Valuation of land - Hobby farm semi­rural residential property - Unimproved value - Methodology of valuation - Expert evidence - Use of comparable sales evidence - Comparisons and adjustments - Words and phrases - "Merged improvements" - "Forced sale"

Valuation of Land Act 1978 (WA), s 4, s 19, s 26(4)(b), s 32, Pt IV

Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170

Cash Resources Aust Pty Ltd v Brett [1996] QSC 32

Duffy v Minister For Planning [2003] WASCA 294

Lake Karrinyup Country Club Inc v Valuer-General (unreported, Supreme Court of WA, Parker J, Library No 960515, 13 September 1996 [BC9604209]

McGeoch v Federal Commissioner of Land Tax [1929] HCA 29; (1929) 43 CLR 277

Pyramid Building Society (in liq) v Royalsville Pty Ltd [1997] ANZ Conv R 554; [BC9605216]

Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418

State Government Insurance Office (Qld) v Valuer-General (1981) QLCR 171

Tetzner v Colonial Sugar Refining Company Limited [1958] AC 50

Toohey's Ltd v Valuer-General [1925] AC 439

Collins & Ors v The Minister 6 LGR 84

1 The owner of a small farm-site in Bridgetown objected to a determination of unimproved value of his land. His estimate of the value of his land was approximately half that of the Valuer General's. He sought a review of the decision, arguing, in effect, that fundamental errors of methodology had been made by the Valuer General and its expert valuers.

2 These alleged errors concerned:

(ii) the properties compared and the adjustments made;

(iv) what constituted "merged improvements" to the land; and

(v) whether certain improvements should be excluded from valuation.

3 The Tribunal rejected all of Mr Wine's arguments, concluding that the Valuer General's expert and other evidence satisfied relevant standards arising out of both the law and practice of valuation, and was otherwise consistent with the statutory regime.

4 The valuation was confirmed.

5 Mr Wines is the registered joint tenant of Lot 641 Wheatley St, Bridgetown in the Shire of Bridgetown-Greenbushes, being land more particularly described on certificate of title Vol 1743 Fol 182 (land).

6 He has sought a review in this Tribunal of a determination by the Valuer General of the unimproved value of the land. He claims that the valuation has incorrectly arrived at an amount which is too high.

7 Mr Wines suggests that a proper value would "be that of a farm in the townsite of Bridgetown". A "reasonable value" for farmland in the Shire, at present, is $5000 per hectare. The applicant calculates the correct valuation as follows: "Allowing, say, 20%, for what would be the added value for the subdivision potential of the property gives a value of $6000 per ha or $60,702 for the property". The Valuer General's figure is approximately double that of Mr Wines.

8 The land is a square-shaped parcel of approximately 10 hectares and is located in Bridgetown. The land is more particularly described by the Valuer General as follows:

"The subject property is located within the townsite of Bridgetown, which abuts the Blackwood River, approximately 94 kms south-east of Bunbury and 267 kms south of Perth, in the heart of the South West's timber country. A temperate climate and high rainfall produce the native forests, rich farmland, pine plantations, vineyards, orchards and wildflowers that attract many tourists.

More specifically, the property is located approximately 3.5 kilometres south-west of the Bridgetown CBD precinct and situated along the south-eastern boundary of Wheatley Street, Bridgetown. The property is generally bounded by similar small semi-rural holdings as well as State forest along its southernmost boundary.

Access to the property is via Wheatley Street, which is a gravel roadway in good condition, carrying local traffic. ... The lot has a medium rise from its street frontage to the rear south-eastern boundary. The site is predominantly (approx 70 %) cleared fenced and pastured, and parkland cleared primarily over the rear south-eastern quarter, which is also scattered with ironstone rock outcrops."

