Pyntoe Pty Ltd v Valuer General of NSW

[2012] NSWLEC 1201

Land and Environment Court

New South Wales

Medium Neutral Citation:

Pyntoe Pty Ltd & Anor v Valuer General of NSW [2012] NSWLEC 1201

Hearing dates:

15 and 16 May 2012

Decision date:

27 July 2012

Jurisdiction:

Class 3

Before:

Cowell AC

Decision:

(1)The appeal is upheld.

(2) The land value for the property at 506 Bunnerong Road, Matraville, NSW, as at the Base Date of 1 July 2010 is $748,250.

(3)The exhibits to be returned except exhibits A, B and 1.

Catchwords:

STATUTORY VALUATION - land value at base date - development potential

Legislation Cited:

Valuation of Land Act 1916
Randwick City Council Development Control Plan for Matraville Town Centre April 2006
Randwick City Council Development Control Plan Parking 1998
State Environmental Planning policy No 65 - Design Quality of Residential Flat Development

Cases Cited:

Gilles v Valuer General [2008] NSWLEC 1508
Pyntoe Pty Ltd & Gilles v Valuer-General of NSW [2011] NSWLEC 1207
Segal and Another v Waverley Council [2005] NSWCA 310

Category:

Principal judgment

Parties:

Pyntoe Pty Ltd & J. J. Gilles (Applicants)
Valuer General of NSW (Respondent)

Representation:

Ms P Becker (Applicants)
Ms M Carpenter (Respondent)
Solicitors
Giles Payne & Co (Applicant)
Crown Solicitors Office (Respondent)

File Number(s):

30767 of 2011

Judgment

1. This appeal is a statutory valuation appeal relating to property 506 Bunnerong Road, Matraville, over the Valuer General's valuation of the land as at the Base Date of 1 July 2010.

The valuations

1. The land value originally assessed by the Valuer-General was $868,000. The value contended by the applicants (Pyntoe) is $641,715.

1. At the hearing it was contended by the Valuer General that the value, as assessed by their valuer Mr Glitsos, is $925,000, which in evidence was increased to $1,030,000. The Valuer General did not seek to have the original statutory valuation increased.

1. Mr Hyam , a registered valuer, on behalf of Pyntoe, contended that the valuation should be $557,500.

Site and surrounding area

1. The property is located on the western side of Bunnerong Road Matraville, in the centre of the Matraville shopping centre, which is a strip shopping area. The shopping centre has declined over the years and is now no more than a neighbourhood or convenience centre which suffers severely from its major competitors, namely, Westfield Eastgardens, South Point Shopping Centre (both of which are situated on Bunnerong Road, 1.2 km and .5 km respectively, north of the subject site) and Pacific Square at Maroubra Junction. They provide a full range of facilities and services including department stores, supermarkets, speciality stores, entertainment as well as incorporating excellent car parks. A Woolworths supermarket complex is under construction almost opposite the subject property. During the view it was advised that a Development Approval for this Woolworths development existed at the relevant date. Four other developments were noted under construction in the vicinity during the view.

Background

1. The valuation of this property (and other properties in the vicinity also owned by Pyntoe) has been before this Court on two previous occasions.

1. In Gilles v Valuer General [2008] NSWLEC 1508 Acting Commissioner Miller determined, for 506 Bunnerong Road, without the benefit of town planning advice, in par 17:

Consideration of the DCP and the DCP Parking has led me to the conclusion that the maximum car parking that can be provided on the respective properties is as follows...

206 Bunnerong Rd - 5 car spaces with direct access from Baird Lane...

1. Paragraph18 states:

Having regard to the valuers agreed views on the highest and best use of the subject properties and my conclusions in respect of achievable car parking numbers, I consider that the maximum prospective development of the properties is as follows;.

506 Bunnerong Rd. Two ground floor retail/commercial areas each of 40 square metres (two car spaces), two studio apartments (one car space) and two 1-bedroom apartments (two car spaces)...and

1. In Pyntoe Pty Ltd & Gilles v Valuer-General of NSW [2011] NSWLEC 1207 Senior Commissioner Moore determined, for this property, in par 20:

...I prefer and adopt the development potential set out by Mr Juradowich ...being three two-bedroom units, three one-bedroom units, four studio units and two retail sites and appropriate off-street parking.

