Tipperary Developments Pty Ltd and Valuer-General
[2006] WASAT 215
•31 JULY 2006
TIPPERARY DEVELOPMENTS PTY LTD and VALUER-GENERAL [2006] WASAT 215
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 215 | |
| VALUATION OF LAND ACT 1978 (WA) | |||
| Case No: | DR:38/2006 | 18 APRIL 2006 | |
| Coram: | JUSTICE M L BARKER (PRESIDENT) MR J JORDAN (MEMBER) MR R J PRIEST (SENIOR SESSIONAL MEMBER) | 31/07/06 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Valuation of Valuer-General correct and preferable Review application dismissed | ||
| A | |||
| PDF Version |
| Parties: | TIPPERARY DEVELOPMENTS PTY LTD VALUER-GENERAL |
Catchwords: | Valuation of land Valuation of Land Act 1978 (WA) Place listed on Register of Heritage Places under Heritage of Western Australia Act 1990 (WA) "Unimproved value" "Site value" Whether unimproved value or site value should be assessed taking into account listing on Register |
Legislation: | City of Perth City Planning Scheme No 2 Heritage of Western Australia Act 1990 (WA), s 35, s 78, s 79, s 80 Land Tax Act 2002 (WA), s (1)(a), s 4, s 5 Land Tax Assessment Act 2002 (WA) State Administrative Tribunal Act 2004 (WA), s 27(2) Valuation of Land Act 1916 (NSW), s 6A Valuation of Land Act 1978 (WA), s 4, s 4(1), s 4(1)(a), s 4(1)(b)(vii)(I), s 23, s 33 |
Case References: | Kiddle & Anor v The Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 Melwood Units Limited v Commissioner Main Roads [1979] AC 426 Property Nominees Pty Ltd v Valuer-General (2002) 31 SR(WA) 42 Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50 Toohey's Ltd v Valuer-General [1925] AC 439 Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 Commonwealth v Baume (1905) 2 CLR 405 Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 438 R V Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 |
Orders | 1. The Valuer-General's valuation is affirmed.,2. The review application is dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : VALUATION OF LAND ACT 1978 (WA) CITATION : TIPPERARY DEVELOPMENTS PTY LTD and VALUER-GENERAL [2006] WASAT 215 MEMBER : JUSTICE M L BARKER (PRESIDENT)
- MR J JORDAN (MEMBER)
MR R J PRIEST (SENIOR SESSIONAL MEMBER)
- Applicant
AND
VALUER-GENERAL
Respondent
Catchwords:
Valuation of land - Valuation of Land Act 1978 (WA) - Place listed on Register of Heritage Places under Heritage of Western Australia Act 1990 (WA) - "Unimproved value" - "Site value" - Whether unimproved value or site value should be assessed taking into account listing on Register
Legislation:
City of Perth City Planning Scheme No 2
Heritage of Western Australia Act 1990 (WA), s 35, s 78, s 79, s 80
(Page 2)
Land Tax Act 2002 (WA), s (1)(a), s 4, s 5
Land Tax Assessment Act 2002 (WA)
State Administrative Tribunal Act 2004 (WA), s 27(2)
Valuation of Land Act 1916 (NSW), s 6A
Valuation of Land Act 1978 (WA), s 4, s 4(1), s 4(1)(a), s 4(1)(b)(vii)(I), s 23, s 33
Result:
Valuation of Valuer-General correct and preferable
Review application dismissed
Category: A
Representation:
Counsel:
Applicant : Mr J Giles
Respondent : Mr NC Monahan
Solicitors:
Applicant : Solomon Brothers
Respondent : State Solicitor
Case(s) referred to in decision(s):
Kiddle & Anor v The Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316
Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111
Melwood Units Limited v Commissioner Main Roads [1979] AC 426
Property Nominees Pty Ltd v Valuer-General (2002) 31 SR(WA) 42
Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50
Toohey's Ltd v Valuer-General [1925] AC 439
Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160
Case(s) also cited:
(Page 3)
Commonwealth v Baume (1905) 2 CLR 405
Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 438
R V Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141
(Page 4)
Summary of Tribunal's decision
1 The Tribunal decided that the decision of the former Land Valuation Tribunal of Western Australia, that the assessment of the "unimproved value" of land under the Valuation of Land Act 1978 (WA) should be made without regard to the listing of a place on that land on the Register of Heritage Places compiled under the Heritage of Western Australia Act 1990 (WA), should continue to be followed in Western Australia.
