Chowdhury v The Commissioner for Act Revenue (Administrative Review)
[2014] ACAT 15
•21 March 2014
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
CHOWDHURY v THE COMMISSIONER FOR ACT REVENUE (Administrative Review) [2014] ACAT 15
Case Number AT 13/86
Catchwords: ADMINISTRATIVE REVIEW – unimproved value of land (UV) for determining rates – objection to UV – method of determining of UV: section 6 of the Rates Act 2004 – use of comparable land sales before or after the acquisition of land, for determining the UV – whether UV of adjoining or surrounding sites is relevant consideration
Legislation:ACTCivil and Administrative Tribunal Act 2008, s 68
Rates Act 2004, ss 6 and 10
Taxation Administration Act 1999, ss 107A and 108A
Cases: Commonwealth v Arklay (1951-1952) 87 CLR 159
Hamilton v Demgold Pty Ltd (1990) 97 ALR 481
Jens Svensson & Commissioner for ACT Revenue
[2010] ACAT 59
Tribunal: Ms E. Symons – Presidential Member
Date of Orders: 21 March 2014
Date of Reasons for Decision: 21 March 2014
ACT CIVIL AND ADMINISTRATIVE TRIBUNAL AT 13/86
RE: MD ASHEQUL AREFIN CHOWDHURY
Applicant
AND: THE COMMISSIONER FOR ACT REVENUE
Respondent
TRIBUNAL: Ms E. Symons – Presidential Member
DATE:21 March 2014
ORDER
The Tribunal Orders that:
1. The decision under review is confirmed.
………………………………..
Ms E. Symons - Presiding Member
REASONS FOR DECISION
Decision Under Review
This is an application to the ACT Civil and Administrative Tribunal (‘the Tribunal’) for review of a decision (‘the decision’) of the Commissioner for ACT Revenue (‘the Commissioner’) made on 23 October 2013 with respect to the 1 January 2013 Unimproved Value (‘UV’) of the crown lease at Block 1 Section 61 Bonner (‘the property’). At all relevant times the Applicant owned the property.
The Commissioner originally determined the UV at $224,000 on 16 July 2013. The Applicant had objected to that decision by letter dated 30 July 2013. The Commissioner determined to disallow the Applicant’s objection and confirmed the valuation on which the assessment of rates was based.
The matter was heard on 17 March 2014. The Applicant represented himself. Ms Katavic of Counsel appeared for the Commissioner, instructed by the ACT Government Solicitor. At the conclusion of the hearing the Tribunal reserved the decision.
Issues
The issue for consideration is whether the Commissioner has arrived at the correct UV for the Applicant’s property pursuant to section 6 of the Rates Act 2004 (‘Rates Act’).
Applicable Law
Section 108A of the Taxation Administration Act 1999 (‘TAA’) provides that a taxpayer in relation to whom a reviewable decision is made may apply to the ACT Civil and Administrative Tribunal for review of the decision.
Pursuant to section 107A(1)(a) of the TAA a reviewable decision is a determination by the Commissioner of an objection by the taxpayer to an assessment.
The Commissioner’s determination made on 23 October 2013 disallowing the Applicant’s objection to the assessment is a reviewable decision.
Division 6.3 of the ACTCivil and Administrative Tribunal Act 2008 (‘ACAT Act’) sets out the tribunal’s powers and decisions in applications for administrative review. Section 68 of the ACAT Act applies if the tribunal reviews a decision by an entity, and states:
68Review of decisions
(1)This section applies if the tribunal reviews a decision by an entity.
(2)The tribunal may exercise any function given by an Act to the entity for making the decision.
NoteA reference to an Act includes a reference to the statutory instruments made or in force under the Act, including regulations (see Legislation Act, s 104).
(3)The tribunal must, by order—
(a)confirm the decision; or
(b)vary the decision; or
(c)set aside the decision and—
(i)make a substitute decision; or
(ii)remit the matter that is the subject of the decision for reconsideration by the decision-maker in accordance with any direction or recommendation of the tribunal.
