Maurici v Chief Commissioner of State Revenue

Maurici v Chief Commissioner of State Revenue - [2005] NSWLEC 20 - NSWLEC 1978 case summary — Zoe

[219]

Mr Byron said that the original building was around 70 years old and had been renovated and extended at various times. He said that further extensive renovations and extensions were commenced in about 1996 (p 115 ex K). Mr Byron does not go on to say whether those extensions were completed or to give an account of the property as at the base date. However, an examination of the many photographs of the property taken in 1999 (ex H) gives the impression that these renovations and extensions did not result in a desirable sort of building for a prestige waterfront site. While some new brickwork is evident in the photographs, the general condition of the property exteriorly as at 1999 was not good. It seems to me that in a period of three years parts of the building could not have deteriorated to the extent that some of the photographs show unless those parts had already deteriorated as at the date of the first contract in August 1996. This is a case where the cost of the improvements in my opinion clearly had little relationship to the value of the improvements. The photographs taken of the house in 1999 (particularly photographs I have marked 11, 12 and 13 in the bundle ex H) show part of the interior where a large floor area had been completely removed and interior walls demolished, and the interior of this large section of the house gives the impression that a rebuilding of the house would be needed. In the circumstances I cannot see how the building could have a value anywhere near that attributed to it by Mr Byron. The photograph of the modern house on 1 Angelo St taken in July 2004 (ex 6) is in stark contrast to the unattractive looking building shown in the photographs of 1999. From the July 2004 photograph, one would not know which parts (if any) of the building that were existing as at the sale dates were retained. The form of construction of the building as shown in the July 2004 photograph compared with the 1999 photographs is different: the front part of the new building appears to extend with its large balconies further towards the waterfront than the building existing at the sale dates. A completely new roof has been constructed substantially different from what Mr Byron said was a new tiled roof appearing in the 1999 photographs. The building in 1999 (and at the sale dates) had only two storeys but in 2004 it has another floor within the higher roof form, with at least three small recessed balconies with a set of double doors leading onto each balcony from the rooms at this new upper level in the roof. On the eastern side of the new house, a ramp coming down from Angelo St has been constructed to provide a new access to a garage at the ground-floor level, when previously the house that existed at the sale dates had no parking available at that level.

[234]

At the date of sale a substantial two-level brick residence with tile roof existed on the land, together with garden facilities and waterfront facilities including a timber jetty and aged boatshed and a timber skid. From the site plan (ex P) a small concrete ramp at the waterfront appears to be outside 10A Gale St and appears to relate to the small open-space zone at Collingwood St (ex F). According to information given to Mr Byron, the residence at 10A Gale St was occupied for about 3 years after the date of sale, before it was demolished. Subsequently a new boatshed was constructed and extensive excavations for a new house were done. These excavations remain and the new house was never constructed. Mr Byron disagreed with the approach taken by Mr Croker who concluded that the improvements at the date of sale had no value and who added $30,000 to the sale price for demolition, even though the residence was occupied for sometime after the sale date. In support of Mr Byron's contention that the added value of the house and other improvements was $708,439, the applicant's senior counsel tended a two-sentence letter addressed to the applicant from the purchaser Urs Wolfensberger, who wrote: When I purchased the above property, it had recently been renovated and was in good condition and readily habitable. From purchase to the time of demolition (approximately three years), the house was occupied by family members and business associates. What the letter does not say is why the house was demolished. No photographs were available of the interior of the house, which had not been inspected by either valuer. The only photographs made available to Mr Byron are set out pp 148-150 of ex K. Although the house was in reasonable condition from the outside as seen in the photographs, the architectural design and appearance was of a two-storey house of an earlier period. In my opinion, the house did add value to the land, but I cannot accept that it had the value contended for by Mr Byron. Having regard to the fact of the demolition of the house and to the photographs of the exterior and to the floor plan of the house, it seems likely that the building (although habitable) did not meet desirable modern-day design and layout requirements. The floor plan dated July 1997 (ex P) indicates an awkward disposition of rooms. It seems to me that this is a case where an inadequate amount of $100,000 was allowed for obsolescence (p 33 of ex R). The amount for obsolescence should have been at least $200,000, which is still below the obsolescence allowance of $300,000 in the case of 29 Wybalena Rd, and which results in an added value of improvement at 10A Gale St of no more than $768,000. In the circumstances, it is appropriate that minimal weight be given to this sale in the final determination of the land value for the subject land.

[390]

