DONOHUE v ACT PLANNING AND LAND AUTHORITY [2014] ACAT 39 | Case summary

DONOHUE v ACT PLANNING AND LAND AUTHORITY [2014] ACAT 39 | Case summary | Zoe

[41]

At the beginning of the hearing, in outlining his case, Mr Donohue indicated that he would be submitting that the date on which the CUC should be determined was not necessarily the date on which the decision to agree to vary the lease was made, i.e. 4 February 2011, but was at some future date yet to be determined. Ms Katavic objected to this submission on the grounds that it had not previously been raised as an issue and that it should have been disclosed to enable the respondent to consider it.
Mr Donohue said that he had in fact alluded to the possibility in paragraphs 4 and 10 of his most recent Reply to Respondent's Statement of Facts and Contentions dated 17 April 2014, although he conceded that it might have been more fully explained. While Ms Katavic did not accept that the paragraphs referred to constituted adequate notice, the Tribunal decided that because Mr Donohue's submissions, if correct, would have led to the hearing being futile, the Tribunal adjourned briefly to enable Mr Donohue to put his submissions on this matter in writing and then again to allow Ms Katavic to consider them and respond.
In essence, Mr Donohue submitted that the date on which the CUC was to be determined was not the date of the decision under review but the date that the lease was varied and that this only occurred when the lease variation was lodged by the respondent with the registrar-general and the registrar-general had endorsed a memorial to that effect on the folium of the register, in accordance with section 72A of the Land Titles Act 1925, or at some date in the future (see below). He observed that the respondent's decision had only "approved" a variation and that there was a considerable difference between an approval to change the lease and the actual change of the lease.
He drew attention to the sections of the Planning Act that dealt with lease variation and the CUC, in particular, section 165A which provides that if the planning and land authority approves, under section 162, a development application seeking variation of a lease, the planning and land authority must vary the lease in accordance with the terms of the approval.
He also cited section 185 which provides that a development approval for a lease variation ends at the end of the period of 2 years starting on the day after the approval takes effect; and also cited section 276, which provides that the planning and land authority must not execute a variation of a nominal rent lease unless the lessee has paid the Territory any CUC worked out by the authority less any remission under section 278 plus any increase under section 279 and that a variation of a lease has no effect if the CUC payable has not been paid.
Mr Donohue also cited section 277 of the Act as it was in 2010 which sets out how the CUC was to be calculated and which refers to the capital value immediately before and immediately after the lease was varied, and the definition of "variation of a lease" in the Dictionary of the Planning Act which reads:

[45]

Mr Donohue submitted that, based on these statutory provisions, the real variation is the registration, but conceded that when final agreement is reached and signified by both parties signing the lease, then the agreement is legally binding on both parties and the lease should be deemed to be varied, subject to registration. He concluded that "the valuation date should be a date agreed and reasonably projected to the date when the final agreement is reached".
In response Ms Katavic agreed, as statutorily correct, that the lease was not yet varied because section 165A(2) of the Planning Act required the respondent to vary the lease in accordance with the conditions of approval and those conditions had not yet been met. She observed that a precondition of section 72A of the Land Titles Act was that the authority had "executed a variation of a Crown lease" but section 276 of the Planning Act prohibits the authority from executing a nominal lease variation unless any CUC worked out by the authority has been paid. Consequently, the proposition advanced by Mr Donohue was logically impossible.
Ms Katavic submitted that the calculation of the CUC, which was the only matter before this Tribunal, was necessary to advance the matter. Section 277 of the Planning Act requires the CUC to be worked out on the basis of a hypothetical sale of the lease immediately before and immediately after the variation and that requires a date to be determined on which the hypothetical sale took place. In her submission, the only possible date that can be adopted is the date of the decision to approve the variation and that has been accepted by the tribunal in a number of cases (e.g. Trust Company Ltd & ACT Planning and Land Authority [2], City Hill Pty Ltd v ACT Planning and Land Authority[3] and Borrowdale House Pty Ltd v Environment and Sustainable Development Directorate[4]) and referred to as the "relevant date". While that term is not an accepted legal term nor is it used in the legislation, she submitted it was a convenient term to adopt for valuation purposes.
The Tribunal carefully considered the submissions of the parties and the relevant legislation and concluded that Mr Donohue's proposition could not be accepted. While the legislation does not specify the date on which the CUC is to be calculated (and it would have been helpful to all concerned had it done so) it is clear that the authority cannot "execute" a lease variation until the conditions attaching to the approval have been met.
While "execute" is not defined in either Act nor in the Legislation Act 2001, it is generally accepted legal meaning is the signing of a deed or other written instrument in such manner as to make it legally valid. In the present case, execution of the varied lease could only take place following the meeting of the two conditions attaching to the approval, viz. payment of any worked out CUC and the surrendering of the old lease and the issuing of a new lease.
Although the Planning Act does not stipulate a date for working out the CUC, the Tribunal will follow the precedents of earlier tribunals and accept that the "relevant date" for valuation purposes is the date on which the decision to approve the lease variation was made, i.e. 4 February 2011.

