Pavlovich and Valuer General

[2014] WASAT 125

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: VALUATION OF LAND ACT 1978 (WA)

CITATION:   PAVLOVICH and VALUER GENERAL [2014] WASAT 125

MEMBER:   MS L WARD (MEMBER)

HEARD:   11 JUNE 2014

DELIVERED          :   9 SEPTEMBER 2014

FILE NO/S:   DR 489 of 2013

BETWEEN:   RATOMIR RAY PAVLOVICH

Applicant

AND

VALUER GENERAL
Respondent

Catchwords:

Valuation of land ­ Purpose of rating ­ Gross rental value ­ Vacant rural property ­ Valuation evidence ­ Comparable properties ­ Location and subdivision potential ­ Verification of property sales ­ Date of property sales

Legislation:

City of Greater Geraldton Town Planning Scheme No 5
State Administrative Tribunal Act 2004 (WA), s 27(2)
Valuation of Land Act 1978 (WA), s4(1), s 18, s 19, s 26, s 32(1), s 33(1), s 33(2)
Valuation of Land Regulations 1979 (WA), reg 3

Result:

Application for review dismissed
Decision affirmed

Summary of Tribunal's decision:

An owner of a vacant rural property on the outskirts of Geraldton objected to the Valuer General's determinations of the gross rental value as at 1 August 2011.

The Valuer General determined the gross rental value of the property at $30,000 as at the valuation date.  The owner contended that the gross rental value of the property should not exceed $22,500 per year as at the valuation date.

Both parties provided the Tribunal with expert valuation evidence.  The Tribunal preferred the evidence given by the respondent's valuation expert.  The respondent's valuer verified all of the property sales relied upon by both parties and gave detailed evidence of the most comparable property based on location and subdivision potential.

The Valuer General's decision of 4 December 2013 was affirmed and the application for review was dismissed.

Category:    B

Representation:

Counsel:

Applicant:     Self represented

Respondent:     Mr P Edwards (Acting as Agent)

Solicitors:

Applicant:     N/A

Respondent:     N/A

Case(s) referred to in decision(s):

Edwards and Valuer General [2014] WASAT 99

McKay v Commissioner of Main Roads [No 7] [2011] WASC 223

Spencer v Commonwealth of Australia [1907] HCA 82

REASONS FOR DECISION OF THE TRIBUNAL: 

Introduction

1. These reasons for decision were delivered orally on 9 September 2014 and have been edited and citations added.

2. On 6 August 2013, Mr Ratomir Ray Pavlovich (applicant) sent an email to the Valuer General (respondent), objecting to his vacant rural property at Lot 58 Carnalea Road, Moresby (property or site), which is within the City of Greater Geraldton, being assessed as having a Gross Rental Valuation (GRV) of $30,000 as of the assessment date of 1 August 2011.

3. A GRV of $30,000 is the equivalent of an assessed value of $600 000 for the site as of 1 August 2011. This calculation is based on reg 3 of the of the Valuation of Land Regulations 1979 (WA) which applies a rate of 5% to all land, other than land which is designated for residential use.

4. The applicant submits that the assessed value should not exceed $450,000, giving him a GRV for rating purposes of $22,500.

5. The applicant identified a number of reasons for his objection to the GRV as assessed by the respondent, including, in summary:

   •The property being too small for farming (18.5 hectares);

   •Water restrictions applying to the property;

   •Subdivision restrictions applying to the property;

   •A recent Commonwealth valuation being for $400,000; and

   •The property being 'good for nothing'.

6. The respondent disallowed the applicant's objection on 4 December 2013.  The respondent's reasons for disallowing the objection included, in summary:

   •In relation to the claim that the property is too small for farming, the Valuer General responded that the property was cropped and a ground rental was being achieved.

   •In relation to the claim that water restrictions apply to the property, the Valuer General responded that the 'non­standard service agreement' with the Water Corporation was not an impediment to the land.

   •In relation to the claim that subdivision restrictions apply to the property, the Valuer General responded that Amendment No 20 to the City of Greater Geraldton Town Planning Scheme No 5 (TPS 5) proposes rezoning land near the applicant's block from Rural to Rural Residential', so clearly the land has subdivision potential.

   •In relation to the Commonwealth valuation of $400,000, the Valuer General responded that the assessment was for a different purpose, namely, asset/pension purposes.

   •In relation to the claim that the property is 'good for nothing', the Valuer General responded that the property does possess a current use and latent subdivision value.

