Signel Pty Ltd v Valuer General

[2008] NSWLEC 1232

Land and Environment Court

of New South Wales

CITATION:

Signel Pty Ltd v Valuer General [2008] NSWLEC 1232

PARTIES:

APPLICANT
Signel Pty Ltd

RESPONDENT
Valuer General

FILE NUMBER(S):

30708 of 2007

CORAM:

Parker AC

KEY ISSUES:

Valuation of Land :- Land Value

LEGISLATION CITED:

Land and Environment Court Act 1979
Valuation of Land Act 1916

CASES CITED:

Commonwealth Custodial Services as Trustee for the Burwood Trust Fund; Trust Company of Australia Limited v Valuer-General [2006] NSWLEC 400
Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673 (CA)

DATES OF HEARING:

06/05/2008

 
DATE OF JUDGMENT: 

17 June 2008

LEGAL REPRESENTATIVES:

APPLICANT
Mr S Hoddinott, litigant in person
on behalf of Signel Pty Ltd

RESPONDENT
Mr G Newport, Barrister
Instructed by Mr P Rankins, Solicitor
of Valuer General

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Parker AC

17 June 2008

30708 of 2007 Signel Pty Ltd v Valuer General

JUDGMENT

1 This is an appeal by Signel Pty Ltd (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 50 Pacific Parade, Dee Why (the subject property).

Background

2 The land value of the subject property at 1 July 2006 (the base date), was assessed by the Valuer General at $1,620,000 and by Signel Pty Ltd at $1,050,000.

3 The matter was the subject of mediation under Section 34 of the Land and Environment Court Act 1979 but the parties were unable to reach agreement. The parties consented to my disposing of the proceedings with a further hearing under Section 34(3)(b)(ii) of the Land and Environment Court Act 1979. The parties consented to my having regard to all matters considered in the mediation conference.

4 The matter was the subject of an on site inspection on 6th May 2008, followed by a hearing in the Land and Environment Court.

5 Mr Hoddinott, a Registered Valuer, appeared as the representative for Signel Pty Ltd and not as an expert valuer.

6 Mr Newport, Barrister, represented the Valuer General, instructed by Mr Rankins, Solicitor of the Valuer General.

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 is located on the northern side of Pacific Parade, situated between the intersections with Sturdee Road and The Crescent. It is a regularly shaped block, having an area of 765.1sqm, with a frontage to Pacific Parade and comprising Lot 23 in Deposited Plan 6643. Improvements consist of 15 units comprising 6x1 bedroom and 9x2 bedroom units over three storeys with lower ground floor parking and garages.

Highest and best use

9 The existing development of 15 units appears likely to exceed the density of development currently permitted under the LEP, which may be in the order of 9 units.

10 Mr Hoddinott contended that the existing development should be disregarded and that the lower density of development permitted under the LEP was the highest and best use of the site.

11 Mr Hoddinott contended that this approach was consistent with Section 6A(1) of the Act which states (emphasis added):

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 owner’s predecessor in title had not been made .

12 Mr Newport contended that the highest and best use of the site was the existing use of the site.

13 Mr Newport contended that this approach was consistent with Section 6A(2) of the Act which states (emphasis added):

Notwithstanding anything in subsection (1), in determining the land value of any land it shall be assumed that :
(a) the land may be used, or may continue to be used, for any purpose for which it was being used , or for which it could be used, at the date to which the valuation relates, and
(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used, but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that the improvements, if any, other than land improvements, referred to in subsection (1) had not been made.

14 Mr Newport cited Commonwealth Custodial Services as Trustee for the Burwood Trust Fund; Trust Company of Australia Limited v Valuer-General [2006] NSWLEC 400 as authority where Biscoe J considered the issue of highest and best use and stated at paragraph 18:

The reference to the purpose for which land may be “used” in s 6A(2) of the Act (which I have set out above) provides a limited exception to the otherwise paramount assumption in s 6A(1) that improvements on the land had not been made.

and further

It permits existing use rights under planning legislation, which typically depend on the presence of improvements on land and which can add appreciably to market value, to be taken into account in determining its unimproved value: Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673 (CA) at 682 [25].

