Malicki v Valuer General
[2009] NSWLEC 1165
•28 May 2009
Land and Environment Court
of New South Wales
CITATION: Malicki v Valuer General [2009] NSWLEC 1165 PARTIES: APPLICANT
RESPONDENT
Mr S Malicki
Valuer GeneralFILE NUMBER(S): 30979 of 2008 CORAM: Parker AC KEY ISSUES: VALUATION OF LAND :- Land Value LEGISLATION CITED: Land and Environment Court Act 1979
Valuation of Land Act 1916
Great Lakes Local Environmental Plan 1996DATES OF HEARING: 20 April 2009
DATE OF JUDGMENT:
28 May 2009LEGAL REPRESENTATIVES: APPLICANT
Mr S Malicki (litigant in person)RESPONDENT
Mr G Newport (Barrister)
Instructed by Mr P Rankins (Solicitor)
for Valuer General
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESParker AC
28 May 2009
JUDGMENT30979 of 2008 Malicki v Valuer General
1 This is an appeal by Mr S Malicki (the Applicant), under Section 37 of the Valuation of Land Act 1916 (the Act), against the Land Value assessed by the Valuer General (the Respondent) in respect of the property known as 43 Elouera Crescent, Forster (the subject property).
Background
2 The Applicant represented himself.
3 The Respondent was represented by Mr G Newport, Barrister, instructed by Mr P Rankins, Solicitor for the Valuer General.
4 The Land Value of the subject property at 1st July 2007 (the Base Date), was assessed by the Applicant at $360,000 and by the Respondent at $410,000.
5 The matter was the subject of a conference under Section 34 of the Land and Environment Court Act 1979 but the parties were unable to reach agreement.
6 The matter was the subject of an on site inspection on 20th April 2009, followed by a hearing in Forster Courthouse.
7 Section 40(2) of the Act states:
- "On an appeal, the appellant has the onus of proving the appellant's case."
The subject property
8 The subject property comprises a single storey brick and tile house on a relatively level rectangular block with an area of approximately 557.4 square metres, fronting square onto Elouera Crescent, a quiet, narrow loop road.
9 Significantly, the rear boundary of the subject property comprises approximately 15 metres of waterfront abutting a narrow canal with a streetscape view of residential property on the other side of the canal.
10 The subject property is zoned 2(a) Low Density Residential in the Great Lakes Local Environmental Plan 1996, a zoning within which use for dwelling-houses is permissible with development consent.
11 The highest and best use of the subject property was agreed to be the current use.
12 The subject property comprises Lot 67 DP245073.
The issues
13 The Applicant raised ten issues for consideration in support of the contention that the Land Value as at the Base Date was $360,000.
14 Issues 1 to 5 inclusive concerned the trend in market values, with the Applicant contending that improved residential property in the Forster Keys area had fallen in price by up to 25% between 2004 and the base date.
15 Issue 6 concerned deterioration in Forster Keys canals over the last thirty years through progressive silting, stagnation and diminishing water quality, which the Applicant contends to have an adverse effect on value.
16 Issue 7 concerned a lack of demand for residential property in the current market, which the Applicant contends to have an adverse effect on value.
17 Issues 8 and 9 concerned the construction cost of residential property, with the Applicant contending the cost of construction of the subject property improvements to be $150,000 and construction costs to range from $980-$1,580psm.
18 Issue 10 concerned the use of a small sample of waterfront sales by the Respondent in the valuation process, with the Applicant contending insufficient regard to market conditions, land size, water views and additional land improvements.
The evidence
19 The Applicant tendered as evidence a statement dated 14th April 2009 proposing the Land Value to be $360,000 as at the Base Date.
20 The Applicant did not tender any expert valuation evidence.
21 Mr Lewis, Registered Valuer, tendered as evidence a valuation of the subject property dated 12th March 2009 and gave expert evidence on behalf of the Valuer General. He considered the Land Value of the subject property of $410,000 as at the Base Date to be correct.
22 The parties submitted four common comparable sales, with the Applicant submitting four further comparable sales and the Respondent submitting one further comparable sale.
23 The parties submitted common comparable sales at 37 Elouera Crescent, 24 King George Parade, 23 Elouera Crescent and 17 Wyuna Place which were inspected externally. I note that the canal frontage of 23 Elouera Crescent was not inspected.
24 The Applicant further submitted four comparable sales at 18 Supply Avenue, 12 Roebuck Key, 46 Wyuna Place and 47 Wyuna Place which were inspected externally. I note that the canal frontage of 12 Roebuck Key was not inspected.
25 The Respondent further submitted one comparable sale at 30 Wyuna Place which was inspected externally.
Consideration of the evidence
26 Having regard to the date of sale, site area, length of canal frontage, width of canal, nature of views, nature of street, street aspect, site shape and location, the nine comparable sales may be compared with the subject property as follows.
