Maurici v Chief Commissioner of State Revenue

LEGISLATION CITED: Land Tax Manangement Act 1956, s 38A Valuation of Land Act 1916, s 6A(1)

DATE OF JUDGMENT DELIVERY: 10/06/1999

APPLICANT Mr C Birch, barrister SOLICITORS Speed & Stacey LEGAL REPRESENTATIVES:

RESPONDENT Mr M Croker, District Valuer of the Valuer's General's Office

JUDGMENT: ___________________________________________________________________________________________________ In the Land and Heard by: Commissioner A. J. Nott Environment Court Decision date: 6 October 1999 of New South Wales

Anthony Phillip Maurici v Chief Commissioner of State Revenue

1 This is an appeal under s 38A of the Land Tax Management Act 1956 in respect of the land value of a residential waterfront property at 66 The Point Road, Woolwich as at the base date 1 July 1997.

2 The respondent ascertained the land value at that date to be $2,440,000. However, waterfront properties in the Hunters Hill Municipality were reviewed and reduced in value and it was intended also by the respondent that the land value of the subject land be reduced to $2,000,000, but the omission to do so was not discovered until the respondent's expert valuation report was being prepared.

3 At the hearing, the applicant contented that the land value should be reduced to $1,250,000.

4 Evidence for the applicant was given by registered valuer Mr P. Byron. Mr Byron's first method of valuation was by direct comparison with sales of improved waterfront properties where the land value of each of those properties was deduced by subtracting from the sale price what he considered was the added value of the improvements. As regards the improvements, Mr Byron had regard to the costings of Mr P. Hammond, who has completed the requirements (except for the submission of a thesis) for the bachelor of building degree (incorporating full quantity surveying electives), employed by Napier Blakeley Pty Ltd. I will refer to these costings and Mr Byron's method of valuation in more detail later.

5 The alternative method of valuation of Mr Byron was to estimate the improved value of the subject land itself and then deduct what he considered to be the value of the improvements.

6 Evidence for the respondent was given by Mr M. Croker, a district valuer employed by the Valuer-General's Office. He arrived at a land value of $2,000,000 by direct comparison of the subject land with sales of other waterfront properties in the locality, being properties he regarded as vacant land sales or sales where any improvements on the land had little or no value.

7 In columns A and B of the schedule (at the end of this judgment) I have set out some particulars of the sales referred to by the two valuers. Mr Croker relied on sales 1, 2, 4 and 5; and Mr Byron relied on the other remaining sales in the schedule. Bundles of photographs of most of the properties in these sales were tendered (exhibit H). Subject land

8 The subject land comprises lot 1 DP 217282 having an area of 1,764 m2 , and a leased area below mean high water mark of 38 m2.

9 Lot 1 of the subject land has a street frontage of about 19.69 m, a waterfront boundary of 31.42 m, a western boundary of 82.74 m and an eastern boundary of 67.71 m. Lot 1 is owned by the applicant Mr A. Maurici. Erected on the lot is a three-level house having a floor area of 379 m2 (excluding balconies) built in about 1970 and extensively refurbished in about 1996. Other improvements include: a two-storey outbuilding with a floor area of 111 m2, having a large office on the upper floor; a pool; a double garage; and inclinator between the two main levels of lot 1.

10 From the street frontage to about halfway down lot 1 the land is fairly level and then drops approximately 8 to 10 m to another generally level area towards the waterfront.

11 The leased area of the subject land of about 38 m2 below mean high water mark is the site for a timber jetty, ramp, and floating pontoon. The leased area includes the site also of three mooring piles, which enable a private vessel to be moored between the piles. The leased area is owned by the Marine Ministerial Holding Corporation (formerly the Maritime Services Board) and is leased from the Corporation by Mr Maurici, the owner of lot 1.

12 At the waterfrontage, more or less forming the waterfront boundary of lot 1, is a sandstone seawall, which retains filling on that part of lot 1 which apparently was formerly below mean high water mark. This seawall is in need of repair.

