YOUNG and VALUER GENERAL

[2009] WASAT 228

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   DEVELOPMENT & RESOURCES

ACT: LAND TAX ASSESSMENT ACT 2002 (WA)

CITATION:   YOUNG and VALUER GENERAL [2009] WASAT 228

MEMBER:   MS J HAWKINS (MEMBER)

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   16 NOVEMBER 2009

FILE NO/S:   DR 400 of 2009

BETWEEN:   BRETT YOUNG

Applicant

AND

VALUER GENERAL
Respondent

Catchwords:

Valuation of land - Coastal residential property - Methodology of valuation - Use of comparable sales evidence

Legislation:

Land Tax Act 2002 (WA), s 4, s 5
Land Tax Assessment Act 2002 (WA)
State Administrative Tribunal Act 2004 (WA), s 27(2)
Valuation of Land Act 1978 (WA), s 4, s 4(1)

Result:

Dismissed

Category:    B

Representation:

Counsel:

Applicant:     Self-represented

Respondent:     Mr M Palandri (Representative)

Solicitors:

Applicant:     Self-represented

Respondent:     Valuer General's Office

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

Brzezinski and Office of the Valuer General [2008] WASAT 166

Duffy v The Minister for Planning [2003] WASCA 294

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1Mr Young objected to the determination of the unimproved value of his property in Cottesloe.  The Valuer General valued the unimproved value as at 1 August 2007 at $2,050,000.

2The applicant chose not to obtain any expert valuation evidence.  The Valuer General relied on a report prepared by a valuer and scrutinised by two other valuers from the Valuer General's Office.

3The matter turns on its own facts.

4Due to the lack of evidence, including expert evidence, the Tribunal did not accept the submissions raised by the applicant.  The Tribunal considered that the valuation made by the Valuer General had been correctly performed and therefore the decision on value was affirmed.  The application to review was dismissed.

Background and Issue

5Mr Young is the registered owner of No 16 (Lot 35) Margaret Street, Cottesloe, described in Certificate of Title Volume 70, Folio 197A (16 Margaret Street).  16 Margaret Street has a house upon it which Mr Young maintains has been vacant since 2004 due to it having poor wiring, being subject to white ants and having a leaking roof.  It is currently used by Mr Young for office storage.

6This is an application for review of an objection to the valuation of the unimproved value of 16 Margaret Street made by the Valuer General on 28 July 2009 for the purposes of land tax assessment pursuant to the Valuation of Land Act 1978 (WA) (VL Act) (valuation). The Valuer General had originally assessed the unimproved value of the land at $2,390,000. Following an objection lodged by Mr Young, by letter dated 11 May 2009, the valuation of the unimproved value of 16 Margaret Street was reduced to $2,050,000. Mr Young has objected to the reduced valuation of $2,050,000 and seeks a review of that decision.

7The matter was the subject of a directions hearing on 30 October 2009 at which time Senior Member Parry ordered that the matter be listed before me for mediation on 6 November 2009.  It was also ordered that in the event that agreement was not reached at mediation, the parties were to advise whether they consented to my deciding the matter.

8The matter did not resolve at mediation held on 6 November 2009 and both parties advised that they were agreeable that I make a determination on the documents.

9The documentation filed by the parties is as follows:

•The Valuer General's bundle of documents entitled 'Initial Papers' filed 14 October 2009;

•The Valuer General's bundle of documents entitled 'More and Better Particulars' filed 14 October 2009; and

•Mr Young's bundle of documents entitled 'Applicants Submissions' filed 5 November 2009;

10By this review proceeding my task is to decide if the valuation made by the Valuer General is correct and preferable: see s 27(2) State Administrative Tribunal Act 2004 (WA).

Relevant Legislation

11As stated above, the valuation is made for the purposes of imposing land tax. Land tax is imposed according to the unimproved value of land: see s 5 of the Land Tax Act 2002 (WA) (LT Act).

12The glossary in the Land Tax Assessment Act 2002 (WA) (LTA Act) applies to the LT Act: see s 4 of the LT Act.

13In the LTA Act, 'unimproved value', in relation to land, has the same meaning as in the VL Act.

14There is a long definition of unimproved value in s 4(1) of the VL Act, but in this matter only para (a) of that definition applies, which states:

unimproved value means-

(a)in relation to any land situate within a townsite … the site value;

…

15There is no dispute here that the land falls within the meaning given to townsite under the VL Act.

