Drysdale Brothers and Co v Federal Commissioner of Land Tax [1931] HCA 28

308 HIGH COURT (1931.

(HIGH COURT OF AUSTRALIA]

DRYSDALE BROTHERS & CO. . 2 i APPELLANTS ;_

THE FEDERAL COMMISSIONER OF LAND

TAK ie oc ea ©} Rasroxomn,

1931. —Mill bound to take sugar from assigned land at rates giced by Board—Value of Ss __ assigned lands greater than that of similar unassigned lands—Regulation of Sugar Brisbane, Cane Prices Act 1915 to 1922 (Q.) (6 Geo. V. No. 5—13 Geo. V. No. 10), see, 5~ Tune Vi. Land Tax Assessment Act 1910-1930 (No. 22 of 1910—No. 8 of 1930), sec. 3. Sypwey, Under the Regulation of Sugar Cane Prices Act 1915 to 1922 (Q.) sugar-Jands Aug. 28. may be assigned to a particular sugar-mill, which is bound to accept all the Gayan Duly _-Sugar-cane grown on the lands so assigned and to pay for same at prices Dinca Bvatt mined by a Board. The market and capital values of lands so assigned are, and MeTiernan —_ecause of the assignment, greater than the values of similar lands in

same neighbourhood not so assigned.

Held, by the whole Court, that the assignment is not an improvement within the meaning of the Land Tax Assessment Act 1910 to 1930.

Held, by Gavan Duffy C.J., Starke and Buatt JJ. (Dixon and McTiernan Id dissenting), that the value of the assignment is not included in the value of improvements as defined by the Land Tax Assessment Act (No. 2) 1930.

Held, by the whole Court, that the enhancement in value of the lands assigned should be taken into consideration in ascertaining the unimpro value of the lands for the purposes of the Land Tax Assessment Act 1910-193

Case StaTep.

This was a case stated pursuant to sub-sec. 8 of sec. 44m of Land Tax Assessment Act 1910-1930, for the opinion of the Hig Court, on an appeal against an assessment to land tax with r

OF AUSTRALIA. 309

fo certain sugar-lands in Queensland. The case was substantially H. C. or A.

as follows : 1931.

ke bees 1. The appellants are and were at all material times the owners Drvspate _ in fee simple of certain lands in the State of Queensland. ae bee 2. The appellants in copartnership or their tenants at all material rh times carried on and still carry on the business of sugar-farmers and s'oxen or

cane-growers within the meaning of the Regulation of Sugar Cane er Prices Act 1915 to 1922 (Q.) on portion of the said lands, which said

_ portion is hereinafter referred to as the subject lands. The subject

lands are physically improved lands. The appellants at all material

times carried on and still carry on in copartnership the business

of graziers on the portion of the lands mentioned in par. 1 which is

~ not the subject lands.

4, The appellants duly made and lodged land tax returns for

e financial year 1929-1930.

5, The Deputy Federal Commissioner of Land Tax assessed

duly given by the appellants. 'The appellants' objection to the said reassessment was in the rords and figures following, that is to say :—'' With reference to the mended land tax assessments issued to the abovenamed in respect of landed interests held as at 30th June 1928 and 1929, . . . it is considered that the value of land as assessed . . . is still ive, and accordingly it is desired that you treat the objections appeals and forward them to the High Court for determination. is apparent, in view of the high values adopted, that the value of the licences to grow cane on certain areas has been included in the unimproved value of the land whereas sec. 2 (c) of the amended d Tax Assessment Act (No. 2), No. 8 of 1930, definitely provides the value of any such licence is in the nature of an improvement. e High Court will be requested to review the values adopted g regard to the value of licences to grow cane which should » included in the value of the improvements as provided by the n of the Act quoted above."

310 HIGH COURT int

H.C.orA. 8, The Central Board, meaning thereby the Central Sugar Cane

es Prices Board constituted under the provisions of the Regulation of

Drvspatx Sugar Cane Prices Act 1915-1922, from time to time assigned the _ ae el £2: subject lands under the provisions of the said Act to a mill as defined

TeeneAY by the said Act, that is to say, to the Pioneer Mill, being a mill —

SIONER OF situate near Ayr in the said State. The subject lands remained at Layp Tax. :

—— all material times and still remain assigned to the said mill.

9. The market value of the subject lands so assigned as aforesaid, and by virtue thereof, became greater and at all material times remained greater than the market value of similar lands in the neighbourhood and with respect to which no such assignment or assignments had or have been made.

10. The capital value which the fee simple of the subject lands so assigned as aforesaid might be expected to realize, if offered for sale on such reasonable terms and conditions as a bona fide seller would require, is greater by virtue of such assignments than th capital sum which the fee simple of similar lands in the same neigh- bourhood, but with respect to which no such assignments have been made, might be expected to realize if similarly offered. ;

11. The Deputy Federal Commissioner of Land Tax, for the purpose of ascertaining the unimproved value of the subject lands, valued the subject lands as assigned lands, and did not deduct from such valuation any amount in respect of the value of such assign- ment.