Section 10 of the Rates Act provides for the annual redetermination of UVs for parcels of land in the ACT. It states:
10Annual redeterminations
(1) As soon as practicable after each 1 January, the commissioner must redetermine the unimproved value, as at that date, of each parcel of land rateable on that date.
(2) An annual redetermination of the unimproved value of a parcel of land applies to the parcel for the period—
(a) beginning on 1 July in the calendar year in which the relevant date when the redetermination is made falls; and
(b) ending on 30 June in the next calendar year.
Section 6 of the Rates Act defines UV and states:
6Meaning of unimproved value
(1)The unimproved value of a parcel of land held under a lease from the Commonwealth is the capital amount that might be expected to have been offered on the relevant date for the lease of the parcel, assuming that—
(a)the only improvements on or to the parcel were the improvements (if any) by way of clearing, filling, grading, draining, levelling or excavating—
(i)if the Territory or Commonwealth had, before the parcel became rateable as a separate parcel, granted a development lease of land that included the parcel—made by the lessee under that lease or by the Territory or Commonwealth, or the cost of which was met by that lessee or by the Territory or Commonwealth; or
(ii)in any other case—made by the Territory or Commonwealth or the cost of which was met by the Territory or Commonwealth; and
(b)the circumstances that existed on the prescribed date also existed on the relevant date; and
(c)on the relevant date, the lease had an unexpired term of 99 years; and
(d)a nominal rent was payable under the lease for the 99 year term.
NoteRelevant date is defined in the dictionary.
(2)The unimproved value of a parcel of land held in fee simple is the capital amount that might be expected to have been offered for the parcel at a genuine sale on the relevant date on the reasonable terms and conditions that a genuine seller would require, assuming that no improvements had been made on or to the parcel.
(3)In this section:
prescribed date, for a parcel of land, means—
(a)for a determination of the unimproved value of the parcel—the date the parcel became rateable; or
(b)for an annual redetermination of the unimproved value of the parcel—the date the redetermination applies; or
(c)for a redetermination of the unimproved value of the parcel under section 11 (Redetermination—error) or section 11A (Redetermination—change of circumstances)—the date the redetermination begins to apply to the parcel.
The Applicant’s contentions
The Applicant contends that the criteria applied to determine the property’s UV at 1 January 2013 should also be applied to “an identical block (Block 5 Section 60...) just across the road from my block ... which has been valuated (sic) at $204,000 [when] my block has been valuated (sic) at $224,000 (i.e. a difference of $20,000).”[1] The Applicant also stated in his Application that until 2012 the valuation prices of [both] blocks were the same.
The Respondent’s contentions
[1] Applicant’s Application for Review lodged 15 November 2013 at page 2
The Respondent contends[2] that the UV of the property as at 1 January 2013 has been determined correctly, in accordance with section 6 of the Rates Act. The Respondent relies on the Australian Valuation Office (‘AVO’) report based on comparable sales evidence.
Relevant Agreed facts
[2] Respondent’s Statement of Facts and Contentions dated 28 February 2014, paragraph 7.
It is agreed that that the subject property is rateable land for the purposes of the Rates Act.
The Hearing
The Applicant did not give evidence or call any evidence.
The Respondent called evidence from Mr Geoff McInerney who is a Senior Valuer with the AVO. Mr McInerney had filed a Witness Statement dated 14 March 2014 to which he attached his Curriculum Vitae. The Tribunal noted his qualifications and experience.
Both parties made oral submissions at the conclusion of the hearing.
Consideration
This review has arisen from the decision of the Commissioner to determine the property’s UV as at 1 January 2013 at $224,000.
The Applicant’s property is located on the corner of Charles Perkins Circuit and Newfong Street, Bonner and is known as 52 Charles Perkins Street, Bonner. The property on the opposite corner of Charles Perkins Circuit and Newfong Street Bonner, being Block 5 of Section 60 and known as 48 Charles Perkins Circuit, Bonner, is owned by a work colleague and friend of the Applicant.