15 Accordingly, I consider that Section 6A(2) is applicable to the subject property.

The evidence

16 Mr Hoddinott tendered as evidence a valuation report dated 13th September 2007 by himself, a Registered Valuer, concluding that the land value under Section 6A of the Act was $1,050,000 as at the base date.

17 Mr Davis, a Registered Valuer, tendered as evidence a valuation report by himself dated 23rd April 2008 and gave expert evidence on behalf of the Valuer General. He concluded that the land value under Section 6A of the Act was $1,545,000 as at the base date.

18 The Valuer General sought a land value under Section 6A of the Act of $1,545,000 as at the base date.

19 I note minor differences in stated site areas for both the subject property and comparable sales between Mr Davis and Mr Hoddinott. For consistency, I have adopted the site areas as stated by Mr Davis.

20 Mr Hoddinott submitted four comparable sales and Mr Davis seven comparable sales.

21 Both parties submitted comparable sales at 30 Pacific Parade, 22 Sturdee Parade, 113 Pacific Parade and114 Pacific Parade which were inspected externally.

22 Mr Davis submitted a comparable sale at 118 Pacific Parade, which was inspected externally.

23 Mr Davis further submitted comparable sales at 11 and 13 Holborn Avenue, which were not inspected externally.

24 I note that the subject property is situated within Locality E7 for the purposes of development control. I further note that the comparable sales evidence includes properties with different Localities including E8, E13 and E14 for which the development controls are marginally less benign than for Locality E7.

Consideration of the evidence

25 I consider the comparable sales at 30 Pacific Parade, 22 Sturdee Parade, 113 Pacific Parade and 114 Pacific Parade submitted by both parties to be directly relevant comparable sales.

26 I consider the comparable sale at 118 Pacific Parade submitted by Mr Davis to be a directly relevant comparable sale.

27 I consider the comparable sales at 11 and 13 Holborn Avenue submitted by Mr Davis to be indirectly relevant comparable sales.

28 The directly relevant comparable sale at 30 Pacific Parade, submitted by both parties, comprises 766.0sqm land area upon which is situated a single storey brick and tile house and which sold for $1,215,000 at 14th September 2006 being marginally after the base date. Mr Hoddinott analysed the sale to indicate a rate of $1,357-$1,430psm, with Mr Davis analyzing the sale to indicate a rate of $1,586psm for E7 development. The location is inferior to the subject property, being closer to the shops but further away from the beach. The proximity of a car park ramp on the adjacent block was contended by Mr Davis, with whom I agree, to adversely affect the value of the property though Mr Hoddinott disagreed. The topography is comparable to the subject property, being on the lower side of the street. The size is comparable to the subject property being of approximately the same area. The permissible development density is potentially comparable to the subject property being E7, but with lesser existing improvements. I consider that this sale is highly informative for the valuation of the subject property.

29 The directly relevant comparable sale at 22 Sturdee Parade, submitted by both parties, comprises 683.0sqm land area upon which is situated a single storey brick and tile house and which sold for $950,000 at 31st March 2006 being marginally before the base date. Mr Hoddinott analysed the sale to indicate a rate of $1,222psm, with Mr Davis analyzing the sale to indicate a rate of $1,391psm for E8 development. The location is inferior to the subject property being further from the beach and shops. The topography is superior to the subject property, being on the upper side of the street. The size is marginally smaller than the subject property. The permissible development density is potentially less than the subject property being E8. I consider that this sale is less informative for the valuation of the subject property.

30 The directly relevant comparable sale at 113 Pacific Parade, submitted by both parties, comprises 506.0sqm land area upon which is situated a single storey timber and tile house and which sold for $1,130,100 at 15th January 2007 being some time after the base date. Mr Hoddinott analysed the sale to indicate a rate of $2,010psm, with Mr Davis analyzing the sale to indicate a rate of $2,233psm for E14 development. The location is superior to the subject property being a corner site closer to the beach. The topography is superior to the subject property, being on the upper side of the street. The size is smaller than the subject property. The permissible development density is potentially less than the subject property being E14. I consider that this sale is less informative for the valuation of the subject property.