7. Following the respondent's disallowance of the applicant's objection, at the applicant's request, the respondent referred the valuation to the Tribunal for review under s 33(2) of the Valuation of Land Act 1978 (WA) (VL Act) on 12 December 2013.

Issue for determination

1. The issue for determination by the Tribunal is:

   What is the 'gross rental value' of the property as of 1 August 2011?

2. In particular, is the valuation made by the Valuer General in its letter dated 4 December 2013 the correct and preferable decision: see s 27(2) of the State Administrative Tribunal Act 2004 (WA).

3. In order to answer the above question the Tribunal is required to decide which, if any, of the competing expert valuation opinions it should accept.  The applicant's expert valuer, Mr Stafford, submits that market value as of 1 August 2011 is $500,000, whereas the respondent's expert valuer, Mr Scuderi, considers that $600,000 is the value.

4. Before considering the evidence before the Tribunal, and the applicant's reasons for objection in detail, the Tribunal will examine:

   •The statutory background under which the GRV is required to be calculated by law, namely, under the VL Act, and then;

   •The general legal principles associated with valuations of this type, as well as

   •The procedural history of the matter in the Tribunal;  and

   •The description of the site.

   The Tribunal will then consider the applicant's objections and the available expert opinion.

Statutory background

1. The applicant has standing in the Tribunal as he is one of the persons liable to pay any rate or tax assessed in respect of the land and he is dissatisfied with the valuation dated 4 December 2013: see s 32(1) and s 33(1) of the VL Act.

2. In accordance with the provisions of the 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.

3. Section 18 of the VL Act requires the Valuer General to determine, or cause to be determined, the GRV (or the unimproved value as the case requires), with respect to rateable land.

4. Section 19 of the VL Act provides for the date at which a general valuation is to be made.

5. By reason of the Western Australian, Government Gazette (no.117 p 3037) , the Valuer General has fixed 1 August 2011 as the date on which the value of land is to be determined in this case:  see Edwards and Valuer General [2014] WASAT 99 at [27] Edwards.

6. 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[.]

7. The terms 'assessed value' and 'capital value' are both defined in s 4(1) of the VL Act to mean:

   assessed value of land means such percentage of the capital value of the land as may from time to time be prescribed either ­ 

   (a)in respect of land generally; or

   (b)in respect of a class of lands which includes the land;

   …

   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[.]

8. The definition of capital value involves an assessment of the market value of the applicant's property.

Principles of valuation evidence

1. The legal principles and case authorities in relation to valuation evidence are well established and the cases have been extensively examined by Justice Beech in McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (McKay).

2. The Tribunal notes that McKay was the subject of an appeal to the Court of Appeal.  However, the legal principles referred to by Justice Beech in McKay were not the subject of challenge;  rather, it was the application of some of those principles which was challenged (see Edwards at [36]).

3. The Tribunal has recently, and very helpfully, summarised the relevant authorities and principles in relation to assessing market value in Edwards at [36] and [37].  The Tribunal applies the authorities set out in McKay and summarised in Edwards.

4. Of particular importance to this application are the following principles as summarised in Edwards at [36] and [37]

   Value is determined by presupposing the person who is willing to give the thing that is being valued in exchange for money and another willing to give money in exchange for that being valued (Spencer v Commonwealth ofAustralia [1907] HCA 82; (1907) 5 CLR 418; Boland vYates Property Corporation Pty Limited [1999] HCA 64; (1999) 74 ALJR 209; (McKay No 7 at [144]).

   Value is determined by identifying the price of a notional bargain between a hypothetical vendor and purchaser who are prudent, well informed, but not anxious, to complete the exchange (McKay No 7 at [145]).

   …

   The value determined in the way explained above reflects market value. (McKay No 7 at [150]).

   There are a number of methods of assessing market value. …  (McKay No 7 at [152]).

   The primary method is by analysis of comparable sales (McKay No 7 at [153]).

   In determining the value of the land taken, 'the court relies on the evidence of professionally qualified valuers'.  (McKay No 7 at [163])

   The court or tribunal is not a valuation agency: (Mount Lawley) and must not take on the role of the 'third valuer' (Brewarrana; Bronzel v State Planning Authority (1979) 21 SASR 514 (Bronzel))[.]

   Valuation is an art not a science; it involves the exercise of many subjective judgments and the steps in reasoning are not always able to be articulated fully. In The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 (McKay No 7 at [165]).

5. Importantly, post valuation date events such as sales of comparable properties are not relevant to prove hindsight.  That is, such evidence is not relevant to prove the market value of the subject at an earlier time or to justify or confirm an opinion of market value made for an earlier time.