In 2011 and 2012, the UV of both of these properties was identical. In 2011 the UV was $205,000 and in 2012 the UV was $217,000. In 2013 the UV for
48 Charles Perkins Circuit, Bonner was set at $204,000, $20,000 less than the UV of $224,000 for the Applicant’s property.In his letter dated 30 July 2013 seeking reconsideration of the original decision, the Applicant stated:
·Considering location and surface level, block 5/60 is in better position. The house in that block gets full northern sun and the block is nearly levelled, whereas my house does not get much northern and eastern sun as it blocked by neighbour’s houses. So the price of my block should be less than that of block 5 section 60.
·My block is almost 1.5 meter difference from back to front (block details attached) and it cost additional $15,000 for excavation and building retaining wall around the block (except front) then my friend’s block. Retaining wall in back of the block is more than 1.5 meter in some places. So the price of my block should be at least $15,000 less than the other block.
·Comparing with the above block and considering the current property market in ACT my block should not be valued above $189,000 in 2013.
In the Application to the Tribunal, the Applicant referred to the following criteria in the letter to the Commissioner dated 17 September 2013 from Mr Ian Robertson, Acting Regional Manager of the Australian Valuation Office:
The Unimproved Value of the subject block in terms of Section 6 of the Rates Act 2004 is based on the levels of land values disclosed by sales of property in the locality near January 2013. The Valuer compared this block with the sales evidence, making appropriate adjustments for any significant differences between the blocks. Such differences may include size, shape, physical features, location factors, etc.
and stated
If these criteria have been applied for valuation of Block 1 Section 61, then the same criteria should be applied to Block 5 Section 60, because valuation as indicated in the report conducted at the same time frame (January 2013) and location.
In addition, considering location and surface level, my block is in inferior position than Block 5 Section 60. My House does not get much northern and eastern sun as it is blocked by neighbour’s houses whereas the house in block 5 Section 60 gets full northern sun.
In his Reply, filed on 4 March 2014, to the Respondent’s Statement of Facts and Contentions, the Applicant stated:
1.In reply to fact 6, I believe an unimproved value of nearby land (assessed at the same time) is sufficient to prove that the criteria used to evaluate nearby block were not applied equally to evaluate Block 1 Section 61 Bonner.
2.Contention 7 - disagree; if unimproved value of the property was determined correctly then there should not be much difference of unimproved value of equivalent nearby property (such as Block 5 Section 60 Bonner) determined at the same time.
3.Contention 13 - considerable variation of unimproved value of the block compare to unimproved value of the nearby block determined at the same time using same criteria indicates that the valuation was not correct.
4.Contention 14 - comparable sales evidence as indicated in the AVO report was not apply uniformly to valuate Block 1 Section 61 Bonner.
5.Applying these criteria as mentioned in Contention 14, the value of an identical block (Block 5 Section 60) just across the road of my block (Block 1 Section 61 Bonner) has been valuated $204,000 in 2013 valuation, where as applying the same criteria my block has been valuated $224,000 in the same year (i.e. a difference of $20,000). The valuations of these blocks were exactly same until 2012. Because of this valuation I have to pay $800 more land rent per annum than that of Block 5 Section 60.
Subsection 6(1)(a) - (d) of the Rates Act sets out the meaning of “unimproved value”. In essence, this section sets out relevant assumptions which are required to be taken into account when determining unimproved value. The assumptions are designed to put landowners on an equal footing in relation to the determination of the unimproved value of the land for taxation purposes.[3]
[3] Hamilton v Demgold Pty Ltd (1990) 97 ALR 481
The High Court, in Commonwealth v Arklay,[4] considered the “value” of land under the Lands Acquisition Act 1906 - 1936 and said:
...It is established that “value” in such a context means the value of the land to the owner. Where the amount by which a vendor may sell and a purchaser buy is not controlled the Court poses the hypothetical problem, the answer to which supplies this value. ... Shortly stated what is required is “an estimate of the price which would have been agreed upon in a voluntary bargain between a vendor and purchaser each willing to trade but neither of whom was so anxious to do so that he would overlook any ordinary business considerations. ... It is simply an analysis of what in all the relevant circumstances would be the price that a willing purchaser would have to pay a vendor willing but not anxious to sell in order to obtain the land. [Tribunal’s emphasis] Where the land has no special suitability for some business or activity carried on by the owner and has no added potential value if put to some better use, the value on a free market is usually its market value. The best evidence of this value is of comparable sales of other land either before or after the date of acquisition but this evidence is often not available. [Tribunal’s emphasis]
[4] (1951-1952) 87 CLR 159, at 169 - 170
In the present case, the property is a private residential block which is, contextually, unremarkable.[5] No evidence of any special circumstances in relation to the property was put to the Tribunal.