1. Senior Commissioner Moore also concluded in para 15 that a "two-step (valuation) process...is necessary". Step one being to determine the development potential of the site and step two being to apply a rate per unit to the determined development potential.

1. I am of the view that the decision of the Court of Appeal in Segal & Anor v Waverley Council [2005] NSWCA310; [2005] 64 NSWLR 177 means that in merit appeals or merit assessments such as this, just as in the case of merit assessments under s 97 of the Environmental Planning and Assessment Act 1979, requires me (if I am to disregard a conclusion of a colleague reached in generally comparable or identical circumstances), to have sound and cogent reasons for so doing, if the matter that is the subject of the proposed departure is one that has been put by at least one (if not both) of the parties to the proceedings as a centrally contested matter.

1. I am satisfied that in these proceedings the question of consistency with the analysis of Miller AC and Moore SC has been put, by Mr Hyam's evidence and Mr Glitsos' disagreement with it, as a centrally contested element of the differences between the parties.

1. I am satisfied that now, with the benefit of evidence from both parties regarding the development potential of the property, that I should rely on that evidence, as Moore SC did, rather than the decision of Miller AC, regarding the development potential.

Development Potential Evidence

1. Mr J Baker gave written and oral evidence on behalf of Pyntoe, while Mr N Juradowich gave similar evidence on behalf of the Valuer-General. Mr Baker is an architect of wide experience and Mr Juradowitch is a town planner of wide experience.

1. The development potential as assessed is summarised in the following table:

Retail	Studio	1 Bed	2 Bed	Comment
Mr Baker	2	0	6	2	Over 2.5 basements with car lift
Mr Juradowich	2	4	3	3	2 x basements + 2 turntables + car lift

1. Mr Baker and Mr Juradowich were in general agreement on many points. Mr Baker calculated a lower number of larger units compared to Mr Juradowitch who proposed a higher number of smaller units, with very small (70 sq m) twobedroom units.

1. Randwick City Council's Development Control Plan for Matraville Town Centre requires a minimum area 80 sq m for a two-bedroom unit, however State Environmental Planning Policy No 65 - Design Quality of Residential Flat Development requires only a minimum area of 70 sq m.

1. Mr Glitsos, valuer, gave evidence that some 70 sq m two-bedroom units have recently been constructed in the vicinity.

1. As Moore SC in the 2011 hearing adopted the Juradowich proposal and as Mr Baker conceded that the Juradowich proposal may be approved by Randwick City Council, I also conclude that it is most likely that Randwick City Council would approve a development similar to Mr Juradowich's proposal, being for 160 sq m retail, four (4) studio units, three (3) x one-bedroom units and three (3) small two-bedroom units.

1. The development experts agreed that the Randwick City Council Development Control Plan Parking 1998 (the Parking DCP) would require seventeen (17) parking spaces for this development. Mr Baker's plan indicated and Mr Juradowich agreed that it would be possible, with the provision of a car lift, to accommodate four (4) car spaces on basement level 2, and eight (8) car spaces on basement level 1. They also agreed that it would be possible to accommodate four (4) car spaces on the ground floor but only if they were covered by a landscaped podium. Although this car parking provision is marginally below the parking required by the Parking DCP, the experts were confident that it would be approved.

1. The experts agreed on the following approximate costs to reflect the additional costs in developing this narrow site:

a.   Podium $180,000

b.   Cost of installation of car lift $150,000

c.   Assorted building work $80,000

d.   Inefficient parking layout factor $60,000.

Valuation Evidence

1. Mr Hyam and Mr Glitsos, valuers agreed that the two-step procedure detailed in para 9 above is the correct procedure for the valuation of this property.

1. However, Mr Hyam adopted Acting Commissioner Miller's assessment of the properties development potential (made without the benefit of town planning evidence), disregarding the evidence of both development experts.

Findings

1. As detailed in par 20 above, I agreed with the evidence of Mr Juradowich that the optimum development potential of the property is 160 s qm retail, four (4) studio units, three (3) x one-bedroom units and three (3) small twobedroom units.

