Objections to property valuations results in *increase* to property valuations

Most councils in South Australia rely upon valuations made by the Valuer-General when modelling, declaring, and assessing rates. The valuations of the Valuer-General therefore play a central role in that most critical of council functions, the rating of land.

If any owner of land wishes to object to a valuation made by the Valuer-General, the objection must first be made to the Valuer-General. If the person remains dissatisfied following the Valuer-General’s decision on objection, further review may be sought, including in the South Australian Civil and Administrative Tribunal (SACAT).

The case of Bosnakis v Valuer-General [2023] SACAT 30 demonstrates that the objection process can prove to be a double-edged sword for a dissatisfied property owner. In that case, which was brought by the property owner, the SACAT opted to increase the valuation of certain properties.

Background

Mr Bosnakis made three separate applications for review to the SACAT with respect to decisions made by the Valuer-General following objection. The three parcels of land owned by Mr Bosnakis that were the subject of these applications, and valuations ascribed to those properties by the Valuer-General following objection, were:

• a parcel of land located at Valley View (the Valley View property) with a site and capital value of $475,000 and $720,000, respectively;
• a parcel of land located at Burnside (the first Burnside property) with a site and capital value of $670,000 and $680,000, respectively; and
• another parcel of land located at Burnside (the second Burnside property) which is directly next-door to the first Burnside property, with a site and capital value of $600,000.

For each property, Mr Bosnakis submitted that both the site and capital value were too high.

Determination of Property Values

The Valley View property

The Valuer-General’s valuations for the Valley View property were based on the best use of the property being residential use, having regard to comparable sales data for residential properties available at the time.

Mr Bosnakis argued that site and capital values should be decreased due to an above average amount of contaminants in the soil (though this was disputed), water inundation during heavy rainfall which often led to landslides, constant sewer blockage, the overall poor condition of the house, and tree root damage. Mr Bosnakis contended that it would be extremely costly to rectify these issues, and accordingly, the valuation should be lower.

The Valuer-General submitted in the course of the SACAT proceedings that it would be appropriate to decrease the site value, though not the capital value.

The Burnside properties

The Valuer-General considered that the best use for the Burnside properties (which are next-door to each other) was as a developmental site for a single dwelling, consistent with its current use. The Valuer-General’s valuations took into account sales of comparable developmental properties, and demolition costs necessary for development.

Mr Bosnakis once again flagged issues including soil contamination (which was again disputed),

the location of the properties on a busy main road, driveways which were difficult to access, and stormwater management issues caused by the properties being located below road level and on an incline.

The Valuer-General submitted in the course of the SACAT proceedings that the SACAT should increase site value and capital value for both Burnside properties.

Decision

The SACAT considered the submissions made by the Valuer-General to be well-founded, and supported by evidence. SACAT held that the Valuer-General had addressed all the issues and concerns raised by Mr Bosnakis. The concerns of Mr Bosnakis had also been taken into account by the Valuer-General at the time of making the valuations which were under review.

SACAT noted that Mr Bosnakis’ case would have been stronger had he sought to adduce evidence from a different qualified valuer. In light of the absence of such evidence, SACAT accepted the expert evidence provided by the Valuer-General, and made the following orders consistent with the position advanced by the Valuer-General in the SACAT proceedings:

• to affirm the capital value of the Valley View property at $720,000, and decrease the site value to $385,000;

• to increase the site and capital value of the first Burnside property to $720,000; and

• to increase the site and capital value of the second Burnside property to $750,000.

Take home messages

As indicated at the beginning of this article, this decision of the SACAT demonstrates that the process of objection to valuations can be a double-edged sword for a dissatisfied property owner.

Further, should a council find itself involved in a SACAT review of valuation (either because the council has challenged the Valuer-General’s valuation of certain land, or because a person has challenged the council’s valuation of land), nothing prevents the council from arguing for a higher valuation.

This decision also serves as a more general reminder that, when the SACAT conducts a review of a decision, that review is a full ‘merits review’. This is the case not just with respect to objections to valuations, but with respect to all matters within the review jurisdiction of the SACAT. Although the SACAT will give due weight to the original decision, the ultimate task of the SACAT is to reach the decision which is correct or preferable in all the circumstances. The SACAT may have regard to fresh evidence when undertaking this task.

Accordingly, although the onus is on a person whose interests are affected by a decision to seek review of that decision in the SACAT (if available), once a matter is in the SACAT the decision-maker does have the opportunity not only defend its decision but to lead new evidence and argue for a different decision, if it wishes.

Should you wish to discuss any of the matters raised in this article, please contact Felice D’Agostino on +61 8 8210 1202 or FDAgostino@normans.com.au; Dale Mazzachi on +61 8 8210 1221 or DMazzachi@normans.com.au; or Chris Alexandrides on +61 8 8210 1299 or CAlexandrides@normans.com.au