[5] Respondent’s Statement of Facts and Contentions at [12]
Mr Geoff McInerney, who has been a Registered Valuer without limitation since September 1981, said that valuations conducted under the Rates Act adopt a comparable sales approach. He said that valuations did not adopt an approach comparing valuations of other properties because these valuations could, for example, be contested or be out of line. He had read the 1-1-2013 Rating Valuation report by Ms Natalia Guzman and Mr Ian Robertson of the AVO. He agreed[6] with the conclusions and statement in that report and adopted the opinions as his own. The Applicant did not provide any expert evidence.
[6] Mr Geoff McInerney Witness Statement 14 March 2014 at [4] and [5]
It was clear from the 1-1-2013 Rating Valuation report and Mr McInerney’s evidence that the AVO has adopted the approach of this tribunal[7] and other Courts in determining UV for rating purposes by comparing sales of properties with similar land use near the relevant date, 1 January 2013. When sales of improved properties are analysed for comparison purposes an appropriate deduction is allowed for the added value of improvements. Mr Robertson states[8] “A method of analysis is to assess the depreciated value of all chattels, buildings and other improvements for the purpose of assessing the value of the land component”.
[7] Jens Svensson & Commissioner for ACT Revenue [2010] ACAT 59
[8] Letter from AVO to the Commissioner dated 17 September 2013, being Attachment B to Mr McInerney’s Witness Statement
In determining the UV of the subject property, the AVO compared four sales of vacant land which occurred near to the valuation date. They are:
| Sale No | Block | Section | Address in Bonner | Contract Date of Sale | Sale Price $ | Site Area m ² | Comments Site/Location | Analysed Land Value | Reconciliation with subject |
| 1 | 30 | 64 | 44 Henry Williams St | 09/01/ 2013 | 220,000 | 487 | Vacant land sale. Near regular shaped inside parcel located on south eastern side of street south of Gubbo Street. Elevated with views including mountain views to south. Single storey dwelling under construction at DOI Sewerage easement located at rear boundary. | 218,000 | Comparable site and location. Considered similar overall. Sale appears low in regards to other analysed evidence |
| 2. | 18 | 67 | 120 Rob Riley Circuit | 31/01/ 2013 | 256,000 | 450 | Vacant land sale. Rectangular shaped inside parcel located on the southern side of the street. Possible views to rear from a second storey level. Land rent option available. Sewerage easement located at rear boundary.. | 254,000 | Smaller site area and possible views. Considered superior overall. |
| 3 | 20 | 71 | 16 Dejerrkura Street | 25/10/ 2012 | 233,000 | 418 | Vacant land sale. Near rectangular shaped inside parcel located on southern side of the street. Located near a public reserve. Subject to right of way easement on side boundary and sewer easement on rear boundary. | 231,000 | Smaller site area in an elevated location but with easement affectations. Considered slightly inferior overall. |
| 4. | 21 | 121 | 90 Irinyill Street | 17/09/ 2012 | 259,950 | 521 | Vacant land sale. Rectangular shaped parcel located on the southern side of the street. Possible over roof tops local views. Located near a public reserve. Subject to sewer easement along western boundary | 250,950 | Superior site in an elevated location. Considered superior overall. |
Ms Guzman stated in her report that she considered sales (2) and (3) above were the most relevant to the subject property, with (2) being considered superior and (3) inferior. While sale (1) was considered to be similar in site area and location the purchase price was considered to be low compared to other analysed evidence. She also stated that the issued unimproved value of $224,000 for the subject property is considered to be within acceptable market parameters and is therefore confirmed.
