Eric Roberts Investments v Valuer General

[2004] NSWLEC 304

Land and Environment Court

of New South Wales

CITATION:	Eric Roberts Investments & Ors v Valuer General [2004] NSWLEC 304
PARTIES:	APPLICANT Eric Roberts Investments & Ors RESPONDENT Valuer General
FILE NUMBER(S):	30068 of 2004
CORAM:	Bly C
KEY ISSUES:	Valuation of Land :- Access - size and character
LEGISLATION CITED:	Valuation of Land Act 1916
CASES CITED:
DATES OF HEARING:	27/05/2004
DATE OF JUDGMENT:	06/21/2004
LEGAL REPRESENTATIVES:	APPLICANT Mr J Maston, barrister SOLICITORS Hertzberg Heydon RESPONDENT Mr A Pickles, barrister

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Bly C

21 June 2004

30068 of 2004 Eric Roberts Investments & Ors. v Valuer General

JUDGMENT

1 This is an appeal under s 37 of the Valuation of Land Act, 1916 against the Valuer-General's determination of the land value of certain land off Jonson Street, Byron Bay, being Lot 8 DP 617509 ("the site"). At base date 1 July 2002 the notified land value is $1,570,000 and the respondent contends, that this value is supported by the evidence of its expert and the comparable sales evidence. The applicant’s expert disagrees, contending that, based on comparable sales evidence the land value should be $1,100,000.

2 Whilst its address is 108-114 Jonson Street the site has no street frontage and relies on adjoining lands for access. There are no easements for this purpose. It is fairly level, has an irregular shape and has an area of 2,457 sq m.

3 The site is situated in a commercial area to the south of the Byron Bay central business district. This area generally comprises a wide range of commercial development mainly retail On the site there are some 15 single-storey shops, together with a carparking area and landscaping. It is adjacent to two large commercial developments including a supermarket, picture theatre and specialty shop complex, it also adjoins a large backpacker accommodation development. The rear of the site abuts the Northern Railway Line corridor.

4 The site is zoned 3(a) Business Zoning under Byron Local Environmental Plan 1988.

The evidence

5 Expert written and oral valuation evidence was given on behalf of the respondent by Mr R H Druitt and on behalf of the applicant by Mr O J Allsop. The site and the nearby comparable sales as utilised by these experts were inspected by the Court.

The comparable sales

6 The experts each provided detailed information in relation to five comparable sales, which they utilised in reaching their respective positions. Of these sales there were two, which they agreed were the most comparable although they disagreed as to the priority in which they should be applied to the site. I agree that these sales being 6 Marvel Street and 90 Jonson Street would provide sufficient evidence and can be appropriately utilised to determine the land value of the subject site.

7 I also agree that the approach taken by both experts which involves adjusting the comparable sales firstly for time and then according to their particular characteristics to produce an average land value per square metre and applying this to the subject site so as to determine its land value. However the experts disagreed as to the precise manner of adjusting the sales for time and their differing characteristics.

Adjustment for time - 6 Marvel Street

8 The experts agreed that the sale of 6 Marvel St. in November 2001 represents an average rate of $988 per sq m of site area. They also agreed that an increase of 5% to adjust the rate from the sale date to the base date, a period of 8 months, was appropriate resulting in an average rate of $1037 per sq m of site area.

Adjustment for time - 90 Jonson Street

9 The experts agreed that the sale of 90 Jonson St. in July 2001 represents an average sale value of $846 per sq m of site area. However they did not agree in relation to an adjustment for the time difference of 12 months between the sale date and the base date.

10 Mr Allsop argued for an increase of 5% to $888 per sq m of site area. He did not accept that the additional four months time difference by comparison with the Marvel Street sale required an increase above the 5% adopted in that instance. This is because he believed that in the four months there was no evidence to indicate any movement in prices.

11 However, Mr Druitt argued for an increase of 15% which when applied produces an average sale value of $972 per sq m of site area. He explained that the 15% was consistent with sales of industrial land in Byron Bay over a similar period.

12 I find no comfort in either of the positions taken by the experts. By reference to their 5% agreement in relation to the Marvel Street property, which I consider to be reasonable, I fail to understand how they could not reach an agreement in relation to the Jonson Street property. In the absence of specific evidence to the contrary I do not accept that there was no price movement at all in the relevant 4 month period. I also do not accept that sales of industrial land some distance away can be any more than a rough indication that land values are generally increasing.

13 In the circumstances I have decided that it is appropriate to simply extrapolate the 5%, which applies to the 8 month period, to the relevant 12 month period. This results in a rate of 7.5% and applying this to the agreed $846 results in an average sale value of $909 per sq m.

Analysis of the characteristics of comparable sales

14 The experts essentially agreed that the average sale values of the comparable sales, having been adjusted for time, need to be further adjusted before they can be applied to the subject site. The relevant agreed adjustment characteristics are location, size and access. Despite this agreement the experts disagreed as to how these characteristics should be applied and in most instances the extent to which they should be applied.