[54]

Evidence was given that, at the relevant date of 4 February 2011, land values for multi residential redevelopment sites in inner Canberra had stabilised. The Tribunal was told that, prior to this time, sale prices had risen in the order of 10% to 15% after 2008/09 and had again increased by up to 10% in the first quarter of 2010. Mr Underwood[13] quoted from the Real Estate Institute of Australia Real Estate Market Facts (December quarter 2009) that there had been "an increase in the median house price of 11.3% for the quarter and 10.2% over the 12 months to December 2009". Mr Underwood also said there was anecdotal evidence that this growth "has again been replicated in the first quarter of 2010 with median sale prices across Canberra having increased approximately 10% since December 2009". This view was generally supported by Mr McInerney[14] who said that values had stabilised "after increased prices of approximately 10% to 15% since 2008/9 to the relevant date in February 2011. Since early 2011 to around mid 2011 the market value levels had risen only slightly".
The application of this market intelligence to a comparative analysis of relevant sales or an assessment of the market value of the subject site immediately before or immediately after approval of the lease variation was not made apparent to the Tribunal and was not clearly explained by either expert witness. This was particularly so in the calculation of the After Value of the subject site. Mr Underwood says only that "recent market evidence is inconsistent as indicated in our sales evidence ... sales equated for the before and after calculations can be somewhat objective and we have therefore concluded that a small premium is applicable to the lease variation".[15] Mr Underwood calculated the V1 After Value by multiplying the site area (1,073 square metres) by an "assessed land value rate" of $1,325 per square metre of site area less a sum of $15,000 to demolish the original house and this produced a V1 After Value of $1,400,000.
Mr McInerney's calculation of the After Value ignored his own sales evidence altogether. His report said that he would compare "medium density residential development site sales"[16] to indicate the effect of varying the lease purpose clause to specify "a number of residential or dwelling units permitted".[17] Instead of doing this, he reports that for the After Value situation the AVO had adopted a "value rate of 11 residential units x $130,000 = $1,430,000".[18] Mr McInerney followed Mr Rudat's earlier valuation by adopting $130,000 per unit but neither he nor Mr Rudat explained how they arrived at this figure. Mr McInerney's analysis showed values ranging from $129,863 per unit to $165,322 per unit.
The applicant's witness, Ms Cengic, gave evidence that Mr McInerney had telephoned to inquire about the sale price of the units, and she had informed him accordingly but had added that they were considering reducing the prices being asked because of lack of sales to that time. However, her evidence was not able to be related to the After Value estimates of either Mr Underwood or Mr McInerney and played no further part in the Tribunal's deliberations
The respondent placed some emphasis on the fact that Mr McInerney and Mr Underwood had agreed to accept the amount of $1,430,000 as the After Value of the subject site but no clear explanation was given as to how this agreement was reached. Cross examined by Ms Katavic, Mr Underwood was asked "with or without a preapproved development the site is valued at the same?"[19] to which he replied: "yes ... we have got no market evidence to determine what a design and siting might be worth. Logically you would think that a design and siting would add value because it's the time and effort you go through to get it but to try and quantify it, I'm sure Mr McInerney will agree there's no market, there's no market evidence and hence we don't attempt to try and put a figure on it".[20]
In her submission, Ms Katavic noted as a fact that "the experts agree V1 (After Value) is $1,430,000". In the absence of evidence from either valuer as to the proper means of calculation of the After Value in accordance with the requirements of s 277 of the Planning Act, the Tribunal does not feel inclined to reopen this debate and therefore accepts the decision of the parties that the After Value of the subject site is $1,430,000.
Calculation by the Tribunal of any Added Value and hence a preferable Change of Use Charge, therefore, hinges on a determination of the V2 Before Value.

