SPANJICH and VALUER GENERAL
[2009] WASAT 204
•20 OCTOBER 2009
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: DEVELOPMENT & RESOURCES
ACT: VALUATION OF LAND ACT 1978 (WA)
CITATION: SPANJICH and VALUER GENERAL [2009] WASAT 204
MEMBER: MR P McNAB (MEMBER)
MR D LIGGINS (SENIOR SESSIONAL MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 20 OCTOBER 2009
FILE NO/S: DR 406 of 2008
BETWEEN: IVAN SPANJICH
Applicant
AND
VALUER GENERAL
Respondent
Catchwords:
Valuation of land - Unimproved value - Two vacant 'Special Rural' lots in close proximity - Lots subject to poultry farm buffer zone - Related caveats affecting land - Potential Aboriginal heritage and flood issues - Tentative potential zoning changes - Whether unimproved value affected by any of these restrictions - Significant variation of expert opinion - Tribunal varying valuation for one of the lots because of detriment factors - Application for costs refused
Legislation:
Heritage of Western Australia Act 1990 (WA)
Metropolitan Region Scheme
Shire of Kalamunda Local Planning Scheme No 3
State Administrative Tribunal Act 2004 (WA), s 87(1)
Transfer of Land Act 1893 (WA), s 70A
Valuation of Land 1978 (WA), s 33
Result:
Review successful in part
Category: B
Representation:
Counsel:
Applicant: Mr J Steenhof
Respondent: Mr M Palandri (Representative)
Solicitors:
Applicant: Cornerstone Legal
Respondent: Valuer General's Office
Case(s) referred to in decision(s):
Big Country Australia Pty Ltd and Shire of SerpentineJarrahdale [2006] WASAT 10
Robertson and Valuer General [2007] WASAT 213
Tipperary Developments Pty Ltd and ValuerGeneral [2006] WASAT 215
Weld Club Trustees and Valuer General [2007] WASAT 256
Wines and The Valuer General [2005] WASAT 263
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
This was a review of the valuation, as at 1 August 2006, of the unimproved value of two lots of 'Special Rural' land in the Shire of Kalamunda. The two valuers in the case held significant differences of opinion as to the value of each of the lots.
Central to their differences of opinion were the extent of the detriment arising out of a poultry buffer zone connected to a broiler farm situated on an adjoining property; the associated caveats registered by the Shire on both titles; and a flood plain and an associated Aboriginal heritage constraint applicable to Yule Brook, a waterway extending across the rear of both properties.
The Tribunal agreed that those factors materially affected the smaller of the lots but that the Valuer General's valuation of the larger lot was fair and reasonable in the circumstances.
The Tribunal therefore varied the unimproved value of the smaller of the lots but otherwise affirmed the decision under review.
A costs application was also sought on the basis that the Valuer General had acted unnecessarily 'defensively' and had neglected to adequately factor in the constraints on the land referred to. The application was refused on the basis that the applicant had only been partly successful in its application for review. In any event, there was in the Tribunal's view nothing exceptional or unreasonable in regard to the general conduct of the respondent and its officers warranting an adverse costs order.
Introduction
These proceedings are a review under s 33 of the Valuation of Land Act 1978 (WA) (VL Act) of the Valuer General's determination of the unimproved value as at 1 August 2006 of two lots of land owned by Mr Ivan Spanjich (applicant).
On 1 September 2008, a delegate of the Valuer General (respondent) disallowed a 2007 objection made by the applicant in respect of the following unimproved land valuations:
PROPERTY: Lots 85 and 87 on Diagram 89452
UNIMPROVED VALUE: 2007 (Lot 85): $500,000
2007 (Lot 87): $550,000
DATE OF VALUATION: 1 August 2006
The subject land
Lot 85 and Lot 87 (subject land) are located on Coldwell Road in the Shire of Kalamunda (Shire) and are both zoned 'Special Rural' under the Shire of Kalamunda Local Planning Scheme No 3 (LPS 3) and the Metropolitan Region Scheme. Lot 87 has corner frontage to Welshpool Road. Further relevant planning material - to the extent that it was provided - is referred to below.
Lot 87 is 1.4222 hectares and Lot 85 is 1.0095 hectares in size. According to the respondent, the lots 'are both located approximately 12 kilometres south east of Perth in the fast emerging suburb of Wattle Grove'.