27 37 Elouera Crescent, submitted by both parties, is in a comparable location and of a comparable size to the subject property with the same quiet, narrow loop road. The property is triangular in shape, fronts on to a wider canal junction with more expansive views and was sold around seven months after the Base Date. However, the property has a considerably longer canal frontage than the subject property, having angular street frontage and a reserve adjacent. Having regard to the considerable comparability of this sale to the subject property, I consider the sale to be a directly relevant comparable sale.
28 24 King George Parade, submitted by both parties, is comparable to the subject property in that it fronts a narrow canal with a streetscape view of residential property on the other side of the canal, comprises a rectangular block, fronts square on to the street and was sold close to the base date. However, the property is in a different location to the subject property, has a larger site area, has a longer canal frontage and fronts a busy arterial road. Having regard to the comparability of this sale to the subject property, I consider the sale to be an indirectly relevant comparable sale.
29 23 Elouera Crescent, submitted by both parties, is in a comparable location to the subject property with the same quiet, narrow loop road and similar canal frontage being sold close to the Base Date. The property is triangular in shape, fronts on to a wider canal and has angular street frontage. However, the property is considerably larger than the subject property and enjoys considerably superior lagoon views. Having regard to the comparability of this sale to the subject property, I consider the sale to be an indirectly relevant comparable sale.
30 17 Wyuna Place, submitted by both parties, is a rectangular block with the house fronting square onto the street, has a streetscape view of residential property on the other side of the canal and was sold close to the date of valuation. However, the property is in a different location to the subject property, has a considerably larger site area, has a considerably longer canal frontage, fronts a wider canal and fronts a wider, straight road. Having regard to the limited comparability of this sale to the subject property, I consider the sale to be of limited relevance.
31 18 Supply Avenue, submitted by the Applicant, comprises a rectangular block, with a comparable site area and canal frontage to the subject property, fronts a narrow canal with a streetscape view of residential property on the other side of the canal and is situated on a narrow loop road. However, the property is some distance from the subject property, faces a reserve and the date of sale was not tendered in evidence. Having regard to the comparability of this sale to the subject property, I consider the sale to be an indirectly relevant comparable sale.
32 12 Roebuck Key, submitted by the Applicant, comprises a rectangular block, with a comparable canal frontage to the subject property, fronts a narrow canal with a streetscape view of residential property on the other side of the canal, is situated on a cul de sac, fronts square on to the street and sold close to the Base Date. However, the property is some distance from and larger than the subject property. Having regard to the comparability of this sale to the subject property, I consider the sale to be an indirectly relevant comparable sale.
33 46 Wyuna Place, submitted by the Applicant, comprises a rectangular block, with a comparable canal frontage to the subject property, comparable site area and fronts square on to the street. However, the property is in a different location to the subject property, fronts a wider canal, has considerably superior lagoon views, is situated on a wider, straight road and sold around seven months after the Base Date. Having regard to the comparability of this sale to the subject property, I consider the sale to be an indirectly relevant comparable sale.
34 47 Wyuna Place, submitted by the Applicant, sold close to the Base Date and has a comparable streetscape view of residential property on the other side of the canal to the subject property. However, the property is in a different location to the subject property, fronts a wider canal, is situated on a wider, straight road, is set back from the street on a battle axe block, has a longer canal frontage and a considerably larger site area than the subject property. Having regard to the limited comparability of this sale to the subject property, I consider the sale to be of limited relevance.
35 30 Wyuna Place, submitted by the Respondent, sold close to the Base Date and is of a comparable site area to the subject property, being a rectangular block with the house fronting square on to the street, having comparable canal frontage and being on a narrow canal. The property is in a different location to the subject property, has considerably superior lagoon views and is situated on a wider, straight road. Having regard to the considerable comparability of this sale to the subject property, I consider the sale to be a directly relevant comparable sale.
36 I consider the comparable sales at 37 Elouera Crescent and 30 Wyuna Place to be directly relevant comparable sales.
37 I consider the comparable sales at 24 King George Parade, 23 Elouera Crescent, 18 Supply Avenue, 12 Roebuck Key and 46 Wyuna Place to be indirectly relevant comparable sales.
38 I consider the comparable sales at 17 Wyuna Place and 47 Wyuna Place to be of limited relevance.
39 I note that the Applicant, in his statement dated 14th April 2009, analysed the directly relevant comparable sale at 37 Elouera Crescent by deducting construction costs of $750-$800psm from the sale price of $535,000 to deduce a land value of $401,000-$408,750. I also note that the Applicant did not make any further explicit adjustments to the comparable sale for differences to the subject property.
40 I note that the Respondent, in his valuation report dated 12th March 2009, analysed the directly relevant comparable sale at 37 Elouera Crescent by deducting construction costs of $625psm or $120,000 from the sale price of $535,000 to deduce a land value of $415,000. I note that the Respondent made no adjustment for size or location compared to the subject property, but adjusted upward by 2.5% for street aspect and downward by 2.5% for canal aspect resulting in an adjusted analysed land value of $415,000.