6. In Spencer v Commonwealth of Australia [1907] HCA 82, (Spencer) Isaacs J stated at page 440:

   All circumstances subsequently arising are to be ignored.  Whether the land becomes more valuable or less valuable afterwards is immaterial.  Its value is fixed by Statute as on that day… The facts existing on [the valuation date] are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain[.]

7. If a future event or possibility is in contemplation of the hypothetical Spencer parties as at the date of the valuation, such event or the effect of that event or possibility as at the date of valuation is relevant.  But the valuation must be 'ascertained in the light of the facts, including the probabilities, then existing, and without taking notice of subsequent happenings'.

8. In the Tribunal's view, while the legal principles are well established, difficulties may arise in the application of the legal principles to the facts of a particular case.

Procedural history in the Tribunal

1. The application for review was lodged in the Tribunal on 16 December 2013.  The matter was referred to mediation on 13 March and 16 April 2014.  As the matter was not resolved at mediation, a final hearing was held in the Tribunal on11 June 2014.

2. The applicant and Mr Philip Edwards as agent for the respondent both made submissions at the final hearing.

3. Two independent valuation experts gave evidence at the final hearing, namely:

   •Mr Rex Stafford, a certified practicing valuer from Opeton (Midwest) WA, was called as a witness by the applicant.  He provided a report dated 30 April 2014;  and

   •Mr Sam Scuderi, a licensed valuer for 28 years employed by the Valuer General and Landgate for 34 years and who has been involved in various categories of valuation work in Geraldton for 15 years, was called as a witness by the respondent.  He provided a valuation report dated 30 May 2014.

4. Both experts were subject to cross­examination by the other party.  Both experts were considered by the Tribunal to be independent experts who assisted the Tribunal with making the correct and preferable decision in accordance with the VL Act.

5. The Tribunal acknowledges that the task of valuation involves an inquiry about which reasonable minds may well differ widely:  see Edwards at [36] on page 14.  In this case, the valuations from the two experts differ by an amount of 20%.  Mr Stafford said in his evidence that a 20% difference in valuation is not a great deal, which the Tribunal accepts.

6. However, the Tribunal's task under the VL Act is to determine a particular valuation rather than a range of valuations.  Accordingly, the Tribunal must form a view as to which expert it prefers and the basis for that preference:  see McKay at [173].

7. The Tribunal accepted into evidence all of the documents provided by the parties, namely:

   •Bundle of documents provided by applicant (Exhibit 1);

   •Bundle of documents provided by  respondent (Exhibit 2);

   •Map ­ Geraldton & Surrounds Property Evidence (Exhibit 3); and

   •Bundle of planning documents (Exhibit 4).

8. The applicant and Mr Stafford both appeared at the final hearing via video link from the Geraldton Courthouse.

The property – site and location

1. Since 29 January 1992, the applicant has owned the site, a vacant rural property at Lot 58, Carnalea Road, Moresby within the City of Greater Geraldton.  According to the certificate of title retrieved by the respondent on 13 December 2013, the applicant is a joint tenant in a half share with Ms Nada Pavlovich, with Mr Jeremy Pavlovich owning a half share, as tenants in common of the property.

2. According to the certificate of title, the property, is on Diagram 74765.  The property is approximately 7 kilometres north­east of central Geraldton, on the eastern side of the North­West Coastal Highway.

3. Carnalea Road runs south off Chapman Valley Road.  Hill Creek Road, Moresby is a loop road which runs off Carnalea Road.

4. The property is cleared and rectangular in shape, with an area of 18.5362 hectares.

5. The topography of the land is described as undulating, sloping gradually from around the eastern boundary in a west, north and south direction.  Part of the property provides ocean glimpses in the distance, and views of the Moresby Ranges to the east.

6. Both electricity and town water, under a non-standard service agreement with the Water Corporation, are available at the property.

7. Based on the photographs available to the Tribunal, the property is fenced and was covered with stubble and had a few large round hay bales on it at the time of the photographs which were taken and provided in the documents.

Zoning

1. The property is zoned Rural under TPS 5.

2. However, the property was identified in August 2009 in the Moresby Range Management Strategy as being within a possible area for development:  see map 8, Exhibit 3.

3. The Moresby Range Management Plan dated June 2010 includes the property as part of 'Precinct 11', which is identified as comprising lots typically larger than 1 hectare:  see Figure 4.1 and Appendix 2.