12. The appellants claim that the assignment or assignments of the subject lands are improvements to such lands acquired by them as such owners as aforesaid within the meaning of the Land Tar Assessment Act 1910-1930, and that neither the assignment or assignments, or the enhanced value resulting from the making of the same, is or are part of the unimproved value of the subject lands, whilst the respondent denies the same.

The questions of law arising on the appeal were as follows :—

(1) Is or are the said assignment or assignments an improve ment or improvements within the meaning of the Land Tax Assessment Act 1910-1930 ?

(2) Is the value of the said assignment or assignments includ in value of improvements, as defined by the Land Tax Assessment Act (No. 2) 1930 ?

LR. OF AUSTRALIA.

(3) Is the said assignment or are the said assignments, or the enhancement of value due thereto part of the unimproved value of the lands as defined by the said Acts ?

(4) By whom should the costs of and incidental to this appeal be borne and paid ?

~ Philp (with him Seaman), for the appellants. Under the Regula- of Sugar Cane Prices Acts 1915 to 1922 lands are assigned to tain sugar-mills and are known as "assigned lands." The inition of " cane-grower " in the Acts does not expressly include person growing cane on assigned lands. A person on assigned lands need not grow cane. But if he does grow cane he must send to the mill to which the lands are assigned. Only a cane-grower can apply to have his land assigned to a particular mill. Land of y tenure may be assigned. An "assignment? amounts to a ence to grow cane for a particular mill. It is therefore something ental to the business of cane-growing, and is not part of the unimproved value of the land. It is not part of the fee simple of he land, but attaches to the ownership of the land, and has no alue if the owner gave up cane-growing. If there were two pieces nd of the same area side by side, one being assigned land and the other unassigned land, their unimproved fee simple values would be the same (In re Land Tax Acts; Wilson's Case (1)). If the ignment is part of the fee simple, it is an improvement appertain- g to the land and has to be deducted from the capital value 's Ltd. v. Valuer-General (2) ). The amendment to the Land Assessment Act was made after that case was decided, and the ture has allowed the method of valuation adopted in that to stand. The questions should be answered: (1) Yes; (2) he minimum ; (3) No.

for the respondent. The "assignment" is something 'ic to the right of ownership. It gives no personal right or to anyone. It makes a market for certain lands. The ion of Sugar Cane Prices Acts were statutes to adjust prices y. Colonial Sugar Refining Co. (3)). The Acts take away

(1) (1927) V.L.R. 399 ; 49 ALLA. 54. (2) (1925) A.C. 439. (3) (1920) 28 CLR. 330, at p. 342.

3ll

H.C. or A.

1931. ww DryspaLe Bros. & Co. t FrpErat Comais- SIONER oF Lanp Tax.

H.C. or A.

1931. Ww

DrysDaLE

Bros. & Co. FEDERAL Commas- SIONER OF Lanp Tax.

Aug. 28.

HIGH COURT 193

his cane. It is similar to railway facilities near lands to give ready access to market. The increase in value is due to extrinsic circum stances and not to the result of operations on the land. It is then fore portion of the unearned increment of the land and forms p; of the unimproved value (McGeoch v. Federal Commissioner of Tax (1)). The question is not governed by Toohey's Ltd. v. Valuer: General (2). That was the case of a liquor licence granted to a certain building approved of by a licensing authority. The poten: tiality of the land as sugar-growing land is increased, and potentiality goes with the land on transfer. It is therefore improvement (see Northwood v. London County Council (3); Mini for Home and Territories v. Lazarus (4); McDonald v. Dep Federal Commissioner of Land Tax (N.S.W.) (5)). A water rig conferred by statute on land is not an improvement: it is part the unimproved value of the land (Basey and Howie v. Comm sioner of Taxation (6)). Commissioner of Land Tax v. Nathan 7) is not affected by Toohey's Ltd. v. Valuer-General. The questions should be answered : (1) No; (2) No; (3) Yes. i

Howie v. Commissioner of Taxation (6) was decided are differe from those of the Land Tax Assessment Act 1910-1930. An assi ment is something inherent in the land and differs from extrin circumstances such as railways, mentioned in McGeoch v. Fe Commissioner of Land Tax (8).

The following written judgments were delivered :— Gavan Durry ©.J. anp Starke J. This is a special case state' pursuant to the Land Tax Assessment Act 1910-1930. The appella

(1) (1929) 43 ©. (2) (1925) A. (6) (1919) S.A.L.R. 53.

(3) (1926) 2 (7) (1913) 16 C.L.R. 654. (4) (1919) 26 CLR. 159. (8) (1929) 43 C.L.R. 277.

