DEFINITION OF MARKET VALUE IN AGREEMENTS MAY INCLUDE GST

When words“market value” of land in agreements and valuations is used a question arises whether the Words “Land Value” in the Valuation of Land Act meant including or excluding GST.

This particularly becomes important when parties agree on sale of the land at “market value”: does it means anything different to “land value” as defined in the Valuation of Land Act?  In the decision of the Land and Environment Court Storage Equities Pty Ltd v Valuer -General [2013] NSWLEC137, these two terms were equal: it was stated that the definition under s6 of the Valuation of Land Act contained a word “to realise” which excluded “any component of the sum that the vendor may be liable to pay a consequence of receiving it”.  For a legal definition of a market value, the foundation maybe often quoted words of Griffith CJ at page 432 of the High Court udgment Spencer v The Commonwealth of Australia (1907) 5 CLR 418, where the test of value of land is to be determined “by inquiring: What would a mand desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?”.

Therefore, when inserting words “market value” in agreements or other documents, it is likely that ENOS notices which include comparable sales already included GST component in them.