HAMILTON and VALUER GENERAL
[2010] WASAT 5
•21 JANUARY 2010
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: DEVELOPMENT & RESOURCES
ACT: VALUATION OF LAND ACT 1978 (WA)
CITATION: HAMILTON and VALUER GENERAL [2010] WASAT 5
MEMBER: MS J HAWKINS (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 21 JANUARY 2010
FILE NO/S: DR 401 of 2009
BETWEEN: IAIN HAMILTON
Applicant
AND
VALUER GENERAL
Respondent
Catchwords:
Gross rental value of vacant land - Methodology of valuation - Differences between gross rental value of land upon which there are improvements and vacant land
Legislation:
Bassendean Town Planning Scheme No 3
State Administrative Tribunal Act 2004 (WA), s 27(2)
Valuation of Land Act 1978 (WA), s 4, s 32
Valuation of Land Amendment (Assessed Value) Act 2009 (No 33 of 2009) (WA), s 4
Valuation of Land Regulations 1979
Result:
The application is dismissed
Category: B
Representation:
Counsel:
Applicant: Self-represented
Respondent: Mr M Palandri (Representative)
Solicitors:
Applicant: N/A
Respondent: Valuer General's Office
Case(s) referred to in decision(s):
Duffy v The Minister for Planning [2003] WASCA 294
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
Mr Hamilton objected to the gross rental value assessed by the Valuer General for vacant land he owns in Bassendean. The Valuer General assessed the gross rental value for Mr Hamilton's land by reference to capital value rather than gross annual rental. This was due to his land being vacant and the gross rental value of the land not being reasonably determined.
Mr Hamilton objected and sought a review of the assessment made by the Valuer General. Mr Hamilton referred to the comparative value of gross rental value for vacant land being greater than the gross rental value of improved land in the surrounding area, where the assessment of such improved land was by reference to the rental values.
Despite this discrepancy, the Tribunal considered the gross rental value, as assessed by the Valuer General for Mr Hamilton's land, was correct. The Tribunal considered that it was open for the Valuer General to assess the gross rental value by reference to capital value as the land was vacant.
The decision of the Valuer General was therefore affirmed and the review application was dismissed.
Background
Mr Hamilton is the registered proprietor of 10 Villiers Street, Bassendean (land). The land is a 1,818 square metre rectangular corner block and is vacant with no improvements upon it.
This review concerns an objection made by Mr Hamilton in respect to the valuation of the Gross Rental Value (GRV) of $28,500 for the land as at 1 August 2006 made by the Valuer General under the Valuation of Land Act 1978 (VL Act) for tax and rating purposes (valuation).
As the land is vacant land, the Valuer General has determined the value of the land under the VL Act by reference to the 'assessed value' of the land. The 'assessed value' is defined under the VL Act and the Valuation of Land Regulations 1979 to be 5% of the 'capital value' of the land, which in this case was the unimproved value of the land.
Mr Hamilton has objected to that valuation because the GRVs for surrounding developed properties in his locality are less than the GRV for his land.
This matter was the subject of a directions hearing on 30 October 2009 at which time programming orders were made requiring the parties to file the documents and submissions upon which they sought to rely. It was ordered that following the time for compliance with those orders, the matter would be determined on the documents.
The parties filed the following documents:
•The Valuer General filed a bundle of documents on 17 November 2009 and a letter dated 23 November 2009
•Mr Hamilton filed submissions on 17 November 2009 and 5 January 2010.
The Tribunal must now decide if the valuation made by the Valuer General is the correct and preferable decision: see s 27(2) of the State Administrative Tribunal Act 2004 (WA).
Relevant legislation
It is necessary to set out some of the statutory background for the review.
Pursuant to s 32 of the VL Act, Mr Hamilton is:
[A] person liable to pay any rate or tax assessed in respect of land who is dissatisfied with a valuation of such land made under Part III …
In this case, the valuation has been made according to the GRV of the land.
The relevant provisions of s 4 of the VL Act (not in the order as they appear in the VL Act), for the determination of the GRV, are 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 (emphasis added);
assessed value of land means such percentage of the capital value thereof as may from time to time be prescribed;
capital value of land means the capital amount which an estate of fee simple in the land might reasonably be expected to realize upon sale provided that where the capital value of land cannot reasonably be determined on such basis, the capital value of such land shall be the sum of, first, the unimproved value of the land, and, secondly, the estimated replacement cost of improvements to the land after making such allowance for obsolescence, physical depreciation, and such other factors as are appropriate in the circumstances;
unimproved value means
(a)in relation to any land situate within a townsite, … the site value;
site value of land means the capital amount that an estate of fee simple in the land might reasonably be expected to realize upon sale assuming that any improvements to the land, other than merged improvements, had not been made and, in the case of land that is reserved for a public purpose, assuming that the land may continue to be used for any purpose for which it is being used or could be used at the date of valuation;
Valuation methodology and general principles
In this case, the valuation is based on the 'assessed' value of the land as it is a vacant lot and it is submitted therefore, that the GRV of the land cannot be reasonably determined.
