Tratta One Pty Ltd v Valuer General
[2008] NSWLEC 1186
•21 May 2008
Land and Environment Court
of New South Wales
CITATION: Tratta One Pty Ltd v Valuer General [2008] NSWLEC 1186 PARTIES: APPLICANT
RESPONDENT
Tratta One Pty Ltd
Valuer GeneralFILE NUMBER(S): 30953 of 2007 CORAM: Miller AC KEY ISSUES: Valuation of Land :- LEGISLATION CITED: Valuation of Land Act 1916
Warringah Local Environmental Plan 2000CASES CITED: McCathie v. Federal Commissioner of Taxation (1944) 69 CLR 1 at p 16)
A.R.P. Black and Ors v. Valuer General 32 CLLR 146 at p 155DATES OF HEARING: 28/04/2008 and 29/04/2008
DATE OF JUDGMENT:
21 May 2008LEGAL REPRESENTATIVES: APPLICANT
Mr S. Lambert, agentRESPONDENT
Mr G. Newport, barrister
Instructed by Mr P. Rankins
of Crown Solicitors Office
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES
Miller AC
21 May 2008
JUDGMENT30953 of 2007 Tratta One Pty Ltd v Valuer General
1 This is an appeal against the revised Land Value assessed under section 6A(1) of the Valuation of Land Act 1916 in respect of the property 541 Pittwater Road Brookvale as at the Base Date of 1 July 2006.
2 The Land Value was originally assessed at $965,000 but subsequently reduced to $845,000. Tratta still contends that the Land Value should be $630,000.
The Subject Property
3 The property is located on the northern side of Pittwater Road, between Pine Avenue and Victor Rd. It has a frontage of 11.34 m, at a slight angle to the side boundaries which have depths of 50.18 m and 49.36 m with a rear alignment, at right angles to the side boundaries, of 11.28 m. The land area is 562.7 square metres. In its natural state the land rose from street frontage to the rear but during the construction of the existing improvements excavation was undertaken resulting in the land being now comparatively level.
4 Pittwater Road is a divided arterial road serving the Northern Beaches of Sydney. It carries a heavy and consistent volume of traffic in both directions. A reserved bus lane for buses travelling north in the afternoon peak period extends along the northern side of Pittwater Road in front of and in the vicinity of the subject property.
5 The land is zoned Locality F2 Brookvale Service Centre under the Warringah Local Environmental Plan, 2000.
6 The property is one of some 15 properties located between Pine Avenue and Victor Rd comprising a quasi-retail/commercial area. The majority have generally similar frontages to the subject property. It is incorrect to describe this section of Pittwater Road as straight retail as it lacks pedestrian passing trade which is a defining feature of such an area.
7 Existing improvements comprise a two-storey brick building with showroom/ retail accommodation on the ground floor and office space on the first floor. The building has a net lettable area of 292 square metres of which 222.3 square metres is located on the ground floor. The building is set back from the eastern boundary to provide driveway access to the rear where concrete paved, at grade , car parking is provided. At the rear the property adjoins residentially zoned land, occupied by home unit buildings, necessitating a building set back from the boundary of 5m but as this area is used for car parking the setback is of no consequence.
Valuation Evidence
8 Mr S. Lambert, a Director of Tratta gave evidence on behalf of the company. Mr Lambert is not a Registered Valuer but since 1990 has conducted a business as a commercial and industrial real estate agent servicing the Brookvale, Manly Vale, Balgowlah and Artarmon areas specialising in the sale and management of industrial properties. Mr Lambert demonstrated that he carefully researched property sales in Brookvale.and has ample experience to enable him to express an opinion on the land value of the subject property. However, he has an obvious conflict of interest, cannot be regarded as an independent expert but discharged the obligation of proving Tattra’s case under Section 40 (2) of the Valuation of LandAct
9 Notwithstanding Mr Lambert's initial objection, subsequently withdrawn, Mr B. Sheales, a Registered Valuer and an Associate of the Australian Property Institute with over 20 years valuation experience, gave expert evidence on behalf of the Valuer General.
10 Fourteen sales were submitted as evidence of value. They spanned a four-year period from June 2003 to September 2007 but it was agreed that market conditions remained unchanged during this period. However, Mr Lambert contended that the only relevant sales were those that occurred in the 12 month period prior to the Base Date and all other sales should be disregarded. The law is well settled concerning the consideration of sales, deemed to be comparable, over a period prior to and subsequent to the applicable date. In Daandine Pastoral Co. Pty Ltd v. Commissioner of Land Tax (not reported but quoted by the same Judge [Williams J.] in McCathie v. Federal Commissioner of Taxation (1944) 69 CLR 1 at p 16)
- “values must be calculated in the light of circumstances which existed on the material date, in this case 30th of June 1939, but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If, between the material date and the date of the subsequent sale supervening events occur which alter conditions previously existing, the subsequent sales would not be comparable and would be useless..... The whole tendency of the Courts is to admit evidence of any events prior to the date of the trial which will throw any real light on the issues”.