Valuer General's view of the use and attractiveness of the land

9 The Valuer General considers that the land is used "as a hobby farm and as a semi-rural residential lifestyle property" with the "aesthetic benefits of attractive valley views to the north-west". This use is consistent with the local planning instrument of the Shire. It is surrounded by "similar semi-rural properties and State Forest". The photographs tendered by the Valuer General indicate a small farm apparently typical of this area.

10 The land is also, according to the Valuer General, "enhanced by being located only a short distance to the commercial-retail facilities available within [the] Bridgetown CBD precinct".

11 These general descriptions of the land offered by the Valuer General are not relevantly objected to by Mr Wines.

12 In 2004, Mr Wines received an assessment for a rate or tax with a date of valuation of 1 August 2003. Mr Wines objected to that assessment on or about 25 October 2004.

13 The objection by Mr Wines arises out of the determination by the Valuer General of the unimproved value of the land arising out of a general valuation for the State of Western Australia, which valuation came into force on 30 June 2004 (see s 17(4) [whole of State valuation district] and s 21 [requirements for notice] of the Valuation of Land Act 1978 (WA) (the Act) and the corresponding gazette notice of 9 July 2004: Government Gazette at 2787). That notice fixed 1 August 2003 as the date of valuation: see s 19.

14 The original assessment valued the land at $138 000. An inspection carried out on behalf of the Valuer General in November 2004 led to the objection being allowed and the valuation reduced to $125 000 "for coordination purposes". This was more fully expressed in the Valuer General's letter to Mr Wines of 24 December 2004 as "[coordination] with sales evidence at the Date of Valuation being 1 August 2003 and with values placed on surrounding properties". This is a matter that the Tribunal will return to below.

15 It is necessary to refer to some of the statutory background to the review, as follows.

16 First, it is not in dispute that Mr Wines is "a person liable to pay any rate or tax assessed in respect of land who is dissatisfied with a valuation of such land made under [the Act]" within the meaning of s 32 of the Act. Second, it is common ground that the valuation of land is by way of the respondent determining the "unimproved value of the land" (cf s 26(4)(b) of the Act dealing with particulars of rateable land on "valuation rolls"). See also the definition of "value" and the corresponding expressions in s 4 of the Act.

17 Finally, it is not in dispute that Mr Wines has properly objected to his valuation and that that valuation was properly varied (see above) within the meaning of Part IV of the Act. It is also common ground that his application for a review of the Valuer General's decision was properly brought under Part IV of the Act.

18 However, the meaning or application of some of the following definitions in s 4 of the Act are contested by the parties. These definitions are (emphasis added):

"Unimproved value" means "in relation to any land situated within a townsite [which this land is conceded to be] ... 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".

19 Thus, the land, being within the townsite of Bridgetown, has been assessed by the respondent, apparently consistently with these definitions, on "an Unimproved Value (site value) basis".

20 The Valuer General's methodology may be summarised as follows:

1. The unimproved value for the subject land would be assessed by way of direct comparison to (market) sales evidence from the Bridgetown locality, if available.

2. Market value would be determined "in accordance with the Australian Property Institute and the International Assets Valuation Standards Committee" as follows:

"[T]he 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 transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion."

(The Tribunal interpolates here that this standard is entirely consistent with valuation law and practice, which is referred to with more particularity below.)

3. However, here "[t]here [was] no directly comparable sales evidence on which to assess the subject property". The conclusion reached by the Valuer General was that, generally speaking, "observations based on [certain] sales evidence" indicate that the assessed unimproved value arrived at by the Valuer General was "fair and reasonable". That sales evidence is summarised as follows:

(It should be emphasised that this summary must be read in the light of the general observations already made by the Valuer General as regards the subject property - see above, and as supplemented by the more detailed and specific comments on each of the comparator properties, as appears in the Valuer General's expert witness statement.)

