Gray v Valuer-General

DATES OF HEARING: 25 and 26 August 2005 EX TEMPORE JUDGMENT DATE : 08/26/2005

LEGAL REPRESENTATIVES: RESPONDENT Ms A Pearman, barrister INSTRUCTED BY Crown Solicitor

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES MOORE C

JUDGMENT 1 COMMISSIONER: This is an appeal pursuant to s 37 of the Valuation of Land Act 1916 (the Act) against the valuation determined by the Valuer General for a property at 24 Waratah Crescent, Minnie Water (the site). 2 The applicant, Dr Gray, is a self-represented litigant and is not legally qualified. As a consequence of that I have provided to him the usual assistance which is provided by a member of this Court to an unrepresented litigant by explaining to Dr Gray the process that is to be followed and to ensure that he has had ample opportunity to present his case to the Court.

3 The statutory onus that applies in these proceedings is that which is set out in s 40(2) of the Act, namely, that the applicant has the onus to show why the valuation proposed by the Valuer General should be disturbed. 4 In these proceedings a novel path has been followed by Dr Gray's as his initial position was that he wished to question the validity of the underlying basis of the valuation process adopted by the Valuer General and supported, in the evidence in these proceedings, by the independent valuation evidence put to the Court by Ms Chapman, who was commissioned to undertake the supporting revaluation process for these proceedings. 5 It is long settled (and recently confirmed by the High Court's decision in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111) that a comparative valuation process making relevant adjustments for positive and negative factors of comparison between properties is the appropriate and preferable course to be followed in undertaking a valuation assessment.

6 There are other alternatives permitted by valuation theory and adopted by courts over the years. These include capitalisation of rents and the like. 7 It is also clear from the decision of the High Court in Maurici that it is possible for a comparative valuation to be undertaken even when there is only one comparable sale of vacant land. 8 However, it is also long settled that in the absence of a broadly representative sample of vacant land from which a comparison can be drawn, it is appropriate to take developed land and notionally strip it of its improvements in order to read its undeveloped land value - this being the basis of the valuation process for the purposes of the statute that is before me at the present time.

9 I have therefore rejected, during the course of the proceedings and confirm in this decision, the appropriateness of an attack by Dr Gray on the underlying assumptions of the valuation process. Even if I were attracted to such a course, I am satisfied that it is not open to me in these proceedings to do so.

10 Dr Gray also puts to me, however, an alternative statistical basis of assessing comparable value between two of the properties that he has prayed in aid of these proceedings. He does so by putting to me a comparison between a property at 57 Ocean Road, Brooms Head and the site and invites me to adopt an average annual rate of increase from an actual sale of the Brooms Head property in 2001 through to a subsequent resale of the Brooms Head property in February 2004 from which he derives an average annual rate of increase in that property. 11 He says that it is relevant for me to apply such average annual rate of increase to the subject property because the initial sale of the Brooms Head property and his purchase of the Minnie Water property took place in effect simultaneously and that I ought have regard to that to derive an average annual rate of increase over some three year period which can be factored down to be relevant to the base date of 1 July 2003.

12 Applying that process in Dr Gray's reasoning arrives at a net land value of $401,000 for the site, leading him to contend for a rounded valuation of $400,000 in lieu of the $500,000 provided for by the Valuer General. 13 However, I have the uncontested expert evidence of Ms Chapman that the real estate markets in the area have not moved uniformly over that period of time and that there was a greater degree of buoyancy in the early part of the market with a subsequent slowing down as a consequence, amongst other things, in her opinion, of changes to the State Land Tax system.

14 I am satisfied that in any event, absent expert evidence appropriately demonstrating to me that the market has increased or moved in a uniform fashion over a period of time, it is not appropriate for me to assume that that is the case. 15 When faced with contrary expert evidence, it would be folly not to accept the proposition that applying a uniform average annual rate of increase would be an inappropriate reflection of what actually took place in the relevant market place over the relevant periods of time. 16 I am therefore satisfied that the second alternative basis of submission by Dr Gray is not an appropriate one and that with respect to that he has not discharged his onus under s 40(2) of the Act.

17 I then turn to the question of whether or not, by his questions of Ms Chapman with respect to her basis of adjustment of what she says are relevant comparable sales, I should find that he has, as it were, opened the door somewhat and by doing so has discharged his onus and, having discharged his onus, it would be appropriate for me to have regard to any concerns which I might have arising from my questioning of Ms Chapman to continue the analogy to open the door further on the valuation.