As will emerge, both lots are affected to some degree by the existence of a nearby poultry operation (a chicken farm) and an associated buffer zone.
Respondent's position
The respondent's delegate, so far as is material, determined as follows:
The objection which you lodged against the Unimproved Values of $500,000 and $550,000 for the [subject land] has been investigated.
Unimproved Values assigned to land must reflect the general level of value prevailing in the market at the Date of Valuation as determined by the Valuer General. The Date of Valuation for all values currently in force in the [relevant] valuation district is 1 August 2006.
…
The Unimproved Value determined is supported by sales evidence at the Date of Valuation, being 1 August 2006, and correctly co-ordinated with comparable properties in the area.
…
The Unimproved Value is considered to be both co-ordinated with adjoining properties and supported by sales evidence.
The supporting material annexed to the disallowance contains the following observations:
Property Description: Lots 87 & 85 - Vacant land, flat, and cleared of large vegetations [sic]. Sparsely scattered small bushes are situated around the property. Lot 87 is an irregular shaped triangular plot with double frontages, 161.91 metres fronting onto Welshpool Rd and 42.18 metres onto Coldwell Rd. This property is situated at the corner of Welshpool Rd & Coldwell Rd. Lot 85 is rectangular in shape and has a 68.5 metre frontage with a depth of 147.12 metres. Both properties are located approximately 70 metres from each other.
…
Report: The owner of the properties objects to the Unimproved values [UV] of both lots. The subject properties and comparables in the immediate locality of Wattle Grove have been inspected. No additional details or information to substantiate the reduction of values have been provided by the owner to support his demand in lowering the UV. Having considered the appropriate sales evidences and market conditions, the subject UV are determined to be fair, reasonable and coordinated with values in the vicinity…
Mr M Palandri, for the respondent, said in his opening (T: 15-16, 27.05.09):
… I'd like to set the scene about when these valuations were made. They were made as part of the revaluation in August 2006 in what is a wellrecognised heated market. The land we're dealing with is good land and only 15 minutes from the central business district via the Polly Farmer Freeway. It's zoned special rural and it also appeals equally to investors in this area because of conjecture and information relating to the potential for future industrial rezoning and possibly a relocation of the shire boundaries … The land in question was subdivided in, I think, 1995 and approved with building envelope[s] as part of the condition of approval of that subdivision. The building envelopes provide sufficient area to build a residence comparable to any of the other lots in there that are zoned special rural and also in that area. It would only affect an area for the houses which is quite a considerable area exceeding the size of most houses in that location. Investors are quite prominent in this area, including the owner.
The owner has chosen to follow an argument of poor coordination and also a buffer of surrounding a chicken farm. In relation to those particular aspects, we feel that in that market there was no consideration of these matters. They weren't enough to impact on a valuation which may have been rounded by any amount which would perhaps defer for those type of detriments …
On the effect of the nearby poultry operation, Mr Palandri said (T: 1920, 27.05.09):
…We also have produced two sales within another buffer chicken zone, within the same locality, a much larger operation which does operate 24 hours a day, 365 days a year, two sales, one within the buffer [zone] and one without. Both show the value of [$]600,000 for the land.
…
The other aspect of the buffer zones which we recognise in the state planning [policy] documents is that they encourage the local governments to apply the buffer zone policies to the actual chicken farms. With respect to the properties that are affected, they allude to negotiated planning solutions and ways of compensating anybody who is within that buffer zone.
[The Valuer General does] allow only in very severe situations, like I think the one that [the Tribunal raised, such as] the Sinagra area, where the actual buffer zone impacts on the planning and development of the adjoining sites, the residential land. In that particular instance, the land required a deferment of 10 years for the operations to come under pressure to move and release the value of the land. So we usually make careful inquiry or take note of the effect on property values.
This and other locations within the Gosnells area, there's never been a demonstrated effect of the buffer zones and the coordination is exactly as it has been for the last 20 years. There have been no other complaints on the values on this property since the subdivision in 1985 [sic]. We believe that much of the contention is around the land tax which is being paid by the owner, and as the argument initially concerned around the rate per square metre of land tax that he had to pay was unfair in relation to larger lots, which are at a lower rate per square metre.
Specifically, on the effect of the possibility of nearby rezoning to an industrial area (see above, in the first part of his opening), Mr Palandri said that, in any event, valuations 'would probably remain the same' (T: 21, 27.05.09).
