MARSH and VALUER GENERAL
[2007] WASAT 185
•18 JULY 2007
MARSH and VALUER GENERAL [2007] WASAT 185
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 185 | |
| VALUATION OF LAND ACT 1978 (WA) | |||
| Case No: | DR:50/2007 | 24 MAY 2007 | |
| Coram: | JUDGE J CHANEY (ACTING PRESIDENT) MR D LIGGINS (SENIOR SESSIONAL MEMBER) | 18/07/07 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application for review dismissed | ||
| B | |||
| PDF Version |
| Parties: | MICHAEL JOHN AND SUSAN MARSH VALUER GENERAL |
Catchwords: | Valuation of land Whether fair, unjust, inequitable or incorrect by comparison with valuation of adjoining lot |
Legislation: | Valuation of Land Act 1978 (WA), s 32(3) |
Case References: | Nil |
Orders | 1. The application is dismissed.,2. The valuation of Lot 504 on deposited plan 25033 at $701 000 effective from 30 June 2006 is confirmed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : VALUATION OF LAND ACT 1978 (WA) CITATION : MARSH and VALUER GENERAL [2007] WASAT 185 MEMBER : JUDGE J CHANEY (ACTING PRESIDENT)
- MR D LIGGINS (SENIOR SESSIONAL MEMBER)
- Applicants
AND
VALUER GENERAL
Respondent
Catchwords:
Valuation of land - Whether fair, unjust, inequitable or incorrect by comparison with valuation of adjoining lot
Legislation:
Valuation of Land Act 1978 (WA), s 32(3)
Result:
Application for review dismissed
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Category: B
Representation:
Counsel:
Applicants : In person
Respondent : Mr R Dodd and Mr J Clark (Agents)
Solicitors:
Applicants : N/A
Respondent : N/A
Case(s) referred to in decision(s):
Nil
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Summary of Tribunal's decision
1 Mr Michael Marsh and Mrs Susan Marsh are the owners of a rural lot, being Lot 504 Joshua Mews, in Baskerville. The Valuer General initially valued the lot at $803 000 as at 1 August 2005. The valuation was to apply for the financial year 2006/2007. An objection by Mr and Mrs Marsh to the initial valuation led to a reduction of the valuation to $701 000.
2 Mr and Mrs Marsh were not satisfied with the reduced value, principally because they considered it inconsistent with the valuation of an adjoining lot. Both lots had been purchased from the original subdivider. The price paid for the adjoining lot was in excess of that paid by Mr and Mrs Marsh. The valuation by the Valuer General resulted in the Marshs' land being valued, for the relevant year, at a figure greater than the adjoining lot.
3 The Valuer General acknowledged the discrepancy, but said that the valuation for the adjoining lot was too low, and would be amended as of the next valuation date. Mr and Mrs Marsh maintained that, until that occurred, their lot should continue to be valued at a lower figure than the adjoining lot.
4 The Tribunal concluded that the value of Mr and Mrs Marsh's lot should not be solely governed by the value of the adjoining lot. Apart from the comparison to the adjoining lot, there was no basis to adjust the valuation attributed to Mr and Mrs Marsh's land. The anomaly between the Marshs' land and the adjoining lot would be corrected at the next valuation. In the meantime, the fact that the adjoining lot had been assessed at too low a value did not result in any unfairness to the Marshes in having the proper value of their land utilised for rating and taxation purposes. Accordingly, the Tribunal declined to vary the valuation.
Background
5 Mr and Mrs Marsh, the applicants in these proceedings, purchased Lot 504 on deposited plan 25033 (Lot 504) in June 2002. They paid $417 000. Lot 504, comprising 50.4 hectares, was created from a subdivision into two lots of a larger parcel of land. The other lot created, Lot 505, comprises 40 hectares and was sold by the subdivider in December 2002 for $500 000.
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6 The value of Lot 504 was assessed by the Valuer General as at 1 August 2005 at $803 000. At the same date, the value of Lot 505 had been assessed at $735 000. Those values were achieved using what was described at the hearing as the Valuer General's "mass appraisal technique".
7 Mr and Mrs Marsh objected to that valuation. Mr Russell Dodd, a valuer from within the Valuer General, dealt with the objection. He collated sales evidence of potentially comparable properties and inspected the property in company with Mr Marsh. Mr Dodd noted that access to Lot 504 from the only adjoining road, Joshua Mews, was unsafe and had been blocked off pending safer access being provided following a proposed extension of Joshua Mews which would enable access from a different point on Lot 504. Because of that access problem, Mr and Mrs Marsh have purchased Lot 19 Basuto Rise, a lot with a common boundary with Lot 504 and which provided access onto a road in the adjoining Brigadoon subdivision. Lot 505 has direct and safe access onto Joshua Mews. The road access through Lot 19 is significantly less convenient because it is less direct, and involves greater distance, for connections to the main roads leading away from the subdivision. Mr Dodd considered that the access difficulties resulted in an additional 10 minutes' commuting time.