4. The essential reasoning of the Valuer General which draws these matters together is captured in these passages of the respondent's expert witness Mr M Pritchard, as follows:

"Generally, sales of Special Rural lots of approximately 2 hectares disclose a land value range of $65 000 to $75 000, with 3-4 hectare lots disclosing a land value range of approximately $96 000 to $150 000. The values vary within these ranges depending on individual lot characteristics such as topography, clearing and location factors, etc. This is exemplified in the [sales schedule above, items 1-5].

The key indicator sale from the schedule above is considered to be [sales schedule item 6, above]. This sale is considered [to be] the closest comparable to the subject property having regard to the land area at 8.66 hectares (the subject property comprises 10.1171 hectares) and also having similar features such as a house site, dam, single carriage gravel road access and extensive valley views. The main difference between the two properties is the relative distance from the Bridgetown townsite, with the subject property much closer. Also, [sales schedule item 6] is located outside the Bridgetown townsite and is therefore assessed as a Rural [unimproved]."

5. The unimproved value in this case was assessed by including all "merged improvements" as required by the Act: see the definitions of "unimproved value" and "site value" set out above. As will be recalled, merged improvements to land are defined to mean "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".

6. The principal "merged improvements" for the land, as seen by the Valuer General, are summarised as follows:

a) Clearing and pasture to approximately 70% of the site area, and parkland clearing to the remainder.

b) An internal access road linking Wheatley Street with the main residence, which is constructed predominantly of gravel with a small section of bitumen. It is approximately 3 metres wide and 200 metres in length.

c) An elevated and terraced house site of approximately 2,000 square metres, which comprises the house pad, driveway access, curtilage gravel parking area and landscaping areas.

d) A levelled site for the two water tanks located along the eastern boundary.

e) Retaining to the front and rear of the house site, which is constructed primarily of locally quarried rock.

f) An earth dam located along the western boundary, with a water holding capacity of approximately 3,000 cubic metres.

7. The Valuer General's witness stated that he did not have regard to certain other non-merged improvements, namely the "[s]tructural improvements of the house, water tanks and fencing".

21 In Lake Karrinyup Country Club Inc v Valuer-General (unreported, Supreme Court of WA, Parker J, Library No 960515, 13 September 1996 [BC9604209] the Court said (BC9604209 at 20):

"It was common ground before me that the definition [in the Act], especially by the words '... amount that ... the land might reasonable be expected to realise upon sale ... ', directed attention to the market value of the land. Subject to the express modifications provided in the definition, it was ... common ground that the market value in this sense was aptly determined in accordance with the long settled principles enunciated in decisions such as Spencer v Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418 which, particularly at 432, 436-437, 440-441, postulated a hypothetical prudent purchaser on the date for valuation and directed attention to what such a purchaser would have to pay to purchase the land for the most advantageous purpose for which it was adapted in a process of voluntary negotiation with a hypothetical vendor who was willing to sell, both purchaser and vendor being perfectly acquainted with all circumstances relevant to the value of land and neither of them being so anxious to trade that they would overlook any ordinary business consideration."

22 In Duffy v Minister For Planning [2003] WASCA 294, McLure J (with whom Anderson J and Steytler J agreed) made certain observations which may be taken, in this context, to lay down general propositions relevant to the issues raised by Mr Wines. Her Honour said (emphasis added):

22 The test of market value is what in all the relevant circumstances would be the price that a willing purchaser would have to pay a vendor willing but not anxious to sell in order to obtain the land: Commonwealth v Arklay [1952] HCA 76; (1952) 87 CLR 159 at 169-170; Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418 per Griffiths CJ at 432.

23 One method of ascertaining market value is the comparable sales method. That method requires that the sales evidence relied on be relevant and sufficient in volume: Maurici v Chief Commissioner of State Revenue [(2003) [2003] HCA 8; 212 CLR 111] at [18]; [2003] HCA 8; (2003) 195 ALR 236 at 242 [18].