[58]

A number of reports by Mr Underwood were tendered to the Tribunal as evidence. The earliest of these reports has the title A Change of Use Charge Assessment prepared for C. J. DONOHUE and is dated 31 May 2010.[22] It was prepared by Mr Underwood when he was a director of CB Richard Ellis. The V1 and V2 values are assessed "on the status of the property as at 31 May 2010". This report accompanied the development application for the subject site dated 8 June 2010.
Mr Underwood's second report dated 14 May 2013[23] was prepared in his present role as an independent property consultant. He had been instructed by the applicant to determine the then present value of the subject site with its approved development and also to assess the then market value of the approved development "as if complete". This second report did not address the matter of either the Before Value or the After Value for the subject site at the relevant date and is therefore irrelevant to the decision under review.
A third document by Mr Underwood was presented to the applicant on 16 February 2014 in response to his request for an updated independent assessment of the V1 and V2 values of the subject site as at 4 March 2011.[24] The date for assessment of the V1 and V2 values in this report is one month after the date of the Notice of Decision which approved DA 201018070. As previously noted, the Tribunal accepts that the "relevant date" is 4 February 2011 and it is this date, not 4 March 2011, which Mr McInerney used in his assessment of the market value of the subject site. However, the Tribunal considers that any movements in the real estate market between 4 February 2011 and 4 March 2011 will be small and may safely be ignored.
The parties were also required to lodge with the Tribunal a statement "identifying the issues upon which the experts for the parties agree and matters in respect of which they disagree".[25] A "Joint Statement by Expert Witnesses" prepared and signed by Mr McInerney but not by Mr Underwood was before the Tribunal as was a further document prepared by Mr Underwood with comments on Mr McInerney's "Joint Statement" but neither document was tendered in evidence nor were they relied upon by either party at the hearing.
Cross examined by Ms Katavic, Mr Underwood agreed that his first report dated 31 May 2010 contained a number of numerical and other errors and cited incorrect legislation. In his report, for the Before Value Mr Underwood looked at the sales evidence of five property sales which he said were "comparable". None of these properties, he said, had any pre-approved development. However, under cross examination he advised that he no longer relied on any of these transactions. He said he no longer relied on the sale of 54 Macleay Street, Turner because of "the passage of time" but he did not say what the effect of time had been; nor did he rely on the sale of 3 Forbes Street, Turner because he got the site area wrong in 2010 and therefore used an incorrect and misleading rate per square metre; nor did he now rely on the sale of 42 Macleay Street, Turner because that sale did not proceed.
Mr Underwood's first report also included the sale of a property at 8 Cunningham Street, Griffith, and he told the Tribunal that Griffith "has got a similar value to Turner".[26] The Griffith property was zoned RZ5 not RZ4, it was part of a three-block development and the site area was significantly less than the subject site. There was nevertheless, he said, "some comparability in the context of that valuation at that time".[27] Ms Katavic asked him "how can that be if it's in a different suburb with a different zone"?[28] Mr Underwood replied that the AVO had used a sale in O'Connor for a Turner valuation in another instance. He had limited his later assessment to sites in Turner with an RZ4 zoning and had at that stage eliminated the Griffith sale. He had thought at the time that it was a useful comparison but now believed there was "better evidence".[29]
The fifth sale used by Mr Underwood (26 Watson Street, Turner) took place in April 2008. It was in the same street as the subject site and slightly closer to the city, but it too was part of a three-block development, purchased in one line by the same person. Mr Underwood disagreed with Ms Katavic that these factors made this sale not truly comparable. He said it was "useful" because it was in the same street with the same zoning but he said he had eliminated the sale in his second report because he believed it was "too old".
In his calculation of the Before Value in this first report, Mr Underwood did not include the Griffith site. The two sites in Macleay Street north of Haig Park showed values per square metre of site area of $904 and $1,244 and the Watson Street property showed $1,647 per square metre. The subject property, he said, was in the same street as the "landmark" Watson Street sale and was in a superior location to the other Turner sites. Without further explanation, Mr Underwood said "I have adopted $1,272 per square metre of site area"[30] as the Before Value of the subject site. The site area was 1073 sq m, so that the Before Value of the subject site came to $1,364,856, which Mr Underwood rounded up to $1,365,000.
Mr Underwood's second report[31] contained what Mr Underwood said was "the most appropriate evidence" to assess the V2 or Before Value. All the sales were of land in Turner and were zoned RZ4 - at 51 Moore Street, 52 Macleay Street, 17 Macleay Street, 3 Forbes Street and 39 Forbes Street. Mr. Underwood said each of the sites in Forbes Street was "vastly inferior" to the subject site. "The best sale", he said, was 51 Moore Street, which "sold at public auction, is identical in size and shape but is considered to be in a slightly inferior location i.e. not located opposite vacant land". The five sales ranged in value from $1,050 to $1,244 per square metre "on an adjusted site area basis which in my opinion is the most reliable basis of comparison". On this basis, said Mr Underwood, "I have adopted a rate of $1,300 per square metre of site area i.e. $1,300 x 1073 = $1,394,900 which I round to $1,395,000".[32] This was an increase of $30,000 over his earlier assessment, and was matched by the increase of $30,000 in the After Value which he adopted following consideration of the AVO's additional sales evidence.