OF AUSTRALIA.

nd, to which sugar-cane is usually sold or supplied for the nufa e of sugar therefrom. Under the Regulations of Sugar e Prices Act 1915 to 1922 of Queensland, local Boardsare constituted ining the prices to be paid and accepted by owners of mills and cane-growers respectively for sugar-cane sold and 0 ed. But each local Board is constituted in respect of one ill only, and the land or lands assigned to such mill. Sugar-lands re assigned to specified mills, and, substantially, sugar-cane grown nsuch lands must be supplied to the mills to which they are assigned. The owners of lands not so assigned cannot or do not participate in the benefit of awards determining the price or prices of sugar-cane. ch lands are thus forced out of the cultivation of sugar-cane, and assigned lands acquire a greater value—rising and falling, we se, with the prices paid for sugar-cane. The case states that capital value which the fee simple of the assigned lands might 'expected to realize if offered for sale on such reasonable terms d conditions as a bona fide seller would require, is greater, by virtue of such assignments, than the capital sum which the fee simple Jands in the same neighbourhood but with respect to which 9 such assignments have been made might be expected to realize if similarly offered.

he Land Tax Assessment Act 1910-1930 imposes a land tax upon the nproved value of all lands as owned on the 30th June immediately ceding the financial year for which tax is levied (see sees. 10, 12). questions stated in this case relate to the method of ascertaining he unimproved value of the sugar-lands of the appellant. Under Acts (Act 1930, No. 8, sec. 2) the unimproved value of improved means the capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms conditions as a bona fide seller would require, assuming that-the vements did not exist; provided that the improved value

the value of improvements from the improved value. A definition is given of improvements, and the value of improve- means the added value which the improvements give to the d, irrespective of the cost of the improvements, including in such

H. ©. or A.

1931. —_ DryspaLE Bros. & Co. t FEDERAL Commas- S1ONER OF Lan Tax,

Gavan Dotty Ca

Starke J.

DryspaLe

Bros. & Co.

Bs FEDERAL Commis- SIONER OF

Lanp Tax.

Gavan Dutty oy

Starke J

- added value the value of any hotel licence or other similar intere

HIGH COURT

the value of which has been included in the improved value. The first question stated is whether the assignment or assignme of the sugar-lands is or are an improvement or improvements witl the meaning of the Land Tax Assessment Act 1910-1930. An ment, as we have seen, enables a sugar-cane grower to send his cane to a particular mill, and to obtain for it the prices detern by a local Board, and subject to such determination as it makes. facts that the lands are suitable for growing sugar-cane and that n restriction is placed upon their most beneficial use, enhance, already pointed out, their value in the market; but there is "improvement" on the lands or appertaining thereto wheth er visible or inyisible—to use the definition in the Land Tax Assessment Act (No. 2) 1930 (No. 8 of 1930), sec. 2. The second question is whether the value of the said assignment or assignments is included in " value of improvements " as defined by the Land Tax Assessment Act (No. 2) 1930 (No. 8 of 1930), sec. 2 The answer depends upon the meaning to be attributed to the word "including in such added value the value of any hotel licence or oth similar interest." Often the existence of such a licence, &c., in res} t of particular premises enhances the value of those premises in the market (cf. Belton v. London County Council (1) ). So far as additional value due to a licence, &c., has been included in the improved value then the Land Tax Assessment Act (No. 2) 1930 (No. 8 of 1930) provide that it may be deducted as part of the value of improvements. So, w should think, could the value of any covenant " annexed in actual enjoyment to the existence of premises" (Bourne v. Mayor de. of Liverpool (2) ), because the benefit arising from such a covenant is L similar interest to a hotel licence within the meaning of the A But we cannot understand how the fact that lands are assigned 1 a particular mill falls within the description of a " similar interest." The assignment is in no sense a licence, and it annexes nothing actual enjoyment to the use of the lands. The Sugar Cane Price Acts afiect the beneficial use of unassigned lands, but they assigned lands wholly unaffected : it is because the unassigned are thrown out of cultivation and competition that the value of the

(1) (1893) 62 LJ. QB. 222. (2) (1863) 33 LJ. Q.B, 16, at p. 17.

OF AUSTRALIA.

dlandsrises. Consequently the second question should also be red in the negative.

third question is whether the assignment or assignments is or or the enhancement of value due thereto is part of the unim- d value of the lands as defined by the said Acts. The answer d be that the enhancement in value of the lands by reason of the n of the Regulation of Sugar Cane Prices Acts of Queensland be taken into consideration in ascertaining the unimproved ue of the lands for the purposes of the Land Tar Assessment Act

juestion of costs raised by the fourth question should be : Costs in the appeal.

