Panagiotonakos v Valuer General

The subject property 10The subject property is located in Petersham, an inner western suburb being approximately seven kilometres west of the Sydney CBD in an area of residential development. 11The subject property has a frontage to Livingstone Road, a high volume four lane road subject to clearway conditions, resulting in high levels of traffic noise and vibration. 12The subject property is subject to vibration, aircraft pollution and aircraft noise, being situated approximately upon the 25 decibel contour of the Marrickville Council Australian Noise Exposure Forecast (ANEF) map, which was tendered as evidence by the Respondent. 13The subject property is improved by a single storey, brick residence in the Federation style, occupied for residential purposes, which the parties agree to be the highest and best use of the subject property. 14Having a site area of 480.6 sq m, the subject property slopes slightly and is a regularly shaped block. 15The subject property is adversely affected by a sewer pipe running close to the rear boundary of the property, to which access may be required by relevant parties causing inconvenience to the occupier 16The subject property is further adversely affected by a large tree situated on a site to the rear of the subject property. 17The subject property is also adversely affected by overlooking and security problems arising from a large residential development adjacent to the subject property. 18The subject property is zoned 2(a) - Residential A under the Marrickville Local Environmental Plan 2001. 19The subject property comprises Lot 3, Section 1 in DP5892.

The issues 20The Applicant identified, at length, erroneous information in the Respondent's Statement of Basic Facts, though the Statement was not tendered as evidence. Where relevant to his valuation, Mr Veris confirmed that he had adopted correct information except for the size of the sewer pipe. The Applicant identified that the sewer pipe was 6 inches and that Mr Veris had adopted 9 inches in his report. Under examination, Mr Veris noted that the adoption of 6 inches rather than 9 inches would not have an impact on his assessment of value of the subject property. 21The Applicant stated that the subject property is adversely affected by clay soil conditions. The Respondent tendered evidence that the subject property, together with those comparable sales relied upon by the Respondent, were outside of an area of acid sulphate soils. However, the impact of soil conditions on land value was not considered further by the parties.

The comparable sales evidence 22The Applicant, a registered valuer though not appearing as an expert witness in the matter, tendered as evidence a letter dated 25 January 2011 stating the land value of the subject property to be $313,000 at the Base Date. 23Mr Veris, Registered Valuer, tendered as evidence an undated valuation of the subject property at the Base Date and gave expert evidence on behalf of the Respondent. He concluded the land value of the subject property to be $370,000 at the Base Date. 24I note that the valuation by the Applicant is below the amount claimed by the Applicant of $315,000 at the Base Date. 25I note that the valuation by Mr Veris is in excess of the amount assessed and claimed by the Respondent of $344,000 at the Base Date. 26The parties submitted nine comparable sales, comprising one common comparable sale with the Applicant submitting two further comparable sales and the Respondent submitting six further comparable sales. 27The parties submitted one common comparable sale at 249 Stanmore Road, Petersham which was inspected externally. 28The Applicant further submitted two comparable sales at 15 Junction Street, Marrickville and 53 Barwon Park Road, St Peters, which were inspected externally. 29The Respondent further submitted six comparable sales at 12A Cook Street, Lewisham, 23 Jarvie Avenue, Petersham, 11 Audley Street, Petersham, 12 West Street, Lewisham, 549 Princess Highway, Tempe and 37A Wardell Road, Lewisham, which were inspected externally.