Applicant's position
In his opening, Mr Steenhof for the applicant said (T: 23-24, 27.05.09):
The two grounds we have are that the valuation itself is incorrect; the second ground is there is a lack of coordination. The fundamental differences between the applicant and the valuer general on the valuation come down to a number of things, one of them being the poultry buffer zone and the effect that it has on the applicant's property. It's interesting to note that in the initial material, that poultry buffer zone or its existence is not ever referred to in the valuer general's expert report and the future industrial potential of comparable properties is also not referred to at all. …
[The other issue is] what weight should be given to the future potential industrial rezoning for properties in the [neighbouring] Shire of Gosnells but not for properties within the Shire of Kalamunda, where the subject lots are located. So the applicant's contention is, his property has no future rezoning potential, the comparison properties do. His property has a poultry buffer zone over it which is the subject of a caveat, the other properties do not.
The applicant's expert valuer, Mr Brian Miles, describes the locality and surrounding development in his written opinion, as follows:
[The] [s]urrounding land use is predominantly rural lifestyle uses with some rural uses including a large poultry broiler farm and a large horse riding school. Expanding residential development is located immediately north of Welshpool Road and opposite Lot 87.
Mr Miles claimed that both properties were detrimentally affected by the poultry buffer zone connected to the broiler farm situated on an adjoining property, the associated caveats registered by the Shire of Kalamunda on both titles, and a flood plain and an associated Aboriginal heritage constraint applicable to Yule Brook, a waterway extending across the rear of both properties.
Mr Miles said that the coordination of land values by the respondent did not include any relevant consideration of these factors.
In summary, Mr Miles assessed three alternative estimates of the unimproved values, as at 1 August 2006, as follows:
1.Unimproved value derived from comparable sales, less a 15% factor representing total detriment arising from the constraints identified above:
Lot 85: $380,000
Lot 87: $410,000.
2.Comparable UV valuations derived from residential neighbouring properties less the respondent's 'conservatism' factor of 92.5%, combined with the 15% detriment reduction:
Lot 85: $350,000
Lot 87: $380,000.
3.Comparable UV valuations with rural neighbouring properties:
Lot 85: $242,280
Lot 87: $341,328.
The 'conservatism' discount factor referred to above by Mr Miles is explained by these exchanges with the Tribunal (T: 80-83, 27.05.09):
LIGGINS, MR: … As I understand it, when you arrive at a value of a property there was or does there still remain a certain percentage deduction factor?
SOONG, MR [witness for the Valuer General]: Yes.
LIGGINS, MR: Last time I was involved there was - whatever the figure was, it was actually computed to the actual rate or tax notice at 92.5[%] of the value. Is that still appropriate?
SOONG, MR: Yes. That still applies.
…
PALANDRI, MR: That figure isn't a mandatory figure. It's actually the level of regulation that's required on the regulator for all the valuations, and our international standards have to show that the median valued price they share across the whole area has to be at least that.
…
LIGGINS, MR: It's a sort of solatium is it? Just allows for out of pocket or is it just a sort of a across the board decision that stops objections, or --- …
SOONG, MR: Just to allow other detriments that we may have overlooked, and also to give a - based on the sales as a variation in the - in sales [sic].
Finally, we note that Mr Miles has had over 30 years experience as a valuer.
Coordination of land values
The reference in the extract above from the supporting material annexed to the disallowance to 'coordinated with values in the vicinity', is explained by the respondent's representative Mr Palandri, as follows (T: 121, 27.05.09):
PALANDRI, MR: Coordination arises from the sales of properties within a revaluation at the [relevant] date. So as an example, there are five sales in an area. The five sales are looked at and an unimproved value decided upon for those five properties, directly analysed from the sale.
McNAB, MR: Not averaged?
PALANDRI, MR: No, not averaged. The coordination aspect is for all of the lots that don't have sales on them, you must adjust up and down, coordinate up and down, from the evidence of those lots, from their size, other detriments like inundation in this area, anything else that might be a detriment to property has to be allowed off that evidence that's demonstrated by the sales. That's coordination. So it's how you apply the values to all of the other lots from the evidence and the unimproved values we would put on those lots that have sold.
