SCOLARO and VALUER GENERAL - [2011] WASAT 53

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: DEVELOPMENT & RESOURCES

ACT: VALUATION OF LAND ACT 1978 (WA)

CITATION: SCOLARO and VALUER GENERAL [2011] WASAT 53

MEMBER: MR D R PARRY (SENIOR MEMBER)

HEARD: DETERMINED ON THE DOCUMENTS

DELIVERED : 31 MARCH 2011

FILE NO/S: DR 377 of 2010

BETWEEN: ROBERT SCOLARO
Applicant
AND
VALUER GENERAL
Respondent

Catchwords:

Valuation of land - Gross rental value - Assessed value - Property with ocean views - Comparable sales method - Whether sales of properties with inferior views are comparable - Whether sales subsequent to valuation date are relevant - Whether actual sale of subject land three months after valuation date is relevant

Legislation:

City of Geraldton-Greenough Town Planning Scheme No 5
State Administrative Tribunal Act 2004 (WA), s 46(1)
Valuation of Land Act 1978 (WA), s 4(1), s 18, s 33
Valuation of Land Regulations 1979 (WA), reg 3

Result:

Gross rental value of $14,750 as at 1 August 2007 confirmed for Lot 51 on Plan 17176 (30 Barrett Drive, Wandina) and Lot 639 on Plan 49351 (27 Flavio Crescent, Wandina)

Category: B

Representation:

Counsel:

Applicant: Self-represented
Respondent: Mr M Palandri (Public Sector Employee)

Solicitors:

Applicant: N/A
Respondent: N/A

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

Hamilton and Valuer General [2010] WASAT 5
John Bridge Ltd (in liq) v Commonwealth (1951) 11 The Valuer 375
Kelly v Western Australian Planning Commission [2006] WASC 208
Leichhardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

Mr Robert Scolaro challenged the Valuer General's determinations of gross rental value as at 1 August 2007 in relation to two properties at Wandina to the south of Geraldton. Both properties have excellent ocean views. The Valuer General determined the gross rental value of each property at $14,750 as at the valuation date. Mr Scolaro contended that the gross rental value of one property was $12,400 and that the gross rental value of the other property was $13,100 as at the valuation date.
The Tribunal found that the comparable sales evidence supported the Valuer General's valuations. The Tribunal relied on three comparable sales, two suggested by the Valuer General and one suggested by Mr Scolaro. Other sales identified by Mr Scolaro were not comparable, as three of the properties have significantly inferior views and one has an inferior view in comparison to the properties being valued. The Tribunal determined that two sales subsequent to the valuation date, including the sale of one of the subject properties within about three months of the valuation date, were relevant comparable sales.
The Valuer General's determinations of gross rental value were confirmed.

