NELSON SANDER and REPATRIATION COMMISSION
[2012] AATA 502
•31 July 2012
[2012] AATA 502
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/4581
Re
NELSON SANDER
APPLICANT
And
REPATRIATION COMMISSION
RESPONDENT
DECISION
Tribunal Senior Member C R Walsh
Date 31 July 2012 Place Perth Decision Summary
The Tribunal sets aside the decision of the Repatriation Commission, dated 11 September 2011, and substitutes it with the decision that, for the purpose of assessing Mr Sander’s service pension, Mr Sander’s property at 13 Devon Street, Woodbridge, Western Australia is to be valued according to the Australian Valuation Office’s most recent valuation of the Property, being $325,000 (at 29 June 2012).
...(sgd) C R Walsh.............................................
Senior Member C R Walsh
Catchwords
Veterans’ entitlements – service pension – property of applicant an “asset” for the purposes of the “assets test” – dispute regarding Australian Valuation Office’s valuation of the applicant’s property - decision under review set aside and substituted
Legislation
Veterans’ Entitlement Act 1986 – section 5L - section 216 - Module F of Schedule 6
Cases
Nil
Secondary Materials
Nil
REASONS FOR DECISION
Senior Member C R Walsh
31 July 2012
INTRODUCTION
Mr Sander seeks a review of a decision of a Service Pension Review Officer, a delegate of the Repatriation Commission (Commission), dated 11 September 2011, affirming an earlier decision of a delegate of the Commission (dated 6 July 2011) that valued Mr Sander’s property at 13 Devon Street, Woodbridge, Western Australia (Property) at $380,000, for the purpose of assessing his service pension under the “assets test”, with the result that Mr Sander’s service pension was reduced effective 1 July 2011.
On 18 October 2011 Mr Sander applied to the Tribunal for a review of the Commission’s decision.
It is not disputed that the Property is an “asset”, as defined in section 5L of the Veterans’ Entitlement Act 1986 (VEA) and for the purposes of the service pension “assets test” in Module F (Assets test) of Schedule 6 (Calculation of rates of service pension and income support supplement) of section 216 (Regulations) of the VEA.
What is in dispute is the valuation of the Property by the Department of Veterans’ Affairs (DVA) based on the valuation reports requested by and provided to it by the Australian Valuation Office (AVO). Mr Sander’s contention is that the current market value of the property is $300,000. In contrast, the Commission takes the view that the AVO’s most recent valuation of the Property of $325,000 (at 29 June 2012) should be applied in assessing Mr Sander’s service pension.
RELEVANT FACTS & EVIDENCE
Mr Sander has been in receipt of a service pension since 23 August 2007.
Since that date, the Property has been included by the DVA as an “asset” for the purposes of the VEA “assets test” and in assessing Mr Sander’s service pension.
The Property is owned by Mr Sander in addition to his principal place of residence.
The area of the Property is approximately 1012 square metres and it is zoned “R20” and “Residential” under the Swan Planning Scheme, broadly meaning it can be redeveloped as a duplex site.
The Property is located in Woodbridge, approximately 14 kilometres north east of the Perth CBD, in a small, old triangular subdivision, separated from the other areas of Woodbridge by the Perth to Midland railway line and by a freight railway line running to the Welshpool and Kwinana industrial areas. The Property is situated opposite a controlled flashing railway crossing on the Perth to Midland railway. This crossing is the only road accessing the triangular subdivided area in which the Property is located. The Property is surrounded by older style houses of mixed age, construction, quality, size and presentation on lots ranging in area from 400 square metres to 1012 square metres.
On 22 July 2009 Mr Sander was notified by the DVA that the Property had been re-valued from $300,000 to $350,000 with the result that his service pension had been reduced.
On 31 July 2009 Mr Sander wrote to the DVA challenging the re-valuation of the Property and the reduction of his service pension.
On 21 September 2009 Mr Sander again wrote to the DVA concerning its valuation of the Property, this time attaching a market appraisal of the Property prepared by Mr Reginald Oakes J.P. CMC (dated 22 September 2009).
Mr Oakes’ Witness Statement (dated 27 April 2012) (referred to by Mr Oakes as an “Affidavit”) provides that Mr Oakes is a Property Consultant (real estate agent) with Raine & Horne, Midland and that he has “lived and worked in the Midland area and its environs for the last forty (4) years or so.” Mr Oakes’ Witness Statement further provides, in part:
“(3)I have an intimate knowledge of real estate and property values in this area [i.e. Midland]; this encompasses the suburb of Woodbridge.
(4)As a direct result of my occupation I follow the trends of the real estate market, and have watched in interest as prices followed a downward trend during the Global Financial Crisis, and I believe they have now plateau-ed.
