HAFEZ and VALUER GENERAL
[2012] WASAT 103
•11 MAY 2012
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: DEVELOPMENT & RESOURCES
ACT: VALUATION OF LAND ACT 1978 (WA)
CITATION: HAFEZ and VALUER GENERAL [2012] WASAT 103
MEMBER: MS L WARD (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 11 MAY 2012
FILE NO/S: DR 318 of 2011
BETWEEN: HAFEZ HAFEZ
AGNUS HAFEZ
ApplicantsAND
VALUER GENERAL
Respondent
Catchwords:
Valuation of land - For the purpose of rating - Gross rental value - Residential property in suburban Perth - Multiple dwellings - Expert assessment by valuer - Nonexpert assessment by property owner - Difference of $1,820 per year - Expert evidence preferred by Tribunal
Legislation:
State Administrative Tribunal Act 2004 (WA), s 27(2), s 31(2)
Valuation of Land Act 1978 (WA), s 4(1), s 6(2)(a), s 18, s 24, s 26, s 32, s 33
Result:
Application dismissed
Decision of respondent dated 24 January 2012 affirmed
Category: B
Representation:
Counsel:
Applicants: Self-represented
Respondent: Mr R Wickens (Acting as Agent)
Solicitors:
Applicants: Self-represented
Respondent: N/A
Case(s) referred to in decision(s):
Duffy -v- The Minister for Planning [2003] WASCA 294
Watson & Anor and ValuerGeneral [2006] WASAT 224
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The owners of a residential property in Morley challenged the Valuer General's determinations of the gross rental value as at 1 August 2009. The Valuer General determined the gross rental value of the property at $42,900 as at the valuation date. The owners contended that the gross rental value of the property was $41,080 per year as at the valuation date. That is, the owners contended that the gross rental value was $1,820 per year less than the Valuer General's assessment.
The Tribunal found that the comparable rental evidence supported the Valuer General's expert valuation. The Tribunal relied on the four comparable rentals relied on by the Valuer General. The owners did not provide any independent expert valuation evidence to contradict the Valuer General's expert opinion, although one of the owners of the property provided his personal view of what he thought were comparable properties.
The Valuer General's decision of 24 January 2012 was affirmed and the application for review was dismissed.
The property
Dr Hafez Abdel Razzek Hafez and Ms Agnes HafezErgaut (owners) are the registered proprietors of Lot 26 on Diagram 30282 known as No 45 Kennedy Road, Morley (property). The property has an area of 1,224 square metres.
The property is a residential block with three dwellings on it referred to below as Units A, B and C. The dwellings include the original home built in the 1960s (Unit A), a three bedroom, one bathroom unit built in the early 1990s (Unit B), and Unit C, which was built in 1997 and is identical to Unit B, with some differences regarding the security features.
Valuer General's assessment of Gross Rental Value
This review concerns an objection made by Dr Hafez in respect to the valuation of the gross rental value (GRV) for the property as at 1 August 2009. The GRV of the property as at 1 August 2009 is utilised by the rating authorities as of 1 July 2011.
The valuation was made by the Valuer General under the Valuation of Land Act 1978 (WA) (VL Act) for rating purposes. The Valuer General aggregated the valuations for each of the Units A, B and C as he is entitled to do under s 24 of the VL Act.
The Valuer General has provided the following three assessments of GRV of the property as at 1 August 2009, namely:
•on or about 20 July 2011, an initial assessment of a GRV of $47,840;
•on 24 August 2011, following an objection from the owners, a GRV of $43,940; and
•following a reconsideration under s 31(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), on 24 January 2012, the GRV in relation to Unit A was reduced from $305 per week to $285 per week, and the GRV for both Unit B and Unit C remained unchanged at $270 per week, giving a GRV for the whole of the property of $42,900.
Accordingly, it is the Valuer General's assessment of a GRV of $42,900 and dated 24 January 2012 insofar as it relates to Unit A of the property which is the subject of this application for review.
Statutory background
The owners have standing in the Tribunal as they are liable to pay any rate or tax assessed in respect of the land and they are dissatisfied with the valuation dated 24 January 2012: see s 32 of the VL Act.
In accordance with the provisions of VL Act, the Valuer General is required to maintain valuation rolls of rateable and taxable land throughout Western Australia: see s 26 of the VL Act. These rolls are periodically provided to rating and taxing authorities. 'Unimproved value' is used for land tax purposes and GRV is used for rating purposes.
