This Red Dot decision emphasises the importance of expert land valuers clearly articulating the reasoning and analysis behind their exercise in professional judgment in valuing land.
In our view, the important lessons to take away from this case relate to the style and content of written expert valuation evidence and include the following:
- a valuer’s expert valuation report in contested proceedings needs to be robust, transparent, clearly articulated and contain a ‘flow of reasoning’ to support the valuer’s exercise of professional judgment in assessing the value of land;
- a greater level of analysis is generally required in valuation reports in relation to the assessment of the ‘highest and best’ use of land and should include details of what town planning considerations (if any) or other factors have been taken into account; and
- a valuer needs to be able to clearly articulate the underlying basis for their judgment concerning sale rates of comparable sales and include the following information in their valuation report:
- the time, size, location, attributes and other relevant factors that have led to the chosen value;
- an explanation of why one site or location is superior to another;
- an identification of the particular market conditions or trends that have been relied upon; and
- an explanation of why the valuer has chosen a particular quantum for a particular adjustment (on an individual adjustment basis, rather than bundled together).
This case is also a reminder of the Tribunal’s ‘guiding principles’ in valuation proceedings, namely:
- that it is not the role of the Tribunal to undertake its own valuation of the land in question, although it does have a greater degree of latitude in using its expert skill and knowledge in the review of a valuation than would a Court; and
- that the Tribunal also has a greater degree of latitude in using its expert skill and knowledge to correct, complete or reconcile defective or incomplete evidence in order to reach an appropriate valuation outcome.
Case facts and findings
This case concerned the determination of the site value of the Calder Park Raceway located at 377-877 Calder Fwy, Calder Park (Site). As at 1 January 2012, the valuation authority, Brimbank City Council (Council) assessed value of the Site at $22.82mil. This valuation was then included in a 2013 Land Tax Assessment Notice. Calder Park Raceway Pty Ltd (Calder Park), being the owner of the Site, appealed the site value to VCAT pursuant to Section 22(1) of the Valuation of Land Act 1960 on the basis that the Site should be valued at $7.9mil. By the time of the VCAT Hearing, Calder Park contended for a site value of $5.95mil and Council contended for a site value of $22.75mil.
Given the complex and diverse nature of the landholding, the Tribunal found that the Site should be valued as ‘the sum of its parts’. In this regard, the Tribunal took a holistic view in assessing the site value, having regard to the Site’s distinct parcels and the relevant planning controls that applied to those parcels. In this case, the different parcels were subject to the Industrial 3 Zone, the Special Use Zone – Schedule 3 and the Urban Floodway Zone. The Tribunal undertook an assessment of ‘highest and best’ use with consideration of comparable sales, leading to a valuation of $10.85mil.
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