con J. The Regulation of Sugar Cane Prices Acts 1915-1921 to give an added value to lands of cane-growers which are yned to a sugar-mill. The substantial question for consideration her this added value is included in the unimproved value of within the definition contained in sec. 3 of the Land Tar ent Act 1910-1930. he effect of the Regulation of Sugar Cane Prices Acts is to set up Sugar Cane Prices Board in respect of each mill and the land assigned to the Board. The lands are assigned by the ror in Council, who " declares" the mill and the lands of the growers in respect of which the local Board is constituted ; but Sugar Cane Prices Board also has power to assign any land or lands or any defined area or locality to any mill the assignment from one mill to another, and, in exercising

power, it may declare the period for which such lands shall nain so assigned. local Board, subject to appeal to the Central Board, deter- in every year the prices to be paid for cane supplied to the m the lands assigned, and cane-growers bound by the award eliver their undamaged sugar-cane to that mill in reasonable ities as required and must not dispose of it to any other mill,

@ mill is bound to receive it. The obligations arising out of rd are binding upon all owners of sugar-mills and cane- r upon the lands to which the award applies, including all

H. ©. ov A. pe DryspaLe Bros. & Co. r FEDERAL Comms.

Starke J.

H. C. or A.

1931. reas DRYSDALE Bros. & Co. a FEDERAL Comms STONER OF Lanp Tax.

Dixon J.

HIGH COURT

mortgagees, lienees, assignees, transferees and other persons h any title to or interest in such mill or lands or the sugar-cane such lands. The expression ' usually or ordinarily grow sugar-cane, and there is nothing in |

" cane-growers "' includes persons

condition upon which cane has not actually been grown.

The lands which are the subject of this case have long been a to a mill, and the price which the fee simple might be expects realize is greater by virtue of the assignment than the price whi the lands might be expected to realize if they were not assi This, of course, means that owners of unassigned lands upon whie cane might be grown cannot easily obtain an assignment to am and, without an assignment, cannot as profitably dispose of cane because the mill need not pay the award prices. The iner value which arises from the assignment is a consequence of th conditions governing the disposal of the commodity; and, happened that those conditions were completely changed, it is inconceivable that assignment might operate to lessen values.

It appears to me to follow, from the opinion of Isaacs 0.3. and Star J. which prevailed in Stephen v. Federal Commissioner of Land Ta (1), that peculiar conditions annexed to the ownership of land are be taken into account in ascertaining the unimproved value, and cannot see that it matters whether the condition operates, as it didi that case, to detract from the selling value of the land or to enhai it. In this case, asa perusal of the particular award in force will show the assignment of the lands resulted in the imposition upon a person growing cane thereon of a complicated scheme of rights am duties requiring him to perform a number of positive ac entitling him to services and rewards. Nevertheless, these oblig tions and rights run with the land and bind, to the extent of thei participation in growing and disposing of cane, all persons e the land or any estate or interest therein. I think the jud referred to require the conclusion that the existence of the ment and its consequences must be taken into account in ing the capital sum which the fee simple of the land might bee to realize if offered for sale assuming that improvements

(1) (1930) 45 C.L.R. 122,

R.. OF AUSTRALIA. 317

It is almost needless to say that the assignment is not, in H.C. or A. 1931.

7 , an improvement. a the definition of "unimproved land" is not satisfied when Dryspare

sum is found that the land is expected to realize. It a

that the unimproved value must not be less than the amount ae ch the improved value exceeds the value of the improvements. —— ecessitates a deduction from the improved value of the " value ay e improvements," an expression which is defined to mean the value which the improvements give to the land—including added value the value of any hotel licence or other similar

st which has been included in the improved value. The value

Dixon J.

able for the licence or interest apart from the land, and must n the amount of increase in price obtained because it is disposed with the land. But the question what is a " similar interest " is 'no means easy. To begin with, the word " interest" is used r ely inrelation to a hotel licence. Then it does not appear it characteristics the similarity is sought. On the whole, I the feature of a hotel licence to which resemblance is required ts in the special authority it gives to use the land in a profitable 7, which is denied to owners in general. It appears to me that is feature is to be found in the " assignment " in this case.

I think the questions in the special case should be answered : ; (2) Yes; (3) Yes; (4) Costs in the appeal.

Evarr J. The appellants carry on the business of sugar-farmers | cane-growers on lands situate in the State of Queensland and med by them in fee simple. These lands are physically improved, | are hereinafter referred to as the "subject lands." Certain s have arisen relating to the liability of the appellants to e land tax imposed by Federal law upon the unimproved value subject lands.

Central Sugar Cane Prices Board, constituted under and in accordance with a statute of the Queensland Legislature | as the Regulation of Sugar Cane Prices Act 1915 to 1922, " the subject lands to a sugar-mill known as the Pioneer d the lands remained at all material times and still remain " to the said mill.

FepErau Comatis- SIONER OF Lanp Tax.

Evatt J.