13 According to the evidence of Mr Croker, at low tide a sandy beach is exposed at the base of the seawall.

14 The subject land enjoys a north-facing waterfrontage to the Lane Cove River, and there are excellent views across the river to Northwood and Longueville. As mentioned earlier, the width of the waterfrontage of lot 1 of the subject land is approximately 31 m. Planning instrument

15 The subject land (above mean high water mark) is zoned Residential 2(a2) under the Hunters Hill Local Environmental Plan No 1. The minimum area for the creation of a lot by subdivision is 900 m2, and the minimum area for the erection of a dwelling house on a lot created after the appointed day is also 900 m2. Development consent is required for the erection of a dwelling house. Clause 15 of the LEP contains a development standard relating to the height of buildings. And cl 16A provides that the council shall not consent to the erection of a building within the zone 2(a2) on an allotment having a frontage to the Lane Cove River or the Parramatta River unless the allotment has a garden area equal to or greater than 60% of the area of the allotment. There is a foreshore building line of 10 m at the subject land (cl 18), and the subject land is within a foreshore scenic protection area (cl 18A) and within a conservation area (cl 19A).

16 It was agreed that the highest and the best use of the subject land, assuming the land to be vacant, was for the erection of a dwelling house and ancillary facilities. The properties in the attached schedule are also single house sites, with the possible exception of the large property at 1 Angelo Street. Whether retaining walls are "land improvements"?

17 There are certain retaining walls on the subject land and on a number of the comparable sales. One of the issues in the hearing was whether the value (if any) of these retaining walls should be included or excluded from the land value of the property. The answer to this question, it seems, depends upon the nature and function of the retaining wall and the meaning of "land improvements" appearing in s 6A of the Valuation of Land Act 1916.

18 Section 6A (1) provides: 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 his predecessor in title had not been made.

(a) the clea ring of land by the removal or thinning out of timber, scrub or other vegetable growths, (b) the picking up and removal of stone, (c) the improvement of soil fertility or the structure of soil, (d) the restoration or improvement of land surface by excavation, filling, grading or levelling, not being works of irrigation or conservation, (d1) without limiting paragraph (d), any excavation, filling, grading or levelling of land for the purpose of the erection of a building, structure or work, not being for the purpose of irrigation or conservation, (e) th e reclamation of land by draining or filling together with any retaining walls or other works appurtenant to the reclamation, and (f) und erground drains.

20 Of particular importance for this case are paras (d), (d1) and (e) of the above definition.

21 Paragraph (d1) was inserted following the decision of Perpetual Trustees Company Ltd v Valuer-General (1994) 83 LGERA 206, where Bannon J held that an excavation for an underground carpark was not an improvement of the "land surface " within the meaning of para (d), even though the excavation was an improvement of the site in the sense of making it more suitable for the erection of a high-rise structure. Paragraph (d1) was inserted by the Valuation of Land Amendment Act 1996 No 67 , which was proclaimed to commence on 1 November 1996, so that it was in force at the relevant date (9 September 1997) for the purpose of this appeal.

22 Applying the above definition of land improvements, it is clear (and not disputed) that the seawall at the subject land is a retaining wall of the kind referred to in para (e).

23 From the photographs of the subject site (part of exhibit H) there appears to be at least one wall that supports filling which provides a base or levelled area for the existing house on the subject land.

24 On behalf of the applicant it was argued that since retaining walls are not mentioned in paras (d) and (d1) but are mentioned in para (e), then retaining walls that serve a purpose other than the reclamation of land are not to be included as land improvements. In some factual situations this submission would be correct.

25 However, it seems to me that where, as a question of fact, the filling or levelling (of the surface of the land or for the purpose of a proposed building site) could not exist without the existence also of a supporting structure, then any added value from the filling or levelling (as thus necessarily supported) should be included as part of the land value of the subject land.

26 The definition of land improvements has particular importance in this case where a number of the comparable sales have extensive retaining walls supporting large areas of filled land. In order to infer a land value for the subject land it is first necessary to analyse the contract price for the comparable sale to arrive at a land value for the property in the comparable sale.

