New South Wales Cremation Company Pty Limited v Valuer General & Anor

KEY ISSUES: Valuation of Land :- unimproved value - Rookwood crematorium site - restricted usage of land - comparable sales method - lack of comparable sales - comparison to industrial land inappropriate - adjustment for time

LEGISLATION CITED: Rookwood Necropolis Act 1901 ss 6A, 8B, 8D, Schedule 3 cll 2(1), 5

Ashfield Municipal Council v Roads and Traffic Authority of New South Wales (2001) 117 LGERA 203; CASES CITED: Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105; Leichhardt Council v Roads and Traffic Authority of New South Wales [2005] NSWLEC 86

APPLICANT: A E Galasso (barrister) SOLICITORS: Deacons

FIRST RESPONDENT: J B Maston (barrister) LEGAL REPRESENTATIVES: SOLICITOR: I V Knight Crown Solicitor

SECOND RESPONDENT: G B Newport (barrister) SOLICITORS: Houston Dearn O'Connor

JUDGMENT:

• 7 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

NEW SOUTH WALES CREMATION COMPANY PTY LIMITED v VALUER GENERAL & ANOR [2006] NSWLEC 393

JUDGMENT 1 HIS HONOUR: The applicant, New South Wales Cremation Company Pty Limited, is the lessee of about 9.3 hectares of land within the Rookwood cemetery, upon which it conducts the business of a crematorium known as Rookwood crematorium. It pays rent to the owner of the cemetery, the second respondent, the Joint Committee of Necropolis Trustees ("Joint Committee"). The rent is fixed at 10 per cent of the unimproved value of the land as determined by the Valuer General. 2 The applicant appeals to the Court against the Valuer General's valuation of the Rookwood crematorium site dated 30 April 2005. The Valuer General had determined the unimproved value of the land at $9.3 million. The applicant says that the Valuer General's valuation is too high - it should be either $2.791 million or $5.584 million (depending upon the method of valuation adopted). 3 The Joint Committee was joined as a party by notice of motion after the appeal had been filed. It says that the Valuer General's valuation is too low - it should be $11.632 million. 4 The Valuer General's valuer re-assessed the valuation after the commencement of these proceedings and now says that the value of the land at the relevant date is $7.91 million. 5 The question for determination is what is the unimproved value of the Rookwood crematorium site as at the relevant date, which in this case is 1 July 2005. 6 Each party relies upon the expert evidence of an experienced valuer. Having regard to the qualifications and experience of each valuer and the great disparity between them, I repeat the observation I have made in earlier cases - the appointment a single court-appointed expert would have been of great assistance (Leichhardt Council v Roads and Traffic Authority of New South Wales [2005] NSWLEC 86 at par [4]).

7 The valuation in the present case is governed by the Rookwood Necropolis Act 1901. The Act sets aside the subject land for use as a crematorium - known as the "general crematorium site": s 6A. The lease is described as the "general crematorium lease": s 8B. The lease is deemed to contain the terms and conditions specified in Sch 3 to the Act: s 8D. 8 Schedule 3 to the Act states that the lessor may determine the lease if the land ceases to be used for a crematorium: cl 2(1). The rent payable by the lessee is specified - relevantly 10 per cent of the value of the land as at 1 July in any year. Clause 5 is in the following terms: 5 Calculation of rent - value of land (1) For the purpose of ascertaining the rent payable, the value of the land shall be determined in accordance with this clause. (2) The value of the land at a particular time is the value determined by the Valuer-General (appointed under the Valuation of Land Act 1916 ) in accordance with subclause (3) and notified to the lessor most recently before that time. (3) The value of the 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 seller in good faith would require, assuming that: (a) the land were to continue to be used in connection with a crematorium,

(b) the land were to be sold as 1 parcel, and (c) the improvements, other than land improvements (within the meaning of the Valuation of Land Act 1916 ), made or acquired by the lessee had not been made. (4) The lessor shall forward a copy of any such valuation of the Valuer-General to the lessee as soon as practicable after the lessor receives it.