[59]

Mr McInerney's valuation report also "relies on a comparable sales method".[33] There was some confusion as to the date of his valuation. Mr McInerney confirmed that the valuation report was prepared on 31 March 2014 and received by ACAT on 7 April 2014 but the "valuation date" is given on the cover of the report as 4 February 2011. His report was entered into evidence as exhibit 15 after he had made two changes. In the first of these, he advised that in February 2011 he had used the sale of 51 Moore Street in his assessment of the After Value. He now wished this sale to be considered as part of the Before Value evidence. In the second of his changes, he said that he had been in error in saying that 52 Macleay Street adjoins the rear of 51 Moore Street, when the former site is actually on the other side of Haig Park some 300 metres to the north of the Moore Street site.
Mr McInerney agreed that in his assessment he had used some different sales from those chosen by Mr Underwood. Where he and Mr Underwood had looked at the same sale, each had made a different adjustment to the sale price to account for the time between the sale and the relevant date for the subject site. All his sites were in Turner and zoned RZ4 - at 52 Macleay Street, 46 Macleay Street, 17 Macleay Street, 3 Forbes Street and 10 Towns Crescent, to which he now added 51 Moore Street. Two sites, 17 Macleay Street and 51 Moore Street were south of Haig Park, with the other sites north of Haig Park. Towns Crescent is at the extreme north of Turner but Mr McInerney told the Tribunal he had included that sale because it was in the same suburb and same RZ4 zone so that in most regards it was "a fairly comparable sort of sale".[34] He had included 3 Forbes Street, which had also been used by Mr Underwood, but he had corrected the site area and adjusted the price to the relevant date. Mr Underwood had earlier included and then had withdrawn 42 Macleay Street but Mr McInerney had not considered it because the ACT Revenue Office had advised him that the sale did not occur. He did not agree with Mr Underwood's inclusion of sites in Cunningham Street Griffith or in Watson Street Turner because they were purchased in each case as part of a site consolidation. In summary, Mr McInerney reported that his five sales showed a value range or between $1,016 and $1,148 per square metre of site area. The AVO, he said, "has adopted $1,197 per m2 in the 'before value' assessment".

[60]