27 Although the concept of the land value is a "highly artificial conception" (cf. Gollan v Randwick Municipal Council [1961] AC 82 (PC) at 102 per Lord Radcliffe), further artificiality in statutory construction and in the application of the Act should desirably be avoided if possible. Take the case, for example, of sale 1 (30B Viret Street), as seen in the photographs of that site (part of exhibit H). The photographs show a very substantial and high sandstone retaining wall erected on top of a rock shelf which is above mean high water mark. This substantial retaining wall, being above mean high water mark, is not a retaining wall relating to the reclamation of land, and hence not within para (e). Looking at the other photographs of that site, it is apparent that there is a large stretch of fairly levelled and filled land extending towards and supported by the retaining wall. Without that retaining wall, a substantial volume of the filling or a substantial area of the levelled land of 30B Viret Street would not exist. The levelling or filling that has taken place at that site has been an improvement of the land surface. Without the retaining wall, one would have to imagine a massive volume of fill near the waterfront being magically kept in place, extending to a sheer vertical height of about 3 m above the water level; whereas in reality, without the wall, a massive area of soil or fill would come tumbling down over the rock base of the wall and into the river.

28 It was the submission of Mr Croker that no amount should be deducted from the contract price for a retaining wall, such as the property at 30B Viret Street, which is necessarily required for the existence of the levelling or filling, and I am inclined to accept that submission. The land value of the property is to be taken as including the added value of the levelling or filling (together with the necessary retaining wall).

29 If (contrary to the above) the value of such a retaining wall has to be extracted from the land value, it is to be noted that it is the value of the wall, and not the cost of the wall as determined by Mr Hammond, that is to be ascertained. Sales of improved properties

30 The applicant's valuer, Mr Byron, relied upon sales of improved properties. Using the costings of Mr Hammond, Mr Byron deduced a land value for the land in each of the comparable sales, from which he then derived a land value for the subject land.

31 It is an acceptable method of valuation to deduct the added value (if any) of the improvements from the contract price for an improved property in order to get an estimated land value for that property and then by way of comparison to infer a land value for the subject land: cf. Nock v Minister for Capital Territory (1982) 48 LGRA 293, Morling J; Nap Nap Station Pty Ltd v Valuer-General (1989) 72 LGRA 275, Stein J. But in valuing residential properties for the purpose of s 6A(1) of the Act, this method is generally not as reliable as using sales of vacant land or of land where the improvements may be regarded as having little or no value.

Added value (if any) of the improvements, distinct from cost

32 One of the problems with using improved sales is that the cost (or depreciated cost) of the buildings on the land does not necessarily equal their value. Indeed, as stated by Rost and Collins, Land Valuation and Compensation in Australia (3rd edition) at p. 120: An improvement which…is old or obsolete, or one which is either inadequate or excessive, will not make the best use of the land, consequently the value which it adds to the land may not be even distantly related to cost.

33 In Collins v Livingstone Shire Council (1972) 127 CLR 477 at 500 Gibbs J said: …evidence of the cost of improvements…may be relevant to the value of the land in its improved state, but it is the value and not the cost that is the matter for ultimate determination. Some improvements increase the value of land to a greater extent than the cost, but in other circumstances the cost of an improvement may greatly exceeds value, e.g., because its wasteful design renders it unnecessarily expensive to construct, or because it is redundant or out of place and cannot be put to profitable use having regard to its situation.

34 In respect of 5 Kareelah Road (sale 6), Mr Byron conceded that the improvements probably added no value. And therefore I have taken the contract price as indicating the land value of that property at the date of contract, and have made a small adjustment for the movement in the market from the date of contract to 1 July 1997.

35 In respect of the other sales analysed by Mr Byron (and in particular sales 7, 8 and 9), he appears to have equated the value of the improvements as being roughly equal to or closely related to certain costings of Mr Hammond. And for reasons given elsewhere in this judgement, it seems to me that Mr Byron's estimates of the added value of the improvements are far too high.

