Brown and Repatriation Commission (Veterans' entitlements)

[2018] AATA 2790

Brown and Repatriation Commission (Veterans' entitlements) [2018] AATA 2790 (2 July 2018)

Division:VETERANS' APPEALS DIVISION

File Number(s):      2017/4337

Re:Douglas Brown

APPLICANT

AndRepatriation Commission

RESPONDENT

DECISION

Tribunal:Senior Member D. J. Morris

Date:2 July 2018

Place:Melbourne

The reviewable decision of 30 May 2017 is affirmed.

...........[sgd].............................................................

Senior Member D. J. Morris

Catchwords

VETERANS’ ENTITLEMENTS – service pension – value of assets – property other than principal home is an asset – periodic valuation disputed – property in developing area – principals followed in valuations under Act – decision affirmed

Legislation

Administrative Appeals Tribunal Act 1975 (Cth), s 37

Veterans’ Entitlements Act 1988 (Cth), ss 5Q(1), 36N, 37N, 38N, 57(2), Sch 6, Module F, 5L(1)

REASONS FOR DECISION

Senior Member D. J. Morris

2 July 2018

1. Mr Douglas Brown and Ms Cheryl Mathieson are in receipt of a service pension paid under the provisions of the Veterans’ Entitlement Act 1986 (the Act).  They were granted this pension with effect from July 2008.   They own a property at Donnybrook Road, Woodstock in Victoria (the Woodstock property).  This property has been recorded in the service pension assessment since they were granted the pension.  The Woodstock property was initially valued at $500,000 by the Australian Valuation Office.

2. The Respondent engaged a certified practising valuer to value the Woodstock property, and the valuation from 1 January 2017 was adjusted to $700,000 (the valuation decision).  On 3 December 2016 the Respondent wrote to Mr Brown and Ms Mathieson advising that this new assessment would be included in the assessment of their service pension.

3. On 19 February 2017 Mr Brown lodged a request for review of the valuation decision.  He did so in accordance with the provisions of section 57(2)(c) of the Act which provides that a pensioner who is dissatisfied with a decision of the Repatriation Commission (the Commission) which reduces or increases the rate of a service pension or income support supplement may request the Commission to review the decision.

4. On 30 May 2017 a Service Pension Review Officer of the Commission affirmed the valuation decision, that the market value of the Woodstock property is $700,000 and that no adjustment is to be made in the property value held in Mr Brown and Ms Mathieson’s service pension assessment with effect from 1 January 2017.  It is this decision which is before the Tribunal for review.

5. The hearing took place on 22 March 2018.  Mr Brown represented himself.  Mr Ken Rudge appeared for the Commission.  Mr Brown gave evidence and was cross-examined.  Mr Daniel Maggs, a commercial valuer, also gave evidence and was cross-examined.

6. The Respondent tendered documents relating to the reviewable decision in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (T-documents).  The Respondent also tendered:

   a)Supplementary (ST) documents;

   b)An email statement from MVS Valuers dated 31 October 2017.

7. The Applicant tendered the following documents:

   a)A summation of evidence in an email received on 7 February 2017;

   b)A letter dated 19 January 2017 from Mr Tom Egan, licensed real estate agent and auctioneer;

   c)A bundle of photographs sent to the Tribunal on 27 October 2017;

   d)A table with the Applicant’s assessment of recent sales of adjacent properties;

   e)Four maps of Whittlesea Shire, 3 Landata maps and an urban growth zoning map; and

   f)A bundle of documents relating to a property in Beveridge.

   The Law

8. Section 36N of the Act sets out that a veteran’s age service pension rate is worked out in accordance with the Rate Calculator. Section 37N provides that a veteran’s invalidity service pension rate is worked out the same way. Section 38N provides that a person’s partner service pension rate is also determined in accordance with the Rate Calculator. Section 5Q(1) of the Act defines the Rate Calculator as the Rate Calculator in Part 2 of Schedule 6 to the Act.

