Allen v Valuer General

[2006] NSWLEC 691

Land and Environment Court

of New South Wales

CITATION:

Allen v Valuer General [2006] NSWLEC 691

PARTIES:

APPLICANT
Michael Phillip Allen

RESPONDENT
Valuer General

FILE NUMBER(S):

31497 of 2005

CORAM:

Murrell C

KEY ISSUES:

Appeal :- Valuation of 3 hectares parcel of land at Adelong, comparable sales, constraints and variables

LEGISLATION CITED:

Valuation of Land Act 1916
Tumut Local Environment Plan 1990

DATES OF HEARING:

22/06/2006

 
DATE OF JUDGMENT: 

11/09/2006

LEGAL REPRESENTATIVES:

APPLICANT
Mr M Allen, litigant in person

RESPONDENT
Ms A Pearman, barrister
Instructed by: Mr P Rankins, solicitor
Of: Crown Solicitor's Office

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Murrell C

9 November 2006

31497 of 2005 Michael Phillip Allen v Valuer General

JUDGMENT

1 This judgment is for an appeal under s 37 of the Valuation of Land Act 1916 (the Act) for the property being Lots, 64, 70 and 1053 in DP 757211 Victoria Hill Road, Adelong, in the Tumut Shire.

2 The land is 3.15 ha in size and is zoned Rural 1(a) under the Tumut Local Environment Plan 1990. Figure 1 shows the location of the site and the township of Adelong.

3 Victoria Hill Road serves the subject property and this is an all weather gravel road except for the last 200 m where it becomes a gravel track. The topography of the land is relatively steeply sloping from Victoria Hill Road and becomes more gently undulating to the sandy creek flats adjacent to the adjoining parcel of land. The site is generally cleared with a few scattered trees and rock outcrops with mounds of mining filings. Adelong township can be seen on the other side of the river from the subject property as well as the surrounding rural area.

4 The base date of the valuation is 1 July 2004 and the land has been valued by the Valuer General under s 6A(1) of the Act at $35,000. The applicant contends that the valuation should be $20,000.

5 Section 40(2) of the Act provides that “on an appeal the appellant has the onus of proving the appellant’s case”.

6 On behalf of the respondent, evidence was given to the Court by Mr Geoffrey McInerney, a certified practising valuer. For the applicant, evidence was given to the Court by Mr Mark Magann, a licensed real agent and valuer in Tumut.

7 The subject site is zoned Rural 1(a) under the Tumut Local Environment Plan 1990. Clause 13 sets out where dwelling houses may be erected on rural land with consent and (2) (ii) is the relevant provision for the subject site.

A dwelling house or dual occupancy may, with the consent of the council, be erected on land to which this clause applies, but only if the land:
a) in respect of land within Zone No. 1(a);

i) has an area of not less than 150 ha;
ii) is the whole of an existing holding …

8 A site inspection was carried out of the subject property and the Court also had the opportunity of viewing the comparable sales identified by Mr McInerney.

9 Sale No. 1 is in the closest proximity to the subject site as shown on the locality plan at figure 1.. Sale 1 is the land known as 43 Victoria Hill Road, Adelong, and it has an area of 8,878 sq m. This can be described as a rural residential home site fully cleared and the sale also includes a Crown lease for grazing. Approximately 60% of the site is flood liable creek flats with the upper portion of the site near the road suitable for a home site. The contract date of the sale was 14 June 2005 and the sale price was $110,000 and this included two small sheds and fencing and according to Mr McInerney it has a deduced land value of $100,000 and he further adjusts the sale to the base date and arrives at $75,000. This land is zoned the same as the subject site, however, a dwelling house can be erected on the site with town services and without the same physical constraints as apply to the subject site.

10 Sale No. 2 is at 18 Gilmore Street, Adelong, with an area of 2,023 sq m. This property is within the Village Zone and the contract date of the sale is 3 June 2004 with a price of $40,000. This site also is differentiated from the subject land in that there is no question that a dwelling house can be erected on this block of land with town services.

11 The location of Sale No. 3 is shown on figure 1 and is a parcel of land in Gundagai Road, Adelong, and has an area of 4,465 sq m. This site was purchased for $45,000 13 October 2004 and is within the Village Zone where town services and a dwelling house can be erected on the land.

12 Sale No. 4 is No. 29 Smarts Road, Gocup and this is a parcel of land nearly 10 ha and zoned Rural with no building right for the erection of a dwelling house. The sale included a machinery shed, stockyards and water tank and the deduced land value is $85,000 and adjusted to the base date Mr McInerney provided a value of $65,000.

13 Sale No. 5 in Smarts Road, Gocup, has an area of nearly 10 ha zoned and is Rural with a building right for a dwelling house. The purchase price was $150,000 and the contract date 28 October 2003. Mr McInerney provides a deduced land value of $146,000 having regard to the fencing and an adjusted base land value of $160,000. Mr McInerney comments that relative to Sale No. 4 this sale demonstrates an approximate increase in land value of 145% owing to the fact that it has a building right for a dwelling.