18 I am satisfied that the extremely limited questioning that Dr Gray undertook of the witness may have been influenced in part by the fact that in order to assist him understand the nature of the process, I questioned Ms Chapman prior to affording him the opportunity to do so. 19 I have considered carefully whether or not this might constitute a prejudice to Dr Gray in the way these proceedings have unfolded and therefore limited his ability to discharge his onus. 20 I have concluded that I have sufficient doubt in my own mind as to whether that might be the case, arising from my greater experience in these matters than Dr Gray has, so as to cause me to set to one side the question of whether Dr Gray had discharged the onus arising out of that questioning to deal, almost in a hypothetical fashion, with whether or not I would otherwise disturb the valuation that the Valuer General had proposed on the assumption that Dr Gray had in fact discharged the onus.

21 If I had been of the conclusion that the valuation might be appropriately disturbed, I intended to return to the more difficult question of whether, on the basis of the questioning, Dr Gray had discharged the onus. 22 However, as I have concluded that, on the merits of a comparative analysis, it would not in any event be appropriate to disturb the valuation that has been proposed by the Valuer General, I propose to deal with that and then not turn further to the question of the discharge of the onus of proof, as I am satisfied that it would not be necessary to do so.

23 I have carefully considered the various properties that are put in the table of comparisons that have been made by Ms Chapman. 24 In this regard, I note that she has been prepared, in the witness box, to concede readily that she has made a re-examination of a number of her proposed adjustments and has amended them in light of the view and the questions that were put to her in the course of the view. Although some might regard that as an indication of an inadequacy of the earlier assessment, I prefer to regard it as a truly professional approach to reconsideration of an opinion held in light of further evidence with respect to the matters that underpin that opinion.

25 I had expressed to Ms Pearman, counsel for the Valuer General, that I had reservations about the use of Ms Chapman's sale five at Safety Beach near Woolgoolga, but I accept that, in light of the High Court's comments in Maurici concerning the appropriateness of the use of sales of vacant land, it is an appropriate sale to consider even though the adjustments that need to be made to it are somewhat more great in their cumulative effect - that is disregarding whether they are positive or negative adjustments - than is the case with a number of the other sites.

26 I am satisfied that the one other property, which it is appropriate to have regard to in the valuation, is the property at 11 Grevillea Parade, Minnie Water, it being, in many respects, not merely the geographically most comparable property, but also, on my assessment, the one which, when adjusted, is the most appropriately comparable.

27 I had significant difficulties, as a result of the planning controls and differing geographic circumstances and village surroundings, of accepting the Wooli property, particularly in light of the Development Control Plan and the erosion controls that apply to that site.

28 I also drew little comfort from either the Brooms Head sale prayed in aid by the Valuer General or that to which I was taken by Dr Gray, for reasons which I do not believe I need to canvass.

29 Although it would be possible, from the questions that I asked of the witness, to draw a series of conclusions that there ought be minor amendments made to the various adjustment factors that were considered by Ms Chapman to each of the Minnie Water and Safety Beach properties, I am satisfied that, even if I were minded to make those adjustments, the resulting valuations would not differ in any radical significance from the conclusions that were reached by Ms Chapman in respect to each of them. 30 They provide support for my adoption of the adjusted deduced land value of the subject property that is set out in her revised annexure 8. 31 From the Minnie Water property, that would result in a valuation of $490,000-odd rounded up in the normal fashion and from the Safety Beach property to a valuation of $510,000. The value that is postulated by the Valuer General is squarely and precisely at the middle of that range.

32 I am therefore satisfied that, even if I were to conclude that Dr Gray had discharged his onus under s 40(2) of the Act, I would still not disturb the value that was contended for by the Valuer General. 33 I think, under the circumstances of the case, given the novelty of the approach taken by Dr Gray, the more appropriate course for me to follow is to take the view that even if Dr Gray had discharged the onus, which it is not necessary for me to determine, I would not have disturbed the value for which the Valuer General had contended. 34 Therefore, I propose to issue formal orders pursuant to s 40(1)(a) of the Act confirming the valuation contended for by the Valuer General. The exhibits are returned.

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