The issue of the respondent's efforts to 'coordinate' nearby properties has been the subject of the following observations made in another valuation matter in this Tribunal (Weld Club Trustees and Valuer General [2007] WASAT 256 at [88]):
As explained at some length in the reasons for decision in AMP Life Ltd and Valuer General [[2007] WASAT 257], the Tribunal shares this concern [about aspects of 'coordination']. While the Tribunal appreciates the need for coordination of unimproved values of other nearby properties with the subject land that the Valuer General habitually undertakes, especially for the purpose of 'bulk valuations' in helping to set rates annually in the metropolitan area and beyond, it is obvious that if the exercise in coordination is not correctly carried out, it may perpetuate an error in the method of determining market value from one property to another, while still demonstrating a properly coordinated outcome. In other words, the [particular methodology adopted by the Valuer General] may be useful in the CBD valuation context [there under review], but only if the sales evidence that underpins it is disclosed and supports that rate.
In any event, as we understand his evidence, Mr Miles' view was that there was a lack of coordination of unimproved valuations for other properties on both Coldwell Road and as to nearby 3 hectares to 4 hectares properties.
If necessary, the Tribunal will return to this issue in more detail below.
Referral to the Tribunal
On 2 October 2008, the applicant's solicitors, being dissatisfied with the decision of the delegate, requested the respondent to refer the matter to this Tribunal for a review. On 21 October 2008, the respondent referred the matter to the Tribunal by the provision of a file of relevant papers, including the request for a review.
The original grounds of objection to the valuation, dated 15 November 2007, included the following:
The Unimproved Value[s] [are] too high, and therefore unfair, as the valuation is not a reflection of the true value of the properties. The properties do not have any other potential besides that of rural use, and the valuation ought to reflect that. …
[The respondent ought] to take the area as a whole and ascrib[ing] that value [as determined by the respondent] to these small rural properties is unjust, but also does not follow valuation principles.
Subsequently, this position was refined by Mr Steenhof to suggest that the valuations were not fair, just, equitable or correct either 'in their own right' or 'in comparison with other valuations under the [VL Act]'.
Issue to be determined
The principal issue for consideration in this review is whether the correct and preferable decision to be reached in relation to ascertaining the unimproved value (as defined by the VL Act), as to both of the lots and in the light of the expert valuation evidence, is as has been determined by the respondent.
If not, then the Tribunal will consider determining the unimproved value for itself, exercising the respondent's powers under the VL Act in light of that expert valuation material before us. Depending upon the circumstances, the matter might also be capable of remitter to the respondent for reassessment.
The applicant has now, in its written closing submissions, also sought costs from the respondent. Much of the argument about costs follows from the respondent's alleged failure to recognise the poultry buffer zone, and the respondent's allegedly 'defensive' attitude to the review.
The application for costs is a matter that we will deal with below.
The statutory framework
The general statutory context of the review is set out in cases such as Robertson and Valuer General [2007] WASAT 213 at [10] to [15], and Wines and The Valuer General [2005] WASAT 263 (Wines) at [15] to [19]. It is therefore unnecessary to reproduce that material here, except to set out some key definitions found in the VL Act, as follows:
•'Unimproved value' means 'in relation to any land situated within a townsite [which is the case here] … the site value'.
•The 'site value' of land 'means the capital amount that an estate of fee simple in the land might reasonably be expected to realize upon sale assuming that any improvements to the land, other than merged improvements, had not been made'.
•'Improvements' in relation to land 'means the value of all works actually effected to land, whether above or below the surface, and includes fixtures, but does not include … machinery, whether fixed to the land or not'.
•'Land' means 'lands, tenements and hereditaments, and any improvements to land, and includes any interest in land'.
•'Merged improvements' means 'any works in the nature of draining, filling, excavation, grading or levelling of the land, retaining walls or other structures or works for that purpose, the removal of rocks, stone or soil, and the clearing of timber, scrub or other vegetation'.
In his first witness statement dated 17 October 2008, Mr Albert SV Soong (together with Mr Richard Ronchi, Acting Chief Valuer Metropolitan), stated the general principles to be applied as follows:
Within [the] statutory definitions [under the VL Act], Market Value is determined in accordance with the Australian Property Institute and the International Assets Valuation Standards Committee as:
'… the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms' length transactions after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.'
This statement of principle is common ground in this review. It is generally consistent with the passages from the authorities reproduced in Wines at [21] to [25]. Those authorities also set out the general approach to valuation methodology.
We record that Mr Soong was the respondent's only witness; he has had four years experience as a valuer.