31 The directly relevant comparable sale at 114 Pacific Parade, submitted by both parties, comprises 766.0sqm land area upon which was situated a house at the time of sale and which sold for $1,380,000 at 1st March 2007 being some time after the base date. Mr Hoddinott analysed the sale to indicate a rate of $1,643psm, with Mr Davis analyzing the sale to indicate a rate of $1,802psm for E14 development. The location is superior to the subject property being closer to the beach. The topography is comparable to the subject property, being on the lower side of the street. The size is comparable to the subject property being of approximately the same area. The permissible development density is potentially less than the subject property being E14. I consider that this sale is highly informative for the valuation of the subject property.

32 The directly relevant comparable sale at 118 Pacific Parade, submitted by Mr Davis, comprises 765.1sqm land area upon which is situated a timber house with metal roof and which sold for $1,200,000 at 18th August 2007 being over one year after the base date. Mr Davis analysed the sale to indicate a rate of $1,568psm for E14 development. The location is superior to the subject property being closer to the beach. The topography is comparable to the subject property, being on the lower side of the street. The size is comparable to the subject property being of approximately the same area. The permissible development density is potentially less than the subject property being E14. I consider that this sale is highly informative for the valuation of the subject property.

Findings

33 I consider that the comparable sales of 30 Pacific Parade, 114 Pacific Parade and 118 Pacific Parade are highly informative for the valuation of the subject property.

34 As none of these sales are as at the base date, an adjustment is required for the impact of time. Mr Davis proposed an adjustment based on the trend in movement of value of improved properties in the vicinity as measured by Residex Pty Limited, an independent party, which I accept to be an useful guide in the absence of an index of movements in the value of unimproved land.

35 Mr Davis made further adjustments for differences in location, topography, size and Locality (for development control purposes) between the respective comparable sales and the subject property.

36 I note that Mr Davis also approached the valuation on the basis of an amount per unit site and reconciled such an approach to the rate psm land area approach.

37 Mr Davis further addressed the issue of the greater density of development on the subject property than may be undertaken on the comparable sales, resulting in generally smaller units on the subject property, through a discount to the amount per unit site of 30% giving a land value of $1,545,000.

38 I note that Mr Davis’s valuation of $1,545,000 represents a rate of $2,019psm site area on the basis of a greater density of development which Mr Davis considers to be appropriate.

39 Mr Hoddinott contended that the location of a bus stop outside the subject property comprised an adverse effect on value. Mr Davis disagreed with this contention. I consider that the bus stop is unlikely to have a material impact on the value of the subject property.

40 I consider that Mr Davis presented a transparent approach to the valuation of the subject property through the application of comparable sales evidence.

41 The conclusion presented by Mr Hoddinott in his valuation report lacked granularity, focusing on the comparable sales at 30 Pacific Parade and 22 Sturdee Parade.

42 Mr Hoddinott did not appear to explicitly address the issue of passage of time in a consistent manner nor density of development in the application of comparable sales to the subject property.

43 I consider that Mr Hoddinott did not present a transparent approach to the valuation of the subject property through the application of comparable sales evidence.

44 My consideration of the various aspects of the selected comparable sales, above, leads me to conclude that the land value of the subject property assessed by Mr Davis is supportable.

45 Having regard to the evidence tendered, the cross examination of Mr Davis and the summation presented, I consider Mr Hoddinott did not prove his case as required by Section 40(2) of the Act.

46 The orders of the Court -

1. The Appeal is dismissed.
2. The land value of $1,545,000 as at the base date of 1st July 2006 for the property at 50 Pacific Parade, Dee Why is confirmed.
3. No Order is made as to costs.
4. The exhibits are returned.

___________________

Dr David Parker
Acting Commissioner of the Court
ljr