9. In Schedule 6 of the Act, Module F concerns the assets test and requires the Respondent to work out the value of a pensioner’s assets.  Section 5L(1) of the Act defines ‘asset’ as property or money.  The Act also provides that a person’s principal home is to be disregarded in calculating the value of a person’s assets.

10. It was not in contention between the parties that the Woodstock property is a vacant block of land.  The Applicant does not live there.  The property has a dam and fences but no structures.  Mr Brown told the Tribunal he purchased the property in 1975 with the original intention of building there, but has never done so.  He formerly kept a horse there.  Mr Brown told the Tribunal that the property may be suitable for limited grazing but it was too small for farming or cattle or livestock grazing.  The Applicant did not dispute that the Woodstock property was an asset the value of which was required to be taken into account in assessing the pension he and Ms Mathieson receive from the Commission.  His disagreement was with the revaluation.

    Mr Brown’s evidence

11. Mr Brown said the valuation of $700,000 equates to $80,552 per hectare and that this was, in his contention, “reverse engineering”.  He referred the Tribunal to a valuation he obtained from Mr Egan.  Mr Egan inspected the Woodstock property and wrote to Mr Brown on 19 January 2017:

    Based on current sales results and the information you have provided the above property’s appraisal is approximately $650,000 to $700,000.

12. Mr Brown told the hearing that he is not contending that the valuation accepted by the Respondent is wildly inaccurate, but he thought it should err on the conservative side.  Mr Brown said a valuation of $80,552 per hectare was, in his view, not supported by the evidence.

13. Mr Brown submitted that the valuer engaged by the Commission had not seen the property before he met Mr Brown on site for a personal inspection.

14. It was put to Mr Brown by Mr Rudge that it would be fair to say that a Precinct Structure Plan approved in November 2017 will lead to the Woodstock property becoming more valuable, as there is increased surrounding development, and plans for more development into the future.  Mr Brown disagreed with that contention because he said the Woodstock property is within a conservation area, which he did not think would change in the foreseeable future.  He contended that this fact suppressed the value of his land.

15. He agreed that building development had commenced in the new planning zone but said that this new development was predominantly near Donnybrook station, which is a distance from the Woodstock property.

    Mr Maggs’ evidence

16. Mr Maggs gave evidence to the Tribunal.  He confirmed he was a certified practising valuer engaged by the Respondent to value properties, and that he had valued the Woodstock property.  He said that the valuation made on 22 May 2017 reflected his opinion that the property was valued at $700,000.

17. Mr Maggs said he had looked at subsequent correspondence from the Applicant which cited other nearby properties and recent sales and had done his best to respond.  Mr Maggs said that his opinion on the valuation had not altered but if there had been more recent sales his opinion may vary.  When asked how it may vary, Mr Maggs said in his opinion it would be likely to increase the value of the land.

18. Mr Maggs explained that his company was engaged to undertake the task by the Commission because the Australian Valuation Office has ceased to operate.  Mr Maggs told the Tribunal that he has an administrative instruction from the Commission that, when a valuation range is adopted for a property, the valuer is to look towards the lower end in finalising the assessment of a property asset for consideration under these provisions of the Act. 

19. Mr Maggs told the Tribunal that this causes him to adopt a different approach from the one he would professionally take if valuing for a bank where a market range would be provided, but that it was his understanding that Government policy in providing valuations for veteran purposes under the Act is to adopt a conservative approach and err on the lower end of a market value range. That is therefore the approach he follows in providing professional property valuations to the Commission.

20. Mr Maggs agreed that the fact that the Applicant’s property was in a conservation zone would affect the valuation, but not necessarily reduce it.  He told the Tribunal that he had personally done the original kerbside valuation but had not told the Applicant that fact when he met Mr Brown at the property to undertake an on-site valuation, because the Commission asked valuers not to disclose that information if they had personally done a prior kerbside valuation.

21. Mr Maggs said that, after he had done the valuation, he had looked at a number of additional properties of which Mr Brown had subsequently provided details, but several of them were not properties he would use as comparable to the Woodstock property in coming to an assessment.  He repeated that his opinion on the conservative market value of $700,000 for the Woodstock property as at the date of assessment had not altered.

