
purposes of the valuation exercise. All one needed to do was to
identify the extent of the land held under each certificate of title.
Each unit of ownership would then be the subject of a separate entry
in the valuation roll, and it was also be the unit of valuation.
Conversely, if the unit to be adopted was the unit of occupation, the