Slight and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 319 (30 April 2010)

Last Updated: 4 May 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 319

ADMINISTRATIVE APPEALS TRIBUNAL )

) Nos 2009/5632

GENERAL ADMINSTRATIVE DIVISION		) 2009/6160
	Re		ERIC and BLAIR SLIGHT

Applicants

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

M J Carstairs, Senior Member

Date 30 April 2010

Place Brisbane

Decision

The Tribunal affirms the decision under review.

.................[Sgd].......................
Senior Member

CATCHWORDS

SOCIAL SECURITY – Age pension – Value of excess land – Valuation evidence agreed on value of $50,000 – Decision affirmed.
Social Security Act 1991 (Cth), ss 11A, 1118(1)

Re Hughes and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 293

REASONS FOR DECISION

30 April 2010

M J Carstairs, Senior Member

1. In this application to the Tribunal, Eric and Blair Slight challenge Centrelink’s assessment of the value of the land around their principal place of residence. The value of such land is taken into account for pension purposes to the extent that the land exceeds two hectares. A person’s principal place of residence is otherwise exempt from asset testing.

ISSUES

2. The issue before the Tribunal is thus confined to the correct valuation of the excess land, in this case some 12.16 hectares adjoining the applicants’ home in northern New South Wales.

BACKGROUND

3. Mr and Mrs Slight applied for age pension in 2009 and thereafter commenced receiving that pension at reduced rates, taking into account the valuation of the excess land.
4. Section 1118(1) of the Social Security Act 1991 (“the Act”) exempts a person’s “principal home” from the assets test—the “principal home” is taken as the house plus the land adjacent to the house, to the extent that the land is held on the same title as the house and is used primarily for private or domestic purposes.[1]
5. Mr and Mrs Slight purchased the 14.16 hectare block at Tumbulgum (as vacant land) in 2002. They built a house on the high part of the land, near the boundary. The land falls away steeply from the area on which the house was built.
6. On 10 August 2009 Centrelink requested that Mr Greenhalgh, Senior Valuer with the Australian Valuation Office, carry out a roadside inspection and valuation. Soon after that first inspection, Mr Greenhalgh carried out an onsite inspection with Mr Slight in attendance. Mr Greenhalgh changed his opinion on this second visit to the land, in particular reducing his assessment of the relative value of the excess land (12.16 hectares) in relation to the property as a whole. On closer inspection, Mr Greenhalgh observed the land to be steeper and more heavily treed than was evident by roadside inspection alone. Mr Greenhalgh reduced the value of the excess to $50,000 (the overall value of the property, he concluded, was $1 million).
7. Mr and Mrs Slight are not taking issue with the overall valuation, but they do take issue with the valuation of the excess land at $50,000. They contend that the land outside the two hectare curtilage has no real value taken on its own, adds nothing to the overall value, and in fact is something of a liability.
8. As the Social Security Appeals Tribunal pointed out to Mr and Mrs Slight, such a case is difficult to prove except through accredited valuation evidence. At the time of the Social Security Appeals Tribunal hearing, only Mr Greenhalgh’s valuation report was available. Now there is a second valuation report, which agrees with the first.
9. In these circumstances, I can only affirm the decision under review. However in deference to Mr and Mrs Slight’s detailed submissions, I will set out my reasons for doing so.