24 A helpful description of what the comparable sales method involves was given by Wells J in Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170. He said (at 179-180):

'It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to have been sold, or the same thing as its true value. Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances ... appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v The Commonwealth of Australia ... to warrant a court's reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape ... land use (actual and potential), scope for, and difficulties of, development, ...; and in relation to the transaction of sale, the valuer must weigh such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special considerations that induced or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or effected.'

25 There is no hard and fast rule by which a valuer can draw the line that clearly separates sales that are comparable from those that are not. It is a matter of degree. Some adjustment is always necessary but too much adjustment may render it unsafe to use a sale. Where the line is to be drawn is a matter for the expert valuer to determine. Further, just because a sale is excluded from use in the comparable sales reasoning process does not necessarily mean that it is irrelevant: Brewarrana (supra) per Wells J at 180.

26 The general principles relating to the admissibility of and weight to be given to expert evidence are not in dispute. The basic principle is that an expert must either prove by admissible means the facts on which the opinion is based or explicitly state the assumptions as to fact on which the opinion is based: Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370; Pollock v Wellington (1996) 15 WAR 1; Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705.

27 Further, the process of inference that leads to the opinions of the valuer must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about their reliability. If not, the opinion can carry no weight: Pollock v Wellington (supra) at 4 per Anderson J; Makita (Australia) Pty Ltd v Sprowles (supra) at 741.

28 The expert must fully expose the reasoning relied on in reaching his or her opinion and the opinion must be rationally based: Maurici v Chief Commissioner of State Revenue (supra).

29 However, those principles have to be applied in the context of the valuers 'art'. The established principles were stated in Spencer v Commonwealth (supra) where Isaacs J quoted with approval the following passage in Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391:

'It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at.'

30 An illustration of the practical application of the principles is seen in Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409. In that case the subject land to be valued was a container terminal site. It was common ground that that was the best and highest use for the land. Notwithstanding that there was no sales evidence of container terminals, one expert used the comparable sales method and the basic sale he relied on was of industrial land with no water frontage. The valuer added between $100,000 - $120,000 per hectare as an adjustment for the subject land's water frontage. It was common cause that the expert did not have any sales evidence on which to rely for his quantification of the water frontage adjustment and he said it was fixed as a matter of judgment. The appellant in that case submitted that while judgment based on experience is a permissible method of making adjustments in the course of valuing, the selection of a figure based on nothing could not alter its character as in essence a guess or an arbitrary figure. The Court held that the need to make adjustments to values to arrive at the true valuation of subject land does not preclude the valuer or the Court who has the task of valuing the land from making adjustments which may be nothing more than the best guess that can be made in the circumstances. The Court also rejected an argument that a judgment of that nature was not valid unless there was evidence to establish the upper and lower limits within which the judgment must operate.

31 An opinion that is not based on sales or other empirical evidence is often referred to as a judgment, usually said to be based on skill and experience. Sometimes it may be difficult to draw the line between judgment and mere speculation. A rule of thumb is that a judgment formed without some disclosed rational basis will be speculation to which little, if any, weight should be given. However, generalised statements of principle are best avoided because whether and if so what weight should be accorded to a valuer's opinion will depend on the facts and circumstances of each case.

32 As to what is required disclosure, the appellant relies on a statement by Pullin J in [Arcus Shopfitters Pty Ltd v WAPC [2002] WASC 174] (at [78]) that:

'It is not satisfactory, in my opinion, for a valuer who values land using the comparable sales method, to list a number of comparable sales, each one suggesting a different value for the subject land and each of which requires some adjustment, and then simply to state an opinion about the value of the subject land. Such an opinion will only have any value if the valuer explains which is the most important of the comparable sales, why that is so, and what adjustments have been made to reach a conclusion about the value of the subject land.'

33 The first sentence is uncontentious. The second sentence is not. Insofar as it is contended that the second sentence states an absolute requirement with automatic consequences as to weight, that cannot be so. The formation of an opinion on value has been likened, correctly in my view, to the exercise of judicial discretion. Rules affecting weight must be sufficiently generalised to allow for different methodologies and circumstances."