(5)What has taken place during this period; is that vendors who wanted to dispose of their properties, and were listed up to eighteen months or more without a sale have continued to reduce the price until such time as they have secured a sale.”
According to Mr Oakes’ appraisal of the Property (dated 22 September 2009), the Property “should be marketed at: $305,000 to $315,000 to achieve a figure of $305,000 or more.” Further, Mr Oakes stated that his appraisal of the Property took the following factors into account:
“The actual selling price of comparable properties
Estimate[d] (sic.) building construction costs
Estimated depreciation of the building
Comparable properties currently for sale in the area
Market economic trends
Special attributes that the property offers
The improvements and commodities added to the property”In his appraisal letter (dated 22 September 2009) Mr Oakes also noted that “The main dwelling, garage and fences are infested with white ants, including stumps [so] it is strongly recommended that the property be marketed as land value only.” In addition, Mr Oakes attached some information about previous sales in the area, as an indication of market trends, to his appraisal.
In his Witness Statement (dated 27 April 2012) Mr Oakes comments:
“…..in September 2009…..the dwelling was found to be very old and had been damaged by a white ant infestation at some time in the past, and would not be a viable proposition to renovate or restore.”
On 8 October 2009, the AVO conducted a valuation of the Property at the DVA’s request (submitted on 25 September 2009). AVO valuer, Mr Ron Sawyer, valued the Property at $315,000 (with a “DVA Supplied Value” of $315,000). This figure was used by the DVA in its subsequent assessment of Mr Sander’s service pension. In the “Comments” section of his valuation report, Mr Sawyer states “Review of sales in the locality confirms requirement for a reduction in assessment value.”
On 6 July 2011, as part of AVO “bulk” valuation exercise (conducted at the request of the DVA), the AVO valued the Property at $380,000, representing an increase in the value of the Property of $65,000. As a result, Mr Sander’s service pension was reduced by the Commission effective 1 July 2011.
By letter dated 22 August 2011 (which was received by the DVA on 25 August 2011), Mr Sander requested a review of the DVA’s decision (dated 6 July 2011) to increase the value of the Property (from $315,000 to $380,000) and reduce his service pension effective 1 July 2011. In support of that review request, Mr Sander attached various relevant newspaper articles.
On 9 September 2011, the AVO conducted a desk top review valuation of the Property at the DVA’s request (submitted on 30 August 2011). On this occasion, a different AVO valuer, Mr David Penny A.A.P.I. Certified Practising Valuer, valued the property at $380,000 (with a “DVA Supplied Value” of $315,000). In the “Comments” section of his valuation report, Mr Penny states “Based on review of sales evidence utilised in J1473530 it is recommended the original AVO valuation figure of $380,000 stand.”
On 11 September 2011, the Commission affirmed its earlier decision, dated 6 July 2011, that the Property be valued at $380,000 for service pension purposes. The Commission’s “Statement of Reasons” provides, in part:
“A qualified Valuer from the AVO conducted a valuation on 9 September 2011 confirming the value of the property at [Unit 13/] (sic.) 13 Devon Road West Midlands, WA 6152 at $380,000.
I am reasonably satisfied that the valuation has been carried out in a competent and professional manner by an expert Valuer, and that the above values are a fair market valuation for each of the properties. I have therefore determined that the market value of $380,000 for [Unit 13/] (sic.) 13 Devon Road West Midlands, WA 6152.”
On 11 January 2012 Mr Oakes conducted a further appraisal of the Property at the request of Mr Sander. That appraisal valued the Property at $295,000 to $300,000 and states, in part:
“Having taken into account all the above factors, I believe because of the pest problem in the main dwelling the white ant infestation in the fences the property is of land value only. The property is triangle[d] by three railway lines within 450 metres and a highway with metres with a railway crossing directly across the road of the property. The above property is expected land value of: $295,000 to 300,000.”
Mr Oakes’ appraisal also states that “There will be approximately costs of $20,000 to remove the old home.”
In this regard, Mr Oakes’ Witness Statement (dated 27 April 2012) provides:
“(7)In January 2012, I was again asked to assess the property, since my previous appraisal the white ants had been active on the property and have eaten the fence posts and railings; I once again re-affirmed my earlier assessment that the property was land value only.”
On 27 January 2012 the AVO carried out a full inspection valuation of the Property at the DVA’s request (submitted on 12 January 2012). The AVO valuer, Mr Penny, valued the Property at $350,000 (with no “DVA Supplied Value”). In the “Comments” section of his valuation report, Mr Penny states “The sales evidence supports the valuation.”