36 For example, in respect of sale 9 (17 Ady Street) Mr Hammond's cost of totally reconstructing as new the same sort of improvements on that property as now exist was $888,000, while the cost of merely renovating the existing buildings was $120,000. The applicant's method of valuation involved first deducting the latter figure from the former, which gives $768,000. However, Mr Hammond's costings include site preparation works (being excavation, filling, grading, reclamation, underground drains, and reclaimed land retaining walls), which appear to be land improvements, amounting to $103,898, to which should be added (according to the oral evidence) approximately 40% of that figure for part of the "other costs of carrying out works" (being part of the builder's margin, preliminaries, professional and approval fees), giving a total of $145,457 for site preparation and related costs. Deducting the $145,457 from $768,000 leaves $622,543. The added value of the improvements that Mr Byron did in fact adopt for 17 Ady Avenue was rounded to $650,000.

37 For 29 Wybalena Road (sale 8), the reconstruction costs (not including site preparation and related other costs) minus the renovation costs gives $1,114,000; and Mr Byron said that he rounded the added value of the improvements down to $900,000 because of an unusual addition at the front not in keeping with the rest of the house.

38 For 49 Wybalena Road (sale 7), deducting Mr Hammond's renovation costs from the reconstruction costs (not including site preparation and related other costs) gives $1,083,000. In Mr Byron's opinion, the added value of the improvements on that property was $1,100,000.

39 As indicated above, even if a completely new house is constructed, it is possible that the cost of the construction of that house will be much greater than the value that the house adds to the raw land value. There could be many reasons for this, including the fact that the layout of the rooms or their size or some other features are more in keeping with the design of a house of an earlier era and are not as desirable for modern needs, even though all the materials used in the building are new.

40 Generally speaking, when ascertaining the added value (if any) of improvements, the cost factor is relevant but it is only one of the factors to be considered. As a matter of general principle, it seems an incorrect approach to valuation to roughly equate the added value of improvements to a figure derived by deducting the renovation cost (that is, the costs of renovating the existing structures on the land to a new condition but assuming no structural repairs) from reconstruction costs (where it is assumed that the current improvements are not on the land but that these same improvements are then constructed in the same form and design from new materials). I have not seen this approach taken before, and I was not referred to any other case where such an approach has been accepted.

41 That approach of the applicant's valuer would, generally speaking, bring about an inflated added value of the existing improvements, assuming for the moment that those improvements are the most suitable and optimal use of the site (about which I am not convinced). The fact is that for each of the properties in sales 7, 8 and 9 the improvements are aged, and in the approach of deducting renovation costs from reconstruction costs no allowance is made for that fact. The starting point for that approach is to take the reconstruction costs of a completely new building with new materials in it. Now as a general rule, a renovated existing building is likely to have a lesser added value than a completely reconstructed building, precisely because the structure itself of the renovated building is an older structure. (There could be some exceptions to this general rule, for example, for a heritage sandstone home, but I am not satisfied that the improvements in the present case fall within such an exception.)

42 The value of the improvements which has to be determined (if sales of improved properties are used) is not the reconstruction costs of those improvements, nor the renovation costs, nor the difference between these two set of costs, but the actual value (if any) that the existing buildings and other improvements (in their existing unrenovated condition) add to the raw land value of the comparable property.

43 The difference between cost and value is most apparent in the case of the analysis of sale 4 relating to lots 100 and 101 DP 861106 at 1 Angelo Street. Sale 4 occurred on 13 August 1996 for $3,270,000. The property has an area of 2,037 m2 and a long curving waterfrontage of 74 m, part of which includes a sandy beach - and its waterfrontage is far superior to the subject land. The evidence of Mr Croker was that at the date of sale 4, there was (and still is) a substantial two-storey brick residence land which has been unoccupied till the present time. Vandals broke in and considerable demand was sustained, and in Mr Croker's opinion the house was uninhabitable as at the base date. He was of the opinion that it would be uneconomic to renovate the residence, and he considered the added value was equated to the cost of demolition and the removal of debris. There was a small in-ground pool which in his opinion added $5,000 to the value of the land. In support of his opinion, Mr Croker said that the purchaser in sale 4 (Mr P Campbell) lodged a development application on 24 September 1997 to demolish the existing residence and construct a new residence to cost $2,000,000. However, this application was refused by the Hunters Hill Council. Mr Campbell then sold 1 Angelo Street on 13 October 1998 for $3,750,000 (sale 5).