The Tribunal considered the submissions made by both parties at the conclusion of the hearing. For the applicant, Mr Donohue submitted that the Tribunal was not bound to accept one or other of the valuations that had been submitted by either side, but should apply its own expertise and wisdom, including its own knowledge about matters that had not even been raised, to come to a decision. He contended that the Before and After Values should be based solely on the lease variation that was sought and should not take account of any design and siting proposals that often accompanied an application to vary a lease. In his submission, a significant part of any increase in the After Value derives from the work involved in the design and siting application and approval process itself.
Mr Donohue further submitted that by seeking to vary the lease to limit it to not more than 11 units, compared with the unrestricted number of units that the current lease allowed, there had been no increase in value; indeed the value could have decreased. He relied on the former ACT Administrative Appeals Tribunal's decision in Spence and Minister for Urban Services [35] where it was held that a lease which placed no restriction on the number of dwellings that might be constructed on it could not attract a CUC when the lessee sought approval to construct a second dwelling
Mr Donohue also submitted that properties located north of Haig Park were less desirable than those to the south, primarily because of the additional distance from the city centre and the ANU, which was sufficient to make people want to drive rather than walk. Another factor affecting values to the north of Haig Park, in his submission, was a fear that heritage issues might arise affecting development potential. He referred to the activities of the Turner Residents' Association over recent years in pursuit of heritage listing of sections of Turner, noting however, that a recent decision of the tribunal had rejected the heritage listing of most of sections 47,48,49 and 50 Turner,
Mr Donohue then turned to the sales evidence and submitted that the two most relevant sales were those of 17 Macleay Street and 51 Moore Street which had resulted in higher prices than were achieved for properties north of Haig Park. These two sales were quite comparable with each other once the adjustments were made. He rejected Mr McInerney's suggestion that the value of 51 Moore Street should be reduced because the purchaser may now think he paid too much for it. First it was hearsay evidence and the buyer had not been called to give evidence that could be tested. Second, the fact was that it was sold at auction and the only relevant consideration is what the buyer was thinking at the time, not some four years later. There were no special circumstances attaching to the sale that would make the price achieved unreliable.
Regarding 17 Macleay Street, Mr Donohue submitted that Mr McInerney's account of his telephone discussion with the vendor was again hearsay evidence and should be rejected. The fact was that because of the trees that had to be retained, only eight units had been able to be built on a block the same size as the subject site and in his submission, that lowered the price paid for it. Its Before Value should, therefore, be adjusted upwards to take account of the "lost" units and indeed to something comparable to that achieved for 51 Moore Street.
For the respondent, Ms Katavic submitted that the Tribunal should have regard to whether the comparable sales relied upon by the experts were truly comparable to the subject site immediately before 4 February 2011; the weight that should be attributed to each of the comparable sales; and whether the comparable sales relied upon supported a particular Before Value for the subject site.
Ms Katavic accepted that 51 Moore Street may be regarded as a comparable sale because of its similarities with the subject site, but did not consider it to be a "reliable" sale for a number of reasons. The respondent placed weight on the purchaser's opinion that he paid too much for the site. She submitted that the sale price was not consistent with other market sales and should be regarded as anomalous; that it was an "out-of-line" sale; and that Mr Underwood applied disproportionate weight and inappropriate emphasis to it in support of his rate of $1,300 per square metre for the subject site. Ms Katavic relied on Western Australian Planning Commission v Arcus Shopfitters Pty Ltd ,[36] in which the Western Australian Court of Appeal held that it was necessary to give appropriate weight to a sale that is out-of-line with a basket of comparable sales.
The respondent also considered the sale of 17 Macleay Street as "not reliable" because "there was no direct evidence" that trees on the site impacted on the purchase price to a significant degree. She also submitted that there is "no material difference" between the values for properties north and south of Haig Park.
The Tribunal accepted the respondent's submission that the experts had agreed to the After Value and that the Tribunal should therefore "disregard the evidence given by Ms Cengic as she was not employed in any relevant capacity at the date of valuation".

[62]

The Tribunal has carefully reviewed the evidence provided and has concluded that many of these sales offer "so little assistance that they ought be disregarded". The Tribunal believes that values for the subject site can be derived from the sales of four of these properties of demonstrable comparability in Turner at 3 Forbes Street, 52 Macleay Street, 17 Macleay Street and 51 Moore Street. Each of these sales was selected by both Mr McInerney and Mr Underwood for assessment. The sites are relatively close to Haig Park, the first two north of the Park and the others south of the Park. Each of these sites was considered by both valuers to be in an "inferior" location compared to the subject site, although the extent of the impediment was not expressed by either in terms of price.
The Tribunal accepts Mr Donohue's submission that blocks north of Haig Park are less sought after and therefore less valuable than those to the south, for reasons of distance from the city centre and the ANU. Therefore, when comparing the subject site to sites north of Haig Park, the Tribunal will add a value equal to 5% of the adjusted sale price on account of the "superior" location of the subject site south of the Park. The Tribunal will allocate additional adjustments of 5% of the adjusted sale price to the subject site where there is a clear benefit or amenity from increased area or site shape or impact on value from nearby development. The Tribunal will in all cases allocate a further 5% of the adjusted sale price to the subject site to acknowledge its position immediately across from large public parklands.
3 Forbes Street is almost immediately north of Haig Park. It is the smallest of the four sites and tapers to the rear along its southern boundary. A development application for eight units was submitted four months after the sale date.
52 Macleay Street may be seen as typical of original Macleay Street residential sites north of Haig Park. The street is level and lined with mature Turkey Oaks. Macleay Street is the same width as it is south of Haig Park and the blocks are the same depth, but the frontages are slightly narrower (22.9 metres versus 23.5 metres) and the site area is 1045 square metres instead of 1076 square metres. The site is level, with the same orientation to the sun as the other sites in Macleay Street. It is approximately 300 metres north of the other two sites in Macleay Street and, therefore, somewhat more remote from the city centre and the ANU.
17 Macleay Street and 51 Moore Street have the same rectangular shape and the same dimensions and area as the subject site at 36 Watson Street. Each is typical of original Turner residential sites south of Haig Park. These two sites and the subject site are almost exactly the same distance from Haig Park and the same travel distance to the city centre and the ANU. The settings of the two sites are similar and 17 Macleay Street shares a rear boundary with the subject site. The streets are level and lined with mature trees (Claret Ash in Moore Street, Turkey Oak in Macleay Street). Watson Street has Lusitanian Oak trees on the eastern verge with an open aspect to the large Masson Street Oval and, further south, to the North Oval of the Australian National University.
The sale of 3 Forbes Street took place on 22 August 2009 and the sale of 52 Macleay Street was on 17 December 2010. The sales of 17 Macleay Street and 51 Moore Street took place on 17 March and 15 May 2010 respectively. The relevant date for valuation of the subject site is 4 February 2011.