On 17 April 2012 the DVA instructed the AVO to provide a market valuation of the Property under the provisions of the DVA. On 20 July 2012, the AVO provided the DVA with a “Valuation Report”, prepared by AVO valuer, Mr Penny, in accordance with the DVA’s request (Valuation Report). The Valuation Report records the “Inspection Date” as being 23 January 2012 and the “Valuation Date” as being 31 December 2010 and 29 June 2012. In conclusion, the Valuation Report states:
“Valuation
The estimated market value of the subject property known as 13 Devon Street, Woodbridge, WA 6056 at 31 December 2010 is considered to be THREE HUNDRED AND FIFTY THOUSAND DOLLARS. ($350,000)
The estimated market value of the subject property known as 13 Devon Street Woodbridge, WA 6056, at 29 June 2012 is considered to be THREE HUNDRED AND TWENTY FIVE THOUSAND DOLLARS. ($325,000)”
In reaching that conclusion, Mr Penny considered and addressed the following in the Valuation Report:
·Mr Sander’s contentions, as set out in his “Statement of Facts” (filed in May 2012), concerning the AVO’s valuations of the Property and, in particular, Mr Sander’s assertion that the AVO’s valuation of the Property on 27 January 2012 at $350,000 was excessive;
·The state of the Perth residential property market in 2010;
·The state of the Perth residential property market in 2012;
·The approach he took in his valuation of the Property dated 31 December 2010, including an analysis of the sales of four comparable properties (each being 1012 square metres and zoned “R20” and “Residential”, like the Property, and in close proximity to the Property), comprising: (i) 35 Devon Street, Woodbridge (which sold for $530,000 on 12 May 2010); (ii) 31 Devon Street, Woodbridge (which sold for $680,000 on 12 May 2010); (iii) 46 Homesdale Road, Woodbridge (which sold for $400,000 on 22 September 2009); and (iv) 5 Quebec Road, Woodbridge (which sold for $580,000 on 5 May 2010);
·The value calculations he used for the valuation of the Property dated 31 December 2010;
·The approach he took in his valuation of the Property dated 29 June 2012, including an analysis of the sales of two comparable properties (both being 1012 square metres in and zoned “R20” and “Residential”, like the Property, and in close proximity to the Property), comprising: (i) 10 Homesdale Road, Woodbridge (which sold for $515,000 on 4 April 2012); and (ii) 6 Montreal Road, Woodbridge (which sold for $480,000 on 21 September 2011); and
·The value calculations he used for the valuation of the Property dated 29 June 2012.
Mr Penny also appeared before the Tribunal and gave evidence. His verbal evidence about his valuations of the Property reflected and confirmed the content of the Valuation Report. Importantly, Mr Penny confirmed that his valuations of the Property took into account the size and zoning of the Property, the type of dwelling located on the Property, the poor condition of the dwelling (i.e. that the home was at the “end of its economic life”), demolition costs, sales of comparable properties in the “triangle” area in which the Property is located and property market trends. Mr Penny also stated that when he conducted his full inspection valuation of the Property it was not, as suggested by Mr Sander, the first time he had been to Woodbridge and that he had previously valued other properties in the Woodbridge area.
Mr Penny’s verbal evidence regarding his qualifications and professional experience as a valuer is summarised as follows:
·In 1969 Mr Penny commenced work as a trainee valuer whilst attending Perth Technical College to study property valuation. In about 1973 he was made a Certified Practising Valuer by the Commonwealth Institute of Valuers;
·Following that, Mr Penny worked as a valuer for the Western Australian government, the Perth City Council and various private valuation firms;
·In the late 1970s Mr Penny became a residential real estate agent;
·In 1986 Mr Penny obtained a real estate agent’s licence and became the director of a real estate agent company;
·In 1990 Mr Penny started his own real estate agents’ business. He was a partner in a Ray White franchise for about 14 years;
·In 2004 Mr Penny sold his real estate agency (i.e. his Ray White franchise) and recommenced working as a valuer for a private company; and
·In 2008 Mr Penny commenced full-time employment as a valuer for the AVO and has remained employed there since.
In contrast to Mr Penny’s valuation of the Property of $325,000 (at 29 June 2012) , Mr Oakes’ Witness Statement (dated 27 April 2012) provides:
“(8)Since my 2009 valuation, this property has followed the downward price trend, and I value it at between $295,000 and $300,000, taking into consideration the cost to demolish the dwelling and clear the block ready for re-development.”
Mr Oakes did not appear before the Tribunal and give evidence regarding his qualifications, professional experience or his appraisals of the Property. What is clear from the evidence before the Tribunal is that Mr Oakes is a “Property Consultant”, currently employed at Raine & Horne, Midland, who has lived and worked in the Midland and surrounding areas for the last forty or so years: Mr Oakes’ Witness Statement (dated 27 April 2012).