4. The Moresby Range Management Plan dated June 2010 states:

   04.6 New Urban Development West of the Range

   This Section addresses how the long term future urban areas between the City and the Range Precinct, (Precincts 2, 3, 4, 5, 7, 10, 11, 13), should be designed …

   Urban development in this area will be of a more urban character than that described above … and will range from what is typically referred to as rural-residential with lots ranging between 1 and 4ha in size depending on the location.

   … For areas of lower visibility (Precincts 2, 4, 5 and 11), smaller lots of 1 ha or above should be developed[.]

5. The Greater Geraldton Structure Plan June 2011 identifies a number of development investigation areas.  The property is within 'Development Investigation Area 3 – Rural land' adjacent to Moresby Range and it will be ‘considered for future intensification'.

6. It is well established that a valuation requires an assessment of the highest and best use.  The best use assessment will include not only the present use to which the land is applied but also any more beneficial use to which it may reasonably be applied:  see McKay at [156]. Relevantly, in McKay at [158], Justice Beech stated:

   Thus if the most profitable use of the land is one not permitted by its current zoning, the concept of highest and best use requires the potential of the land to be used for that more profitable use, after necessary planning approval, to be taken into account.  It does not require or permit an assumption that the necessary planning approval will be forthcoming.  The prospects of such approval as determined on the evidence, viewed from the perspective of the hypothetical parties, will bear on the assessment of the value of that potential use.

7. In this matter, Mr Scuderi relies on the references to the property, within the above three planning documents.  The Tribunal accepts that as of 1 August 2011, the applicant's property was zoned Rural, although it had some potential for subdivision at a future time.

Applicant's case ­ consideration by the Tribunal

1. As set out above, the applicant relies on the following four types of documents to support his closing submission that the property had a market value of $450,000 as of 1 August 2011 and therefore a GRV of $22,500, namely:

2. Firstly, an Australian Valuation Office (AVO) valuation assessment report dated 22 September 2011 and obtained by the applicant under Freedom of Information (FOI) from the Australian Valuation Office giving the applicant's property a market value of $400,000.  The name and qualifications of the person making the valuation on behalf of the AVO are not known to the Tribunal and nor was the AVO valuer called at the final hearing.  Therefore, the respondent has not been able to cross-examine the AVO valuer in relation to his or her valuation.  In addition, the valuation made by the AVO is for the purpose of assessing the applicant's entitlement or otherwise to the age pension (as per the letter from Centrelink to the applicant dated 21 March 2014).  Valuations are undertaken for many different purposes and as a result, a valuation for one purpose, like rates, may not be suitable for, say, bank security purposes.  This is evident from page 1 of Mr Stafford's report.  Further Mr Scuderi submits that the four properties identified by the AVO are not comparable properties because, in brief: properties one and four are sales between related parties and therefore cannot be taken to be true market price, property two has an improvement in the form of a shed on it and property three is an improved site with a home on it and the zoning is not comparable.  Having considered all of these factors the Tribunal does not consider that the AVO valuation is relevant to these proceedings, particularly as the review requires an assessment to be made in accordance with the VL Act.

1. Secondly, the applicant relies on the market appraisals, variously dated in about mid December 2013 from four sales consultants at real estate agent offices located in Geraldton to indicate that the retrospective selling price in August 2011 was between $400,000 and $425,000.  The Tribunal is unable to attach any weight to the market appraisal evidence provided by the applicant.  This is because a 'market appraisal' is not a valuation under the VL Act.  Further the authors of the market appraisals were not called by the applicant and were not subject to cross­examination by the respondent.  Nor is there any indication that the sales consultants possess any qualifications or experience as valuers.  While the sales consultants are no doubt very familiar with property sales in Geraldton, this experience is very different to the qualifications required to be a valuer.  In terms of relevance and weight, a market appraisal from a real estate sales consultant falls well short of a sworn valuation from a qualified valuer.

2. Thirdly, the applicant relies on Mr Stafford's written report of 30 April 2014.  Mr Stafford gave evidence before the Tribunal and was cross­examined by the respondent.  Mr Stafford has worked for 38 years as a valuer and he has spent the past three years in Geraldton as a valuer.  He is a certified practising valuer.  Mr Stafford's expert opinion was that the market value of the property as of 1 August 2011 was $500,000.  Mr Stafford used the direct market comparison as the method of valuation.  Mr Stafford's report includes reference to the sale of four properties from a selection of sales transactions.  Only one of the four sales listed in the report pre-dates 1 August 2011.