44 In stark contrast to Mr Croker's opinion, Mr Byron adopted the figure of $1,200,000 as the added value of the improvements (not including land improvements) on 1 Angelo Street. That figure appears to have been derived by subtracting Mr Hammond's renovation costs from Mr Hammond's reconstruction costs (less the cost of site preparation works).

45 There have been many instances in this Court where a quite livable house on a property is regarded as adding no value to the land value, even though such a house could be insured for a considerable sum. No value is a usually attributed to such a house where it is intended to demolish the house and redevelop the property. And see, too, the High Court case of Valuer-General (S.A.) v Fenton Nominees Pty Ltd (1982) 150 CLR 160.

46 I am inclined to think that Mr Croker's opinion about the added value of the improvements on 1 Angelo Street is much closer to the mark than Mr Byron's opinion. However, I will deduct about $90,000 as the added value at the base date for all improvements (not being land improvements) on that property.

47 In the reconstruction costs of Mr Hammond referred to above, very large sums were included for garden facilities (which expression Mr Hammond used in a broad sense to cover: fences and gates; paths, paving and stairs; landscaping and garden beds; inclinators, structures and landings; ground lighting; sprinkler system; decorative walls and features; swimming pools and fountains; decks; and other garden facilities). Thus the item for garden facilities for 49 Wybalena Road was $234,924; for 29 Wybalena Road, $190,748; and for 17 Ady Avenue, $178,430. To these items it appears that part of the builder's margin and the other costs mentioned in item 68 of Mr Hammond's costings would have to be added. But even if the builder's margin, etc. were not added, these costs are very substantial and may be very different to the actual value that the garden facilities add to the raw land value of the property.

48 Take the case of 30B Viret Street (sale 1). At the date of contract there was no house on that property. Mr Hammond's reconstruction costs for the garden facilities amounted to $71,280. However, Mr Croker as an expert valuer was of the opinion that no figure for these facilities should be allowed within the land value of that property. In particular, as regards the item of "landscaping and garden beds" (for which $53,900 was specified by Mr Hammond within the $71,280), Mr Croker was of the opinion that an intending purchaser would not necessarily attribute any value to that item, or for that matter to the other garden facilities such as fences and gates, as these facilities may be unsuitable or inappropriate for the future house of the purchaser. Apart from matters of taste and suitability, there is also the fact mentioned by Mr Croker that in the course of construction of a new house at 30B Viret Street, extensive site damage would be done.

49 While Mr Croker allowed no added value on account of the garden facilities, I would be inclined to deduct a relatively nominal amount of about $25,000 for the added value of the garden facilities (including shared driveway) at 30B Viret Street. I would also deduct about $40,000 as the added value of the garden facilities at 11A Viret Street. Valuation of the leased area of the waterway

50 It is not only the freehold title of lot 1, owned by Mr Maurici, that has to be valued, but also the fee simple of the leased area (referred to in para 11 above). In order to value the subject land (including the leased area), Mr Croker compared the subject land with the sales of other waterfront properties that had waterway facilities. The contracts of sale of the comparable properties and any collateral contracts were not tendered in evidence. In the absence of the contracts being tendered, it was agreed by the parties that I should assume that the contract for the sale of the comparable freehold property included a provision that the vendor would assign or transfer the benefit of the leased waterway area associated with that property. So, I will infer that within the contract price for the property in the comparable sale, there is some value attributable to the benefit of obtaining a waterway lease.