[64]

Sale date 22 August 2009, which was 18 months before the relevant date. Sale price was $1,000,000, site area 987 square metres. Mr McInerney adjusted the sale price up to $1,100,000 for market movement to the relevant date (adjusted sale price equals $1,114 per square metre of site area). In his first report, Mr Underwood incorporated an incorrect site area into his calculations for this sale. He told the Tribunal he no longer relied on this sale but it was included in his updated assessment, this time with the correct site area of 987 square metres, and he adjusted the sale price up for a "rising market" to $1,150 per square metre of site area. No design and siting approvals were in place at sale date.
The irregularly shaped site is 86 square metres less in area than the subject site and is a little more remote from the city centre and the ANU. Mr McInerney says it is an "inferior location compared to subject located opposite old government public housing units".[37] Mr Underwood considers it "vastly inferior to the subject site ... located directly opposite a large complex of government flats which is a negative impact on value". Neither valuer has commented on the awkward shape of the block which, together with planning rules re setbacks and boundary clearances, impacts on site planning and the design of the driveway and basement parking.
The Tribunal has carefully considered the evidence and the opinions of the valuers in connection with the sale of 3 Forbes Street and has concluded that the subject site is superior to 3 Forbes Street on account of its orthogonal shape, the fact of it being about 8% bigger in area and closer to the city and its location opposite a large public park rather than a large public housing estate. The Tribunal concludes that these attributes support an increase in the value of the subject site over 3 Forbes Street by 5% for location south of Haig Park, plus 5% for its larger and more regular site, plus 5% for the park opposite, viz. from $1,150 per square metre of site area (Underwood) to $1,322 per square metre of site area which equates to a market value for the subject site of $1,419,042 (say) $1,420,000.

[68]