23 As will be seen below, the Mr Wines appears to take a different view of these principles of valuation law and practice.

24 With respect to what constitutes "merged improvements", in Lake Karrinyup Country Club Inc v Valuer-General (supra) the Court said (BC9604209 at 21):

"[The Tribunal below] concluded that club land was not to be regarded as comprising two functioning golf courses with associated buildings and facilities but as consisting of Lake Karrinyup itself, its swampy surrounds and the adjoining bushland, a significant part of which was cleared including those clearings comprising the fairways and greens. This approach appears to conform with the intent of the definition of 'site value' in the Act."

25 A similar approach was adopted by the Valuer General in this case and the Tribunal sees no error in that approach and adopts it for the purposes of this review. Generally, the Tribunal proposes to follow the approach set out in the passages and authorities set out above, both as regards valuation principles and as regards "merged improvements". The discussion that follows must be read in the context of this approach of the Tribunal.

26 As with the issue of what constitutes "merged improvements", in most cases these passages and authorities provide an answer to the objections raised by the Mr Wines.

27 Before turning to the Mr Wine's grounds of objection, it is worthwhile setting the general scene for rural valuations of unimproved value by reference to this passage in Rost, RO and Collins, HG "Land Valuation and Compensation in Australia" second ed, Australian Institute of Valuers, (Incorporated) 1978, where the learned authors observe at 56:

"The unimproved value of land in most rural districts which have been settled for some time is often difficult to assess because of spareness of potentially useful unimproved land and a virtual lack of sales of such land that could serve as a guide to the ascertainment of unimproved value as defined by law. It follows that ... unimproved value can be deduced only by reference to sales of improved or partly-improved land. As a consequence, the values tend to be contentious and frequently give rise to objections by owners and occupiers."

28 Mr Wines has objected on a number of interrelated grounds. These have been expressed in his submissions and original objection in 2004 in a variety of ways. That which follows below is an attempt to capture the essence of each of them, to set out the respondent's response and then the views of the Tribunal.

29 In addition, where the grounds have referred to an alleged failure to follow an internal policy of the respondent, they have been addressed in terms of their substance as, in the Tribunal's view, those policies merely restate aspects of either the law and practice of valuation, or to put it another way, aspects of the "valuer's art".

30 Matters that were not pressed before the Tribunal, such as an alleged diminution of value caused by a fire to the property in 2003 ("The fire damage issue was discussed [by agents of the respondent] with officers of the Department of Agriculture with the conclusion being that no permanent damage is likely to the land under prudent management controls. Accordingly, [the respondent] reject[s] this as grounds to reduce the Unimproved Value.") have not been addressed here, on the basis that they have been adequately dealt with by the respondent. For the avoidance of any doubt the Tribunal formally affirms the decision under review in respect of those matters.

31 Finally, the Tribunal notes that at various points in his case Mr Wines has complained about the alleged conduct of the agents of the respondent in relation to the valuation of his land. Such complaints arise out of an inspection of land and conversations Mr Wines had with the respondent's agent. It is unnecessary for the purposes of this review to resolve these differences. They do not relevantly affect the expert opinions expressed, nor do they impact upon either the essential facts of the review or, of course, the legal principles to be applied by the Tribunal.

32 Mr Wines did not call any expert evidence of his own.

33 The first group of objections centres on the appropriate comparators and adjustments made by the Valuer General. First, Mr Wines says that the Valuer General ought to have used "similar zones". He alleges that "[t]hree of the sales evidence properties have different zoning". Further, he alleges that "[t]he properties are in different localities, [have] different zoning, with different features and [are] not capable of (transparent) adjustment." Mr Wines also says that the Valuer General must "consider the full basket of sales evidence and particularly in areas where there is a scarcity of vacant land must exclude any element of value that would not apply to all similar properties". Thus, he suggests that "[if the Valuer General] include[s] one 3 ha property sale [then the Valuer General must] include them all [;] if they include one rural property sale they must include them all".