The history of the proceeding
Following the referral, and after various directions hearings and an attempted mediation, the matter was eventually set down for a hearing in late May 2009. At the end of that hearing it became apparent that, amongst other things, much more coordinated and complete expert evidence would be needed, and the matter was adjourned until early July 2009 for a further hearing to enable this to be done. Indeed, Mr Steenhof correctly noted that (T: 29, 27.05.09):
The valuers have come together and prepared a joint expert statement … I think even a cursory examination of that shows that the two experts don't agree on very much and further reading shows that reports seem not to have focused in any systematic way on the actual points of differences between the experts but seems to have degenerated into a point-scoring battle …
The Tribunal's orders of 27 May 2009 included the following requirements:
1.The parties shall arrange that, within 21 days, the Tribunal shall receive a replacement joint experts' report or statement on mutually agreed, representative or selected properties relevant to the each subject lot, addressing in turn:
(a)comparative sales data and opinions; and
(b)the relativities between determined or analysed unimproved values.
2.The applicant shall, as far as is practicable, file and serve a statement of issues, facts and contentions within 21 days.
3.The respondent shall file and serve a statement of issues, facts and contentions in reply within a further 14 days.
…
After that additional material was prepared and filed, the parties jointly requested that the matter be determined upon the documents; the Tribunal has agreed to this course.
Aspects of the planning or regulatory framework
Before turning to the evidence, it is convenient to first note several matters that both the experts and the Tribunal have had regard to in respect of the particular planning controls that are applicable to the subject land (that is, with respect to permissible land uses and any restrictions on those uses).
On 17 June 1998, a notification under s 70A of the Transfer of Land Act 1893 (WA) was registered in respect of neighbouring Lot 86 in relation to the potential land use conflicts arising out of the operations of a nearby poultry farm (on Brook Road). This instrument replaced a previous caveat arising out of a deed between the Shire and the applicant covering the subject land. Importantly, the caveats continue with respect to the subject land. This material appears to reflect the restrictions on development arising from a Special Control Area established under LPS 3, read with a State planning policy (Statement of Planning Policy No 4.3 'Poultry Farms Policy').
According to its owner, the nearby poultry farm (Foxwood Farm) continues to function as a 'broiler chicken farm operation which operates in continuous [eight] weeks cycles throughout the year'.
In short, these various controls limit building envelopes and otherwise notionally create a buffer of at least, it appears, 200 metres from the poultry farm. In fact, a 300 metre 'Poultry Farm Buffer' appears on the LPS 3 district scheme map; that larger buffer zone affects nearly all of the subject land, with a significant impact on Lot 85.
Whatever their precise dimensions and limitations, we understand that it is now agreed between the parties that such restrictions that flow from the existence of the farm should be factored into or at least acknowledged with respect to any valuation.
However, the respondent's view is that by reason of the Shire's classification of the operation as a 'barn' operation; and because it does not actually operate 24 hours a day, 365 days a year; and because of nearby sales (one in the buffer zone, No 113 Victoria Road; one outside, No 67 Victoria Road) which 'show no change in analysed land value[s]', the Tribunal would be, in effect, entitled to give these restrictions little weight in ascertaining unimproved value.
No expert planning evidence on this point was tendered by either party.
With respect, generally speaking we do not agree with the respondent's position. As a matter of basic valuation practice, the poultry farm, the notional buffer and the deed and caveat would all relevantly influence the hypothetical purchaser, by potentially diminishing the unimproved value of the property from what it would otherwise be. See also this Tribunal's planning case: Big Country Australia Pty Ltd and Shire of SerpentineJarrahdale [2006] WASAT 10, on the adverse amenity affects of a broiler operation.
The extent of any reduction, however, remains to be seen. We will return to this central issue further below.
As we have seen, both parties, generally speaking, have largely downplayed any material effect of any nascent rezonings of either the subject land or nearby land with respect to industrial potential.
Finally, before turning to the experts' evidence regarding specific properties and sales or other evidence, we turn to note the parties' respective views concerning two other interrelated matters: a potential Yule Brook Aboriginal heritage restriction, and the '1 in 10 year' flood plain constraint issues, such as they are. Yule Brook potentially affects the rear boundaries of both properties.
The joint evidence of the two valuers as to the Aboriginal heritage issue was as follows (T: 54, 27.05.09):
McNAB, MR: So what's your evidence? That at this stage it's of minimal impact or as at 2006 it was of minimal impact.
SOONG, MR: Minimal impact, yes.