3. In accordance with McKay (and as set out in Edwards at [36] and [37]), the post­valuation date sales evidence is not relevant to this proceeding.  It follows that any attempt to adjust any post­valuation date sales back to the 1 August 2011 must also fall foul of the relevance rule.  Such an adjustment is not one contemplated by the courts: see McKay at [2216].

4. The only relevant comparator property cited by Mr Stafford is at 304 Beattie Road, Waggrakine (Beattie Road property) and the sale took place on 13 September 2010 for $440,000.  The Beattie Road property is a much smaller area than the applicant's property at just 3.7 hectares.  It is similar to the applicant's property in that it has subdivision potential.  Mr Scuderi also relies on the Beattie Road property in his report.  Mr Scuderi states that the sale demonstrates the value of a vacant development lot in the area.  Mr Scuderi states that the location of the Beattie Road property is not as good as the applicant's property because it is 25 metres from North­West Coastal Highway and it does not have any views,  whereas Mr Stafford states in his report that the Beattie Road property does have partial views.  However, Mr Stafford stated in his oral evidence to the Tribunal that as a lot of blocks in Geraldton have ocean views, a block with only partial views does not add value to the block.  Both valuation experts agree that the Beattie Road property has subdivision potential and that a premium is paid for a smaller block.  Accordingly, the valuation of the applicant's property has to be adjusted, given its larger area, in order to make it comparable.  The Tribunal accepts Mr Scuderi's evidence that a rural or rural/residential property which is just 25 metres from a major road, like North­West Coast Highway, ought to be adjusted accordingly. It follows that the Tribunal does not accept Mr Stafford's opinion that the location of the Beattie Road property is superior to the applicant's property.

5. Fourthly, the Tribunal rejects the applicant's submission, which he made in his closing address that the Tribunal ought to take an average of the competing valuations in order to resolve the differences.  The Tribunal understands that, taking an average of all of the market appraisals and valuations is how the applicant arrived at his view that the market value of his property was $450,000 as of 1 August 2011.

6. However, an average of the valuations is not permitted:  see McKay at [170]. This is because an average is not supported by the valuer's evidence. In addition, it is well established that the Tribunal must not take on the role of the 'third valuer': see [163] [167] in McKay and cases cited.  Although it is permitted to make 'adjustments to value as are required by the evidence':  see McKay at [168].

The valuer general's case ­ consideration by the Tribunal

1. Like Mr Stafford, Mr Scuderi has also used the comparable sales method of valuation.  The Tribunal accepts that this is the correct valuation method in this matter.

2. A major point of difference between the valuers is that Mr Stafford stated in his report that his 'scope of work did not extend to verification of all information supplied or due diligence'.

3. In contrast Mr Scuderi has provided the underlying transfer of land documents which identify the parties to all of the transactions relied upon by the AVO, Mr Stafford and Mr Scuderi.  Mr Scuderi also provided a detailed map showing all of the properties identified by the AVO, Mr Stafford and Mr Scuderi.  The Tribunal has considered the documents provided by Mr Scuderi and relied upon by him in considering this matter.

4. Mr Scuderi has, in the Tribunal's view, identified a logical and reasoned process by which he has arrived at his valuation and which is supported by the properties identified and the underlying documentation.

5. In particular, Mr Scuderi has identified  five 'comparable' properties in Schedule A to his report.

6. Mr Scuderi also identified a schedule of  seven 1 hectare blocks all sold in Hill Creek Road Moresby, which is very close to the applicant's property, on Schedule B to his report.  Mr Scuderi stated that the purpose of identifying these sales was to indicate the stability in prices over the period of the sales, from 2010 onwards.

7. Of the five properties identified in Schedule A, three sold before 1 August 2011.  The three relevant properties are at:

   •Lot 80, Hackett Road, Waggrakine;

   •Lot 25, Geraldton, Mt Magnet Road, Deepdale; and

   •304 Beattie Road, Waggrakine (discussed above).

8. For the reasons already set out above and applying McKay, it is only the sales on or before 1 August 2011 which are relevant to the Tribunal's consideration of this particular matter.

