Endeavour Rowing Club Incorporated v Valuer General of New South Wales

[2010] NSWLEC 1099

Land and Environment Court

of New South Wales

CITATION:

Endeavour Rowing Club Incorporated v Valuer General of New South Wales [2010] NSWLEC 1099

PARTIES:

APPLICANT
Endeavour Rowing Club Incorporated

RESPONDENT
Valuer General of New South Wales

FILE NUMBER(S):

30777 of 2009

CORAM:

Miller AC

KEY ISSUES:

VALUATION OF LAND :- Highest and best use, special adapability, adjustment from comparable sale.

LEGISLATION CITED:

Valuation of Land Act 1916
Maitland Local Environmental Plan 1993

CASES CITED:

Toohey's Ltd v. Valuer General [1925] AC 439
Valuer General v. Fenton Nominees Pty Limited [1982] 150
Tetzner v. Colonial Sugar Refining Co Ltd [1958] AC 50
Maurici v. Chief Commissioner of State Revenue [2001] 51 NSWLR 673
Commissioner of Land Tax v Nathan (1913) 16 CLR 654
Peelmont Pty Ltd v The Valuer General, The Valuer , Volume 19, 384

DATES OF HEARING:

22 April 2010

 
DATE OF JUDGMENT: 

7 May 2010

LEGAL REPRESENTATIVES:

APPLICANT
Mr R Bennett (agent)

RESPONDENT
Mss M Carpenter (barrister)
SOLICITOR
Crown Solicitor

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Miller AC

7 May 2010

30777 of 2009 Endeavour Rowing Club Incorporated v Valuer General of New South Wales

JUDGMENT

1 This is an appeal under s 37 of the Valuation of Land Act 1916 (the Act) in respect of the land value assigned under s 6A (1) of the Act in respect of the property, 273 Duckenfield Road, Berry Park [Lot 132 DP 1061122] (the subject property), as at the base date of 1 July 2008.

2 Section 40 (2) of the Act states: "on an appeal, the appellant has the onus of proving the appellant's case. "

3 Land value is defined in s 6A (1) of the Act in the following terms:

The land value of land is the capital sum which the fee-simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona-fide seller would require, assuming that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner’s predecessor in title had not been made.

4 Land improvements are defined in s 4 of the Act and mean:

(a) The clearing of land by the removal or thinning out of timber, scrub or other vegetable growths,
(b) The picking up and removal of stone,
(c) The improvement of soil fertility or the structure of soil,
(d) The restoration or improvement of land surface by excavation, filling, grading or levelling, not being works of irrigation or conservation,
(dl) Without limiting paragraph (d), any excavation, filling, grading or levelling of land for the purpose of the erection of a building, structure or work, not being for the purpose of irrigation or conservation,
(e) The reclamation of land by draining or filling together with any retaining walls or other works appurtenant to the reclamation, and
(f) Underground drains.

Background

5 In response to the initial objection the Valuer General reduced the land value to $45,500. The applicant contended at the hearing that the land value should be further reduced to $19,245.

6 Mr M. Bryer, a Registered Valuer, gave evidence on behalf of the respondent. His uncontradicted description of the subject property was as follows:

The subject property is located at Berry Park, approximately 11.8km east of Maitland Central Business District and Council Administrative Centre. Berry Park is located within the Lower Hunter Valley of New South Wales and is approximately 33km north-west of Newcastle Central Business District and about 162km north of Sydney Central Business District.
Berry Park is accessible from Newcastle via the Pacific Highway and from Sydney via the Sydney to Newcastle F3 Freeway.
Berry Park is an established rural suburb, which is bounded by the Hunter River in the north, Raymond Terrace Road and Thornton in the south, Duckenfield and Millers Forest to the east and East Maitland, Tenambit and Morpeth to the west.
Provided within Maitland township is Council chambers, Courthouse, sub-regional shopping facilities, primary and secondary schooling, rail transport to Sydney and Newcastle, clubs, recreation areas and places of public worship.
The subject is on the northern side of Duckenfield Road, about 1.2km north-west of Eales Road intersection. Surrounding properties are generally of similar topography and cleared of vegetation. Adjoining to the west is a 9.37ha allotment which is pasture improved. Adjoining part of the eastern boundary is a smaller, battleaxe shaped riverfront allotment. Erected upon the land is a small machinery shed. This property is occupied by the Hunter Valley Grammar School.
The subject site comprises an irregular, battleaxe shaped, gently sloping and cleared allotment with frontage to the mean High Water Mark of the Hunter River. The frontage to Duckenfield Road is about 3.16m and from this point the land comprises a long battleaxe handle. The subject has a reciprocal right of carriageway with adjoining Lot 101. The subject is benefited by a 6m wide right of carriageway. The land falls slightly from Duckenfield Road and the majority of the battleaxe handle undulates gently and is below the level of Duckenfield Road.
The main section of the land (northernmost) also slopes gently and appears to have been filled to accommodate construction of the existing improvements. The ground level of the subject varies from about 0.5m to 1.5m above the level of adjoining Lot 131. The land generally rises from south-west to the man-made levee bank which traverses the property parallel to the Hunter River. From the top of the levee bank, the land falls gently to moderately to the Hunter River High Water Mark. Approximately 140° views to the north and east are enjoyed of the district and Hunter River from the levee bank standpoint.
Access from the subject to the Hunter River is satisfactory and at times at low tide, the property adjoins a sandy, pebble, narrow strip. An earthen/grass formed slipway has been excavated into the subject land at the northern corner. This is to facilitate boating access to the Hunter River.
The majority of the land is affected by 1% Annual Exceedence Probability Flooding and is within a floodway. The northern section of the land, which is the most elevated and the location of the existing improvements, varies in contour from about 1.5m AHD to a maximum of about 4.5m AHD. The flood level is approximately 6.2m AHD.
The southern portion of the land (about 55% of battleaxe handle) is not within a floodway.
Erected upon the land is timber post and wire fencing to south-western and north-western boundaries, a detached amenities building and 2 detached contemporary style machinery sheds.
The detached amenities building has rendered brick walls, a concrete floor and curved colorbond roof. The southernmost machinery shed is colorbond clad, has a concrete floor and wall stacking height of about 6m. There are 3 ribbed metal roller doors providing access and there are 2 concrete aprons to the south-eastern and north-eastern elevations.
The northernmost machinery shed is also a colorbond clad building with a concrete floor and a wall stacking height of about 6m. This building has 3 ribbed metal roller door, vehicular access points and there is a mezzanine level which is accessed via an external staircase. Adjoining the south-eastern elevation is a steel framed awning which has a ribbed metal roof and concrete floor.
Services connected include power, telephone and town water.