McNAB, MR: Mr Miles?
MILES, MR: I believe it has some effect by virtue of the fact that it is adjoining, particular to [Lot] 85 and it is an unknown circumstance necessarily. It may go wider, as yet defined, but at the time of our … [valuation] it would have been some effect, but not significant.
A similar joint position seems to have emerged regarding any detriment or other effect of any potential flooding: see T: 4950; 55, 27.05.09.
However, Mr Miles estimated that these restrictions might lead to an approximately 5% reduction in valuation: T: 55, 27.05.09. Later, at T: 62, 27.05.09, he combined these restrictions with the effect of the poultry farm buffer to estimate a '10 to 15 per cent [reductive] effect'. This is reflected in the first of his valuations set out above.
We note that it was not suggested that the Aboriginal heritage issues, such as they were, fall into the same category as those relating to the listing of a place under the Register of Heritage Places compiled under the Heritage of Western Australia Act 1990 (WA), which is a restriction to be disregarded in UV valuations: see, Tipperary Developments Pty Ltd and ValuerGeneral [2006] WASAT 215.
Properties considered by the valuation experts
Both parties' valuers have undertaken, first separately and then together, significant research into land values in the area. For example, in his written valuation of 13 May 2009, Mr Miles, who was engaged by the applicant, considered some 10 properties in Kenwick and Wattle Grove for the purposes of obtaining comparative 2006 sales figures, and 17 nearby properties in Kenwick and Wattle Grove in relation to comparable unimproved valuation amounts.
The respective valuers for the two parties explained the basis of their conclusions contained in their respective formal reports at the initial hearing on 27 May 2009. As has been noted, it was apparent that there was very little middle ground in respect of properties that they both considered directly comparable.
As a result, a further joint statement as to their opinions on the relevant sales evidence and unimproved value comparisons was necessary.
That joint statement set out the sales evidence, referring to properties zoned both 'Rural' and 'Special Rural', and properties both improved and unimproved, in Wattle Grove, Kenwick and Maida Vale. However, the experts' opinions remained at significant variance.
For example, No 35 Coldwell Road, Kenwick, a general rural zoned property with house, car port and shed on 1.2799 hectares sold for $825,000 in June 2006. Mr Miles considered that the 1994 four bedroom, three bathroom residence with outbuildings had a value of $233,860 reflecting a land value of $590,000 and that the property was slightly superior to the subject lots.
The respondent's valuer, Mr Soong, considered that the improvements had a value of $219,684 reflecting a land value of $605,316. He then allowed a location factor of 10% plus and an adjustment of time factor of 11.2% concluding with a value of $740,000.
Number 16 Courtney Place, Wattle Grove, an unimproved special rural lot of 1.0165 hectares and selling for $500,000 was analysed by both valuers with a variation in value of 12%.
Number 122 Victoria Road, Wattle Grove, a 'Special Rural' lot of 1.0873 square metres, again with improvements, was analysed by both valuers. The respondent's valuer, Mr Soong, arrived at a UV value of $430,000 and the applicant's valuer, Mr Miles, at $687,000; a significant variation of opinions.
The UV of No 19 Fontano Road, Wattle Grove, a 1.5165 hectares 'Rural' lot with residential improvements was analysed at $899,000 by Mr Soong, and $650,000 by Mr Miles.
The respondent's valuer considered that all 15 properties in the joint statement of UV comparisons were inferior to the two subject lots.
We observe that it is a difficult exercise to assess property values when expert valuers do not include superior sales evidence and the analysed improved sales to arrive at UV values, which then differ by as much as $80,000 to $250,000.
Conclusions on the subject land
In our view, the detriment factors discussed above, including caveats on the title in respect of the chicken farm; the Yule Brook Aboriginal heritage 'restraint'; and the '1 in 10 year' flood plain, seem to be the reasons for such a wide diversity of opinion from the experts in respect of the two lots under review. One additional, but apparently lesser factor, is the future potential of industrial zoning within the adjacent City of Gosnells regarding particular properties located in Coldwell Street, Kenwick.
We have already indicated above that, generally speaking, we do not agree with the respondent's position on the poultry farm, the associated buffer, and the deed and caveat which we felt 'would all relevantly influence the hypothetical purchaser, by potentially diminishing the unimproved value of the property from what it would otherwise be'.