Sale by private treaty. Sale date 17 March 2010, 11 months before the relevant date. Sale price $990,000 equates to $925 per square metre of site area (1,073 square metres). No design and siting approvals in place at sale date. A development application was approved in June 2010.
Mr McInerney has adjusted the sale price to the relevant date up 10% to $1,089,000 (say) $1,090,000 which equates to $1,016 per square metre of site area and sits at the bottom of his range of adjusted prices for his five sites. He says it is a "slightly inferior location compared to the subject property which has the advantage of views across a public parkland". Mr Underwood says he has accepted Mr McInerney's "adjustment for time" but then refers to $1,050 per square metre and continues "but I believe that the subject site is more valuable ... no tree issues ... opposite a park ... I believe it supports a value of $1,300 per square metre on a site area basis".[38]Mr McInerney has suggested that the seemingly low sale price somehow reflected the intention of the purchaser to build only 8 units instead of the 11 units proposed for the subject site. The Tribunal does not accept this argument because the maximum allowable yield in an RZ4 zone is 80% of the site area, and it is a commercial decision by the lessee as to how many units he builds and of what size or amenity. In the event, Mr McInerney has reported that the purchaser of 17 Macleay Street has built to 78% of the site area, so that no significant disadvantage would appear to have occurred. Mr McInerney also suggested that the site carried an impediment in the form of an existing tree or trees but he made no allowance in his price adjustment for the foresight of the purchaser in recognising and removing this impediment.
Despite Ms Katavic's submission that there was no material difference between the value of properties to the north and south of Haig Park, Mr McInerney has throughout his reports and evidence before the Tribunal maintained that sites in Turner north of Haig Park are "inferior" to those south of Haig Park. Mr Underwood told the Tribunal that "the southern precinct of Turner ... is the one sought after by most developers or owners".[39] As indicated above, the Tribunal accepts both of the valuers' assertions.
Nevertheless, nine months after the sale of 17 Macleay Street, the smaller site at 52 Macleay Street, on the north side of Haig Park and further away from the city, sold for $1,125,000, which was more than Mr McInerney's adjusted price for the larger and clearly superior site at 17 Macleay Street. The sale price for 17 Macleay Street may indeed be "out of line" with other prices in the area at the time but the possibility exists that this purchase was a real estate bargain sold below a proper market value. No evidence was given of any events that might have invalidated the sale price of 17 Macleay Street ("forced sale"; "willing but not anxious"; "arm's length" etc). From the evidence, the sale satisfied fully the IVSC definition of "market value" and the buyer and the seller would seem to have acted "knowledgably, prudently and without compulsion".[40] The application of judgment would nevertheless suggest that the sale price was substantially below its true market value.
The Tribunal has carefully considered the evidence and the opinions of the valuers in connection with the sale of 17 Macleay Street and has concluded that the comparable market value of 17 Macleay Street is at least 10% greater than the adjusted sale price and that the subject site is superior to 17 Macleay Street by virtue of its location opposite a large public park. The Tribunal concludes that this supports an increase in the value of the subject site over 17 Macleay Street by 10% (from Mr McInerney's adjusted sale price of $1,016 per square metre of site area to $1,118 per square metre of site area) plus 5% for the park opposite viz from $1,118 per square metre of site area to $1,174 per square metre of site area, which equates to a market value for the subject site of $1,259,594 (say) $1,260,000.

[70]

Sold by public auction. Sale price $1,335,000. Sale date 15 May 2010, 9 months before the relevant date. The sale price was adjusted by Mr McInerney to the relevant date up 7% to $1,428,450. Mr Underwood did not adjust the sale price for the passage of time. Mr McInerney's adjusted sale price equates to $1,331 per square metre of site area (1,073 square metres). No design and siting approvals were in place at the sale date. A development application was lodged 11 months later in June 2011.
Mr McInerney says 51 Moore Street is "a slightly inferior location compared to the subject property which has the advantage of views across a public parkland". Mr Underwood says 51 Moore Street is "slightly inferior to the subject site as it does not overlook open space".
Mr Underwood calls the Moore Street sale his "best evidence".[41] Mr McInerney told the Tribunal that the sale was "clearly out of line with all the other before market evidence".[42] It was "well outside what the other comparable before value sales indicate".[43] Mr McInerney said he had made enquiries and was told there had been "spirited bidding" at the auction. The purchaser told Mr McInerney he considered he had paid "$200,000 too much for" the property [44] and that he thought "the change of use charge would actually be nominal ... he was of the opinion that he would possibly be paying the change of use charge at ...about $20,000".[45] Mr. McInerney told the Tribunal he assumed "other bidders ... may also have been aware of that situation".[46]
The Tribunal accepts that the Moore Street sale was out of line with comparable sales at the time and that judgment would suggest the sale price was somewhat above its true market value. The Tribunal has carefully considered the evidence and the opinions of the valuers in connection with the sale of 51 Moore Street and has concluded that 51 Moore Street was a genuine sale but that the sale price should not be taken as an accurate indication of true market value at the sale date.
The Tribunal therefore has discounted the sale price by 10% to $1,201,500 which equates to $1,120 per square metre of site area but has accepted Mr McInerney's adjustment of the sale price to the relevant date up 7% to $1,285,605 which equates to $1,198 per square metre of site area. The Tribunal considers the subject site to be superior to 51 Moore Street because of its location opposite a large public open space which supports an increase in the value of the subject site over 51 Moore Street by 5%, viz from $1,198 per sq m of site area to $1,258 per square metre of site area and which equates to a value for the subject site of $1,349,834 (say) $1,350,000.

DONOHUE v ACT PLANNING AND LAND AUTHORITY

At a glance

Court

Decision date

Source

Judgment (80 paragraphs)

DONOHUE v ACT PLANNING AND LAND AUTHORITY (Administrative Review) [2014] ACAT 39 (30 June 2014)

Parties

Legislation Cited (4)