* is authorized to exercise all powers and authorities vested in it

HIGH COURT uf

In order to understand what is involved in such an " assig it is necessary to refer to the main features of the Queensland The Central Board is constituted by the Governor in Council,

the Governor in Council (secs. 4 (1) and (8)). The Governor m: by Order in Council set up Local Boards in respect of each s and the land or lands "assigned" to such mill, and the Orde Council also declares the mill and the lands of the cane-growe respect of which the local Board is constituted (sec. 5). No standing the provisions of the Order in Council, the Central Bo: has power from time to time to assign any particular land or lan or any defined area or locality to any mill, to alter the " assi ment" from one mill to another mill, and to fix the period and # conditions of the " assignment " (sec. 5).

The local Board makes an annual award determining the pric to be paid for cane by the owner of the sugar-mill to the , growers, and also regulating delivery of cane to the mill and it handling and treatment thereat by the mill-owner (sec. 6). 1 general rule is that sugar-cane of standard quality must be accept and paid for by the mill-owner, but the cane-grower referred the award is bound to supply his sugar-cane to the mill in re able quantities as required and may not dispose of the cane than to the mill to which his land is " assigned " (sec. 20 (8) ant sec. 24 (1)). Different prices may be fixed by the local Boar having regard to the conditions under which the cane is grown, al harvested and delivered, and the Minister may also by regulati reduce the price if the labour conditions during growing, harvestil or delivery are considered unsatisfactory (sec. 20 (7) ). Moreover the standard or base price may, under certain circumstances, b altered by the Central Board to which (with certain limitations) appeal lies from the award of the local Board (sec. 20 (6) ). '

The award of the Boards is given the force of law by terms statute (sec. 11 (1) ), and it binds the owners of mills and growers on " assigned" lands and all persons claiming under In place of an award, an agreement may, under certain conditio1 entered into between the mill-owner and the cane-growers who lands are "' assigned" to the mill. In such an event the ag

OF AUSTRALIA.

ding " on all cane-growers growing cane on lands assigned to ich mill" (sec. 25). terms of the local award, which apply to the appellant in respect subject lands, conveniently illustrate the working out of the yscheme. An estimate is made of the total tonnage of cane ailable for harvesting upon the various " assigned" lands, and is accepted daily at the mill in the proportion borne by the ed tonnage of the individual grower to the total tonnage. quantities for daily delivery are allotted at the commencement season, and the grower must supply his allotment from week eek according to a schedule which is under the control of the Board. If the grower does not cut and deliver his cane in e with the mill-owner's requirements, he may be penalized. should be observed that — (1) The Act imposes no legal obligation upon the owner of, or y grower upon, " assigned " lands to grow any cane. _ (2) Nor does it prevent oceupiers of lands not " assigned" from producing or selling cane. (3) Nor does it limit the lands to be " assigned" to a mill, to F physically improved land, or lands ready for or under cultivation. The general scheme of the statute is clear. It regulates and pro- the Queensland sugar industry, by preventing over-production, ducing reasonable labour conditions, by providing for regular nd continuous supplies of cane to the mill-owner and by ensuring the grower on " assigned " lands a fixed market and a guaranteed

is now convenient to turn to the definition of the " unim- lue"' of land in relation to improved land, which has to d to the subject lands. The figure required to be ascer- for assessment purposes is "the capital sum which the fee of the land might be expected to realize if offered for sale reasonable terms and conditions as a bona fide seller would uire, assuming that, at the time as at which the value is required

e ascertained for the purposes of this Act, the improvements exist" (Land Tax Assessment Act 1910-1930, sec. 3).

H. C. or A. 19: Laypl

DryspaLe

Bros. & Co.

FepERaL Commas. SIONER OF Lanp Tax.

Evatt J.

H.C. o A. 1931. eS

DrysDALe

Bros. & Co.

® FEpEraL Comuas- SIONER OF Lanp Tax.

Evatt J.

HIGH COURT

Sec. 3 of the Act also contains a definition of " improvemen which means '"'improvements thereon or appertaining the whether visible or invisible and made or acquired by the owner o his predecessor in title ce

In ascertaining the "unimproved value," we are commande to assume that, at the time in respect of which valuation is to made, the improvements did not exist. It is therefore necess in the first place to ascertain what features of the subject lan are "improvements," attributable to the work and outlay of ts successive holders. These improvements are not always vi because they may include such things as the freedom of the land from timber and scrub. The absence of the scrub, like other " invisible improvements, cannot be taken into account without informat as to the history of the land. The task of investigation may b difficult, but it has to be undertaken. As soon as Parliament included "invisible " improvements in the statutory definition, some kn ledge of the history and prior user of the improved land becan essential in order to discover what " improvements " had been mad on the land, and still existed thereon.

It is clear that the actual "' assignment" of the subject lands to the Pioneer Mill is not an "improvement "' on or appertaining to the land. The "assignment "' has nothing to do with any work or labour performed on or in connection with the physical land. is to be regarded rather as an attribute or characteristic of land, given to it by the operation of the statutory scheme.

Apart from this first question however, the subject lands physically improved, and in ascertaining the unimproved value it necessary to assume that, at the time in respect of which valual is required, the improvements did not exist.

