Read the full judgment text of CACV 000101/1994 on BabelCite. This Court of Appeal judgment was delivered on 15 February 1995 before Power VP, Mortimer JA, Godfrey JA.
Rating law – valuation – power stations and transmission systems – rateable value – appeal from Lands Tribunal – review jurisdiction under s.11A(1) of the Lands Tribunal Ordinance (Cap. 17) – whether Tribunal may alter its earlier 'judgment' (reasons) as opposed to its decision – duty to value on the basis of hypothetical tenancy from year to year – whether assumption of probable duration of four years constituted error of law – whether Tribunal entitled to use book value of tenant's assets at start but not end of the period under a profits method – whether use of weighted average cost of capital ('WACC') as the rate of return disclosed error of law – whether failure to consider permitted return under the ratepayer's scheme of control disclosed error of law – scope of intervention by Court of Appeal – Court of Appeal holds that a rating valuation is a matter of fact impeachable only for error of law – whether Tribunal's reasoning amounted to error of law on each ground – powers of Tribunal on review limited to setting aside, reversing, varying or confirming its decision. Commissioner for Rating & Valuation determined rateable value at $3,180 million; Lands Tribunal fixed it at $2,000 million, later varied on review to $2,020 million; substantive appeal concerned. First ground: Tribunal's reference to a 'finite figure of four years' read as a whole showed valuation on a yearly tenancy with a reasonable prospect of continuing for four years; not an error of law. Second ground: approach to assets at start and end of the tenancy was a valuation judgment, not a legal error. Third ground: use of WACC was a valuation judgment, even if parties' agreement was only to use it as a benchmark. Fourth ground: weight given to scheme of control and actual return on capital was a valuation matter. No error of law established on any ground. Paragraph 3 of second order set aside as beyond the Tribunal's review jurisdiction. Commissioner's appeal No. 83 dismissed; no order on ratepayer's appeal No. 101; no order as to costs of appeals 167 and 101; ratepayer's costs of appeal 83 to be taxed and paid by Commissioner.
Legal issues: Scope of Lands Tribunal's review power under s.11A(1) of the Lands Tribunal Ordinance · Whether valuation on the basis of a finite figure of four years constituted error of law · Whether the profits method required consistent valuation of tenant's assets at start and end of the tenancy · Whether the Tribunal could use the weighted average cost of capital (WACC) as the rate of return · Whether the Tribunal erred in not considering the permitted return under the scheme of control
Outcome: Commissioner's appeal No. 83 of 1994 dismissed; Commissioner's appeal No. 167 of 1994 allowed only to the extent of setting aside paragraph 3 of the Lands Tribunal's second order; no order made on the ratepayer's appeal No. 101 of 1994.