51 Now, for the purpose of s 6A of the Valuation of Land Act 1916 what is required to be valued in this appeal is not only the fee simple of the freehold land above mean high water mark but also the fee simple of the leased area below mean high water mark. But on the agreed assumption, the contract price for each comparable sale related partly to a lesser estate or interest than the fee simple, insofar as the contract price included an amount for procuring the transfer of the leased area of the waterway. It would seem to me to be reasonable to expect that the value of the fee simple of the land leased from the Maritime Ministerial Holding Corporation would be greater than the value of the leasehold that was transferred to the purchaser. However, the respondent did not submit that some greater value than the leasehold value should be adopted. For the purpose of this appeal, I have taken the value of the fee simple of the leased area to be no less than the value of the leasehold interest that presumably was included in the contract price for each comparable sale.

52 Again, for the purpose of s 6A(1) of the Act, it must be assumed that all improvements on the subject land (other than land improvements) did not exist. This means that the improvements (such as jetties and piles) in the leased area of the waterway are to be notionally removed. Likewise, when inferring a land value for the subject land from comparable sales, it seems to me to be necessary to deduct from the contract price the added value of the waterway facilities in the leased area associated with the comparable property.

53 The nature and condition of the waterfront or waterway facilities at 30B Viret Street and at 11A Viret Street can be seen in some of the many photographs that were tendered. The photographs should be viewed with the reservation that they show the condition of the structures at about the time of the hearing and not at the dates of sale or at the base date.

54 Mr Croker made no deduction for the value of the waterway facilities. His rationale was that the facilities themselves were owned by the vendor of the adjoining property and, if the vendor did not procure the transfer of the leasehold interest, the vendor would be liable for the cost of demolishing the facilities, which could be a very expensive exercise, with the demolished material perhaps being taken away by boat. Assuming for the purpose of this appeal that the vendor of the main part of the property in the comparable sale does own the improvements within the leased area of the waterway, it seems to me that the waterway facilities in each of the comparable sales relied upon by Mr Croker do have a value, which value should be deducted from the contract price.

55 However, in my opinion the added value of the waterway facilities in the comparable sales would be substantially less than the value derived from the costings of Mr Hammond. The useful life of the waterway facilities would be affected by their exposure to the winds and water. As Mr Croker submitted, timber jetties are likely to quickly depreciate in value. The applicant's method of deducting renovation costs from reconstruction costs does not sufficiently take into account the existing condition of the improvements that are to be valued (in order to deduct the added value (if any) from the sale price of the property).

56 In the end a value judgment had to be made. I have adopted as the added value of the waterway facilities at 30B Viret Street an amount of about $40,000; and at 11A Viret Street, an amount of $50,000. (The value of other improvements for each of these two properties is given in para 49 above.) Movement in the market

57 For the period from September 1996 (when sale 1 occurred) until May 1999 (when sale 3 occurred) the opinion of both valuers was that there was an overall upward movement in the market.

58 However, there was evidence of only two instances of a sale and resale of the same property. Mr Croker referred to the sale of 1 Angelo Street on 25 September 1996 for $3,270,000 and its resale on 7 December 1998 for $3,750,000. Mr Byron referred to the sale of 30B Viret Street on 4 July 1996 for $1,600,000 and its resale on 5 May 1999 for $1,725,000.

59 I agree with Mr Croker that some adjustment to the contract price for each comparable sale should be made to take account of the likely difference in value between the contract date and the base date - a more or less straight line adjustment involving an assumed regular rate of increase or decrease (as the case may be) should be made, rather than making no adjustment at all.

60 As mentioned earlier, it would have been desirable to have had more evidence concerning the movement in the market, based on sales, if such evidence was available, because the percentage adjustment per month could be affected by a number of factors when only two instances of a sale and resale are used. For example, the contract price for the earlier sale of the same property, while being at a market value could perhaps have been at the top end of the market, which would then produce a lower increase in the movement of the market than might otherwise be the case.

61 For the purpose of this case only and taking into account the conflicting opinion evidence of both valuers, I have adopted for the movement in the market an average increase of around 0.4% per month over the whole of the period from September 1996 to May 1999. Inferring a land value for the subject land from the comparable sales

62 In order to infer a land value for the subject land, I have used sales 1 to 6 inclusive in the attached schedule. For each sale, I have deducted the estimated added value of the improvements (other than land improvements) from the contract price, which I have adjusted for the movement in the market from the date of contract to the base date. I have set out the resultant estimated land value of each of these properties as at the base date in column C of the schedule.