From what was stated at the Bar, it is clear that one improvem to the subject lands—an invisible improvement—is its state freedom from scrub at the moment indicated. To assume that improvement constituted by such absence of scrub does not é is to assume that the cleared condition of the land, so far as it constitutes an improvement, does not exist. In other words, land is to be considered as not being cleared or free from scrub the relevant time. It is impossible to escape the conclusion i

OF AUSTRALIA.

is to be deemed, negatively as not having been cleared, iitively as having continued in its natural state. 'is true that the amending Land Tax Assessment Act of 1930 the hypothesis that the improvements "did not exist" of the previous hypothesis that the improvements " had not made." But it also provides for the full recognition of e" improvements on the land. The result of abstracting the land all existing improvements of a "negative" or structive" or " invisible' character, cannot be distinguished n that obtained by supposing that the " invisible" improve- ts "had not been made." For, if the present absence of tropical from the land is regarded as a present improvement, the same th is expressed in the statement that the effective clearing of the by labour and outlay was, when made, an improvement to the and continues to be such. It follows that to consider the ject lands as being in their natural condition, unaflected by 1 ment, is not merely the logical consequence of the statutory it is itself the positive expression of such assumption. is probable, therefore, that the valuation required by the statute be made as though there were thick tropical scrub upon the ject lands at the time to which valuation relates. Three ques- then arise :— _ (L.) Must the valuer assume that the "assignment" to the Pioneer Mill still exists over the subject lands, although the latter are deemed to be unimproved and in their natural state ? (IL) If so, would the assumed continuance of such " assign- 'ment " result in an enhancement in value of the subject lands ? (IIL) If such enhancement resulted, is it to be included in _ the unimproved value of the subject lands ¢ deal with these three questions in order :— In Toohey's Case (1), the Judicial Committee regarded a blican's licence to sell liquor upon certain licensed premises in South Wales, as necessarily associated with those licensed H It followed that to assume that the improvements (i.e., ed premises) "had not been made" necessarily resulted ie assumed disappearance of the licence as well. The notion of nce dissociated from the physical premises and adhering to the

(1) (1925) A.C. 439, H. ©. or A.

1931. a DryspaLE Bros, & Co. ® FEDERAL Commts- SIONER OF Lanp Tax.

Evatt J.

H.C. of A.

1931. es; DrysDALE Bros, & Co. v Feperat Commrs- SIONER OF Lanp Tax.

Evatt J.

HIGH COURT [lg

site, was not legally possible. Consequently the unimproved y of the land had to be determined without including any enhance ment resulting from an existing licence, although the physical s ability of the land itself for licensed premises was an element for con- sideration. In the present case the "assignment" is not a legal incident any improvements on the land (as in Toohey's Case (1)) nor is it t be regarded (as a hotelkeeper's licence sometimes is) as sometl personal to the occupying cane-grower. On the contrary, "assignment " is regarded by law as attached to the land itself. follows that the valuer cannot assume the disappearance of th "assignment " from the subject lands although he must consi all improvements as non-existing. He must regard the subj lands as being in their natural state, but as still being " assigned" law to the Pioneer Mill. (II.) It does not follow, however, that the assumed continuance of the " assignment " will result in any enhancement of value wl the direction of the statute is obeyed. This question is one of fa But the facts stated in pars. 9 and 10 of the special case do result in any necessary inference that enhancement would res For the facts agreed upon and stated in such paragraphs, do no m than state that the subject lands have a greater value than s lands in the neighbourhood by virtue of the existing " assignment" to the Pioneer Mill. This, however, is a comparison between part of improved lands, and it does not follow that, if the subject la were in their natural condition but still impressed with the "a ment " in question, their market value would be greater than that similar and similarly situated lands in the neighbourhood. If the fee simple of the subject lands (considered as unimprov but with an "assignment" existing at the moment of sale) we offered for sale, it might not fetch a penny more because of " assignment," unless, at the given moment, the most profitable use of the land would be to clear it and grow sugar upon it. Conceivably such user might not afford any reasonable prospects of profit to

sidered as highly profitable.

(1) (1925) A.C. 439,

OF AUSTRALIA.

doubt, use of the subject lands for the purpose of sugar cultiva- would be more obvious than its use for other purposes. The and delay involved in clearing the land for cultivation and

ise improving it would, however, be a very important factor i the price realized. Further, although the statutory definition requires the assumed existence of the "' assignment " at the moment , the continuance thereafter of such " assignment " in respect of the land regarded as free of improvements, is not required to be ed. The hypothetical purchaser might have grave doubts

to whether the "assignment" would be continued or taken by those in authority. That question in turn would depend n the conditions existing at the moment of the proposed sale and would invite enquiries into the existing policy of the Queensland nment and the Central Sugar Board in respect to " assign- s" and the constitution of the local Boards. A purchaser

ble time might elapse before the land would be ready for sugar vation or suitable for resale, and, if policy allowed " assign- s" to continue on particular lands devoid of any improvements, same policy might also extend " assignments "' to other unim- lands in the neighbourhood and result in a levelling of

parcel of land of an "assignment" at the moment when it and another similarly situated parcel of (say) tropical serub being sold, might not operate to increase the price of the "assigned " parcel over that of the " unassigned " parcel.