16Site value is defined in the VL Act as follows:

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 …

17The term 'improvements' is also defined by s 4 of the VL Act to mean:

… 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 extraction of minerals or petroleum;

Valuation methodology: general principles

18In the decision of Duffy v The Minister for Planning [2003] WASCA 294, Justice McLure made observations at [22] ­ [33], concerning valuation principles which 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.

•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.

Contentions and Findings

19In this case, the Valuer General has provided a report on objection to valuation of 16 Margaret Street (Valuer General's report).  The report is signed by three people: Mr Francis, a valuer; Mr Beins, a district valuer; and Mr Woods, a valuation manager with the Office of the Valuer General.

20The date of valuation is confirmed as being 1 August 2007.

21The Valuer General's report refers to the relevant zoning and town planning of the land, details of the locality, access and services, site details and improvements to the land.

22The Valuer General's report states that 16 Margaret Street is situated 200 metres from North Cottesloe Beach and has a dual frontage at both Margaret Street, Cottesloe and Ozone Parade, Cottesloe.  It is 491 square metres in size, with the site rising gradually from Margaret Street to the highest point at Ozone Parade.  Mr Francis considers that due to the sloping nature of the site, 16 Margaret Street offers the potential to obtain sweeping ocean views from the second storey of any building placed upon the land.

23Mr Francis has also included details of comparable sales as follows:

Ref	Address	Sale Detail	2008 UV	Land Area	Description	Comment/Comparability
1	7 Margaret Street, Cottesloe (52P2689)	$2,100,000 1/8/2007	$1,430,000	402 [square metres]	1935 2 storey WB & 1, 3 bed, 1 bath, kitchen, dining and family room.  Car parking comprises a single attached carport - the site has very restricted 1st floor ocean glimpses & improvements are in only fair condition.	Smaller lot size and inferior location being below road grade level.  Overall inferior to subject property.  (depreciated value of the improvements are estimated to have an approx. value of $200000). Sale at relevant date.

Ref	Address	Sale Detail	2008 UV	Land Area	Description	Comment/Comparability
2	36 Margaret Street Cottesloe (51P691)	$2,660,000 11/10/2007	$1,550,000	425 [square metres]	1981 (yr eff 1895) B & T, 5 bed, 2 bath, lounge, kitchen, dining & family room.  Car parking comprises a double garage under main roof.  Improvements currently undergoing major additions/ alterations (garage retained & remainder of improvements demolished - new home under construction	Smaller lot size than subject, narrower frontage, inferior location, adjoining block of flats.  Overall inferior.  Although on the same side of the road and in close proximity.  The views are very restricted due to the rise of the land on the opposite side of Margaret Street.  The imps on the land opposite severely block views from this sale property.  Therefore inferior to the subject property (depreciated value of the improvements are estimated to have an approx. value of $200000 to $300000)
3	3 Torrens Court, Cottesloe (5D8506)	$2,175,000 26/4/2007	$1,840,000	479 [square metres]	1965 B & ASB, 2 bed, 1 bath, lounge, kitchen, dining room & sleep out, together with below ground pool.  Car parking comprises a single attached carport - improvements are in fair condition no views	Slightly smaller lot size, inferior location no ocean views.  Overall inferior.  (depreciated value of the improvements are estimated to have an approx. value of $100000) Sale prior to relevant date.  If assume 2% pcm for market movement FMV at relevant date = say $2308000
4	4 Torrens Court, Cottesloe (2D8506)	$2,350,000 20/5/2007	$1,840,000	412 [square metres]	1945 (yr eff 1965) B & T, 2 bed, 1 bath property demolished in July 2008 and now vacant land.  New home under construction with 2nd storey very restricted ocean glimpses only.	Smaller lot size, inferior location.  Overall inferior. Sale prior to relevant date.  If assume 2% pcm for market movement FMV at relevant date = say $2445000

24Unfortunately, Mr Young has not provided any expert valuation evidence.

25In his letter of objection to the Valuer General dated 11 May 2009, Mr Young refers to a number of properties sold in Margaret Street, Cottesloe as follows:

Dec 06	1 Margaret St Cottesloe	House good condition	$1.7m
Dec 08	1 Margaret St Cottesloe	Same condition	$1.6m
Aug 06	3 Margaret St Cottesloe	Above average house	$1.7m
Aug 07	7 Margaret St Cottesloe	Above average house	$2.1m

26As previously stated, the relevant time for the valuation of 16 Margaret Street is 1 August 2007.  The only comparable sale provided by Mr Young for 2007 is 7 Margaret Street, Cottesloe.  As such, all of the other sales information falls well outside the relevant time frame.  Further, the detail provided in respect to those sales is extremely limited and not assessed by an expert valuer.  Accordingly, details of the sales referred to by Mr Young in 2006 and 2008 of 1 and 3 Margaret Street, Cottesloe are given no weight.