34 In reply, the respondent makes the following points, assembled below as one convenient passage:

"All sales evidence used in the determination of the [land's] unimproved value are utilised for Rural/Residential pursuits, much like the Subject property. It is acknowledged that the Shire's Town Planning Scheme[s] Nos 3 & 4 have differing zonings specified to each property. This is mainly due to the lot size and their location outside the townsite. It is noted, however, that the Subject property has one of the least restrictive land use zonings within the Shire. The only exception to that circumstance is perhaps Sale No 2 - Lot 22 [sic] Tweed Rd, which has some future subdivision potential.

The unimproved value for each property has [had] regard for their separate attributes and detriments, including their likely highest and best use under the Town Planning Scheme and where they are located within the townsite boundary, similar to the Subject property, [regard has been had] to the merged improvements located within their boundaries.

The sales evidence presented in the report is generally comparable to the Subject property, as they are of a similar land use and locality. As there were no sales of exactly similar sized 10-hectare properties in the vicinity, the available sales evidence had to be interpreted to establish a fair and co-ordinated value for rating purposes.

The sales evidence schedule outlines the properties that [were] transacted close to the date of valuation and are the best indicators of unimproved value for the Subject property. Other properties did sell in the district, but were not considered as comparable as those scheduled."

35 In the Tribunal's view, the respondent has "fully expose[d] the reasoning relied on in reaching [its] opinion" and the valuation is rationally based, making appropriate "adjustments" and using properly comparable data. The approach is entirely consistent with both the requirements of expert evidence in this area and the discussion of the relevant principles referred to by Wells J in Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170, the relevant passages of which are referred to above. It is in this context of principle that the Valuer General's downwards variation in unimproved value took place in 2004. The Valuer General's evidence on this matter was as follows:

"The issue of comparison of Townsite Unimproved Values with Rural Unimproved Values was [discussed in person with the applicant]. Noting the differing definitions under [the Act] ([ie], merged improvements), the emphasis needs to be more on coordination with other townsite valued properties. Unimproved Values outside of townsite boundaries are based on a totally unimproved basis, as if the land was virgin bushland, uncleared and without any merged improvements (Rural [unimproved value])."

36 There is no error disclosed in this approach to the valuation. In fact it demonstrates the Valuer General's openness to a review of the assumptions that the Valuer General has made with respect to the subject land. The Tribunal accepts the Valuer General's evidence and opinion.

37 There is one other related matter which may conveniently be dealt with at this point. One of Mr Wines' written submissions contains the following assertion:

"In Collins & Ors v The Minister 6 LGR 84, the Judge of the NSW Land and Valuation Court is reported as saying:

'In analysing a sale of a property the actual sale price of the land and improvements must be accepted and not adjusted by the valuer.'

The valuer in this instance [ie, in relation to Mr Wines' land] has adjusted all of the sales to arrive at an unimproved valuation that is not supported by the sales evidence."

38 This authority appears to be drawn from Rost and Collins (supra), at 88 in reference to criticism by the court where the valuer, having accepted sales prices as his starting point then went on to ignore the market price and substitute his own figures.

39 That error is not replicated here. There is no material at all to suggest that the respondent has substituted the sales prices with other figures.

40 Next, Mr Wines alleges that "forced sales" are not reliable comparators. He says that:

"One of the properties (20 Ecclesiastic Close [see sales item 3, above]) is known to be a forced sale and no evidence has been presented to demonstrate [that] the others are not. The owner of that property went to work on the property one morning and called his wife from Ceduna that evening and told her he was going back to New Zealand to live with his mother."

"The personal circumstances of the sale at 20 Ecclesiastic Close was not known at the time of assessment. However, property is sold in the market place for all sorts of different reasons, generally unbeknown to the purchaser and valuer. The main principle as outlined in the Spencer's Case [supra] remains; if the property was adequately exposed to the market place prior to sale, and an arms-length transaction subsequently transpired, then the sale can generally be relied on for comparison purposes. This sale still appears to be within the principles set out in ... Spencer's Case."