ex Applicant ' s Exhibits Original hearing: A Report of valuer Mr P Byron dated 27 August 1999. B Reply of Mr Byron (to report of Mr Croker) by letter dated 8 September 1999. C Letter of Mr A Maurici dated 26 August 1999 re condition of retaining wall at 66 The Point Rd. D Construction Cost Estimate Report (Additional Properties) dated September 1999: estimates for 1 Angelo St, 30B Viret St, 9 Werambie St and 11A Viret St. E Letter of Mr Maurici dated 26 August 1999: condition of retaining wall. F Zoning map referred to in Hunters Hill Local Environmental Plan No. 1. G Hunters Hill Local Environmental Plan No. 1. H Bundles of photographs taken in August or September 1999 of: 1 Angelo St, 11A Viret St, 30A Viret St, 30B Viret St, 9 Werambie St, 29 Wybalena Rd, 49 Wybalena Rd and subject site. J Construction Cost Estimate Report (Supplementary Information) by Mr Hammond dated 14 September 1999. Present hearing: K Supplementary report of Mr Byron dated 12 February 2004 (376 pages). L Plan of Hunters Hill Municipality showing location of properties referred to by the parties. M Report of Mr Byron dated to July 2004, commenting on reports of Mr Norris and Mr Croker. N Construction Cost Estimate Report of Mr Hammond dated 5 February 2004 (125 pages). O Letter dated 23 July 2004 from U Wolfensberger of 10A Gale St, Woolwich. P Blue folder of plans or photographs of buildings. Q Comparison of cost estimates by Messrs Martin and Hammond (28 July 2004). R Mr Byron's adjustment schedule and analyses of sales, being 34 pages of spreadsheets dated 1 August 2004. S Page 99 of 1998 edition of Rawlinsons. T Large blue folder of photographs of comparable properties taken by Mr Hammond. U 25 photographs of 73 The Point Rd taken in September 1999. V Affidavit of Mr P Hammond sworn on 13 August 2004 with annexed photographs taken in July, August or September 1999. W E-mail of Mr Hammond dated 19 August 2004 re floor area of 73 The Point Rd. X Comparison of consumer price index and Rawlinsons building price index, 2004. Y Affidavit of statistician Mr D Sinclair sworn on 20 August 2004.

Parties

Applicant/Plaintiff:

Maurici

Respondent/Defendant:

Chief Commissioner of State Revenue

Cases Cited (24)

CITATION : Maurici v Chief Commissioner of State Revenue [2005] NSWLEC 20

AMP Henderson Global Investors Ltd v Valuer-General [2004] NSWCA 19; (2004) 134 LGERA 426; Barmuncol Pty Ltd v Maroochy Shire Council (1983) LGRA 309 Daadine Pastoral Co Proprietary Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299 at 304; Duffy v Minister for Planning [2003] WASCA 294 (2003) 129; LGERA 271; Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 at 293; Federal Commissioner of Land Tax v Duncan (1915) 19 CLR 551; Flack v Valuer-General (1952) 18 LGR (NSW) 157 at 158; Guideline Drafting and Design v Marrickville Municipal Council (1988) 64 LGRA 275; Illawarra Meat (Developments) Pty Ltd v Valuer-General (Rath J 10 March 1978); MLC Properties Pty Ltd v Chief Commissioner of State Revenue [1999] NSWLEC 300 at [21] and [38]; Maurici v Chief Commissioner of State Revenue [1999] NSWLEC 299 (Nott C); Maurici v Chief Commissioner of State Revenue [1999] NSWLEC 282; (1999) 105 LGERA 318 (Cowdroy J); CASES CITED: Maurici v Chief Commissioner of State Revenue [2001] NSWCA 78; (2001) 51 NSWLR 673; Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111; McCathie v Federal Commissioner of Taxation [1944] HCA 9 (1944) 69 CLR 1 at 15; Nap Nap Station Pty Ltd v Valuer-General (1969) 72 LGRA 293; Nock v Minister for Capital Territory (1982) 48 LGRA 293; Parramatta City Council v Shell Co. of Australia Ltd [1972] 2 NSWLR 632 at 637; Rodgers v Value-General No. 30457 of 1991, 7 November 1991; Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610; Strongsville Board of Education and City of Strongsville v Auditor and Board of Revision of Cuyahoga County and Hewlett Packard Co (Nos 1996-N-595 & 596, Ohio Board of Tax Appeals, 30 July 1999); Tetzner v Colonial Sugar Refining Co Ltd [1958] AC 50; Torpey Vander Have Pty Ltd v Mass Constructions Pty (2002) 55 IPR 542, [2002] NSWCA 263 at [13]-[18]; Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160; Venti Seven Pty Ltd v Chief Commissioner of State Revenue [2000] NSWLEC 285 at [4]-[6].

On 6 October 1999 I delivered judgment in the original hearing, allowed the appeal and determined the land value to be $1,950,000: see Maurici v Chief Commissioner of Taxation [1999] NSWLEC 299. There were subsequent appeals to Cowdroy J in this Court, to the Court of Appeal and to the High Court. The High Court held, among other things, that the respondent's valuer had been overly selective in using a small number of sales of scarce vacant land and in not using also sales of improved properties, in order to deduce a land value of the applicant's improved property. The High Court referred the appeal back to me for further hearing. The present hearing is not a completely new hearing, and various findings that I made in the original hearing are still relevant, as are those findings of Cowdroy J and of the Court of Appeal that were not disturbed by the High Court. The previous court decisions in this appeal are referred to in more detail at pars 60 ff below.

It might be said that one should not value a property by averaging sale prices of the comparable sales, as it is contrary to authority (McCathie v Federal Commissioner of Taxation [1944] HCA 9 (1944) 69 CLR 1 at 15). However, it was the applicant's own case that averaging in Table 1 was acceptable, because the contract prices adjusted to the base date in Table 1 were not averaged; rather, further adjustments were made to the base-date values to take account of the different features of the properties that were sold and of the subject land (columns O to U of Table 1); and (according to the applicant's submission) having done that, the averaging of the inferred land values was then not contrary to authority.

[2003] WASCA 294

[1999] NSWLEC 300

[2000] NSWLEC 285

(2004) 134 LGERA 426

(1972) 129 CLR 270

(1915) 19 CLR 551

(1999) 105 LGERA 318

(2001) 51 NSWLR 673

(2003) 212 CLR 111

(1944) 69 CLR 1

(1955) 91 CLR 610

(2002) 55 IPR 542