Introduction

Mr Robert Scolaro is the owner of Lot 51 on Plan 17176 known as No 30 Barrett Drive, Wandina (30 Barrett Drive) and Lot 639 on Plan 49351 known as No 27 Flavio Crescent, Wandina (27 Flavio Crescent). Both 30 Barrett Drive and 27 Flavio Crescent are vacant lots located within the City of GeraldtonGreenough, approximately 4 kilometres and 5.5 kilometres, respectively, to the south of the Geraldton city centre. Both properties are zoned Residential with a residential density coding of R20 under the City of GeraldtonGreenough Town Planning Scheme No 5.
30 Barrett Drive is rectangular in shape with a frontage of 20 metres, a depth of 40 metres and an area of 800 square metres. This property is level with the road for approximately 8 metres from the front boundary. The remainder of the property falls steeply to the rear boundary. Because of the topography, panoramic ocean views are available from the property without the risk of being built out.
27 Flavio Crescent is rectangular in shape with a frontage of 20.5 metres, a depth of 38 metres and an area of 779 square metres. This property is level with the road and retained on the rear boundary with a 1.5 metre high limestone wall. This property also has excellent ocean views. Although residential development is likely to occur to the west, the views from 27 Flavio Crescent are unlikely to be materially affected by development because the rear part of the property is elevated compared to the level of the adjoining property and because of the natural fall in the land to the west of the property.
Pursuant to s 33 of the Valuation of Land Act 1978 (WA) (VL Act), Mr Scolaro gave notice to the Valuer General requiring the Valuer General to refer valuations of gross rental value of $14,750 as at 1 August 2007 in relation to each of the properties and unimproved value as at 1 August 2008 of $270,000 in relation to 30 Barrett Drive and $250,000 in relation to 27 Flavio Crescent to the Tribunal for a review. The Valuer General had initially assessed the gross rental value as at 1 August 2007 of 30 Barrett Drive at $18,750 and of 27 Flavio Crescent at $17,500, and had initially assessed the unimproved value as at 1 August 2008 of 30 Barrett Drive at $335,000 and of 27 Flavio Crescent at $295,000. In response to Mr Scolaro's objections to these valuations, the Valuer General reduced the valuations of gross rental value as at 1 August 2007 of 30 Barrett Drive from $18,750 to $14,750 and of 27 Flavio Crescent from $17,500 to $14,750, and reduced the valuations of unimproved value as at 1 August 2008 of 30 Barrett Drive from $325,000 to $270,000 and of 27 Flavio Crescent from $295,000 to $250,000. Nevertheless, Mr Scolaro was dissatisfied with the Valuer General's decisions on his objections and required the referral of the valuations to the Tribunal for a review. Mr Scolaro subsequently withdrew the application for review in relation to the determinations of unimproved value as at 1 August 2008.
Section 18 of the VL Act requires the Valuer General to determine or cause to be determined the 'gross rental value' with respect to rateable land. Where the gross annual rental of land cannot reasonably be determined such as in the present case where there is no rental market for vacant development sites s 4(1) of the VL Act states that 'the gross rental value shall be the assessed value'. The term 'assessed value' is defined in s 4(1) of the VL Act to mean 'such percentage of the capital value of the land as may from time to time be prescribed … '. The term 'capital value' is defined in s 4(1) of the VL Act to mean 'the capital amount which an estate of fee simple in the land might reasonably be expected to realise upon sale … '. The prescribed percentage for the purpose of the definition of 'assessed value' as at 1 August 2007 was 5%: reg 3 of the Valuation of Land Regulations 1979 (WA).

