Hanna v Valuer General

[2004] NSWLEC 544

Land and Environment Court

of New South Wales

CITATION:

Hanna v Valuer General [2004] NSWLEC 544

PARTIES:

APPLICANT
Rifaat G Hanna

RESPONDENT
Valuer General

FILE NUMBER(S):

30527 of 2004

CORAM:

Bly C

KEY ISSUES:

Valuation of Land :- determination of land value of land zoned neighbourhood business - use of comparable sales in residential zone

LEGISLATION CITED:

Valuation of Land Act 1916
Rockdale Local Environmental Plan 2000

CASES CITED:

DATES OF HEARING:

02/09/2004 - 03/09/2004

EX TEMPORE
JUDGMENT DATE :

09/03/2004

LEGAL REPRESENTATIVES:

APPLICANT
Mr R G Hanna, LIP

RESPONDNET
Ms T Towett, solicitor
Instructed by
Ms S Gordon
Valuer Generals

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Bly C

3 September 2004

30527 of 2004 Rifaat G Hanna 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 the property known as 3-7 Clarence Road Rockdale.

2 The triangular shaped site has a frontage to Clarence Road of about 59 m and northern boundary to a laneway of about 38 m and an area of about 847 sq m.

3 The site is included in zone number 3(c) Neighbourhood Business under the Rockdale Local Environmental Plan 2000 which permits inter alia with development consent attached dual occupancies, child care centres, commercial premises, dwelling houses, shops and restaurants.

4 At base date 1 July 2003 the notified land value is $620,000. The respondent relies on the evidence of its valuation expert Mr M Edmondson who maintains that sales of properties comparable to the subject property provide the best evidence of value and that the comparisons, which he has made support the notified value.

5 Relying on the evidence of his valuation expert Mr M Casemore who contends that the capitalisation method is appropriate in this case the applicant submits that the land value should be $480,000. He explained that he had used this method in the absence of any comparable sales of land in the 3(c) zone, which applies to the subject site. He did however explain that the method of calculating this figure was unusual because the existing lease for the property was not being strictly complied with in that the owner is not insisting that the tenant pay for outgoings. If the lease were strictly applied then the valuation would be higher.

6 Mr Edmondson provided in his report a table at Schedule 1, which details five different sales which he compared to the subject property. These sales all relate to land, which is zoned 2(a) residential under the LEP. Because of the difference in zones between these sales and the subject property, Mr Casemore argued that this approach was inappropriate and thus the capitalisation method should be used.

7 However, Mr Edmondson in effect contended that a comparison of the permissible land uses in the two zones points to a similarity between them. An examination of the two land use tables in the LEP reveals for example that both zones permit with development consent attached dual occupancies, child care centres, community facilities, detached dual occupancies, dwelling houses, guest houses and housing for older people or people with a disability.

8 Mr Casemore argued that notwithstanding these similarities, objective (a) of the 3(c) zone should be taken into account. This objective provides that:
(a) to provide a level of local retail and commercial facilities which services the immediate residential community.

9 Because the objective refers to retail and commercial facilities and not for example to residential uses, there is in his opinion less likelihood of such use as being approved by the consent authority and thus the two zones are not comparable.

10 I do not agree with this interpretation. Clause 12(3) of the LEP contains an important threshold test and provides that:
Except as otherwise provided by this plan, consent must not be granted for development on land within a zone unless the consent authority is of the opinion that carrying out the proposed development would be consistent with one or more of the objectives of the zone.

11 Objective (b) of the 3(c) zone provides that:
(b) to ensure that the nature, scale and type of development is compatible with adjacent residential development.

12 I heard no evidence to suggest that any of the land uses which are permissible in both the 3(c) zone and the 2(a) zone referred to earlier would be incapable of being designed so as to meet this objective. Hence I can make the general assumption that cl. 12(3) of the LEP would be complied with.

13 In these circumstances and accepting that objective (a) of the 3(c) zone needs to be taken into consideration, I do not accept that this means that the land uses to which I have referred would be incapable of being approved. This must be so otherwise a reference to those land uses in the land use table as being permissible would have no work to do.

