RUNGERT and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2011] AATA 438

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 438

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/0811

GENERAL ADMINISTRATIVE DIVISION		)
Re		KENNETH RUNGERT

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Deputy President P E Hack SC

Date8 June 2011  

PlaceCairns

Decision 1.     The Tribunal sets aside the decision under review and remits the matter to the Secretary for reconsideration in accordance with a direction that as at the date of the decision under review the applicant’s land, excluding the house and curtilage, had a value of $300,000.00.

..............Signed...............

Deputy President

CATCHWORDS

SOCIAL SECURITY – assets and income – valuation of land – decision under review set aside and remitted.

REASONS FOR DECISION

8 June 2011   Deputy President P E Hack SC    

1. The applicant, Mr Kenneth Rungert, is the owner of a parcel of land situated in a hamlet called Japoonvale, some 20 odd kilometres outside Innisfail. The issue in the present proceedings is the valuation of that part of the land which is outside the house on which Mr Rungert resides and its immediate curtilage.

   2.Mr Rungert’s affairs are managed by the Public Trustee. This matter appears to have had its genesis in a referral by the Public Trustee to Centrelink indicating what certainly seems to be an erroneous view of a valuation done of the land by Mr Neil Teves an experienced local valuer.

   3.The upshot of that was that Centrelink, on the basis of a valuation performed by Mr Gerald Van Den Boogaart, Senior Valuer with the Australian Valuation Office, concluded that Mr Rungert’s assets exceeded the permissible asset limit of $649,250.00 and accordingly, on 22 July 2010, cancelled Mr Rungert’s pension. When Mr Rungert sought a review of that decision Mr Van Den Boogaart made a revised version of the valuation which decreased the overall value from his earlier opinion of $1.2 million to $970,000.00. On that basis the decision to cancel the pension was affirmed internally. The matter went to the Social Security Appeals Tribunal which on 15 February 2011 decided to affirm the decision under review.

   4.It is not necessary for present purposes to find error on the part of the Social Security Appeals Tribunal but I find it inexplicable that that Tribunal would prefer the conclusion of the Australian Valuation Office to that of Mr Teves when there was no analysis in the Australian Valuation Office report of comparable sales and no basis of the valuation evident on the face of the opinion. It is unfortunate that the matter has come this far.

   5.The question is which of the two valuation opinions I should prefer. I have no hesitation in saying that I prefer the approach by Mr Teves. Mr Teves is a valuer with vast experience and in particular vast local experience, who first valued the aggregation of land owned by Mr Rungert, either leasehold or freehold, in March 2009 at $450,000.00. His report Exhibit 2, sets out in a reasoned and logical way the manner in which he has undertaken his valuation and the sales to which he had regard. More recently in April 2011, Mr Teves has revisited that exercise, on this occasion apportioning, as the legislation requires, between the residence and its curtilage which he values at $225,000.00, and the balance of the land together with improvements which he values at $300,000.00. Again, his logic is compelling and explains in a convincing way why he reaches the figure that he does.

   6.Mr Van Den Boogaart comes from the somewhat unfortunate background of having given three opinions of the value of this land, the first at $1.2 million, the next at $970,000.00 and the last at $800,000.00. I found his explanation for those changes unconvincing given that each of them was directed to determine the market value. In his most recent report, which gives an inspection date of 10 August 2010 but appears not otherwise to be dated, Mr Van Den Boogaart determined the market value of the land outside the curtilage on the basis of valuing the 22 vacant allotments on a project return basis. That is, he determined, first, a figure that he thought allotments in that area might fetch and determined the cost of bringing the land to that quality and then calculated from that the likely cost that a purchaser buying in that manner would have to bear. That figure was a figure of $500,000.00.

   7.There is an overall logic in the approach that Mr Van Den Boogaart has taken however I think in at least two respects it is his application of the logic that is flawed.

   8.The first is, as Mr Teves points out, the sales that he has relied upon as comparable sales (which yield his final sale prices in the order of $55,000.00 to $60,000.00) are not truly comparable sales. Mr Van Den Boogaart’s schedule of sales evidence lists sales of vacant residential land within nearby townships, Mourilyn, Silkwood and such like. Those blocks are town allotments fully serviced. They have made roads, town water, septic tanks, street lights and amenities albeit those of a small country town. The allotments that Mr Rungert owns are completely un-serviced and a considerable distance out of town. In order to develop them it would be necessary for a potential vendor to at least provide a septic tank, town water would be prohibitively expensive so tank water would be required. The road would not be surfaced, it would remain as a gravel road and a potential purchaser would be required to meet the costs as well of having electricity connected.

   9.My second difficulty with Mr Van Den Boogaart’s summary of project returns is that I consider that his selling costs are significantly below that which one would expect would be incurred in selling the land. He appears to have allowed only for real estate commission. I can see no allowance having been made, for example, for the costs of marketing the land, nor of legal costs on the sale.

   10.The impression I get looking at the sales evidence put forward by Mr Teves and Mr Van Den Boogaart is that Mr Van Den Boogaart’s final sale prices are perhaps somewhat inflated. If they were inflated by $10,000.00 a lot the figure one would reach undertaking the exercise Mr Van Den Boogaart undertook accords very closely with the valuation that Mr Teves has reached.

   11.I am for that reason further comforted in accepting the evidence and the opinion of Mr Teves. In the result, I would propose to set aside the decision under review and remit the matter to the Secretary for reconsideration in accordance with a direction that as at the date of the decision under review Mr Rungert’s land, excluding the house and curtilage, had a value of $300,000.00.

   I certify that the 8 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

   Signed:         ....................Signed.........................................................
     Associate

   Date of Hearing  8 June 2011
   Date of Decision  8 June 2011
   Applicant  Self represented              
   Solicitor for the Respondent     Departmental Advocate