In our opinion, the combined effect of the caveats on both titles and associated arrangements relating to the buffer zone for the poultry farm; the Yule Brook heritage restraint and the '1 in 10 year' flood plain directly affects the value of Lot 85, and to a lesser extent, Lot 87.
Thus, to the extent that there is a conflict between the experts as regards these constraints, we prefer, as to Lot 85, the evidence of Mr Miles, taking into account his experience and his consideration of these detrimental factors adversely affecting UV.
In short, it is our view that residential values are more susceptible to problems from poultry farms than industrial properties and the potential of future rezoning from 'Special Rural' to 'Industrial' is more likely to occur - if it occurs at all - with respect to (and to favour) Lot 87 which fronts Welshpool Road, a four lane major arterial road with heavy traffic.
The UV value of $500,000 for Lot 85 assessed by the respondent is, in our view, excessive and does not adequately consider the detriment effects of not one but three constraints on the development of this property to its highest and best use in the foreseeable future.
Therefore, the UV figure of, in effect, $ 447058 derived from sales and proffered by the applicant in respect of Lot 85, less a 15% detriment factor in the circumstances is appropriate. This would mean that the UV is to be assessed at $380,000.
Lot 87 is only 68 metres from Lot 85 but, importantly, only a small rear corner portion of the land is relevantly affected by the constraints that we have identified. Allowing for the positive factors of a corner location with a 162 metre frontage to Welshpool Road and a site area in excess of 1.42 hectares, the respondent's valuation at $550,000 is, in our opinion, fair and reasonable.
In fact, an analysis of other sales of properties fronting Welshpool Road, in addition to the one property referred to in the joint statement, might suggest a higher UV value. However, the respondent has not sought to vary this amount and we see no reason to disturb the original valuation.
Where de novo, fair UV values have been determined in respect of specific land with reasonable confidence using the material available derived from comparable sales assessed by, as here, a specialist valuation tribunal, it is unnecessary to then specifically address issues such as alleged errors in or errors said to be caused by coordination, or for that matter whether the previous UV values were in fact 'fair, just, equitable or correct' either in their own right, or in comparison with other valuations under the VL Act. Of course, to the extent that the Tribunal's UV values are different from those originally determined by the respondent, the new values are now to be regarded as the 'correct' values.
Costs
As has been foreshadowed, the applicant has sought costs from the respondent. Lengthy submissions were made on this point in the applicant's counsel's written final address. The respondent has declined to respond on the question of costs.
The relevant principles for costs are set out in Hardy, M (ed) State Administrative Tribunal (WA): Law, Practice and Procedure (2008) at [22669] and following (page 80 to page 89). The learned authors write, at [22669] (emphasis added):
The approach taken by the Tribunal to the award of costs in its review jurisdiction is that there must be some exceptional reason for ordering that one party must pay the costs of another. Usually, an exceptional reason will be in the nature of the matters referred to in s 87(4) [of the State Administrative Tribunal Act 2004 (WA)] or that one party has conducted itself unreasonably in some respect so that the other party has been put to unnecessary expense. If there is no such unreasonable conduct, costs will not generally be awarded.
In this matter, the applicant has only been partly successful in its application for review. In any event, there is in our view nothing exceptional or unreasonable (as that expression emerges from the authorities analysed immediately above) in regard to the general conduct of the respondent and its officers warranting an adverse costs order. Generally speaking, the unrepentant defence of one's professional opinion, in the context of the respondent's overall valuation practice, would not ordinarily attract a costs order in reviews of this type in this jurisdiction, even if that opinion were not eventually sustained. Here, it could not be said that there were either no, or wholly irrational grounds, for the opinion so formed.
There is nothing in our view as regards the respondent's conduct which could be said to displace the ordinary presumption under s 87(1) of the State Administrative Tribunal Act 2004 (WA) that each party is to bear their own costs.
For these reasons we have refused the costs application.
Orders of the Tribunal
For the reasons given above, the Tribunal allows the review in part and makes the following orders:
1.The application for review is, in part, allowed.
2.So much of the decision under review with respect to determining the unimproved value of Lot 85 on Diagram 89452 as at the relevant date is varied by substituting a value of $380,000 in place of the value determined by the respondent.
3.Otherwise, with respect to determining the unimproved value of Lot 87 on Diagram 89452 at the relevant date, the decision of the respondent is affirmed.
4.The application for costs is refused.
I certify that this and the preceding [82] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR P McNAB, MEMBER
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