42 Ordinarily, a forced sale is "[b]y definition ... one where the vendor is under pressure to accept what the market offers" an opinion referred to without adverse comment by Eames J in Pyramid Building Society (in liq) v Royalsville Pty Ltd [1997] ANZ Conv R 554; [BC9605216] at 32. Often it is a sale forced upon the owner by judicial process or by a mortgagee. Cf Isaacs J in Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418 at 441: "[N]ot by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration". In Cash Resources Aust Pty Ltd v Brett [1996] QSC 32 Lee J said: "[S]uch a sale invariably produces a much lower price".

43 There is no evidence as to the exact circumstances of the sale of this property other than the hearsay offered by the applicant. Taken at its face value it does not necessarily indicate, except possibly by inference, that the vendor was under pressure to accept whatever price was offered.

44 In short, the evidence of Mr Wines does not establish that it was a forced sale. Just because the vendor left to go to New Zealand does not mean he accepted a lower price - some more evidence would be required to establish that fact.

45 Even so, it does not assist the applicant's case because if he is correct then the respondent ought presumably to increase the value to be ascribed to that property by the respondent, the implication being that a forced sale is suspect as it is a sale below the "true" price of an object. Such a position in effect strengthens the respondent's case. That course was not adopted here.

46 There is no error disclosed in the approach to the valuation adopted by the respondent with respect to this comparator property.

47 The Tribunal will set out, at some length, Mr Wines' views and concerns on what constitutes a "merged improvement". They appear in the following passages which have been assembled from his submissions:

"An examination of the valuations of properties in my immediate area cast[s] serious doubts about Mr Pritchard's 'extended' definition of merged improvements.

Lot 589, my neighbour to the west, 8.88 ha valued at $121,000.

Lot 595, my neighbour to the south, 9.0194 ha valued at $126,000.

Lot 641, my property, 10.117 ha, valued at $125,000 (previously $138,000).

All three properties are transparently comparable. Lot 589 has a derelict dam that has collapsed once and will collapse again. The fencing is beyond economical repair. Lot 595 has a house with a pad built at natural ground level, plus reasonable fencing and a water tank. My property, Lot 641, has $40,000 to $60,000 worth of improvements that are included in Mr Pritchard's expanded definition of merged improvements. The Valuer General has assigned approximately the same value per ha to all three properties which means my so-called merged improvements have been included at nil value or they are not included.

The same comparison can be made between Lots 596, 597 and 598. Again, they are transparently comparable except Lots 596 and 597 [which] have extensive earthworks for house pads and decorative retaining walls while Lot 598 has a pole house with minimal earthworks. Again, the so-called merged improvements have been included at nil value or not included.

There is not a problem with the comparability of any of these valuations if my interpretation of merged improvements is used. That is: 'The defining characteristic of merged improvements is they cannot be assessed or costed after completion.' Mr Pritchard's definition also creates a number of anomalies:

A house pad is a merged improvement because it involves excavation.

A house pad on level ground is also a merged improvement even though it requires no excavation.

A dam is a merged improvement.

A well is a merged improvement.

A bore is not a merged improvement.

Establishing pasture is a merged improvement even though it involves neither levelling nor excavation.

Landscaping is a merged improvement.

Is [the] planting of a rose bush or tree a merged improvement? Is it the hole or the tree that qualifies? Does the hole continue to be a merged improvement even after it is filled? Do septic tanks and leach drains qualify as merged improvements? They involve excavation and act to retain the soil. They are also levelled when back-filled.

The definition of merged improvements is a question of law and not one of valuation expertise."