8 Having considered those matters, Mr Dodd reached the view that the unimproved value of $803 000 was reasonable subject to an assumption that direct access to a public road from Lot 504 was provided. He considered that, until direct access was provided, a 10% reduction should be applied to the value to reflect the access difficulty. Despite the conclusion that $803 000 was a reasonable value, Mr Dodd applied the 10% reduction to a value of $779 000 rather than $803 000. The reason for that appears to be that he adjusted the mix of land types on the lot which are used for the purposes of the "mass appraisal technique"; in particular, the increased the amount of "grade 18 bush" which resulted in a corresponding reduction in other land types, and an overall reduction in value.
9 In the statement of reasons prepared by Mr Dodd for the purposes of the objection, he refers to "relevant sales evidence" that has been collated, and suggests that "this is the principal evidence used in this valuation". However, under the heading "Reasons for decision", there is no mention of comparable sales. The analysis deals entirely with the comparison between Lots 504 and 505. The figure of $779 000 appears to have been based upon a recalculation of the components of land type utilising the
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- "mass appraisal technique". It is impossible from Mr Dodd's report to discern any reasoning as to how the sales evidence informed his determination of value.
10 Mr Dodd was asked about the relevance of the sales evidence at the hearing. He indicated that the "most relevant" of the six sales referred to was the sale of 50.2 hectares of land some 16 kilometres east of the subject land in February 2005 for an amount of $820 000. He described that land as having "a lot more bush, being not as well located, without the views of the subject site", and sold some six months earlier than the valuation date with the market rising throughout 2005. The property did, however, have a house and a "flatlet" on it, and Mr Dodd assessed its site value at $645 000. The lack of analysis in Mr Dodd's report of the relevance and significance of the comparable sales evidence makes assessment of valuation difficult if not impossible. However, because of the way in which the parties approached the Tribunal's proceedings, that is not a matter that needs to be addressed.
The applicants' contention
11 In the discussions and negotiations which followed the reassessment of the value of Lot 504 at $701 000, Mr and Mrs Marsh agreed with the respondent's representatives that, save for the allowance for the access difficulty on Lot 504, Lots 504 and 505 had the same value. Mr and Mrs Marsh did not seek to adduce expert evidence as to the proper value for Lot 504. Rather, they put their case on the basis that, as at 1 August 2005, there should be coordination between the value attributed to each of Lots 504 and 505.
12 In their written submissions to the Tribunal, Mr and Mrs Marsh suggested that the value of Lot 504, before the 10% allowance for access difficulty, should be assessed at 98% of the value of Lot 505. The figure of 98% was arrived at on the basis of a "mathematical model" set out in detail in an appendix to their submissions. That approach was not pursued in the oral submissions made at the hearing. The "mathematical model" involved a number of assumptions for which no adequate foundation was established. Even if Mr or Mrs Marsh had qualifications as valuers, the mathematical modelling could not be relied upon without the foundation for the assumptions being established. It follows that there is no basis upon which the Tribunal could conclude that the value of Lot 504 (before the access deduction) should be taken as 98% of the value of Lot 505.
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13 The oral hearing proceeded on the basis that the value of Lot 504 and Lot 505 should be treated as equal subject to the 10% reduction in relation to access for Lot 504. The parties also agreed that the 10% reduction should be applied to the value of Lot 504 for so long as those difficulties continued. When direct safe access is available from Lot 504 to Joshua Mews, the deduction will no longer apply. The essential difference between the parties was that Mr and Mrs Marsh contend that the 10% reduction should be applied to the value attributed to Lot 505 as at 1 August 2005, namely, $735 000. The respondent, on the other hand, contends that on further reflection, the value attributed to Lot 505 is too low, and to assess Lot 504 by reference to the erroneous value attributed to Lot 505, would have the effect of rendering the value of Lot 504 uncoordinated with all other properties within the City of Swan. In essence, the Valuer General contends that it is Lot 505 which is the uncoordinated value, and proposes to rectify that position as of the next valuation date.