In coming to the valuation, the Valuer General has referred to comparable sales information of properties at the date of valuation.
The principles of valuation that apply in such circumstances were discussed in the decision of Duffy v The Minister for Planning [2003] WASCA 294 by McLure J and can be summarised as follows:
•market value is what a willing purchaser would pay a willing but not anxious vendor;
•one method of assessing market value is the comparable sales method which must be relevant and sufficient in volume;
•when using comparable sales, although a matter of degree, a valuer should consider whether there are sufficient similarities with the subject land. Adjustments should be made for topography, location, size, shape, land use, scope for, or difficulties in, development;
•in relation to the transaction of sale, the valuer must weigh the character, business and relationship of the parties, their motives, the terms and conditions of the sale, any special considerations that induced them to sell and the date of the sale; and
•in respect to valuation expert evidence, the facts on which the opinion is based must be proven or the assumptions as to fact on which the opinion is based must be stated. In addition, the inferences that lead to opinion must be stated or revealed. However, these principles have to be applied in the context of the valuer's 'art', which essentially takes account of the valuer's skill and experience.
Contentions and findings
The Valuer General has provided a valuation report dated 10 September 2009. The report has been prepared by a licensed valuer, (the valuation report). The date of valuation in the valuation report is 1 August 2006. It confirms that the land is in the locality of Bassendean and is zoned Urban. Under the Bassendean Town Planning Scheme No 3, the land is zoned R5 and is suitable for residential development only. The land is presently vacant and has no development upon it.
The valuation report makes clear that the valuation of the land has been made by reference to the capital value of the land as it is vacant. The Valuer General maintains that a rental value cannot be reasonably determined. The capital value of the land as at 1 August 2006 has been assessed at $570,000. The assessed value, as defined under the VL Act, is 5% of $570.000, being $28,500.00.
Some of the sales evidence of properties within the same locality of the land, relied upon by the Valuer General, were as follows:
•In March 2006, a property at 146 West Road, Bassendean sold for $445,000. The property was lesser in size, being 890 square metres. The improvements upon the land were considered to add no value to the property.
•In October 2006, a property at 7 Villiers Street, Bassendean sold for $680,000. The property was a lesser size at 671 square metres. The property had upon it a modest 1983 built three bedroom brick and tile home which was given a value of $150,000, reducing the unimproved value of the land to $530,000.
Mr Hamilton contends that because his land is vacant, having no improvements upon it, the GRV for his property should be less than that of neighbouring land upon which there are improvements. By a graph, Mr Hamilton has sought to show the change in the comparative GRVs for the land when compared to that of nearby properties, upon which there are improvements. Mr Hamilton maintains the current valuation is unreasonable and that there is a discrepancy between the GRV for his vacant land, which is higher than the GRV for neighbouring developed land. He suggests it is open to the Valuer General to try to assess the GRV of his land based on comparative rental values rather than capital values.
The Valuer General acknowledges Mr Hamilton's concerns that, due to market increases in property values over recent years, the GRV for vacant land, based on unimproved capital value, was greater than the GRV of developed land, based on rental values. The Valuer General refers to a recent amendment to the VL Act which attempts to redress this issue, being the Valuation of Land Amendment (Assessed Value) Act 2009 (No 33 of 2009) (WA). Section 4 of that Act makes the relevant changes to the VL Act. However, that section is yet to be proclaimed and therefore has no relevance to these proceedings.
Despite the discrepancy referred to by Mr Hamilton, I do not consider there is any basis to interfere with the valuation.
The valuation of the land has been made according to appropriate valuation methodology and principles as referred to earlier in these reasons. Further, it is clear the valuation has been made in accordance with the VL Act. In this case, the land is vacant. Where the GRV of land cannot be reasonably assessed, it must be determined according to the assessed value as defined under the VL Act, that is, by reference to the unimproved capital value of the land.
Mr Hamilton's submissions intimate that the Valuer General should seek to assess the GRV of the land not by regard to its unimproved capital value but by assessing its rental value.
However, the VL Act clearly provides that the Valuer General must assess the unimproved capital value of land where the GRV cannot be easily assessed.
In the metropolitan area, there is unlikely to be a rental market for vacant land, as opposed to country areas. Further, Mr Hamilton has not obtained any valuation evidence, or any evidence, which establishes that there is a rental market for vacant land within the metropolitan area. It was therefore appropriate for the Valuer General to assess the GRV of the land upon the unimproved capital value of the land, as required under the VL Act.
Although the Tribunal accepts that the valuation upon the unimproved capital value of the land may result in a higher GRV than surrounding properties upon which there are improvements, the valuation was still carried out in accordance with the VL Act and by application of the correct valuation methodologies and principles.
Accordingly, the Tribunal considers that the decision of the Valuer General should be affirmed and the application dismissed.
Orders
1.The application for review is dismissed.
2.The decision under review is affirmed.
I certify that this and the preceding [30] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS J HAWKINS, MEMBER
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