Issue
2 The issue for determination in these review proceedings is whether the Valuer-General was correct in assessing the "unimproved value" of land known as Lawton House at 18 Colin Street, West Perth under the Valuation of Land Act 1978 (WA) (the VL Act) without regard to the listing of that place (or portions of it) on the Register of Heritage Places compiled under the Heritage of Western Australia Act 1990 (WA)(the Heritage Act).
3 In this regard, in issue is whether the decision of the former Land Valuation Tribunal of Western Australia in Property Nominees Pty Ltd v Valuer-General (2002) 31 SR(WA) 42 should continue to be applied by the Tribunal.
Facts
4 The parties agreed the following facts.
5 The applicant is the registered proprietor of the land known as Lawton House that was, at all relevant times, comprised in certificates of title volume 1820 folios 660, 661 and 662. The lands comprising these titles are adjacent to each other, are enclosed by a wall, are comprised of a total land area of 4259 square metres, and have the street address of 18 Colin Street, West Perth.
6 Lawton House, which is constructed on the land, contains the following buildings and improvements which are considered to have heritage significance: a two storey brick, stucco and tile roof construction villa in the Federation Free style, pavilion, garden walls and open landscape setting.
7 These buildings and improvements were listed in the Register of Heritage Places under the Heritage Actas an Interim Entry on
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- 18 May 2004. A memorial, giving notification of the listing in the Register of Heritage Places was lodged on 25 May 2004. The buildings and improvements were subsequently listed in the Register of Heritage Places as a Permanent Entry on 18 March 2005.
8 At all relevant times, Lawton House was not the subject of a heritage agreement under the Heritage Act.
9 Lawton House is within the "metropolitan region" as defined in s 4 of the VL Act and so the "unimproved value" of the land should be assessed in accordance with par (a) of the definition of "unimproved value" in s 4 of the VL Act.
10 The Valuer-General determined the "unimproved value" of Lawton House as at 1 August 2003 as $5 200 000 for the purpose of the land tax assessment for the year 1 July 2004 to 30 June 2005 (the First Valuation). In determining the "unimproved value" of Lawton House, the Valuer-General adopted a value of $1220 per square metre by taking into account sales of properties considered to be comparable to Lawton House and the unimproved values determined for other land considered to be comparable in the vicinity. In performing the First Valuation, the Valuer-General made no allowance for and took no account of the heritage listing. Consequently, in identifying properties considered to be comparable and relying on the sale price of the properties considered to be comparable the Valuer-General took into account the potential those comparable properties had for redevelopment in accordance with the provisions of the relevant town planning scheme, which is the City of Perth City Planning Scheme No.2.
11 On or about 23 September 2004, the Office of State Revenue issued the applicant with a land tax assessment for the period 1 July 2004 to 30 June 2005 for Lawton House.
12 The applicant subsequently objected to the First Valuation out of time. By facsimile of 24 December 2004 from the applicant's solicitors, the applicant lodged an objection to the First Valuation and applied for an extension of time in which to make the objection.
13 By facsimile of 27 May 2005 the Valuer-General's delegate informed the applicant's solicitors that the extension of time had not been granted but that the First Valuation would be formally reviewed.
14 By facsimile of 17 June 2005, the Valuer-General's delegate informed the applicant's solicitors that the Valuer-General had formally
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- reviewed the First Valuation and determined that the First Valuation was fair and reasonable.
15 The applicant, being dissatisfied with the outcome of the formal review, requested by facsimile dated 5 July 2005 that the Valuer-General review his decision not to extend the time the applicant had to make a valid objection. The Valuer-General reviewed his decision and subsequently granted the extension of time to make an objection to the First Valuation by letter of the Valuer-General's delegate dated 22 July 2005.
16 By facsimile of 9 September 2005, the applicant lodged an objection to the First Valuation.
17 The Valuer-General determined the "unimproved value" of the land on which Lawton House stands, as at 1 August 2004, as $5 200 000 for the purpose of the land tax assessment for the year 1 July 2005 to 30 June 2006 (the Second Valuation). The Second Valuation was made by applying the same methodology adopted to perform the First Valuation.
18 On or about 14 September 2005, the Office of State Revenue issued the applicant with a land tax assessment for the period 1 July 2005 to 30 June 2006 for Lawton House.
19 By facsimile of 20 September 2005, from the applicant's solicitors the applicant lodged an objection to the Second Valuation.
20 By letter of 17 January 2006, the Valuer-General's delegate informed the applicant's solicitors that both objections had been disallowed. The Valuer-General disallowed the objections for the reasons expressed in the letter of 17 January 2006.