27Mr Francis did have regard to 7 Margaret Street, Cottesloe and 36 Margaret Street, Cottesloe as relevant comparable sales, along with sales in a nearby street, Torrens Court, Cottesloe.  He identified several key differences between those properties and 16 Margaret Street, as follows:

•7 Margaret Street, Cottesloe is 402 square metres, whereas 16 Margaret Street, Cottesloe is 491 square metres.

•He also noted that the potential for ocean views from 7 Margaret Street, Cottesloe were very restricted.

•He considered the property to be in an inferior location as it is below road grade level.

•In respect to the comparator of 36 Margaret Street, Mr Francis has identified it being a smaller lot size, 425 square metres, and being in an inferior location because the contour of the land opposite severely blocks ocean views from 36 Margaret Street.

•In respect to the properties in Torrens Court, Cottesloe, Mr Francis notes the smaller lot sizes and the inferior locations, offering no ocean views.

28Although, Mr Young does not take issue that outlook and aspect of a site are factors that can be taken into account, he does object to the weight given by Mr Francis to the ocean view of 16 Margaret Street.  Mr Young refers to a statement in Mr Francis' report where he refers to the views of 16 Margaret Street as 'blocked or restricted by houses opposite in Margaret Street'.

29That statement is, however, taken out of context.  Mr Francis goes on to state the following in respect to the potential for ocean views of 16 Margaret Street, Cottesloe:

… The property has very good ocean views at the eastern boundary being Ozone Parade, however these views dissipate further down towards the western boundary being Margaret Street where the ocean views are blocked or restricted by the houses opposite.

The land drops by about 7 metres from Ozone parade [sic] to Margaret street [sic] based on contour information.  The reason the views are very good from the subject property is because the land continues to drop away in a westerly direction resulting in land on the opposite side of Margaret Street, being below road level.

The sloping nature of the subject site may have been considered a detrimental issue[,] however this slope offers the opportunity or potential to build a new architect style building to obtain the best possible views from a ground floor with sweeping views to the ocean from the second floor similar to adjoining properties. …

30By those comments, Mr Francis clearly acknowledges that the current ocean views from 16 Margaret Street, and the potential for ocean views from a second storey, are significant factors to be taken into account in assessing the unimproved value.

31A further argument raised by Mr Young is that a willing buyer would discount the value paid for 16 Margaret Street, to take into account the potential to have ocean views built out by properties on the western side of Margaret Street.  However, he offers no evidence, expert or otherwise, to support that submission.  In contrast, Mr Francis has explained that a property on the western side of Margaret Street, such as 7 Margaret Street, is located below the road grade level.  Further, the bundle of documents filed by Mr Young includes a photograph of 16 Margaret Street taken at ground level from approximately the middle of the site and from behind the existing house on 16 Margaret Street.  That photograph shows the upward sloping nature of 16 Margaret Street and clearly shows the ocean views possible at ground level at approximately the middle of the site. 

32Finally, Mr Young suggests that the assignment of values for improvements to 7 Margaret Street and 36 Margaret Street are under­valued.  Again, however, he has provided no evidence, expert or otherwise, to support that assertion.

33As a result, I am satisfied in the circumstances, that the Valuer General's valuation has been made according to the principles outlined earlier in these reasons.  A clear and satisfactory explanation has been given as to the comparability of the sales information referred to in arriving at the valuation assessment.  By reference to location, lot size, information concerning improvements upon the lots at the date of sale and the potential for ocean views from these sites, Mr Francis has identified the differences between the comparators referred to in the table above and 16 Margaret Street.  The significant factor in this case relates to the ocean views and potential for ocean views.  The degree of difference in location and ocean views is recognised by valuers to have a significant difference on valuation: see Brzezinski and Office of the Valuer General [2008] WASAT 166 at [39].

34I am satisfied, therefore, that the Value General has established the case supporting the valuation assessment under review and that Mr Young has been unable to establish a basis to interfere with the valuation..

35Accordingly, I consider the decision of the Valuer General should be affirmed and the application dismissed.

Orders

1.The application for review is dismissed.

2.The decision under review is affirmed.

I certify that this and the preceding [35] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS J HAWKINS, MEMBER