48 In reply, the respondent says (emphasis added):

"The merged improvements within the Subject property outlined in [the evidence], is a clear representation of the type of earthworks that have been carried out on the land. The added value of these merged improvements are viewed in a holistic valuation approach and compared to the sales evidence in a similar way, much like how a hypothetical purchaser would view the property. The applicant views each merged improvement purely as a new replacement cost item, which very rarely happens in the open market place."

49 As is mentioned above, the respondent's approach is consistent with the approach endorsed in Lake Karrinyup Country Club Inc v Valuer-General (supra). It is consistent with the relevant statutory definition, which talks in terms of the inclusion, for valuation purposes, of "works in the nature of draining, filling, excavation, grading or levelling of the land, retaining walls or other structures [etc]." Moreover, the methodology of the respondent on this point is consistent with that already endorsed by the Tribunal above, based upon the views of the Full Court of Western Australia. It is unnecessary to answer the applicant's list of hypotheticals one by one, as they are essentially irrelevant to the task of both the respondent and, on review, this Tribunal.

50 Accordingly, there is no error disclosed in the approach to the valuation adopted by the respondent with respect to this issue.

51 Mr Wines' final argument is more complex. It concerns which improvements are to be excluded from valuation. The argument may be summarised by reference to this extract from a much longer submission on the point by him:

"If the improvements are paid for by the Government, they are included in the unimproved value, and if they are paid for by the property owner or previous owners, they are excluded from the unimproved value."

In support of this proposition he cites Tetzner v Colonial Sugar Refining Company Limited [1958] AC 50; Toohey's Ltd v Valuer-General [1925] AC 439; and McGeoch v Federal Commissioner of Land Tax [1929] HCA 29; (1929) 43 CLR 277.

52 Mr Wines applies this alleged principle of law to his circumstances, as follows:

"My property was subdivided prior to 1970 when the Local Authority was responsible for providing roads. The land was used for farming until the late 1980s when it was put on the market as individual lots. The previous owner entered into an agreement with the Shire that required him to pay for all roads, which he did. I was approached prior to settlement and asked to contribute $2000 towards the cost of the roads because the costs had exceeded the owner's estimate. I made that contribution and also paid for extensions to the power lines.

Those improvements, namely roads and power, were clearly funded by the previous owner and myself, which excludes them from the unimproved valuation."

"By including the cost of roads, power, telephone, kerbs, gutters, etc in the site value and ultimately the unimproved value of the properties, [the Valuer General] is, in effect, levying rates and taxes on Government assets ... The main question before this Tribunal is, should off-site improvements be included in the unimproved value, effectively requiring landowners to pay land tax and shire rates on Government property?"

54 With all respect to Mr Wines, these novel arguments are not supported by the authorities that he has cited and, further, fundamentally misconceive the issue before the Tribunal.

55 What is required of the valuing authority by law (regardless of whether this is "fair" or "just") is fidelity to an obligation manifestly recognised in the authorities as artificial, namely to value the subject land "notionally stripped of its improvements and viewed in its natural state but in the environment (with all its inherent advantages, facilities, services, etc) in which the subject land is actually situated at the relevant date of valuation": State Government Insurance Office (Qld) v Valuer-General (1981) QLCR 171 at 180, cited with approval by Hyam, A "The Law Affecting Valuation of Land in Australia" 3rd ed The Federation Press, Sydney 2004 at page 53.

56 The Tribunal is satisfied that the Valuer General's expert witness approached the task in this way. Therefore, no error has been demonstrated as regards this ground of review.

57 The Tribunal is not satisfied that the Mr Wines has made out any of his grounds of review and objection. The Tribunal is satisfied that the Valuer General by his expert and other evidence has demonstrated that the valuation arrived at is in accordance with both the law and practice of valuation having regard to the terms of the Act and the relevant authorities discussed in detail above.

58 The Tribunal therefore arrives at the same valuation figure as reached by the Valuer General on the material before it.

59 The application must be dismissed and the decision under review affirmed.

I certify that this and the preceding [60] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MR P McNAB, MEMBER