21 The applicant then requested the Valuer-General to refer the valuation to the Tribunal for review under LV Act s 33.
Relevant legislation
22 Land tax is imposed "according to the unimproved value of the land": see Land Tax Act 2002 (WA) (LT Act) s 5. The glossary in the Land Tax Assessment Act 2002 (LTA Act) applies to the LT Act: see s 4 of the LTA Act.
23 In the LTA Act, "unimproved value" in relation to land has the same meaning as in the VL Act: see glossary of the LTA Act.
(Page 7)
24 Section 4(1) of the VL Act has a long definition of "unimproved value". However, it is only par (a) of the definition that is relevant in this case. That is because par (a) applies whenever land is situate within a "townsite", as defined by s 4(1). A "townsite" is defined to include all land within the "metropolitan region". The expression "metropolitan region" in turn means all lands within a number of nominated local government districts, including Perth in which district Lawton House is situated.
25 As a result, in the circumstances of these proceedings, "unimproved value" means the "site value". "Site value" is also defined by s 4(1) of the VL Act and 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 and, in the case of land that is reserved for a public purpose, assuming that the land may continue to be used for any purpose for which it is being used or could be used at the date of valuation."
26 The term "improvements" is also defined by s 4(1) of the VL Act and, 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 –
(a) machinery, whether fixed to the land or not; or
(b) any below ground works used in the extraction of minerals or petroleum."
Contentions and findings
27 In these review proceedings, the Tribunal's task is to decide if the valuation made by the Valuer-General is correct and preferable: State Administrative Tribunal Act 2004, s 27(2).
28 The first line of argument of counsel for the applicant as to why the Valuer-General's valuation is not correct, involves an appeal to "logic", that is to say, that it is illogical that an assessment of the unimproved value of land should not take into account the listing of a place on the Register of Heritage Places, where this is relevant.
(Page 8)
29 However, the issue to be determined here is one of statutory interpretation that arises by reference to the very particular expressions "unimproved value", "site value" and "improvements" as used in the VL Act.
30 While it might seem strange to some that land value can be assessed without reference to buildings and the like on land at material times, the whole basis of land tax, rating and other land related taxing statutes for many years has been the unimproved value of land. In broad terms, this requires an assessment of the value of land without regard to improvements made on it. In the long run this approach to valuation is considered fair to all concerned, because it ensures that the value of improvements does not artificially inflate – or deflate - the underlying value of the land itself.
31 So the applicant's appeal to "logic" fails.
32 The second line of argument of the applicant is that as a matter of statutory interpretation, there is nothing in the definition of "unimproved value" that requires the Valuer-General to ignore buildings on land, and so in this way the heritage status of buildings on land, if any, may be regarded. Counsel for the applicant seeks to develop this argument by reference to the definitions of "site value" and "improvements" referred to earlier.
33 Counsel for the applicant rightly observes that it is the definition of "site value" that is important in relation to the unimproved value of the land in this case. To that extent, counsel is correct to observe that in Property Nominees Pty Ltd v Valuer-General (2002) 31 SR(WA) 42, the former Land Valuation Tribunal of Western Australia (which has been replaced by this Tribunal) seems to have proceeded on the incorrect premise that the relevant definition was that referred to in par (b)(vii)(I) of s 4(1) of the VL Act, namely "the capital amount that the estate in fee simple in the land not including improvements might reasonably be expected to realise upon sale".
34 However, the Tribunal observes that the definition of "site value", which is relevant, is rather similar to the definition of "unimproved value" that the former Land Valuation Tribunal relied on. The "site value" definition deals more directly with the question of improvements, perhaps, by adding relevantly the words: "assuming that any improvements to the land, other than merged improvements, had not been made".
(Page 9)
35 In any event, counsel for the applicant said that if one were to have regard to the definition of the term "improvements", which in relation to land means "the value of all works actually effected to land …", and inserts this quoted expression in the definition of "site value" in place of the word "improvements", then the assumption that is required to be made is in respect of "the value" of improvements and not the improvements themselves. This, counsel contends, means there is no statutory requirement to ignore buildings, only their value.
36 In the Tribunal's view, to do this would involve a reasonably tortuous process of statutory interpretation. The definition of the term "improvements" in s 4(1) is no doubt a general one for use throughout the VL Act. Its simple insertion, in the manner proposed, in the definition of "site value" does not produce an entirely satisfactory grammatical outcome. The quoted words would actually need to be inserted in place of the words "any improvements" to give it the prospect of a proper grammatical meaning. If this were not done then, as a matter of grammar, following the suggested insertion, the relevant expression in the "site value" definition would be " … any value of all works actually effected to land …" "…had not been made".