63 I have then compared the features of those comparable sales with the subject land. I have taken into account the various differences between each of the comparable sales and the subject land, such as: location, within its immediate setting and within the Hunters Hill peninsula generally; the availability of views; the width of the waterfrontage; whether the land is a battle-axe block; the aspect towards which the property is oriented; the topography of the site; its shape and size; and any other particular factors affecting value disclosed by the evidence. For example, one particular factor relating to 1 Angelo Street is that that property clearly has the potential to be subdivided into two lots, whereas the subject property does not have that potential.

64 Generally speaking, the greatest adjustments had to be made due to topography (the subject land generally having worse features than the comparables) and on account of the size of the land.

65 The area of each comparable sale column A, as well as the area of the subject land, is exclusive of the small area of the leased waterway, but the analysed land value for the purpose of this appeal has been taken to include the value of the fee simple of the leased area.

66 In respect of sales 1, 3 and 10, the area given in column A is exclusive of the area of the access handle. When making an area comparison of each of those sales with the subject land, it is appropriate to exclude the area of the access handle, because the extent of the access handle in effect adds no value to the main body of the land. If the access handle were made longer with a resultant increase in the area of the property, the increased area would generally not have any additional value in my opinion. Indeed, a very long access handle could result in the whole of the land having a lower land value than an otherwise identical parcel with a shorter access handle.

67 Taking into account the above factors, I have set out in column E of the attached schedule what I infer to be an indicated land value for the subject land from each of sales 1 to 6. In considering all the sales, I have given greater weight to the first sale of 30B Viret Street than to the second sale of that property, because the first sale is closer to the base date. I have also given considerable weight to the sale of 11A Viret Street. I have placed less weight on the sales of 1 Angelo Street (because of some uncertainty about the added value, if any, of the house) and on 5 Kareelah Road (in case I have not allowed a sufficient adjustment for that property being located on the southern side of the peninsula).

68 Having regard to my comments on what appear to be inflated added values of the extensive improvements in the other sales (sales 7 to 15), I am unable to reliably infer a land value from those sales for the subject land.

69 Looking at the totality of the evidence, I consider it appropriate to determine a land value for the subject land as at 1 July 1997 of $1,950,000.

70 It is desirable, however, to comment specifically upon two other matters in the applicant's case. Applicant's second method of valuation

71 Mr Byron's second method of valuation involved estimating the improved value of the subject land itself by reference to sales 13, 14 and 15 and deducting from the improved value of the subject land the estimated value of the improvements. Such a method appears to be contrary to the requirements of s 6A of the Act. In any event, I have found such a method to be unreliable in this case, having regard to the uncertainty of the added value of the extensive improvements in those comparable sales and having regard to the fact that I do not accept the applicant's estimate of the added value of the improvements on the subject land itself. Deduction for a scarcity factor?

72 A novel submission was made by Mr Birch of counsel for the applicant: if a vacant land sale, such as of 30B Viret Street (having no house on it) was used to derive the land value, then an (unspecified) deduction should be made from the land value, because of the general scarcity of vacant land in the Hunters Hill Municipality. It was further submitted that such a deduction would not have to be made if sales of improved properties were used, as the improved sales (of which there were many) would not include a premium for scarcity.

73 In my opinion, no deduction should be made on account of a so-called scarcity factor. It is sufficient to say that in arriving at the land value for the subject land, I have made a direct comparison of the subject land with the comparable sales, principally sales 1-6 in the attached schedule. Orders

74 Accordingly, the orders of the court are: 1. The appeal be allowed. 2. The land value of 66 The Point Road, Woolwich, as at 1 July 1997 is altered to $1,950,000. 3. The exhibits may be returned. _____________________ A. J. Nott Commissioner of the Court db [Schedule attached.] ______________________________________________________________________________

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