7 The subject property is zoned 1(a) Prime Rural Land under Maitland Local Environmental Plan 1993 (as amended) gazetted September 3, 1993. The land does not have the benefit of a residential building entitlement.

8 While the subject property has an area of 7588 square metres, buildings can only be constructed on that part lying to the south of the levee bank; an area of approximately 3800 square metres.

9 Mr Bryer considers that the highest and best use of the subject property is for a lifestyle related activity associated with the Hunter River.

10 No expert evidence was adduced on behalf of the applicant although their Agent made extensive submissions in response to Mr Bryer's evidence including the differing nature of flooding on the Paterson and Hunter Rivers, the wind sheltered nature of that part of the Paterson River adjoining sale 1 and the reduced boat speed limit applying to the Paterson River.

The Concept of Land Value under the Act.

11 Section 6A(1) requires the assumption "that the improvements, if any, thereon or appertaining thereto, other than land improvements, and made or acquired by the owner or the owner's predecessor in title had not been made" The decision of the Privy Council in Toohey's Ltd v. Valuer General [1925] AC 439 clarified the meaning of this assumption: "Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken not only as nonexistent, but as if they had never existed".

12 The decision in Tooheys was approved by the High Court in Valuer General v. Fenton Nominees Pty Limited [1982] 150 CLR at 160. The decision in Tetzner v. Colonial Sugar Refining Co Ltd [1958] AC 50 was approved by the NSW Court of Appeal in Maurici v. Chief Commissioner of State Revenue [2001] 51 NSWLR 673 at 682 [29] stating that for the purposes of s 6A(1) " the subject land is to be valued as vacant, but located in the neighbourhood as it exists in the real world" which I understand to mean as the neighbourhood existed at the relevant base date

Comparable Sales .

13 Mr Bryer considered that three properties sold in 2008 and 2009 could be considered as being comparable, in the valuation sense of that word, to the subject property although, at the view, only two properties were inspected and reliance was placed solely on these two. Details are set out on Annexure A to this judgment.

Application of Comparable Sales.

14 Neither sale can be considered as directly comparable to the subject property necessitating a number of substantial adjustments. Of the two sales it readily became apparent that sale 1 in Old Punt Road, Hilton was the most comparable.

15 Mr Bryer made the following adjustments to the deduced land value of $35,000 of sale 1 for comparison to the subject property in the following sequence; Less 25% for location; plus 25% for direct access to the high water mark of the Hunter River, aspect and views; plus 30% for size; plus 15% for timing on the basis that the market had declined between 1 July 2008 and 24 October 2008 resulting in a land value of $49,055b. In coming to his conclusion he made no allowance for environmental issues, flooding or topography. As both sale 1 and the subject property have no dwelling house entitlement no adjustment for this feature was necessary. Mr Bryer did not make a similar detailed comparison in respect of sale 2.

16 Land value must be assessed on the basis of the highest and best use of the subject property. In coming to a view as to what is the highest and best use of the land the hypothetical bona-fide seller is entitled, consistent with the judgment of the Privy Council in Tetzner , to have regard to the actual use of the subject property up to the base date even though for the purposes of section 6A(1) the improvements thereon, except land improvements, are to be disregarded:

" "In the view of their Lordships the learned judge has here misdirected himself. It is not be "operations" of the sugar mill that have to be disregarded but the improvements consisting of the sugar mill and its accessories as physical entities""

17 On this point, see also Commissioner of Land Tax v Nathan (1913) 16 CLR 654 at 662.

18 The judgment of Sugerman J in Peelmont Pty Ltd v The Valuer General, The Valuer , Volume 19 384 at 388 is also important.