37 Suffice it to say, on a sensible reading, and taking into account the fact that all the definitions provided by s 4(1) of the VL Act, including the word "improvements" are prefaced by the words, "unless the context requires otherwise", the interpretation contended for by the applicant is entirely artificial and defies the otherwise plain meaning of the words utilised in the definitions of "site value" and "unimproved value" that are found in par (b)(vii)(I) of the definition in s 4(1), referred to earlier.
38 It is plain enough that the approach to the valuation of unimproved land under the VL Act is intended to be similar to that which has traditionally been followed in this State and elsewhere in Australia, as indeed the relatively recent decision of the High Court of Australia in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 demonstrates.
39 In these circumstances, the applicant's appeal to a decision such as Kiddle & Anorv The Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316, as suggesting a different approach to valuation of unimproved value must necessarily fail.
40 In the Tribunal's view, nothing in Maurici in the High Courtsupports the applicant's contentions. Indeed Maurici confirms the
(Page 10)
- analysis adopted in Property Nominees and traditionally applied in this area of valuation.
41 In Maurici, the valuation question was how should the "unimproved value" of the appellant's land, which was a parcel of waterfront land in the exclusive Sydney suburb of Hunters Hill, be assessed in circumstances where there were very few, vacant residential sites. The Valuer-General had argued, and his view had been accepted in the New South Wales Court of Appeal, that in such circumstances a "scarcity value" could be taken into account when assessing the unimproved value.
42 In a manner similar to the VL Act, the Valuation of Land Act 1916 (NSW) required improvements on the land to be disregarded when assessing unimproved value. Section 6A of the New South Wales Act provided as follows:
"(1) The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or required by the owner or the owners' predecessor in title had not been made.
(2) Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that:
(a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates, and
(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used,
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than the land improvements, referred to in subsection (1) had not been made.
(Page 11)
- (3) Notwithstanding anything in subsection (1), in determining the land value of any land, being land in relation to which, at the date to which the valuation relates, there was a water right:
(a) the land value shall include the value of the right, and
(b) it shall be assumed that the right shall continue to apply in relation to the land."
• The first step to be taken under s 6A is to identify what is capable of being regarded as improvements, "other than land improvements".
• The second step is notionally to remove the improvements from the land.
• It is at the third point that difficulties arise. How is the land in its notionally unimproved state to be valued? The traditional, and usually unexceptional method is to seek out relatively contemporaneous sales of comparable properties between parties at arm's length, unaffected by special circumstances, such as, for example, a strong desire by a purchaser to buy an adjoining property, and to use those sales as a yardstick for evaluation of the relevant land.
44 The High Court then explained, at [17], how the method adopted by the Valuer-General suffered from a number of defects:
• It was unduly selective. It looked, on a fair reading of the valuer's evidence, effectively exclusively to four sales (including a resale) only.
• These were sales of vacant or substantially vacant land.
• They were not representative of sales in Hunters Hill. It must be so, because as both sides accept, vacant land in Hunters Hill is scarce, if not to say, very scarce.
(Page 12)
- • The approach of the Valuer-General, taken to its ultimate conclusion, would mean that if there were one only (reasonably comparable, in location, outlook and other relevant features) vacant parcel of land left in a district, the likely or actual recent sale price of that parcel would effectively set the value for each and every improved parcel of land in that district.
45 The Court went on to explain, at [18], that s 6A certainly does not dictate that such an exercise as that undertaken by the Valuer-General, be undertaken. In valuing the land, the Valuer-General, to use the language of the Privy Council in Melwood Units Limited v Commissioner Main Roads [1979] AC 426 at 432, "ignored a principle of assessment of [value]", the principle being that sales to be treated as comparable sales need to be truly comparable or to put it another way, in valuing the land the Valuer-General did not proceed rationally, in that he was unreasonably selective in ultimately confining himself to two sales of a scarce vacant land for the purposes of the comparison. A fair estimate could only be made on the basis of a fair, that is to say, a reasonably representative group of comparable sales. A group of comparable sales cannot be representative if it does not go beyond sales of scarce vacant land.
46 Counsel for the applicant suggests that Maurici supports the applicant's contention that if the Valuer-General is to undertake the traditional and usually unexceptional method of valuing notionally unimproved land by seeking out relatively contemporaneous sales of comparable properties etc, then the only comparable properties in West Perth are those which cannot be developed, in the same way that the applicant's land cannot be developed, because of their heritage listings.