1. Mr Glitsos also adopted this development potential.

1. During the view I was shown the subject property and four sales of nearby properties. Both valuers agreed that due to three of the sales being very narrow sites, it is extremely difficult to accurately compare the narrow sites with the subject site. Both valuers concentrated on the sale of the adjoining property, 508 Bunnerong Road Matraville. I propose to only consider the sale of this adjoining property, as this approach is supported by the High Court's decision in Maurici v Chief Commissioner of State Revenue [2003] HCA 8; 212 CLR111;195 ALR 236; 77 ALJR 727, which concluded that the most desirable method to use for valuation appeals of this type is the comparative sales process and that a sufficient sale would be a single sale, provided it was appropriate and relevant to the site. The High Court also indicated that it was appropriate to use vacant land sales if they were available for that purpose, a position that does not apply here. The High Court however also observed that if the only sales that might be relevantly comparable, were ones that could be, in effect, disaggregated so that they reflected vacant land, it was appropriate to do so.

1. The valuers provided relatively close assessments of the analysed rates per unit site.

1. The differences arose from Mr Hyam allowing 20% variation for a development approval and Mr Glitsos allowing 15%. Mr Glitsos in his oral evidence adopted a nil allowance for the development approval. His calculation to support this varied conclusion largely relied on statistics of capital growth in median unit prices in Matraville. This rationale is flawed for this calculation, as he is comparing existing units with vacant land suitable for unit construction, which is a different class of real estate and is subject to different market dynamics.

1. I have adopted Mr Glitsos's original allowance of 15% for the development approval for 2 reasons;

(1)   It may take considerable time to obtain a development approval and,

(2)   As the proposed development provides slightly less parking than required by the Code and as the two-bedroom units are very small there is a slight risk that the approval may not be forthcoming from Council.

1. Consequently the development consent for the adjoining sale property has a value representing the reduction in potential time delays and risk.

1. I note that Senior Commissioner Moore in his decision also adopted an allowance for the development approval of 15%.

1. With regard to the allowance for the timing of the sale, relative to the Base Date, I adopt Mr Glitsos' assessment of 8% pa over Mr Hyam's assessment of 0%, as there were errors of fact in Mr Hyam's evidence.

1. Following the above, I have accepted Mr Glitsos' originally assessed rates for the different units being retail $110,000, studio $60,000, one-bedroom $70,000 and two-bedroom $85,000.

1. It is now necessary to consider whether any adjustments have to be made to allow for the narrow width 10.68 m of the subject property, compared to the sale property with a width of 15.29 m.

1. Mr Hyam has made zero adjustment whilst Mr Glitsos has allowed 9% of the sale price, which equated to $83,250 for the subject property.

1. The development experts advised the following abnormal costs for the subject property;

(a)   $180,000 for the required podium. This cost is not allowed as it is a Development Approval requirement and applied to the principal sale of the adjoining property.

(b)   $150,000 for the installation of a car lift. Mr Glitsos gave evidence that this cost may be $143,000. I propose to rely on Mr Bakers evidence and allow $150,000.

(c)   Assorted building work (to accommodate the car lift) $80,000.Tthis additional cost is allowed.

(d)   Inefficient parking layout factor (due to excessive circulation spaces) $60,000. As Mr Glitsos gave evidence that increased circulation space and larger than average sized car spaces can be a positive selling factor, I will allow $30,000.

1. The allowance for the narrow site is assessed as the sum of the above allowances, $260,000 less Mr Glitsos' original allowance of $83,250. Therefore an allowance $176,750 is appropriate.

Summary - valuation calculation

Retail	Studio	1 Bed	2 Bed
Development potential	2	4	3	3
Unit Rate	110,000	60,000	70,000	85,000
Component value	220,000	240,000	210,000	255,000
Total before adjustments	925,000
Less adjustment for narrow site	176,750
Valuation	748,250

Orders

1. The Orders of the Court are:

(1)   The appeal is upheld.

(2)   The land value for the property at 506 Bunnerong Road, Matraville NSW, as at the Base Date of 1 July 2010 is $748,250

(3)   The exhibits to be returned except exhibits A, B and 1.

_________________

Russell Cowell

Acting Commissioner of the Court.

Decision last updated: 27 July 2012