41 I note that the Applicant did not tender as evidence an analysis of the directly relevant comparable sale at 30 Wyuna Place.
42 I note that the Respondent, in his valuation report dated 12th March 2009, analysed the directly relevant comparable sale at 30 Wyuna Place by deducting construction costs of $800psm or $120,000 from the sale price of $580,000 to deduce a land value of $460,000. I note that the Respondent made no adjustment for size compared to the subject property, but adjusted upward by 2.5% for each of location and street aspect and downward by 2.5% for canal aspect resulting in an adjusted analysed land value of $471,500.
43 I note that the Applicant did not have regard to the comparable sales evidence in determining the Land Value of the subject property. The Applicant proposed an appraisal of improved value of $500,000 for the subject property, attributed a cost of improvements of $150,000 and derived an unimproved value of $360,000.
44 Having derived the adjusted analysed land values of $415,000 and $471,500 from the analysis of comparable sales, the Respondent considered the Land Value for the subject property of $410,000 to be correct. I note that the Applicant did not provide an explicit analysis of the derivation of $410,000 from the adjusted analysed land values of $415,000-$471,500.
Findings
45 Accepted valuation practice permits both explicit and implicit adjustment for differences, such as in location, area and time, to enable valuers to have evidentiary comparable values which, following adjustment, account for the various differences with the subject property. Such adjustment is generally based on a reasoning process drawing on the skill and experience of the valuer and undertaken to derive an opinion of value through a process of working forwards rather than a process of working backwards to justify an opinion of value previously formed.
46 Because properties are rarely identical, explicit and/or implicit adjustment for differences is obviously necessary but caution is required through making as few adjustments as possible, in a consistent manner, to ensure the reliability of the comparable sale when related to the subject property, with too much adjustment potentially rendering the comparable sale unsafe to use. Caution is, therefore, required where large explicit and/or implicit adjustments are required, with particular caution required for large implicit adjustments.
47 I note that under Section 40(2) of the Act, the Applicant has the onus of proof.
48 I note that the Applicant raised the trend in market values as Issues 1 to 5 inclusive, deterioration in the Forster Keys canals as Issue 6 and a lack of demand for residential property as Issue 7. However, I note that the Applicant did not then explicitly relate these issues to the analysis of comparable sales evidence provided by the Applicant or to the valuation of the subject property proposed by the Applicant.
49 Issue 8 raised by the Applicant effectively comprised the Applicants determination of the Land Vale of the subject property.
50 I note that the Applicant contends for a Land Value of $360,000 though the deduction of $150,000 estimated construction cost from the appraised value of $500,000 indicates a residual of $350,000.
51 I note that the Applicant derived Land Value by deducting the cost of improvements from an appraisal of the improved subject property, rather than through the application of comparable sales evidence of improved property adjusted to have regard to the improvements.
52 I consider this approach to be unsatisfactory as it is reliant upon an appraisal of the improved subject property rather than a sale or valuation and does not have regard to comparable sales evidence of improved property tendered by the parties in this matter.
53 I note that the Applicant, in his statement dated 14th April 2009, attached appraisals from real estate agents in December 2007 ranging from $480,000 to $510,000 and in April 2008 ranging from $500,000 to $540,000. Having regard to the passage of time from the Base Date, the wide range of appraisals tendered and the absence of a valuation, I do not consider that the appraisals tendered support the Applicants appraisal of $500,000 for the improved subject property as at the Base Date.
54 I note that the Applicant estimates the construction cost of $150,000 to comprise $30,000 for jetty, wharf, revetment walls, fences, driveway and landscaping and $120,000 for the residence. I further note that the Applicant estimated an adjusted area of the residence up on the subject property to be 140sqm, equating to an adjusted construction cost of approximately $857psm.
55 I note the adjusted construction cost of $857psm adopted by the Applicant is some way below the range of $980-$1,580psm identified by the Applicant as Issue 9. I further note that the Applicant did not tender evidence to explain this difference.
56 Concerning the Applicants Issue 10 regarding sample size and consideration of market conditions, land size, water views and additional land improvements, I note that nine comparable sales were provided by the parties for consideration and nine aspects of each comparable sale were explicitly considered which I consider to be adequate for this matter.
57 Having regard to the evidence tendered, the cross examination and the summation presented, I consider the valuation of the subject property of $410,000 by the Respondent to be at the upper bounds of the supportable range of value having regard to the differences between the comparable sales tendered as evidence and the subject property.
58 Having regard to the evidence tendered, I consider that the Applicant did not present an approach to the valuation of the subject property sufficient to prove the Applicant's case as required by section 40(2) of the Act.
59 The orders of the Court:
- 1. The Appeal is dismissed.
2. The Land Value of $410,000 as at the base date of 1st July 2007 for the property known as 43 Elouera Crescent, Forster is confirmed.
3. No Order is made as to costs.
4. The exhibits are returned.
___________________
- Dr David Parker
Acting Commissioner of the Court
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