15 Mr Druitt was of the opinion that the average sale value of each of the comparable sales should first be concurrently adjusted for location and size and the resulting value subsequently further adjusted for access. Mr Allsop believed that the three characteristics should be concurrently applied.

16 In support of his approach Mr Druitt explained that the access characteristic should be treated differently because access to the site could be resolved by way of negotiation to purchase such access and this would involve a fixed amount, not a percentage. Access is a physical quality but is to be distinguished from the other features of the site, being a risk factor and should therefore be dealt with separately. Despite this he applied a final 30% adjustment at the end stage of his comparative analysis.

17 Whilst he accepted that 30% was the correct adjustment for the access characteristic, Mr Allsop disagreed that it should be separately applied. He explained that there was no reason to distinguish lack of access from the other characteristics just because the problem could be resolved by the purchase of additional land or an easement. The bringing together of the various characteristics and making a single adjustment is all that is required, this being the approved method.

18 I have not been persuaded that the approach of distinguishing one site characteristic from other site characteristics in the manner advocated by Mr Druitt is correct. More particularly, access to this site, whilst highly problematical in this case, is simply another site characteristic like, for example, dimensions, area and topography, which is to be taken into consideration. The fact that the access problem could be resolved by the purchase of additional land makes no difference, this being an approach which could resolve other site disadvantages such as, for example, size. Given that the 30% adjustment for access has been agreed, I agreed that it should be applied together with the adjustments for location and size.

Analysis of location and size - 6 Marvel Street

19 Number 6 Marvel Street is in the same zone as the subject site but having an area of 1012 sq m is significantly smaller. It has a 20 m frontage to Marvel Street, has a rear lane access and is developed with an older style cottage. Whilst it is only a short distance away in Marvel Street, it is located in a less intense "fringe" commercial location.

20 In terms of location and by comparison with 6 Marvel Street which is essentially a side street, the site is superior, being in the Jonson Street commercial area. Unlike Jonson Street, Marvel Street cannot be said to be in a prime retail area. Unlike the Marvel Street property which has street frontage exposure and the site instead has an exposure to adjoining commercial properties. Taking these matters into account I accept that by comparison the site warrants a 20% increase.

21 In terms of size the site is significantly larger than 6 Marvel Street and it is a well established principle that larger sites have lower average values per sq m. In this context I accept that by comparison the site warrants a 15% reduction.

22 Taking into account a 30% reduction for access, a 20% increase for location and a 15% reduction for size I therefore reduce the average, adjusted for time, sale value of 6 Marvel Street by an aggregate 25%, from $1037 to $778 per sq m.

Location and size - 90 Jonson Street

23 Number 90 Jonson Street is in the same zone as the subject site and has a significantly larger total site area of 5,419 sq m. It has a frontage to Jonson Street and is developed with single storey retail shops plus landscaping and carparking. It is only one property removed to the north of the subject site and has many similar characteristics in terms of its location and surrounding development.

24 In terms of location and by comparison with 90 Jonson Street and whilst being close-by and very similar, the site would be inferior given that it has an irregular shape and no street frontage exposure. It does however have a frontage to other retail/commercial development. In the circumstances I accept that the site warrants, by comparison, a 25% reduction.

25 In terms of size the site is significantly smaller than 90 Jonson Street and applying the principle that larger sites have lower average values per sq m this would indicate that, by comparison, the site would have a higher average value per sq m. The experts contend that the adjustment for size should be 10% or 20% and I accept that a 15% increase would be appropriate.

26 Taking into account a 30% reduction for access, a 25% reduction for location and a 15% increase for size I therefore reduce the average, adjusted for time, sale value of 90 Jonson Street by an aggregate 40% from $909 to $545 per sq m.

Determination of land value for the site

27 Applying the adjusted average sale value for 6 Marvel Street of $778 per sq m to the site area of 2457 sq m produces a rounded land value of $1.91 million. Applying the adjusted average sale value for 90 Jonson Street of $545 per sq m to the site area produces a rounded land value of $1.34 million.

28 Whilst Mr Druitt said that the 6 Marvel Street sale was the most comparable I agree with Mr Allsop that because of their close proximity and having much the same commercial character the 90 Jonson Street provides the best basis for the determination of the land value of the site. Nevertheless the Marvel Street sale should not be disregarded. Hence the land value of the site should be somewhere between the two calculated values but closer to that for 90 Jonson Street.

Court's determination of land value for the site

29 In all of the circumstances I have decided that the land value for the property known as 108 -114 Jonson Street, Byron Bay, should remain unchanged at $1.57 million.

30 The orders of the Court are that:

1. The appeal is dismissed.
2. The land value for property number: 0167-1188 - Byron, being Lot 8 DP 617509 and described as 108-114 Jonson Street Byron Bay at base date 1 July 2002 is $1,570,000.
3. The exhibits are returned.
T A Bly
Commissioner of the Court
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