(IL) Assuming that an enhancement in price resulted on the hypothetical sale because of the element of "assignment," the question remains whether such enhancement is to be deemed part

'the unimproved capital value of the subject lands.

The enhancement in such a case would result from the prob- ty or possibility of the land being more profitably used for sugar- ing by reason of the advantages which flow from " assignment " toa mill. The nature of these advantages has, I think, already a ed from the description of the statutory scheme. The thing to the cane-grower on " assigned " land is that his

H. C. or A.

1931. Ww Dryspace Bros. & Co. v FepERaL Commas- SIONER OF Lanp Tax.

Evatt J.

H. C. or A.

1931. eae, DrysDALE Bros. & Co. % FEDERAL Commis- SIONER OF Lanp Tax.

Evatt J.

HIGH COURT

market is guaranteed to him by force of the statute and the aw Tf a State Act of Parliament guaranteed a profitable market pric¢ for wheat produced within its borders, any increase in the u i proved value of lands suitable for wheat-growing would be dire due to the intervention of the State authority. If the State Aci

would at once attach to the lands thus selected.

The statutory scheme in Queensland is no different in principle, External authority enforces a series of relationships in the s industry. The assumed increment of value due to the "ass ment" of the subject lands, is one of the many incidents of

his land, owing to the probability or possibility of a market for th cane to be grown upon it. The increment is none the less unearn ed because an "assignment" is usually found attached to impro lands. The fact is that the State has not only facilitated the mar! ing of cane from all " assigned " lands, but has assured it, and #] there is a resultant increase in the value, even of unimproy "assigned" land. It is closely analogous to an enhancem arising from better transport and a better market. It follows # such increment should be considered as part of the unimpro capital value of improved lands which are " assigned."

I would answer question 3 by stating that in my opinion th subject lands must be valued as if "' assigned " to the mill but no improvements thereon, and that the enhancement of value (if any due to the "assignment" is part of the unimproved value of subject lands.

The Federal Land Taa Assessment Act now provides, however, method by which a minimum unimproved value may be fixed. deduction of the " value of improvements " may be made from the "improved value" of improved lands. The method provides # convenient enough rule of thumb, if it is not possible to observe primary command contained in the definition of " unimproved value." Deducting is not a scientific method of approximating

OF AUSTRALIA.

cut right across the grain of " unearned increment " taxation. some "improvements" on land render land less saleable, because of unsightly or unsuitable buildings or " improvements " reduce the improved or total value of the land below the

ved value. Land—urban and suburban as well as rural—

e "deduction" method, however, may have to be adopted for it of any opportunity of comparison with unimproved land values eneighbourhood. Question 2 therefore asks whether the value "assignment " upon the subject lands is part of the " value of r ents" to be deducted (on this alternative method) from he "improved value" of the land. The answer depends upon er the "assignment" is a "similar interest' within the of the phrase "' value of any hotel licence or other similar tt" in the statutory definition of " value of improvements " Tax Assessment Act, sec. 3). e object of including the value of a hotel licence as part of the of improvements" is reasonably clear. The inclusion erates only for the purpose of ascertaining a minimum unimproved e by the method already described. That method was not ed by the Act until the 1930 amendment, but it had pre- sly been used, upon the authority of a catena of decisions. as used, however, the 'deduction'? method sometimes 8 in the inclusion in the unimproved value of land of a value ributable to the existence of a hotel licence upon the lands valued. d this result was caused by not adding to the value of improve- (ie., the licensed premises) the value of the licence itself when the value of the licence was included in the " improved value " the land and (b) the "value of improvements" was being deducted from the first sum. The Commonwealth Parliament, ous to prevent the recurrence of the fallacious method exposed ey's Case (1), therefore enacted that if (and only if) the value f the licence were included in the improved value of the lands, it ould also be deducted therefrom by including it in the " value of ments." It followed that, if it became necessary to use the

(1) (1925) A.C. 439.

he unimproved value of improved land, and its general adoption 4. © oF A.

1931. —

DryspaLe

Bros, & Co.

a FEDERAL Commas-

SIONRE OF

Laxp Tax,

Evatt J.

H.C. or A.

1931. ees DryspaLe

Bros. & Co.

v FEperaL Commis- SIONER OF Lanp Tax.

Evatt J.

HIGH COURT

"' deduction" method, the existence of the licence could n operate so as to swell or enhance the unimproved value of land on which there was a hotel.

In the case of a hotel licence, therefore, Parliament thus sought te prevent the inclusion of its value in that of the land considered a unimproved. It properly regarded the licence as being an inte in the nature of a business goodwill, inseparable from the impr ments, which were erected upon the land, and in which the hot, business was being conducted.