11 On the same point the Court said in A.R.P. Black and Ors v. Valuer General 32 CLLR 146 at p 155
- “as far as I am concerned, I propose to look at all sales tendered, whether before or after the valuation date, providing they meet the test applied by Williams J. in the Daandine case, and if I can get any assistance from such a sale, I will certainly use it.”
12 Messrs Lambert and Sheales agreed that the highest and best use of the land is that encompassed by the existing building and the uses currently conducted therein which have remained unchanged since before the Base Date. The uses comprise a showroom on the ground floor displaying ,for sale, telescopes, microscopes, binoculars and similar optical equipment and office space on the first floor from which is conducted a media and website business; the whole property being subject to one lease. These uses are consistent with the F2 zoning. They also agreed that it was uneconomic to provide basement/underground car parking on a site having similar dimensions to the subject property in this locality.
13 Some of the comparable sales are zoned F2 while a larger number are zoned F3. Mr Lambert submitted that there was no difference in the value of land zoned F2 or F3 notwithstanding the fact that there are clear distinctions between the zonings.
14 The F3 zoning is centred on Winbourne Road, extends south to include Chard and Sydenham Roads, north to include part of West Street and east to Hardbord Road. The F2 zoning stretches along Pittwater Road from Alfred Street to Warringah Road .Development within each zone area is well established and reflective of the Desired Future Character of that zoning and the permitted land uses.
15 Zoning F3 is described in the LEP as Brookvale Industrial with the intention that this locality will remain an industrial and employment centre incorporating industries, warehouses and ancillary service uses. Land Use Category One permits industries and warehouses. Offices are permitted under Land Use Category Two but provided those offices are ancillary to industries or warehouses. Shops are also permitted under Land Use Category 2 being only those which sell equipment, machinery or materials used by an industry or trade, such as builders’ supply and hardware establishments or which sell goods manufactured on the same land as the industry producing them.
16 By comparison, zone F2 is described in the LEP as Brookvale Service Centre and will be characterised by, light industries, warehouses and bulky goods retailing. Land Use Category One permits bulky goods shops, industries, motor showrooms, warehouses. Shops and offices are permitted under Land Use Category Three without restriction.
17 Having regard to the permitted uses and before analysing the sales evidence, it is reasonable to anticipate that the land values in the zone F2 will exceed those in the zone F3.
18 My analysis of the comparable sales evidence is set out in the appendix to this Judgment.
Interpretation of Sales Evidence.
19 The sales analysis shows that there are significant differences in land value between zones F2 and F3.
20 Setting aside 21 Sydenham Rd Brookvale (which is a corner lot), the other seven sales in zone F3 show deduced land values, (before making any adjustment for location), in what I regard as a narrow band, ranging from $1083 to $1264 per square metre, for properties not materially larger in area or frontage to the subject property and therefore generally comparable in those respects.
21 I regard the sale of 728 Pittwater Rd (zoned F2) to be the critical sale. I accept Mr Lambert's submission that there is a considerable difference between a property having a frontage of 11.34 m to Pittwater Road, (such as the subject property) and the sale property which has a frontage of 14.3 m to the same road. The extra frontage gives, firstly, greater exposure to Pittwater Road and, secondly, presents design and flexibility options not available with a smaller frontage including, if it was considered economic, the provision of basement/underground car parking as is the case with the sale property. For these reasons I have concluded that a comparison of the sale property with the subject property requires a deduction of 5% from the deduced land value of $1517 per square metre indicating a Land Value for the subject property of $1441 per square metre.
22 The Orders of the Court:
1. The Appeal is upheld.
2. The Land Value, as at the Base Date of 1 July 2006, is reduced to $810,850.
3. No Order is made as to costs.
___________________
- E Craig Miller
Acting Commissioner of the Court
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- 398 Pittwater Rd North Manly is located more than 3 km from the subject property with a different zoning under the LEP of G2. Neither Mr Lambert or Mr Sheales considered this sale to be particularly relevant.
- Three substantial Pittwater Road properties, all zoned F2 , (being numbers 559, 569 and 756) ranging in size from 908 square metres to 2555 square metres and with frontages from 40.26 to 50.9 m . Each property is used for automotive related activities. Two are located on street corners while the third enjoys excellent downhill exposure ,over a long distance ,on a sweeping concave bend.
- 18 West St Brookvale, zoned F3, was sold subject to a 12 month option with a development approval being granted prior to the exercise of the option. No evidence was tendered as to what adjustments should be made to the sale price to reflect these special features.