" "The relevant matter in determining the capital sum which "the fee simple of the land" might be expected to realise bearing in mind that the sale envisaged for this purpose is a hypothetical transaction between a hypothetical vendor and a hypothetical purchaser, is, rather, the suitability of the land itself, or any special adaptability or advantage which it may have for the purpose in question. It is in this respect that the history of the subject land has relevance.""

19 The hypothetical bona-fide seller of the subject property, as envisaged under s 6A(1), is entitled to take into account the following facts:

• The subject property has been used as the site for a rowing boat club by two organisations (being the applicant and the University Rowing Club who lease one of the buildings) for some years;
• The adjoining land to the east (Lot101 DP 851765) is owned by the Hunter Valley Grammar School. Erected on the land is a boat shed which, together with the land, is used by the school for its rowing boat activities;
• The subject property extends to the high water mark of the Hunter River;
• Upstream of the subject property is a straight or nearly straight stretch of the Hunter River, approximately one and a half kilometres in length, on which between five and eight regattas are held each year with the finishing line opposite the subject property;
• Parking for regatta participants, their trailers and spectators is provided partly on the subject property and partly on Lot 101 adjacent; and,
• The access track from Duckenfield Road was not sealed and although in poor condition at the base date was still usable.

20 It is significant to note that Mr Bryer made no allowance for what I consider to be the special adaptability and advantages of the subject property for its long-standing use up to the base date.

21 The adjustments which I have made to the deduced land value of the Old Punt Road property are accordingly different from those of Mr Bryer. In sequence they are: plus 15% for timing; minus15% location; plus 50% to reflect the special adaptability and advantages for its use as the site for a boat rowing club which would be apparent to and would be taken into account by the hypothetical bona-fide seller.

22 From the total sum, so calculated, of $51,319 I deduct an amount of $5,000 to reflect the fact that the hypothetical bona-fide seller would accept the fact that some upgrading works were necessary to the access road resulting in a figure of $46,319.

23 In my opinion the applicant has not discharged the onus of proof as required under section 40 (2) of the Act in contending for a land value of $19,245.

Conclusion

24 The court is not persuaded that the Valuer General's assessment of the land value of the subject property, as at 1 July 2008, in the sum of $45,500 is wrong.

25 The Orders of the Court.

1. The appeal is dismissed.
2. No order is made as costs.

___________________

E. Craig Miller,
Acting Commissioner of the Court
ljr

Annexure "A"

Comparable Sales

1. Lot 1 DP 795443, Old Punt Road, Hinton (Port Stephens Local Government Area)

• Date of sale. 24 October 2008.
• Settlement date. 17 December 2008.
• Vendor/purchaser. Gear/Frazer.
• Zoning. 1 (a) (Rural Agriculture "A" zone) under Port Stephens Local Environmental Plan 2000.
• Land area. 36,420 square metres.
• Sale price. $35,000.
• Improvements. Nil with the exception of rural type boundary fencing.
• Features and remarks. A rectangular shaped parcel located towards the southern end of Old Punt Road close to the confluence of the Paterson and Hunter Rivers. The rear boundary adjoins the Paterson River. The rear boundary is not to the high watermark of the river as, over the years, the river has moved to the west with the riverbank now being located approximately 18 m from the rear boundary. At the time of inspection the river level was some 2 m below the level of the river bank. A levee bank, generally parallel to the river, has been constructed on the land some 20 m from the rear boundary. The land is subject to flooding and is located in a high hazard floodway. Subject to council approval there is the potential to construct a shed on the land but a residential building is not permitted. The Old Punt Road reservation is 20.115 m wide; the roadway itself is formed but not sealed. The land is located within level and easy walking distance of Hinton Village.
• Deduced land value. $35,000

2. Lots1A, 2A and 6A DP9901, High Street, Hinton. (Port Stephens Local Government Area)

• Date of sale and settlement. 3 March 2009.
• Vendor/purchaser. Flynn/Dark.
• Zoning. As per sale 1.
• Land area. 21,664 square metres.
• Sale price. $95,000.
• Improvements. Rural type boundary fencing and a small set of cattle yards located adjacent to High Street.
• Features and remarks. The land is situated within a high hazard floodway. A levee bank has been constructed parallel to the Paterson River and traverses the land close to the western boundary. The land could be described as being somewhat triangular in shape. It has the benefit of a frontage of approximately 180 m to a narrow strip of land adjoining the Paterson River to which comparatively easy access is available. At the time of inspection the river level was between one and 2 m below the level of the riverbank. High Street is a sealed road. The property is within level and easy walking distance of Hinton Village. Subject to council approval a shed could be constructed on the land but a residential building is not permitted.
• Deduced land value. $95,000.