    Closing submissions

22. Mr Brown said that he considered a larger number of properties should be used in the valuation assessment.  He said he felt $700,000 “was in the ball-park, not necessarily wrong” and contended that the valuation of the Woodstock property should be in a range between $600,000 and $650,000.

23. Mr Rudge said that the Commission relied on Mr Maggs’ valuation, which the Respondent believes was reasonable and appropriate.  He submitted that the approach to look at a range of recent sales and then make a conservative valuation was a fair approach for the Commission to adopt.  Mr Rudge submitted that the Woodstock property was a desirable property, and the fact that it is only 1.4 kilometres from the new precinct should allow a reasonable conclusion to be drawn that it will increase in value.

    Consideration

24. The Tribunal has carefully considered the submissions of the parties.  Mr Maggs, the valuer engaged by the Respondent, said that he originally looked at four relevant properties to arrive at the valuation.  After correspondence with the Applicant, he expanded his assessment to consider others identified by Mr Brown, but, having done so and looked at a larger number of properties as suggested by the Applicant, he did not alter his conclusion.

25. In answer to a direct question from the Tribunal, Mr Brown conceded that Mr Egan is not a qualified valuer.  However, Mr Egan is a local real estate agent and the Tribunal considers he would have some knowledge and experience of the local market and of land values, so his view, in the Tribunal’s view, had relevance.

26. Weighing all the assessments, the Tribunal considers that the preferable decision in this matter is to agree with the 2017 valuation of $700,000.  That is the valuation Mr Maggs arrived at, adopting (as his evidence was), a conservative approach.  That figure is also in the range quoted by Mr Egan, albeit at the high end.  The Applicant himself had the opportunity to engage a valuer to undertake a valuation of the Woodstock property, but chose not to.  Instead he has undertaken his own assessment of recent sales.  However, after undertaking this task, his own evidence was that he thought Mr Maggs’ valuation was “not necessarily wrong”.

27. The Tribunal places significant weight on the fact that expansive development is planned in the area around the Woodstock property.  At p 18 of the ST documents is a Whittlesea Shire residential development forecast for Donnybrook which states:

    Residential development forecasts assume the number of dwellings in Donnybrook will increase by an average of 782 dwellings per annum to 19,592 in 2041.

28. The Tribunal accepts the evidence of Mr Brown that Donnybrook is some distance away and that the Woodstock property is subject to a conservation overlay (a ‘green wedge’) but when this particular aspect was raised with Mr Maggs, he said that such an overlay can actually enhance the value of a property where the surrounding housing development is more dense, because a larger residential block becomes more desirable to potential purchasers.

29. The Tribunal must, ultimately, consider whether a professional valuation which has been undertaken, and confirmed after a personal inspection, and then further confirmed after a larger number of adjacent properties’ sales data has been taken account, should be preferred, over some other figure arrived at to displace it, in the light of the evidence of the Applicant that he did not think the valuation accepted by the Commission was “necessarily wrong”.

30. The Tribunal does not accept the suggestion by Mr Brown that the Tribunal should adopt a figure between $600,000 and $650,000.  The valuation in 2012 of the Woodstock property was $640,000 and there is no evidence, including from the Applicant, that the value of the Woodstock property has decreased or remained static in the last five years. 

31. After carefully taking into account the changes in the demographics and increased property development in the general area, which was accepted by parties, and the professional expertise of Mr Maggs, and taking into account that that the local real estate agent’s assessment encompassed the figure adopted by the Commission, the Tribunal finds that it should not be disturbed.

    DECISION

32. The Tribunal affirms the reviewable decision of 30 May 2017.

I certify that the preceding 32 (thirty-two) paragraphs are a true copy of the reasons for the decision herein of Senior Member D. J. Morris

..............[sgd]..........................................................

Associate

Dated: 2 July 2018

Date(s) of hearing:	22 March 2018
Applicant:	In person
Solicitor for the Respondent:	Ken Rudge