The value of the land 9 The particular valuation made by the Valuer General under cl 5, which is the subject of appeal, is dated 30 April 2005 and is said to be the unimproved value of the land as at that date. 10 As noted above, the parties each relied upon the expert evidence of a valuer: Mr T A Large for the applicant, Mr K P Newton for the Valuer General and Mr K W Wood for the Joint Committee. Following the exchange of valuation reports, Mr Newton changed his valuation from $9.3 million to $7.91 million, having regard to a particular sale identified by Mr Large. 11 The valuers agreed that the comparable sales method of valuation should be adopted and, in so doing, it was appropriate to use a rate per square metre. 12 The real difficulty which arises with the comparable sales method in this case is that there are no truly comparable sales. The valuation has to be made on an assumption that the land is to continue to be used in connection with a crematorium: cl 5(3)(a) of Sch 3. In the absence of sales of land for use as a crematorium, the valuers initially relied upon sales of industrial land and then adopted a discount to reflect the limitation as to use of the subject land. This was the initial approach of the Valuer General's valuer, Mr Newton in arriving at a rate of $100 per square metre for the subject land, resulting in his valuation of $9.3 million. Mr Newton's attention was subsequently drawn to a sale of a parcel of land at Matraville, identified by the applicant's valuer, Mr Large, which was acquired by the Eastern Suburbs Crematorium for an additional area for its use. Mr Newton then amended his valuation to $7.91 million. 13 Apart from the sales of industrial land and the sale at Matraville, a number of other sales were considered by the valuers, but none of them could be described as comparable to the Rookwood crematorium site. My reasons for disregarding them are as follows. 14 No. 21A School Drive, Tomago. The land, comprising 4,305 square metres, was purchased by Hunter Cremations Pty Ltd as a crematorium for the incineration of bodies, without the trimmings of a chapel, vestries or areas of worship or remembrance. The land was cheap industrial land not connected to a cemetery. 15 Lot 1 Weerona Road, Strathfield. This land has an area of 7,120 square metres which almost abuts the southern boundary of Rookwood Cemetery and comprised a closed road purchased by Strathfield Golf Club from the Department of Infrastructure Planning and Natural Resources, presumably for the purposes of the club. 16 Nos 221-224 Church Lane, Prospect. This land has an area of 3.1705 hectares upon which there is a heritage item - St Bartholomew's Church - and its associated cemetery. The church was restored with funds provided by Blacktown City Council. The land was purchased by the council for its heritage significance and is not intended for use as either a cemetery or a crematorium, neither does it seem that there is sufficient land upon which to erect a crematorium. 17 No. 230 Western Road, Kemps Creek. This land has an area of 8.18 hectares and was purchased by Liverpool Catholic Club for use as a lawn cemetery. Although purchased in 1996, there is no proposal to erect a crematorium. It is not comparable to the Rookwood crematorium site - it only has about two or three burials a week, compared with about 50 a week at Rookwood; and it is in a somewhat remote rural area, unlike Rookwood, which is close to the geographical centre of the metropolitan area. 18 No. 6 Richardson Road, Narellan. This was an existing cemetery adjacent to the local Anglican Church. It is still used as a cemetery, but with less than one burial a week. Its area of 1.036 hectares and its location adjacent to a school suggests that there would be limited potential for the construction of a crematorium, chapel and car parking and no consent for such has been sought since its sale in October 2004. 19 As noted above, I do not regard any of these sales as being comparable to the subject land and I thus disregard them. The only sale that is remotely comparable to the subject land is No. 12 Military Road, Matraville, purchased by the Eastern Suburbs Crematorium in November 1995. Although the sale is about nine years before the relevant date, it can with appropriate adjustment for time from the date of the sale to the relevant date, be used as a comparison. The land area of 5.11 hectares is not greatly dissimilar from the land area of the Rookwood crematorium. Importantly, it was purchased by the Botany Cemetery Trust as an addition to its existing crematorium site and is now used by it for its offices, for memorial gardens for cremated remains and for burials. 20 It was suggested, both in evidence and in submissions, that the use of land for burials was a more valuable use than a use for memorials and memorial gardens for cremated remains. There is no evidence, however, to support this assertion. I would have thought that the converse was the case, since a far greater number of cremated remains can be accommodated in the form of memorials for cremated remains and in memorial gardens than in single burial plots. 21 I regard the use of sales of industrial land as too unreliable in this case. There is no logical basis for adopting the particular discount for such sales, adopted by Mr Large and Mr Wood (of 60 per cent and 50 per cent respectively), having regard to the restricted use of the subject land. In Ashfield Municipal Council v Roads and Traffic Authority of New South Wales (2001) 117 LGERA 203, the Court of Appeal accepted the proposition that it is necessary to take into account, insofar as they were relevant, any restrictions placed upon the use of the land (par [100]). The Court went on to hold, however, that the primary judge had erred in applying a two-thirds discount, which had been applied in Hornsby Shire Council v Roads and Traffic Authority of New South Wales (1998) 100 LGERA 105, without considering the particular facts of the case before him (pars [109] and [113]). 22 In making an adjustment for time from the date of the sale at Matraville to the relevant date, Mr Newton adopted the closest class of real estate, namely the movement in prices of industrial land, since both industry and crematorium are business uses. Mr Large, on the other hand, adopted the annual changes in the bond rate market. There is nothing, however, to suggest that the bond rate is related to real estate values. Since the only evidence of the percentage increases in real estate is that which was furnished by Mr Newton, I accept his figures for the adjustment for time. The Matraville sale showed a rate of $36.15 per square metre, which, when adjusted for time in the manner adopted by Mr Newton, results in a rate of $85 per square metre at the relevant date; that is, a valuation for the subject land of $7.91 million. 23 To repeat, although the passage of time gives rise to uncertainties, the sale of No. 12 Military Road, Matraville, to the Eastern Suburbs Crematorium is the only remotely reliable indicator of value for a number of reasons: it is the only sale of land which was purchased for a crematorium use; it was vacant land; it is adjacent to an existing crematorium and a large cemetery precinct (Botany cemetery); it requires only one adjustment - for time; and it is within the metropolitan area. It was suggested that some allowance should be made for the need for filling and retaining walls at the Matraville site. However, there would be no need for filling if the land were to be used for memorials for cremated remains, and landscaping and gardens would in any event have to be provided. 24 I therefore determine the unimproved value of the subject land at the relevant date, 1 July 2005, to be $7.91 million. 25 The final orders of the Court are:

1. The appeal is allowed.
2. The first respondent's valuation of the general crematorium site at Rookwood dated 30 April 2005 is set aside.
3. The Court determines the value of the general crematorium site at Rookwood in accordance with cl 5(3) of Schedule 3 to the Rookwood Necropolis Act 1901, as at 1 July 2005, at $7.91 million.
4. The exhibits may be returned.
5. The question of costs is reserved. I hereby certify that the preceding 25 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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