2. I have come to the conclusion that five sales should be discarded as comparables.
4. The sales have been analysed to calculate a deduced land value on a dollars per square metre basis. I do not accept Mr Lambert's submission that the sales should be analysed on a lineal metre of frontage. While such an analysis may be useful for some retail properties, it is not appropriate in the circumstances of this case.
- Zone F3 Sales
6. 21 Sydenham Rd Brookvale is located on the corner of Mitchell St and sold on the 13 September 2006 for $1,370,000. Improvements comprised a timber framed residence at the intersection of the two streets with a basic factory building located at the rear fronting Mitchell St. The residence adds no value while I have concluded that the factory building adds value to the extent of $180,000. Land size is 1012 square metres; frontage to Sydenham road is 20.1 m and to Mitchell St 50.3 m. The deduced land value is $1176 per square metre which reflects, in my opinion, the corner location of this property and the fact that the purchaser occupies the factory building.
7. 52 Winbourne Rd Brookvale is located at the rear of 5 Mitchell Rd and is thus close to the intersection of that street where a major roundabout is located. The property sold on the 25 October 2006 for $1,250,000. It has a frontage to Winbourne Rd of 12.2 m and an area of 607 square metres. I accept Mr Lambert's evidence that the added value of the two-storey industrial building is $587,000 indicating a deduced land value of $1092 per square metre.
8. 50 Winbourne Rd Brookvale adjoins 52 Winbourne Rd on the eastern side and has a similar frontage and area. The land is subject to a 1.52 m wide drainage easement, adjacent to its western boundary. It sold on the 24 August 2006 for $1,200,000. I accept Mr Lambert's evidence that the added value of the two-storey industrial building is $433,000 indicating a deduced land value of $1264 per square metre.
9. 37 Carter Rd Brookvale. Carter Rd is at right angles to Winbourne Rd ; the property being located on the eastern side of Carter Rd between Winbourne Rd and the "T" junction with West St. It has a frontage of 13.72 m and an area of 689 square metres. It sold on 2 August 2006 for $960,000. I prefer Mr Sheales evidence that the added value of the single storey workshop and office building is $159,382 indicating a deduced land value of $1162 per square metre.
10. 10 and 12 West St Brookvale. These are separate properties located on the northern side of West Street between Pittwater Road and Carter Rd.. They have identical frontages of 12.19 m and areas of 556.4 square metres. They were sold to the adjoining owner at the rear, whose property fronts Pittwater Road, on the 3 March 2006 for $700,000 each. I concur with Mr Lambert's evidence that the added value of the industrial improvements are respectively $100,000 and $50,000 indicating a deduced land value of $1078 and $1168 per square metre respectively.
11. 13 West St Brookvale is diagonally opposite the two sales just mentioned and closer to the intersection with Pittwater Road. This property was also sold to an adjoining owner; in this case on the 27 September 2005 for $1,200,000. It has a frontage of 12.19 m and an area of 777.8 square metres. I accept Mr Lambert's evidence that the improvements had a value of $320,000 indicating a deduced land value of $1131 per square metre.
- Zone F2 Sale
___________________12. 728 Pittwater Rd Brookvale is located on the southern side of Pittwater Road, west of Mitchell Rd, and is directly opposite Brookvale Oval. It has a frontage of 14.3 m and an area of 524.6 square metres. It was sold on 5 September 2007 for $1,800,000. The purchaser was a company trading under the name of Hardware and General which owns and operates a business from a number of properties in Winbourne Rd specialising in the sale of builders supplies. One of those properties is located at the rear of number 728 Pittwater Rd in the F3 zoning. In October 2002 the company had purchased the adjoining property, 730 Pittwater Rd, for $870,000. This property is zoned F2, was unimproved at date of sale and remained so at the time of inspection. Having considered Mr Lambert's analysis of the sale of 730 Pittwater Rd I have concluded that nothing can be usefully gleaned from that transaction. In analysing the sale of 728 Pittwater Rd allowance must be made for the fact that the purchaser was the adjoining owner both on the Pittwater Road frontage and at the rear. The purchase of this property doubled the company's frontage to Pittwater Road which, in the long term, could be significant in any redevelopment of the Pittwater Road properties and those at the rear. Until redevelopment occurs there could be opportunities for sales diversification having regard to permitted uses under the F2 zoning. Mr Lambert contended that, in analysing the sale of the 728 Pittwater Rd an allowance of 10% should be made as the purchaser is the adjoining owner on two sides. I concur with his opinion. I consider that the improvements have a value of $840,400. Adopting the purchase price as the equivalent of 110%, 100% equals or $1,636,364. The deduced land value is thus $795,964 which is $1517 per square metre.
- E Craig Miller
Acting Commissioner of the Court
21 May 2008
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