9. Mr Scuderi considered that Lot 80, Hackett Road Waggrakine was the most comparable property to the applicant's property.  Lot 80, Hackett Road is 74 hectares, a much larger area than the applicant's property.  It sold for $2,750,000 in July 2007.  Similarly to the applicant's property, Lot 80, Hackett Road was also identified in planning documents as having subdivision potential, according to Mr Scuderi.  Lot 80, Hackett Road is also a similar distance from central Geraldton and from the coast, as the applicant's property.  Mr Scuderi adjusted the dollar amount per hectare rate of Lot 80, Hackett Road from $37,162 to $32,000/hectares in order to reflect the stronger market in 2007 and the subsequent softening to provide a fair and reasonable rate as of 1 August 2011.  Mr Stafford said in his evidence that the market was very different in 2007 compared to 1 August 2011.  However in the Tribunal's view the softening of the market between 2007 and 1 August 2011 has been considered by Mr Scuderi and the rate adjusted accordingly, as is permitted as part of the valuers 'art'.  The Tribunal accepts that Lot 80, Hackett Road is a comparable property to the applicant’s property and that the adjustment made by Mr Scuderi is appropriate in the circumstances of this case.

10. In relation to Lot 25, Geraldton, Mt Magnet Road Deepdale, the Tribunal notes that it is east of Geraldton and it was already zoned Rural Residential at the time of sale.  Accordingly its location and zoning are different to the applicant's property.  The Deepdale property sold for $1,520 078 in April 2010 and is vacant land of 30.533 hectares, giving it a rate of $49, 784 per/hectare.  The Tribunal accepts Mr Scuderi's opinion that the Deepdale property reflected market value at the time.  Contrary to Mr Stafford's evidence there was no evidence of the relevant market softening from April 2010 to 1 August 2011.

11. In addition, Mr Scuderi appeared to place some weight on the post 1 August 2011, Amendment No 20 to TPS 5 (Greenough).

12. Amendment No 20 to TPS 5 applied as of July 2013 and relates to portions of Lot 23, one portion of which abuts the applicant's property to the north, being rezoned Rural to Rural Residential and therefore permitting subdivision to 2 - 4 hectare lots.  The Tribunal understands that Mr Scuderi submits in effect that Amendment No 20 to TPS 5 confirms after the fact, the subdivision potential of the applicant's property.  In the Tribunal's view this is 'post taking evidence' which in accordance with McKay is not relevant:  see McKay at [377] onwards. This is because in valuation matters the cases emphasise that it is the date of the valuation which is the critical time, not what happens after the date of valuation.

13. The Tribunal accepts that the subdivision potential of the applicant's Rural zoned property would have been known or 'knowable' at the time of valuation:  see McKay at [377]. Therefore some adjustment is to be made for the subdivision potential 'down the track' as described by Mr Stafford, although this 'adjustment' would fall short of the adjustment made for a property which is already zoned Rural/Residential. The subdivision potential is a feature of the applicant's property and it is one of the reasons why Lot 80, Hackett Road Waggrakine is a comparable property to the applicant's property.

14. Mr Scuderi also supported his valuation based on the comparable sales method by also considering the hypothetical subdivision analysis (HSA) method as a check method of valuation.  The HSA method is recognised as being a less reliable valuation method because of the number and nature of assumptions that have to be made:  see McKay at [2229]. Mr Stafford challenged some of Mr Scuderi's assumptions in his HSA calculation and said that the figures used by Mr Scuderi were very optimistic and 'don't stack up'. For example Mr Stafford considered that a 25% return was inadequate over a four year period. In the Tribunal's view the HSA method is not a suitable check method due to the applicant's property having only subdivision potential. It was zoned Rural at the time of the valuation. The subdivision potential is just one of the variables for which a small variation will have a great impact on the result: see McKay at [2227].

15. However in the Tribunal's view the identification by Mr Scuderi of three sales of 1 hectare lots with ocean glimpses located close to the western border of the applicant's lot at consistent prices between December 2009 of $260,000 and January 2011 of $265,000 indicates that the pricing was consistent and that there was a reasonable demand for those blocks at that time.

Conclusion

1. The Tribunal is satisfied that the most comparable property is the Lot 80, Hackett Road/Waggrakine property.

2. Accordingly, the Tribunal finds that, based on all of the evidence before it, it is more probable than not that the capital value of the applicant's property as at 1 August 2011 is $600,000 based in particular upon the evidence of the sale of Lot 80 Hackett Road/Waggrakine and supported by the consistent pricing and level of demand for smaller blocks very close to the applicant’s property at the time of assessment.

3. Given the above consideration and weighing of all of the evidence before it, the Tribunal concludes that the correct and preferable decision on the evidence is that the assessed value of the applicant's property as at 1 August 2011 is $600,000, giving a GRV of $30,000.

4. Therefore, the decision of the Valuer General made on 4 December 2013 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 [76] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS L WARD, MEMBER