14 Mr and Mrs Marsh's contention that Lot 504 should not be valued at more than Lot 505 is based on a number of factors. The first is that Lot 504, although larger than Lot 505, was originally purchased for a lower price, even allowing for the rising market between the date of their purchase and the subsequent purchase of Lot 505. They contend that since that time, a deal of work has been done on Lot 505 by way of excavation of rocky ground to provide attractive pasture. Although Mr and Mrs Marsh are undertaking the same sort of work on their own land, as at the valuation date they contend, and we accept, the work on Lot 505 was much further progressed than their own work. They point out that the unimproved value of land for the purposes of the Valuation of Land Act 1978 (WA) (VL Act) takes into account "merged improvements". Merged improvements include work in the nature of grading and levelling and the removal of rocks and stone. Thus, they argue that the merged improvements carried out on Lot 505 between the date of purchase of that lot and the date of valuation should have increased the amount by which the value of Lot 504 exceeded Lot 505.
Conclusions
15 Pursuant to s 32(3) of the VL Act, an objection to a valuation may be made on the ground that the valuation is not fair or is unjust, inequitable or incorrect, whether by itself or in comparison with other valuations in force under the Act. In reviewing the valuation, the Tribunal stands in the
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- shoes of the Valuer General and thus must apply the test identified in s 32(3).
16 In this case, there was no challenge to the methodology that has led the Valuer General to assess the value of Lot 504 at $701 000. The applicants' complaint is that the valuation is unjust, inequitable or incorrect by comparison with the valuation of Lot 505.
17 As already mentioned, the valuation appears to have been assessed by utilisation of the technique applicable to valuations of unimproved land generally. It is asserted by the Valuer General's representatives that the value arrived at, following objection, is consistent with the values attributed to rural properties within the City of Swan, other than Lot 505. There is no cogent basis to challenge that assertion. We accept that the process of valuation undertaken by the Valuer General, being in essence an application of the "mass appraisal technique" is a process which has been generally applied to rural properties within the City of Swan. With respect to those other valuations, it cannot be said, therefore, that the valuation of Lot 504 is not fair, just, equitable or correct.
18 Mr and Mrs Marsh's position is, however, that Lot 505 bears a special place for purposes of comparison with the valuation of Lot 504. Again, there is no cogent basis in the evidence to reject the contention by the Valuer General that, as of the valuation date of August 2005, the valuation of Lot 505 was incorrect. The reason that no retrospective adjustment has been made to that value is by reason of the general approach described by Mr Dodd in a letter to the applicants dated 22 March 2007. Mr Dodd explained:
"The position of this office is that where issues regarding coordination arise between rateable properties and where an affected rateable property is a third party property ie not the property whose unimproved value is being objected to, and whose unimproved value requires adjusting – we, where possible, make these coordination type adjustments effective for the following year. This we have done. Generally there is a reluctance by rate payers to discuss coordination with specific neighbouring properties if they believe their neighbours will have their value increased retrospectively as a result of their query and discussions with us."
19 The sense in that approach is self evident. Mr Marsh's response is that that policy could be maintained by the valuation of his lot
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- maintaining its relativity with the valuation or Lot 505 until the revised valuation of Lot 505 is applied. In other words, he submits that it is fair and just that the relativity of the value between Lots 504 and 505 be maintained at all times.
20 In our view, fairness, justice or equity does not require that Mr and Mrs Marsh receive the benefit of the apparently erroneous undervaluation of Lot 505. So far as can be ascertained from the evidence, the value attributed to Lot 504 has been arrived at by the consistent application of the valuation methods applied to other rural lands within the locality. To allow Lot 504 to benefit from the apparent error in the valuation of Lot 505 would have the effect of producing an inconsistency between Lot 504 and other rural lots in the locality. The fact that an inconsistency exists between Lot 505 and other rural lots in the locality is not a reason to create further inconsistencies. That is so notwithstanding that Lot 505 has obvious similarities to Lot 504 and might be considered to be the most comparable property to it. The valuation process involves, however, comparison with more than simply one other piece of land or transaction in relation to that land.
21 We are mindful of the submissions made concerning the effect of cosmetic improvements to each of Lot 504 and Lot 505, and the timing of those improvements. However, in the absence of any detailed challenge to valuation methodology, it is not at all apparent what part, if any, the cosmetic changes to the lots played in the valuation process. In our view, that issue does not provide a basis for departing from the proposition that the valuation of Lot 504, as determined by the Valuer General on objection, is not a fair valuation.
22 In all the circumstances, we are of the view that the applicants have not demonstrated a basis for setting aside the determination of the Valuer General following the objection, and the valuation should be confirmed.
Orders
1. The application is dismissed.
2. The valuation of Lot 504 on deposited plan 25033 at $701 000 effective from 30 June 2006 is confirmed.
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- I certify that this and the preceding [22] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE J CHANEY, ACTING PRESIDENT
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