MR SANDER’S CONTENTIONS
In summary, Mr Sander’s contentions concerning the valuation of his property by the DVA/AVO are as follows:
·Mr Sander questioned whether the AVO’s valuer, Mr Penny, is a “competent and professional expert valuer” with local knowledge of the Woodbridge area and whether Mr Penny in fact went to the correct location or address to conduct his valuations of the Property;
·Mr Sander argued that Mr Penny has not kept himself “fully acquainted with the movement of prices in the property market during the current Global Financial crisis and observed that prices have been going down steadily over this period”;
·Mr Sander’s view is that the appraisals of the Property by Mr Oakes are to be preferred as Mr Oakes has intimate “local knowledge” of the property in the Woodbridge area, having lived and worked in the area for almost forty years;
·The Property is not “equal to or the same value as the other properties in the vicinity” as allegedly asserted by the AVO’s valuer, Mr Penny. Rather, all of the other properties in the vicinity of the Property were built at a later date than that of the Property and were constructed using more substantial materials (i.e. either brick or stone) than the Property;
·The value of the Property has been affected (reduced) by the fact it is located in a small triangular area with limited access;
·The value of the Property has been affected (reduced) by noise pollution and light intrusion caused by surrounding train traffic. That is, according to Mr Sander:
“Since the electrification of the suburban railway, there is a train in either direction every fifteen minutes during the day, and there is ringing of the warning bells and the rattle of the boom gates opening and closing whenever a train passes through the crossing. At night there is the addition of the flashing red lights which encroach into the front rooms of the house, as well as vehicle head lights.
The rear spur line carries all freight trains coming to and leaving Western Australia. Since this was privatised and purchased by National Pacific some years ago, freight transportation has increased three-fold since, and the trains are normally there maximum allowable length of 1.3 kilometres long. As the freight line is on a bend behind the house, there is a screeching of the contact between the metal wheels and the railway line as each train negotiates its way around the curve in both directions.”·The delay in the development in the area in which the Property is located has had a detrimental effect on the value of real estate in the area. That is, according to Mr Sander, the Midland Redevelopment Authority had plans to upgrade the image of the area and increase residential tenancy within the vicinity of Midland. However, those plans did not come to fruition as the plan to build a university in the area, previously occupied by the Midland Railway Workshops, was cancelled. Further, the plan to replace the ageing Swan Districts Hospital was also put on hold;
·The value of the Property has been affected (reduced) by the “Global Financial Crisis”; and
·Based on sales of comparative properties in the area, the valuation given to the Property by the DVA/AVO is inaccurate and excessive.
In support of the above contentions, Ms Sander provided the following documentation to the Tribunal:
·maps and photographs of the Property and surrounding areas;
·relevant newspaper articles;
·details of comparative property sales in the area;
·a “Property View” from the “RP Data Property System”;
·figures released by The Bureau of Statistics;
·REIWA (Real Estate Institute of Western Australia) “Perth Quarterly Price Charts”;
·a statement from neighbour at 11 Devon Street, Woodbridge, Mr Duri Gadola (dated 6 May 2012) regarding the railway traffic and noise in the area;
·a graph indicating the increase in train traffic in the area in the period 2001- 2011;
·various correspondence between Mr Gadola and the Minister for Transport; Disability Services, the Hon. Simon O’Brien MLC, and between Mr Gadola and the Member for Midland, the Hon. Michelle Roberts MLA regarding the train traffic problems in the area; and
·a quote of $26,700, from Statewide Demolition & Recycling (dated 20 April 2012), for the demolition of the dwelling on the Property.
DECISION
Having considered all of the evidence before it, the Tribunal considers that the valuations of the Property by AVO valuer, Mr Penny, are to be preferred to the appraisals of the Property by Mr Oakes. Mr Penny is a qualified valuer with approximately 43 years’ experience in valuing and appraising residential properties (including, at some points in his career, as a real estate agent). In contrast, on the evidence before the Tribunal Mr Oakes is not a qualified valuer but, rather, a real estate agent who has lived and worked in the Midland area and its surrounds for about 40 years. There is no evidence to suggest, as suggested by Mr Sander, that Mr Penny’s valuations of the Property are excessive or inaccurate (with the exception of a few typographical errors in the Valuation Report).
Consequently, in accordance with section 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 the Tribunal sets aside the decision of the Commission, dated 11 September 2011, and substitutes it with the decision that, for the purpose of assessing Mr Sander’s service pension, the Property is to be valued according to the AVO’s most recent valuation of the Property, being $325,000 (at 29 June 2012).
35. I certify that the preceding thirty four six (34) paragraphs are a true copy of the reasons for the decision herein of Senior Member C R Walsh.
..(sgd) T Freeman............
Associate
Dated 31 July 2012
Date of hearing 25 July 2012 Applicant’s Representative Mr N Sander (Self-represented) Respondent’s Representative Mr C Ponnuthurai
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