14 The respondent submits that the benefit of sales 4 and 5 are that they demonstrate the value that a building right adds to the value of the land.

15 Mr McInerney makes the following general comment on sales:

There is very limited directly comparable sales evidence close to the base date of 1 July 2004. This lack of sales evidence is complicated by the fact that the subject property is valued on the basis of not having a building right.

Sale No. 1 is of a much smaller block with similar terrain being in part flood liable, accessed by the same road and adjoining Adelong Creek. The sale has a building right and town services readily available.

Sales Nos. 2 and 3 are of much smaller village blocks with a building right.

Sale No. 4 is of a small rural grazing block with no building right…

If the subject property had a building right, the site is considered to have a land value of approximately $80,000 at base date - 1 July 2004.

16 With respect to the subject property Mr McInerney makes the following comments:

Inspection of the site revealed some evidence of former surface mining in some sections of the property. The site of 3.15 ha is approximately 40% flood free in the eastern sections of the property. It would be reasonable to assume that with appropriate engineering works that a suitable building flat form could be obtained …

A subsequent inquiry to Tumut Shire Council 14 March 2006 indicated that if a geotechnical engineering report proved that a dwelling structure could be supported on the site and that all other council requirements were satisfied then a building approval may be achieved.

17 Mr McInerney concludes the assessment for the land value of the subject property to be $35,000. This valuation does not include the subject property having a building right.

18 At the Court’s request the respondent furnished a s 149 Certificate under the Environmental planning and Assessment Act wherein it is noted that the minimum area for the erection of a dwelling house is 150 ha and in the annexure to the certificate it states:

The principal purpose of the 1(a) Zone is the protection of agriculture. Council policy does not encourage use of the land for solely residential purposes.

Council’s records indicate that the subject land contains numerous mine shafts and areas of dredging. In addition council’s records also indicate the presence of mullock heaps on neighbouring properties that could present a hazard to the subject land. Council has previously advised that it would not consent to the erection of a dwelling on this land.

19 The general attachment states in respect of unmade roads that “council has adopted a policy not to extend its road network and will not approve development proposing access along an unformed road unless that road is constructed to council’s standard”.

20 It is noted that the Tumut Shire Council advised the applicant in February 2002 that the land has a building right preserved by virtue of cl 13(2)(a)(ii) of Tumut LEP 1990. However, council will not grant approval if the land:

a) is flood prone;
b) is unsafe due to the possibility of landslip or the presence of mullock heaps or mine shafts.

21 The council also advised the applicant by letter 21 October 2002 as follows:

1. The area of the land adjacent to Adelong Creek is clearly flood prone as indicated on council’s LEP map. There is also evidence of significant disturbance of this alluvial area and indications are that it has been dredged for gold extraction. Council will not consent to the erection of a dwelling on that land.

2. The land between the creek of flats and Victoria Hill Road is flood free but has two major constraints:


a) There are mine shafts of indeterminate depths in various locations across the land. Council’s records do not indicate the extent to which drives have been extended underground from these shafts. The east of Victoria Hill Road on Crown land leased by the Adelong Land Company, extensive mullock heaps are located on the steep hillside. While these mullock heaps appear to be stable they must be regarded as a potential hazard to your land.

Consequently council would not approve a dwelling on that area of land either due to these hazards.

My inspection did not reveal any location of your land that would be free of potential hazard. While council can consider a development application for erection of a dwelling house the potential hazards prevent council from granting consent.

22 Mr Magann for the applicant advised the Court that the market value for a similar parcel of land is virtually non-existent. In his opinion Sale No. 1 has significant differences to the subject site even though it is within close proximity. He said this is because of the nature of the subject land in that Sale No. 1 is significantly superior being an alluvial garden with superior access from the road. In his view the subject site is rough grazing land and could not be pasture improved by more than 50% because of the rocky undulating nature of the ground and the evidence of depressions from mining. As such in his opinion it is of little use for agricultural purposes and furthermore it would be difficult to gain approval for a dwelling house. He considers that the ability to build a dwelling house on land in Adelong increases the values by some $45-50,000 as evidenced by the sale of residential blocks in the Village Zone. Furthermore, the subject land would require geotechnical reports, costs to run power and the need to extend the road for two-wheel access. He also comments that the Tumut market would bring close to twice the residential values of Adelong.

23 Mr Magann stated that the residential blocks in Adelong are also not good comparisons with the subject lot and that the most comparable sale is No. 43, Victoria Hill Road. However, this is a much superior property even though it is only approximately 1 ha (compared to 3.15 ha) because of its location, agricultural use and the building right attached to the site without the constraints of the subject site.

24 Mr Magann provided a market opinion/appraisal of the subject land to the applicant of $20,000, noting however, that market evidence for a similar parcel of land is virtually non-existent.

25 The applicant offered to donate the subject land to the council free of charge. However, council advised that it rejected it on the grounds that the land will serve no useful community purpose.