THE VALUATION EVIDENCE

10. Mr Greenhalgh has worked as a real estate valuer in the Tweed Shire for over 20 years. His report dated 21 September 2009 records that Mr and Mrs Slight’s property was about 15 km south of Tweed Heads in a sought after area, surrounded by hobby farms and bushland, had reasonably easy access to the Pacific Motorway and was close to the Gold Coast airport. He commented that the block had an excellent elevated position, with views across rural land to the north, and expansive views to the south over cane fields to the Tweed River and Mount Warning and some ocean glimpses.
11. Mr Greenhalgh noted Mr Slight’s objections to his valuations on grounds including that the excess land is steep, rocky and unsuitable for livestock. Mr Slight adds that the land has no reasonable access and cannot be built on or subdivided and sold. Mr Greenhalgh noted that Mr Slight maintains that the extra land means additional costs to him, in relation to weed control and general maintenance.
12. However Mr Greenhalgh nevertheless maintained that many buyers are attracted to the privacy that a larger holding affords, because this ensures greater control over the surrounding area as well as allowing the enjoyment of private settings in native bushland.
13. Mr Greenhalgh said that Mr Slight’s opinion that the land was a nuisance in many respects and had no real value reflected a personal point of view, and was not a proper valuation approach. He said that in valuing land, account needed to be taken of the fact that people tend to pay more to secure a larger area of land than they do for a smaller one, chiefly because they can then exercise greater control over the surrounds and environment. He said that the forested areas of the excess land was quite attractive and had environmental attributes that ensured privacy.
14. With respect to the more detailed content of Mr Greenhalgh’s report, I note that he undertook a comparative exercise with recent sales, some of which were smaller holdings and others closer to the overall size of the Slight’s land. Mr Greenhalgh explained the ways in which the identified properties were either inferior or superior in particular respects. The other valuation report in evidence was obtained by Mr Slight from Mr Gerry, a certified practising valuer with the firm Herron Todd White.[2] This report provided sales evidence from a larger number of comparative sales. This evidence seemed to me to justify the conclusions Mr Gerry reached with respect to the excess land.
15. Mr Gerry was not called to give evidence, however his report reveals that he carried out a similar exercise to that undertaken by Mr Greenhalgh, by identifying the salient features of the land including its being subject to a local environmental protection zoning under the Tweed Shire Council Planning Scheme. This type of zoning limits the land’s uses as does its steepness. Mr Gerry stated in his report that he had carried out his valuation by (hypothetically) valuing the two hectare parcel detached from the balance of the property. He concluded that, having regard to the identified sales evidence, there indeed was a market for land of limited usability, even though that land carried no permissions to build and had no subdivision potential.
16. Mr Gerry valued the excess land at $50,000, having determined an overall valuation of $750,000 with $700,000 being attributed to the value of the 2 hectare cartilage and improvements.
17. In other words, both certified valuers agreed on the figure of $50,000 for the 12.16 hectares of excess land.
18. Mr Slight acknowledged that the valuation evidence from Herron Todd White ran counter to his submission that the excess land had no value. However, he submitted that I ought to assign some weight to his own research and expertise. He referred to his professional qualifications obtained through the Institute of Chartered Accountants, which gave him some expertise in matters not unrelated to valuing land. He said that while it was not his intention to denigrate the valuers in this case, valuing was not an exact science: he maintained that the two valuers were in error in reaching the conclusions that they did.
19. Mr and Mrs Slight had indeed prepared their case with an impressive degree of thoroughness, providing me with a 14 page written submission, full details of land gradients, estimates of walking feasibility, Google maps of the area, details of zoning, and photographic evidence of the similarity between their land and land that had been the subject of a previous case in the Tribunal (Re Hughes and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 293). In that case, Deputy President Hack concluded that no value ought to be ascribed to the excess land in the case before him (some 2.197 hectares in that case).
20. Mr Slight relied upon the Hughes decision and had obtained permission from Mr and Mrs Hughes to traverse their land and take photographs, in support of Mr Slight’s argument that the respective parcels of land were similarly steep, difficult to traverse and could not be built upon—all matters to which the Tribunal had referred in reaching the decision that it did.
21. However in the Hughes case, there was valuation evidence presented that enabled the conclusion to be reached that the excess land indeed had only a nominal value. The Tribunal preferred that valuation evidence, especially in view of deficiencies revealed in the approach taken by the Australiana Valuation Office valuer.
22. In Mr and Mrs Slight’s case the valuation evidence from two valuers is in complete agreement: they both value the excess 12.16 hectares at $50,000. I am not prepared to accept that I should put that valuation evidence to one side. I consider that Mr Greenhalgh’s and Mr Gerry’s reports provide a sufficient validation of their methods and conclusions. In particular I accept the evidence of the two reports, based upon comparative sales as well as on general principles, that the excess land in this case can be valued at $50,000 even taking into account the physical and zoning restrictions that make the land less useful than it might otherwise be.
23. In cases such as this where the valuation evidence is in agreement, it would be inappropriate for a Tribunal to ignore that evidence and adopt what is in fact a lay person’s assessment. Valuing is a specialised qualification, backed by certification that a person is qualified to practise as a valuer, after appropriate study. The layman is not qualified to express an opinion as to value of land because it is not a matter of inference or ordinary experience. It is specialist knowledge.
24. Furthermore—and this does not reflect upon the care with which Mr and Mrs Slight prepared their case for this hearing, nor upon their motives—Mr and Mrs Slight have an interest in the outcome of the valuation (because the valuing of the land affects the rate of their pensions). Their views about how the land should be assessed and valued cannot be independent of their desire to ensure a particular outcome. Mr Greenhalgh was right when he said that Mr Slight is overly influenced by a personal opinion that the land creates more problems for them to deal with than if it was of a more manageable size and topography. However, the valuation evidence here is that such an opinion would not be held by all potential purchasers of this land.

DECISION

25. The Tribunal affirms the decision under review.
    

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of M J Carstairs, Senior Member.

Signed: ......................[Sgd].......................................

Mátyás Kochárdy, Associate

Date of Hearing 30 March 2010

Date of Decision 30 April 2010

The Applicants were self-represented

Advocate for the Respondent Ms J Forsyth

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[1] See s 11A of the Social Security Act 1991.
[2] Exhibit A1.