14 I therefore accept that the sales in the 2(a) zone as referred to by Mr Edmondson can be utilised subject to appropriate adjustment for size, shape, locality, et cetera.

15 It is beyond dispute that the valuation of land is best achieved by the utilisation of comparable sales and that is the approach that can and should be utilized in this instance. This can be done by utilising Mr Edmondson’s table in Schedule 1of his report.

16 There was much argument as to whether the present use of land would comprise the highest and best use of it as compared to some other use that might otherwise be permissible. However, given what I have already decided as to how the valuation of this land can be ascertained, including if necessary, the need to make an adjustment for the difference in the two zones, there is no need for me to determine what the highest and best use of the land would be I will nevertheless make reference to this later.

17 Mr Edmondson told the Court that because it has the greatest number of similarities to the subject site, the nearby sale No. 1 at 20 Villiers Street Rockdale was the most comparable. I accept this noting that the other sales are in Kogarah, Bexley and Arncliffe.

18 This particular sale was adjusted by Mr Edmondson in terms of area and dimensions and allotment shape. He made no adjustment for location, topography and zoning. In relation to the zero zoning adjustment, he argued that this should reflect the restrictions, particularly the objectives associated with the 3(c) zone by comparison with the 2(a) zone.

19 Notwithstanding his objections to the comparable sales approach, Mr Casemore commented on the adjustments to sale No. 1 and was particularly concerned at the adjustments for zoning and allotment shape. In relation to the zero zoning adjustment, he argued that this should reflect the restrictions, particularly the objectives associated with the 3(c) zone by comparison with the 2(a) zone. He also pointed out that the present commercial facilities on the site are obviously poorly performing and taking into account the cost of redevelopment this indicates that this is not a good site for commercial redevelopment.

20 Mr Edmondson disagreed, pointing out the similarities in the land use tables and noting that some land uses may be more easily approved in the 3(a) zone. As I pointed out earlier, there are many similarities between the two zones with objective (a) of the 3(c) zone being an important difference. This objective would be taken into consideration when dealing with any development application for this site and on the surface would appear to be not insurmountable but nevertheless an impediment to residential development.

21 There was much discussion in the context of the highest and best use of the site as to how it would be likely to be redeveloped if redevelopment were contemplated. And it seems that a child care centre or a dual occupancy development perhaps together with shops is the most likely form of such development.

22 Despite the zone objective it seems to me that on balance a dual occupancy development or a child care centre on either the subject site or on the site of sale No. 1 would face a similar degree of difficulty, although those difficulties may in themselves be different, in obtaining any approval. This confirms in my view the zero adjustment advocated by Mr Edmondson.

23 The second area of disagreement was in relation to the triangular shape of this site by comparison with the regular shape of sale one. Mr Edmondson said that the adjustment should be minus 10% and Mr Casemore said that the adjustment should be minus 35 or 40%. In the absence of a detailed design analysis in relation to possible development proposals, this adjustment can be no more than a subjective estimate and I expect an appropriate figure would be somewhere between the two. I do however accept what Mr Edmondson said in this context, that despite its shape disadvantages the difficulty is not extreme given the size of the site.

24 In the circumstances I would adopt an adjustment of minus 20%. Therefore combining the unopposed adjustment of plus 5% for area and dimensions and minus 20% for shape and making no adjustment for zoning, this gives a total adjustment of minus 15%. Applying this to the purchase price rate per square metre for sale No. 1 of $785 gives an indicative rate for the subject site of $667 per square metre. Multiplying this rate by the site area of 847.3 sq m gives an indicated total land value of $565,361.

25 I therefore adopt $565,000 as the land value for the property 3-7 Clarence Road Rockdale at base date 1 July 2003.

26 The orders of the Court are that:

1. The appeal is upheld.

2. The land value for land at 3-7 Clarence Road, Rockdale, Property Identification No. 1517612 Rockdale at base date 1 July 2003, is $565,000.

3. The exhibits are returned.

_______________________
T A Bly
Commissioner of the Court
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