Review of valuation

In Hamilton and Valuer General [2010] WASAT 5, the Tribunal summarised the general principles in relation to valuation methodology at [18] as follows:
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.
The Valuer General presented valuation expert evidence from Mr Sam Scuderi, a qualified and experienced land valuer. Mr Scuderi applied the comparable sales method to assess market value of the subject properties as at 1 August 2007. Mr Scuderi said, correctly, that '[t]he best method of valuation is direct comparison of like with like'. Mr Scuderi referred to the sales of five properties in the locality in relation to each of 30 Barrett Drive and 27 Flavio Crescent and analysed each of these sales. Mr Scuderi expressed the opinion that there are two property sales that are 'near comparable' in relation to 30 Barrett Drive, namely, the sale of 27 Flavio Crescent to Mr Scolaro in November 2007 for $315,000 (reflecting a gross rental value of $15,750) and the sale of No 2 Highland Loop, Wandina (2 Highland Loop), which has an area of 717 square metres, for $295,000 in January 2008 (reflecting a gross rental value of $14,750). Mr Scuderi considered that there is one property sale that is 'near comparable' in relation to 27 Flavio Crescent, namely, the sale of 2 Highland Loop. Having regard to the sales evidence and applying the valuer's 'art', Mr Scuderi considered that the gross rental value of $14,750 determined by the Valuer General in relation to each of 30 Barrett Drive and 27 Flavio Crescent was 'fair and reasonable as at the date of valuation'.
Mr Scolaro is not a qualified land valuer. Mr Scolaro selected five land sales in the locality of the site between 30 April 2007 and 19 June 2007 which he considered 'the most comparable to my properties'. The sales selected by Mr Scolaro were as follows:
•No 24 Bellimos Drive, Wandina (24 Bellimos Drive) 813 square metres sold for $202,000 on 1 May 2007 (reflecting a gross rental value $10,100);
•No 19 Columbus Boulevard, Wandina (19 Columbus Boulevard) 700 square metres sold for $200,000 on 1 June 2007 (reflecting a gross rental value $10,000);
•No 8 Ti Tree Street, Wandina (8 Ti Tree Street) 765 square metres sold for $215,000 on 19 June 2007 (reflecting a gross rental value $10,750);
•No 7 Viewcrest Drive, Wandina (7 Viewcrest Drive) 826 square metres - sold for $260,000 on 19 June 2007 (reflecting a gross rental value $13,000); and
•No 10 Harbour Ridge Drive, Wandina (10 Harbour Ridge Drive) 715 square metres sold for $285,000 on 30 April 2007 (reflecting a gross rental value $14,250).
From these five property sales, Mr Scolaro derived gross rental values as at 1 August 2007 of $12,400 for 30 Barrett Drive and $13,100 for 27 Flavio Crescent.
However, 24 Bellimos Drive, 19 Columbus Boulevard and 8 Ti Tree Street are significantly inferior in terms of views in comparison to both 30 Barrett Drive and 27 Flavio Crescent. This is because, whereas 30 Barrett Drive and 27 Flavio Crescent are located at or near the top of the escarpment, 24 Bellimos Drive, 19 Columbus Boulevard and 8 Ti Tree Street are located at or near the bottom of the escarpment. Mr Scolaro conceded that the view from 24 Bellimos Drive and 19 Columbus Boulevard are not as good as 30 Barrett Drive. Having regard to the photographs in evidence, the Tribunal also finds that the views from these properties are significantly inferior to the view from 27 Flavio Crescent (even once the land to the west is developed). While 8 Ti Tree Drive is somewhat elevated, the view is still significantly inferior to the view available from 30 Barrett Drive and 27 Flavio Crescent. As Mr Scuderi said, 24 Bellimos Drive, 19 Columbus Boulevard and 8 Ti Tree Street have 'only partial ocean glimpses' and '[t]he sale amounts reflect the location'. The view available from 7 Viewcrest Drive is a generally side view which is likely to be diminished by future residential development. This view is inferior to the views available from 30 Barrett Drive and 27 Flavio Crescent.
In Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409, Hope JA said, at 435, that:
Whether the differences between land a sale of which is to be relied upon and the land to be valued are so great that the land the subject of the sale cannot be regarded as comparable is a question of fact and degree. The differences may be so great that a court may be constrained to hold that the land is in no sense comparable, and that the adjustments which have to be made are so great that the sale can provide no evidence of the value to be determined, and no basis upon which that value can be assessed.
Plainly, a key attribute of each of 30 Barrett Drive and 27 Flavio Crescent is the excellent ocean views available. This would materially affect their market value. The Tribunal therefore finds that the first four sales relied on by Mr Scolaro cannot be regarded as comparable and do not provide evidence of the value to be determined.
The only substantially comparable sale referred to by Mr Scolaro is 10 Harbour Ridge Drive. This block has similar ocean views to each of 30 Barrett Drive and 27 Flavio Crescent taking into account the likely effect of residential development to the west of 27 Flavio Crescent. The land area of 10 Harbour Ridge Drive is less than the land area of each of 30 Barrett Drive and 27 Flavio Crescent. The sale of 10 Harbour Ridge Drive, applied to the larger sites in question in this review, results in a capital value of approximately $315,000 for 30 Barrett Drive and approximately $310,000 for 27 Flavio Crescent. However, whereas 10 Harbour Ridge Drive is a flat block, 30 Barrett Drive is sloping beyond the initial 8 metres from the street and it is therefore appropriate to reduce the capital value of 30 Barrett Drive to take into account this difference. The sale of 10 Harbour Ridge Drive therefore supports a gross rental value of at least $14,750, which is 5% of a capital value of $295,000, in relation to each of the subject properties.
Mr Scolaro questioned the Valuer General's reliance on sales that occurred subsequent to 1 August 2007 and on the sale of one of the subject properties, 27 Flavio Crescent, for $315,000 in November 2007. However, as Webb J held in the High Court of Australia in John Bridge Ltd (in liq) v Commonwealth (1951) 11 The Valuer 375 at 377:
[E]vidence of prices paid for comparable lands, not only before but after the critical date is admissible, the weight of the evidence varying with the distance in time of the comparable sale from the critical date. Prices or future sales, not too remote in time, might well be within the range of forecast at the critical date, not being prices obtained during a period of unexpected prosperity or depression.
Furthermore, in Kelly v Western Australian Planning Commission [2006] WASC 208, Simmonds J said at [393]:
It is indeed the case that sales subsequent to the valuation date may be used as comparable sales: John Bridge (supra) at 377, High Court, per Webb J; Commonwealth v Arklay (1952) 87 CLR 159, at 170, per Dixon CJ, Williams and Kitto JJ. This is subject to allowance, as a matter of the weight to be given to such sales, for any indications that their prices have been affected by events which at the valuation date were matters as to which there was uncertainty: see Housing Commission of NSW v Falconer [1981] 1 NSWLR 547, at 576, per Mahoney JA.
The key subsequent sale of 2 Highland Loop in January 2008 was 'not too remote in time' and was not at a time of 'unexpected prosperity or depression'. The price of this property does not appear to have been 'affected by events which at the valuation date were matters as to which there was uncertainty'. This sale is therefore relevant and properly taken into account by Mr Scuderi.
In Leichhardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409, Hope JA said at 434:
Theoretically a comparable sale may be of the very land to be valued, as where, for example, a contract for its sale was entered into on the very day upon which it was to be valued. This would be a most unusual situation, but often evidence is available of sales of very similar land close in point of time to the date of valuation.
In this case, the sale of 27 Flavio Crescent is not simply a theoretical possibility, but a fact. While it did not occur on 1 August 2007, it occurred within about three months of this date. Mr Scolaro did not present any evidence that his purchase of 27 Flavio Crescent was other than at arm's length. The Tribunal accepts Mr Scuderi's evidence that this sale 'is a good indicator of land value despite being slightly after the Date of Valuation 1 August 2007'.
The Tribunal accepts the evidence of Mr Scuderi that the gross rental value of $14,750 determined by the Valuer General in relation to each of 30 Barrett Drive and 27 Flavio Crescent was 'fair and reasonable as at the date of valuation', because of Mr Scuderi's qualifications and experience and because his evidence is supported by three comparable sales, namely, 10 Harbour Ridge Drive, 27 Flavio Crescent and 2 Highland Loop.