Section 18 of the VL Act requires the Valuer General to determine, or cause to be determined, the GRV, with respect to rateable land.
The term 'gross rental value' applies to this application and is defined in s 4(1) of the VL Act. The relevant part of the definition is set out as follows:
gross rental value of land means the gross annual rental that the land might reasonably be expected to realize if let on a tenancy from year to year upon condition that the landlord were liable for all rates, taxes and other charges thereon and the insurance and other outgoings necessary to maintain the value of the land, provided that -
(a)where the gross rental value of land cannot reasonably be determined on such basis, the gross rental value shall be the assessed value; …
Procedural history in the Tribunal
Notwithstanding the reduction in GRV by the Valuer General on 24 August 2008, Dr Hafez remained dissatisfied with the Valuer General's decision on his objection. As a result, Dr Hafez gave a notice to the Valuer General on 7 September 2011 requiring the referral of the valuations to the Tribunal for a review under s 33 of the VL Act.
This application for review was the subject of directions hearings on 28 September 2011 and 2 December 2011. The Valuer General reconsidered his decision on 24 January 2012, and it is that decision which is under review by the Tribunal. Final documents were ordered to be filed by the parties by 13 February 2012.
The parties filed additional documents in the Tribunal as follows:
•The Valuer General filed a bundle of documents on 22 September 2011, further submissions filed on 11 January 2012, reconsideration letter and reasons dated 24 January 2012.
•Dr Hafez filed submissions with the Tribunal on 16 December 2011, 23 January 2012, and 6 February 2012.
The Tribunal must now decide if the valuation made by the Valuer General in its letter dated 24 January 2012 is the correct and preferable decision: see s 27(2) of the SAT Act.
Valuer General's basis for assessment in relation to Unit A of the property
The GRV assessment was undertaken for the Valuer General by a Regional Valuer at Landgate. The Valuer General's GRV assessment of $285 per week, in relation to Unit A, was based on the comparable rental evidence of four properties, which he considered to be similar, and an inspection of the property on 12 December 2011.
In relation to Unit A, as set out in the Valuer General's letter dated 24 January 2012, it relied on rental evidence from four properties as follows:
Rental evidence as detailed in notice of decision on objection report dated 24 August 2011
•40 Kennedy Road[.]
3 bedroom brick tile residence built 1964[.]
Rent: $360pw, set August 2009[.]
Current GRV $16,120 ($310pw)[.]
•2 Tara Street (cnr Kennedy Road)[.]
3 bedroom brick tile residence built 1964[.]
Rent: $370pw, set July 2009[.]
Current GRV $16,120 ($310pw)[.]
Additional rental evidence
•53 Kennedy Road[.]
2 bedroom brick tile residence built 1965 with a 3rd bedroom added in 1969[.] With rear addition is a larger and more functional layout than the subject unit[.]
Rent: $320pw, set December 2008[.]
Current GRV $16,120 ($310pw)[.]
•6B Kennedy Road[.]
2 bedroom brick tile duplex unit built 1969[.]
Rent: $285pw, set March 2009[.]
Current GRV $14,040 ($270pw)[.]
Owners' basis for assessment of Unit A of the property
Dr Hafez, in his letter received by the Tribunal on 6 February 2012, maintained the owners' objection in relation to the GRV assessment of Unit A only. Dr Hafez submits that the GRV in relation to Unit A should be reduced from $285 per week to $250 per week. The Tribunal understands from Dr Hafez's letter that he maintained his objection to the GRV assessment of Unit A on the following four main grounds, which the Tribunal has grouped as follows:
•Improvements
Improvements have been made to the property since 1 August 2009 and, therefore, the improvements should not be included in the Valuer General's assessment based on an inspection in December 2011. Also, the Valuer General did not make allowances for some detriments (age, air conditioning, garage etc).
•Block size
The comparative properties relied on by the Valuer General are on blocks of between 700 square metres and 900 square metres, whereas Unit A is on a block of 378 square metres. Other houses in Kennedy Road, namely, No 52 and No 54, are on full size blocks and have GRVs of $12,900 and $14,820. Also, one would expect a duplex to have a higher GRV than a triplex or a unit.
•Amenities
Amenities on some of the comparable properties, particularly No 40 Kennedy Road, seem more substantial than Unit A; for example, lot size, building size and amenity. Also, no internal photographs of comparable properties.