In relation to the particular concerns raised by the Applicant in his letter of objection dated 30 July 2013 (see paragraph [20] above), Ms Guzman stated that, as provided by the Rates Act, the unimproved value is the value that would have been expected to be offered at the relevant date, 1 January 2013. The AVO does not consider any detriment previously suffered as it would not affect the price that would be paid for the block as at 1 January 2013. Furthermore, a retaining wall and any clearing, filling or grading is considered to be an improvement to the site as per section 6(1)(a)(i) of the Rates Act.
Mr McInerney adopted the professional opinions in both Ms Guzman’s and Mr Robertson’s reports. He also told the Tribunal that since the Applicant had purchased his property in April 2010 the market had slightly increased and the UVs for blocks 1 to 20 in section 61 Bonner (Tribunal document 16 (T 16)) were consistent with this trend of a slight increase. Likewise, the UVs for blocks 1 to 9, excluding block 5, in section 60 Bonner (T16) were consistent with this trend of a slight increase. He said the UV for Block 5 was out of line with all of the above UVs, adding that this appeared to be an anomaly or a mistake. He opined that the UV for block 5 of section 60 was neither relevant nor reliable.
The Applicant appeared genuinely concerned that the UV for his block and his work colleague’s block across the road differed by $20,000. However, he said he had not sought independent advice from a valuer. In this regard, the evidence of Mr McInerney was not challenged. The Tribunal accepts his evidence.
The Tribunal is satisfied and finds that there were sufficient similarities in the sales of Bonner properties identified in the above table, which were all vacant land, for those properties to be considered comparable in determining the UV of $224,000 for the subject property. The Schedule at T 16 supports Mr McInerney’s evidence that there had been a gradual increase in the UVs for the subject property and the surrounding sites in sections 60 and 61, apart from block 5 section 60, and this gradual increase was consistent with the market trend. The Tribunal is satisfied and finds that the UV for block 5 of section 60 is neither reliable nor relevant.
The Tribunal is also satisfied that the Commissioner’s valuers had followed the valuing process according to section 6 of the Rates Act.
The Tribunal is satisfied and finds that the unimproved value of a nearby parcel of land is not a relevant consideration in determining unimproved valuations. To the extent that the Applicant relied on this ground to support an alternative unimproved value, the Applicant is not successful.
In final submissions, the Applicant put to the Tribunal that he was ‘okay’ with the procedure used by the AVO to determine the UV if the same procedure was used for both his property and his work colleague’s property on “the other corner”. However, as he saw it, either his property’s UV or his colleague’s property’s UV, was wrong. The Tribunal is not required to determine the correctness or otherwise of the UV of the Applicant’s work colleague’s property; the Tribunal is required to determine the correctness or otherwise of the UV of the Applicant’s property.
Conclusion
Taking all these matters into account, and from considering all of the documents, the evidence and oral submissions, the Tribunal concluded that the correct UV for the Applicant’s property was $224,000 at 1 January 2013. This UV was arrived at by the AVO following the procedure in section 6 of the Rates Act and ascertaining the property’s market value in accordance with the test in Commonwealth v Arklay, namely by looking at the evidence of comparable sales of other land either before or after the date of acquisition.
The Applicant will, understandably, be disappointed with this decision. However, in the absence of any contradictory expert valuation evidence supporting his application, for the reasons set out above, the Tribunal has decided to confirm the decision under review.
………………………………..
Ms E. Symons - Presiding Member
PUBLICATION DETAILS
FILE NUMBER: | |
PARTIES, APPLICANT: | MD ASHEQUL AREFIN CHOWDHURY |
PARTIES, RESPONDENT: | COMMISSIONER FOR ACT REVENUE |
COUNSEL APPEARING, RESPONDENT | MS K KATAVIC |
SOLICITORS FOR RESPONDENT | ACT GOVERNMENT SOLICITOR |
TRIBUNAL MEMBERS: | MRS E. SYMONS |
DATES OF HEARING: | 17 MARCH 2014 |
PLACE OF HEARING: | CANBERRA |
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