It will be noted that the Act speaks of a " hotel licence," imply the existence of a hotel building and negativing any conn between the licence and the actual land. From another aspect licence may of course be regarded as something personal to licensee, and therefore entirely disconnected from the land.

I see little or no resemblance between a hotel licence and "assignment" of lands to a sugar-mill under the Queens statute. The authority of the owner of the land to grow sugar do not spring from the " assignment,"' but the authority of the licer to conduct a hotel and sell liquor thereon does spring from hi statutory licence. There is nothing in the Queensland Act which makes it unlawful for persons to grow sugar on lands not " assig but a feature of a hotel licence is that persons, not licensees, denied the right to conduct a hotel or sell liquor. There is obligation on a licensee to conduct his hotel and sell liquor at tim fixed by law. There is nothing which obliges the owner of " assign lands to grow any sugar, although, if he does produce, he must ! to the mill specified. The " hotel licence" may be spoken of as al

"interest," but it is related to the improvements erected upon

other hand, the "assignment" relates directly to the land i is legally an incident of the ownership of the land and may if the improvements on or appertaining to the land are consi as abstracted-from the land itself.

I would therefore answer question 2 in the negative.

The answers should in my opinion be:—(1) No: (2) No: (3) subject lands must be valued as if " assigned " to the mill but w no improvements existing thereon; the enhancement in v

OF AUSTRALIA.

) due to the " assignment " is part of the unimproved value esubject lands : (4) The costs should be costs in the appeal.

'AN J. L agree that question 1 should be answered in the and question 3 in the affirmative. I have nothing to Id to the reasons which have been given for a negative and an rmative answer to these questions respectively. my opinion question 2 should also be answered in the aftirm- I do not think that the Legislature intended that the words similar interest the value of which has been included in the ed value" were intended to indicate only the licences of descriptions issued under the provisions of the laws relating sale of liquor, for example an Australian wine licence under Liquor Acts of New South Wales. The nature of a hotel was described by Higinbotham ©.J. in Anthoness v. Anderson (1), in these terms :—' No doubt the licence constitutes one of the valuable parts of the plaintiff's security. A licence of this \d—a publican's licence-—is, in our opinion, a personal licence, e exercise of which is limited to particular specified premises. seing a personal licence, it is not at common law capable of assign- it or transfer. It is a licence to an individual for particular es till it is taken out of him by legal authority. The Act es several ways in which the licence may be transferred from licensee to another person, and also for means by which the e of the authority given by the licence can be transferred from one house or premises to another house or premises. But, unless in the way provided by the Act, the right of property cannot be ul d, nor can the licensee transfer his licence to another person, ept subject to the provisions of the Act. The transfer depends on the authority given by the Licensing Court." In Jack v. (2) Griffith C.J. said :—* It" (a licence to sell liquor) " is not y; it is a personal right of the insolvent" (the licensee) carry on business in a particular place under conditions pre- eribed by law." That it is a personal licence, is but one characteristic i hotel licence. Having regard to the Act and the context in

(1) (1888) 14 VER.

at p. 142; 9 ALL.T. 175, at p. 177. (2) (1905)

L.R. 684, at p. 705.

H.C. or A.

1931. wget DryspaLe Bros. & Co. t FEDERAL Commas- SIONER OF Laxp Tax.

McTiernan J.

328 HIGH COURT (1931

H.C. or A. which the words " hotel licence or other similar interest the value tee of which has been included in the improved value " are found, I Dryspate not think that it is the character of a hotel licence as a persoi

Bros. & Co. |. ; ae Es <a os» licence which is the relevant criterion for determining whether an

FEDERAL Commis-

ae gto) it. The other qualities inherent in a hotel licence and th effect appear to me to be material in determining whether "interest" in question is similar. I am of opinion that in those respects an "assignment of lands" is similar to a hotel licen Without attempting an exhaustive definition, the Land Taw Ass ment Act (No. 2) 1930, appears to me to show that the Legislat

"interest which has been included in the improved value " is simil

McTiernan J.

other similar interest the value of which has been included in the improved value" at least a special authority created by statute to carry on business subject to conditions, which would not otherwise allowed, resulting in a privilege or advantage, that gives add value to the land in respect of which the authority exists. The fore, in my opinion, the answer to question 2 should be " Yes." Question 4: I think that the costs should be costs in the appeal. — Questions answered :—(1) No. (2) No. (3) The

enhancement in value of the lands by rea

of the operation of the Sugar Cane Pi

Act 1915 to 1922 should be taken i

(4) Costs of case costs in appeal.

Solicitors for the appellant, Roberts, Leu & North, by W. Conwell. ' Solicitor for the respondent, W. H. Sharwood, Crown Solicitor for the Commonwealth, by Chambers, McNab & Co. .

B. J.J.