•Location of comparable properties
One would expect a property one street closer to the Galleria Shopping Centre in Drake Street, Morley, would command a higher GRV based on it being closer the shops and closer to public transport. However, Dr Hafez says that this is not the case based on the GRVs of most houses and duplexes in Drake Street, which he says are below the GRV for Unit A. Dr Hafez submits that a property he knows of on the oceanfront at Hillarys Boat Harbour has a GRV of around $20,000.
Consideration of the objection
In this application for review, the Tribunal has before it the Regional Valuer's assessment of GRV completed on behalf of the Valuer General, which is an expert opinion. While Dr Hafez has challenged the methodology and some assumptions in the valuer's opinion, he has chosen not to produce any independent expert evidence to rebut the Valuer General's expert opinion. The Tribunal notes that there is no evidence before the Tribunal that Dr Hafez has 'qualifications and experience appropriate to the exercise of the powers' under the VL Act: see s 6(2)(a).
Therefore, the Valuer General's assessment is prima facie evidence of an expert valuer's views on the annual GRV of the property as at 1 August 2009. As there is no expert evidence to rebut or to displace the Valuer General's assessment, the Tribunal is therefore entitled to uphold that aspect of the valuation on that ground alone: see Watson & Anor and ValuerGeneral [2006] WASAT 224 (Watson) at [37].
However, for the sake of completeness, the Tribunal will consider Dr Hafez's objections to the Valuer General's assessment of the GRV of Unit A as at 1 August 2009.
Firstly, in relation to the improvements Dr Hafez submits have been made to the property since 1 August 2009, there is no evidence before the Tribunal of precisely what improvements were made to Unit A between 1 August 2009 and 24 January 2012. Therefore, the Tribunal does not accept that any such improvements were made, such that they would undermine the Valuer General's assessment made on 24 January 2012. In relation to Dr Hafez's submission that the Valuer General did not make allowances for some detriments, the Tribunal notes and accepts that the Valuer General compared properties similar in age to his property. Further, the Valuer General, in this case, has applied the 'valuer's art', as it has sometimes been called by the courts and this Tribunal, that art being to compare other rental properties in the locality and to make individual allowance or adjustment for matters such as position and size and the like, as well as considering questions of overall amenity in the area: see Duffy v The Minister for Planning [2003] WASCA 294 at [29] per McLure J and Watson at [21].
In the Tribunal's view, the 'valuer's art' also applies to Dr Hafez's submissions regarding the following features of the comparative properties, namely, the size of the blocks, amenities and location.
In the Tribunal's view, the size of the block is but one factor in making the GRV. For example, a large block with only a one bedroom dwelling may not attract the same rental as a three bedroom home on that same large block. The amenities on the comparable properties have been considered by the Valuer General insofar as it considers them to be relevant to the valuation process. For example, the layout of one of the comparable properties is noted as being more functional than Unit A.
The street location of the comparable properties is also cited as a basis of objection by Dr Hafez. Dr Hafez maintains that the GRVs in Drake Street, a street closer to Galleria Shopping Centre, Morley, and to public transport than Kennedy Street, are lower than in Kennedy Street. In the Tribunal's view, the Valuer General has quite properly compared Unit A to similar rental properties in the same street. All four comparable properties are in Kennedy Street. The Tara Street property is on the corner of Kennedy Street. The level of the GRVs in another street, be it in Drake Street, Morley, or, for that matter, an oceanfront property in Hillarys, is simply not relevant for consideration by the Valuer General when assessing GRV of a property in Kennedy Street. The relevant comparable properties are quite properly those which are in the closest proximity to the subject property and which are the most similar of those proximate properties. The Valuer General quite properly assessed relevant comparable properties in the same street as the property by way of direct comparison on a likewithlike basis. In the Tribunal's view, the Valuer General's approach is entirely correct as a method of valuation. The valuation has been carried out in accordance with the VL Act.
For all of the reasons set out above, Dr Hafez's objections are not sustainable and, accordingly, the owners' application for review is dismissed. Therefore, the decision of the Valuer General made on 24 January 2012 is affirmed.
Orders
The Tribunal makes the following orders:
1.The application for review is dismissed.
2.The decision under review is affirmed.
I certify that this and the preceding [29] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS L WARD, MEMBER