26 The difficulty in assigning a value to the subject land is that there are great variations in topography and constraints in particular previous mining activity and access for 2-wheel drive vehicles for the subject site compared to the sales. The other significant variables are the zoning and whether the land has or can have a dwelling erected. Nonetheless the comparable sales are the best evidence to determine a land value for the property despite the fact that significant differences must be considered and factored in to the sales to provide a land value for the subject land.

27 I accept that Mr Magann has good local knowledge of the market. He considers that the sales 4 and 5 in Gocup near Tumut are in a different market to those in Adelong. He considers the ability to erect a dwelling in Gocup adds about $90,000 whereas in Adelong it adds between $40-$45,000. Mr McInerney stated the subject land with a dwelling right would have a value of $80,000 compared to $35,000 without, that is $45,000 is added for a building right. The difficulty with the Adelong properties is that two are residential blocks in the village where a dwelling house can be erected on each allotment with town services, however, they have utility in ascribing a value for a dwelling right. Sale No. 1 as submitted on behalf of the respondent is the most comparable. However, one must allow for significant variations compared to the subject site.

28 The major differences for sale 1 and the subject land are the use and agricultural potential of the land and the fact that a dwelling with town services could be erected. While the subject property is over 3 ha and No. 43 Victoria Hill Road is less than 1 ha, at the same time an adjustment for size is difficult to determine given the fact that the subject property has very little potential agricultural use whereas Sale No. 1 is a more fertile productive parcel of land that can be used for more intensive agricultural purposes as observed on the site inspection.

29 Mr McInerney has made an adjustment in favour of the subject property by 20% for size compared with sale 1. Having regard to the evidence of sales 4 and 5 that are of significantly superior land to the subject property for agricultural purposes he made an adjustment of only 15%. In my assessment these adjustments should have regard to the agricultural potential and 43 Victoria Hill Road should be adjusted to reflect its superior quality of productive land. As such it is not appropriate to adjust a parcel of 3 ha with little agricultural potential compared to a 1 ha productive parcel of land and therefore I do not accept Mr McInerney’s adjustment.

30 With respect to location Mr McInerney has adjusted Sale 1 by 15% in terms of being superior to the subject site and nil for topography. In my assessment having regard to the lack of town services and access for two wheel drive vehicles, the distance to travel the unmade road compared to Sale 1, and the topography and previous mining history making the subject property inferior to Sale 1, an adjustment of 10% should be made to Sale 1 that is $67,500. Mr McInerney’s $45,000 added value for a dwelling at Adelong provides a land value of $22,500 for the subject site. However the comparable sales for vacant village blocks with a building right would suggest $40,000 and $43,000 and therefore I have deducted $41,500 from $67,500 to determine a land value of $26,000 for the subject site. I accept the respondent’s submission that sale 1 is more comparable however the other sales assist in an understanding of the relevant variables.

31 Sales 2 and 3 are blocks of land within the Adelong Village Zone and are vacant sites with potential for the erection of a dwelling house and therein lies their value as agreed to by the experts. Therefore to factor-in 90% and 85% adjustment for the subject property being larger, appears to be a rather meaningless exercise. On the one hand the subject property has no approval for a dwelling and the probability of a dwelling being approved compared to Sales 2 and 3, is far less certain. The respondent reiterated that a building right has not been factored in to the value of the subject site. These sales are however of utility in terms of the value of the building right issues.

32 For Sales 4 and 5 the major difference for these two properties are that Sale 4 does not have a building right for a dwelling house whereas Sale 5 does. Sale 4 has an adjusted value of $65,000 and this is for nearly 10 ha of superior quality agricultural land compared to the subject site. Therefore if one was looking at the agricultural potential of the land as its best use without a dwelling house, the constraints of the subject property, would mean the value of Sale 4 is significantly greater compared to the subject site. Sale 5 is more difficult to compare having a building right and as noted by the experts this significantly increases the value of this land compared to Sale 4 although I accept Gocup is a different market. The quality of land of the subject property is marginal compared to Sales 4 and 5 and these are approximately 3 times the size of the subject property. As such given the agricultural potential and quality of land in sales 4 in a location that command higher prices a comparative analysis would provide a value for the subject land significantly less.

33 The respondent submitted that the applicant has not tried to get a development consent for a dwelling. However in terms of s 40(2) of the Act an applicant should not be required to submit a development application. Despite this submission the respondent’s valuation has not include a building right and the Court has determined the value of the subject land on this basis.

34 On the basis of the evidence submitted to the Court including the site inspections, the s 149 certificate, the evidence of the experts and the comparable sales, in my overall assessment having regard to the necessary adjustments required, the valuation of the subject land as at the base date of July 2004 is adjusted from $35,000 to $26,000.

35 Accordingly the formal orders of the Court are:

1. The appeal in respect of the property being Lot 64, 70 and 1053 in DP757211 Victoria Hill Road, Adelong, is upheld in part.

2. The valuation of $35,000 for the above property as at the base date of 1 July 2004, is adjusted to $26,000.

3. The exhibits are returned.

___________________
J S Murrell
Commissioner of the Court
Rjs/ljr