Conclusion

The comparable sales evidence supports the determination of gross rental value in relation to each of 30 Barrett Drive and 27 Flavio Crescent of at least the value determined by the Valuer General, namely, $14,750. The application for review should, therefore, be dismissed.

Orders

The Tribunal makes the following orders:
1.Pursuant to s 46(1) of the State Administrative Tribunal Act 2004 (WA), the applicant has leave to withdraw the application for review in relation to the determination by the respondent of the unimproved value as at 1 August 2008 of Lot 51 on Plan 17176 (30 Barrett Drive, Wandina) at $270,000 and of Lot 639 on Plan 49351 (27 Flavio Crescent, Wandina) at $250,000 and the application for review in relation to those valuations is hereby withdrawn.
2.The application for review in relation to the determination by the respondent of the gross rental value as at 1 August 2007 of Lot 51 on Plan 17176 (30 Barrett Drive, Wandina) at $14,750 and Lot 639 on Plan 49351 (27 Flavio Crescent, Wandina) at $14,750 is dismissed.
3.The determinations of gross rental value as at 1 August 2007 of $14,750 in relation to Lot 51 on Plan 17176 (30 Barrett Drive, Wandina) and Lot 639 on Plan 49351 (27 Flavio Crescent, Wandina) are confirmed.

I certify that this and the preceding [24] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR D R PARRY, SENIOR MEMBER