47 The trouble with this contention is that it proceeds without proper reference to the primary statutory requirement of s 4 of the VL Actthat the "unimproved value" of land, being the "site value" in this case, is "the capital amount that an estate in fee simple in the land might reasonably be expected to realise upon sale assuming that any improvements to the land … had not been made". The improvements necessarily include the buildings that form part of the place that is listed on the Register of Heritage Places.
48 The Tribunal considers that the definition of "site value" requires that the improvements are to be taken not only as non-existent but as if they never had existed. In that regard, the Tribunal agrees with the submission of counsel for the Valuer-General, that it is impermissible (in the absence
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- of a statutory command to the contrary) to arrive at the unimproved value by beginning with the value of the site in its improved state and then to subtract the value of the improvements: see Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160 at 165.
49 In Fenton Nominees, the valuation question related to land on which a retail store and associated facilities had been erected. The unimproved value of that land was determined by reference to sales of comparable land that was suitable for use as a supermarket but on which buildings requiring demolition were erected, and adding the demolition cost to the sale price to arrive at the unimproved value. It is not in fact a case where the unimproved value was determined by reference to the value of land with buildings already on the land.
50 Thus the physical improvements and any value directly attributable to improvements must be excluded in the valuation of the unimproved value of the land: Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50 at 56.
51 In that regard, the Tribunal also agrees with the submission of counsel for the Valuer-General that in Toohey's Ltd v Valuer-General [1925] AC 439 at 444, the effect of a liquor licence – which could only be granted in connection with buildings – could not be taken into account in determining the unimproved value of the land. This was recognised in Fenton Nominees at 165.
52 In the Tribunal's view, the listing of Lawton House on the Register of Heritage Places under the Heritage Act is not relevant to the assessment of the unimproved value. Generally speaking, we agree with the reasons of the former Land Valuation Tribunal in Property Nominees Pty Ltd v Valuer-General in this regard.
53 The first point that should be made is that the listing of a place on the Register of Heritage Places under the Heritage Act does not necessarily freeze the use of the land. The most that can be said is that under s 78 of the Heritage Act, the future use and development of the land on which there is a listed heritage place is that its development may potentially be affected. Section 78 when read with sections 79 and 80 effects a system of development control which is designed to protect heritage, but not necessarily prevent the future development of the land. The heritage controls put in place by the Heritage Act are complementary to, and not in substitution of, other planning and development controls. In this regard, the listing of a place on the Register of Heritage Places is not a zoning or
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- land use classification, but a heritage protection device. The potential use to which land may be put - the underlying zoning provided for by planning law, remain relevant and unaffected.
54 Importantly, as the former Land Valuation Tribunal noted in Property Nominees, s 35 of the Heritage Act provides one of a number of incentives for conservation of a place listed on the Register. It enables the owner or occupier of any place that is the subject of, or is the subject of negotiations for, a heritage agreement made under the Heritage Act, to apply to the Valuer-General for a "revaluation to take into account the effect of that agreement". The Valuer-General shall regard the heritage agreement or those negotiations as rendering revaluation expedient pursuant to s 23 of the VL Act, and value or cause to be valued any land thereby affected or proposed to be affected in such a manner to reflect what is, or would become, the then current value subject to provisions of the agreement or proposed agreement as the case may require.
55 The Tribunal agrees with the conclusion of the former Land Valuation Tribunal in Property Nominees, that this section makes it clear that Parliament intended that, prior to the existence of a heritage agreement under the Heritage Act, there can be no reduction in value of land under the VL Act purely because of a listing of the land on the Register of Heritage Places.
56 This view is consistent with the whole scheme of the Heritage Act, which also includes an incentive in the form of a reduction in local government rates and taxes if an owner enters into a heritage agreement. But in the absence of such a heritage agreement no such reduction is available; otherwise the incentive would be lost and the scheme of the Heritage Act undermined.
57 For these reasons, we find that, in this case, the memorial relating merely to the listing on the Register of Heritage Places, and the listing itself, in relation to Lawton House are irrelevant to the assessment of the "unimproved value" of the relevant land in this particular case.
58 There is, therefore, no need to depart from the conclusion reached by the former Land Valuation Tribunal in Property Nominees.
Conclusion and Order
59 For the reasons given above, the Tribunal considers the valuation of the Valuer-General in respect of the applicant's land at 18 Colin Street, West Perth is the correct and preferable valuation.
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60 The Tribunal would affirm the Valuer-General's decision and dismiss the review application.
61 The Tribunal orders:
1. The Valuer-General's valuation is affirmed.
2. The review application is dismissed.
- I certify that this and the preceding [61] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE M L BARKER, PRESIDENT
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