Consideration of the comparable sales Evidence 30The Respondent did not tender evidence concerning the existence or otherwise of a sewer pipe on each of the comparable sales submitted by the Respondent, making a downward adjustment to all sales in recognition of the impact of same on the subject property. 31While the zonings differed between the comparable sales submitted, the parties did not tender evidence regarding the impact of such differences on land value. 32Having regard to location, road proximity (as an indicator of traffic noise and vibration), ANEF contour (as an indicator of vibration, aircraft pollution and aircraft noise), improvements, site area, shape of site and the date of sale, the comparable sales may be compared with the subject property as follows. 33249 Stanmore Road, Petersham, submitted by both parties, comprises a sale of vacant land in March 2009. Located in Petersham, the property is comparable to the subject property in location and proximity to a four lane clearway. However, the property is substantially larger, an irregular shape and approximates the 30 decibel contour. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale. 3415 Junction Street, Marrickville, submitted by the Applicant, comprises an improved property which sold in February 2009. The property is comparable to the subject property in approximating the 25 decibel contour and being of a regular shape. While the property faces a quiet, split level residential road, it is very substantially larger and some considerable distance from the subject property. Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance. 3553 Barwon Park Road, St Peters, submitted by the Applicant, comprises a partially improved property which sold in April 2009. The property is comparable to the subject property in approximating the 25 decibel contour. While the property is close to a busy, two lane road, the site is an irregular shape, very substantially larger and some considerable distance from the subject property. Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance. 3612A Cook Street, Lewisham, submitted by the Respondent, comprises a sale of vacant land in March 2010. The property is comparable to the subject property having a regular shape and being within reasonable proximity. However, the property is within the 20-25 decibel contour, is substantially smaller than the subject property and faces an albeit busy, one lane road. While having regard to the differences between this sale and the subject property, I consider this sale to be a relevant comparable sale though I note that the sale occurred after the Base Date. 3723 Jarvie Avenue, Petersham, submitted by the Respondent, comprises a sale of vacant land in March 2010. Located in Petersham, the property is comparable to the subject property approximating the 25 decibel contour and being regular in shape. However, the property is substantially smaller than the subject property and faces a two way residential laneway. While having regard to the differences between this sale and the subject property, I consider this sale to be a directly relevant comparable sale though I note that the sale occurred after the Base Date. 3811 Audley Street, Petersham, submitted by the Respondent, comprises an improved property which sold in March 2008. Located in Petersham, the property is comparable to the subject property approximating the 25 decibel contour and being regular in shape. However, the property is substantially smaller than the subject property and faces a two way residential street. While having regard to the differences between this sale and the subject property, I consider this sale to be a relevant comparable sale. 3912 West Street, Lewisham, submitted by the Respondent, comprises an improved property which sold in March 2009. The property is comparable to the subject property having a regular shape and being within reasonable proximity. However, the property is substantially smaller than the subject property, being within the 20-25 decibel contour and facing a quiet cul de sac. Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance. 40549 Princess Highway, Tempe, submitted by the Respondent, comprises a sale of vacant land in March 2009. The property is comparable to the subject property being of regular shape and facing a busy, six lane arterial road. While the property is very significantly smaller than the subject property, it is some considerable distance from the subject property and within the 30-35 decibel contour. Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance. 4137A Wardell Road, Lewisham, submitted by the Respondent, comprises a sale of vacant land in August 2009. The property is comparable to the subject property being within reasonable proximity and approximating the 25 decibel contour. While the property is very substantially smaller than the subject property and faces a two lane road, it is irregular in shape. Mr Veris gave evidence that the property was sold by a mortgagee in possession following an auction marketing campaign to an adjoining owner, though the exact point at which the sale occurred was unclear creating the possibility of a related party transaction inconsistent with the principles enunciated in S pencer v Commonwealth (1907) 5 CLR 418 . Having regard to the differences between this sale and the subject property, I consider this sale to be of limited relevance. 42Accordingly, I consider the comparable sales at 249 Stanmore Road, Petersham and 23 Jarvie Avenue, Petersham (sale occurred after the Base Date) to be directly relevant comparable sales. 43Further, I consider the comparable sales at 12A Cook Street, Lewisham (sale occurred after the Base Date) and 11 Audley Street, Petersham to be relevant comparable sales. 44However, I consider the comparable sales at 15 Junction Street, Marrickville, 53 Barwon Park Road, St Peters, 12 West Street, Lewisham, 549 Princess Highway, Tempe and 37A Wardell Road, Lewisham to be of limited relevance. 45I note that the Applicant and Mr Veris each analysed the directly relevant comparable sale at 249 Stanmore Road, Petersham. 46The Applicant made a deduction of $100,000, for a house on the site, from the sale price of $490,000 but without further adjustment to derive a rate of $692psm for application to the subject property at the Base Date. 47The Respondent tendered as evidence, which I accept, a Transfer form and attached plan for the sale indicating the sale price of $490,000 and a clear site without house. 48Mr Veris made explicit percentage adjustments to the sale price for differences with the subject property of -10% for road noise, +5% for aircraft noise, +5% for site area and shape and -5% for sewer pipe to derive a rate of $826psm, rounded down to $800psm, for application to the subject property at the Base Date. 49Concerning the analysis of the relevant comparable sale at 11 Audley Street, Petersham, I note that the Applicant did not undertake same and that Mr Veris made a deduction of $170,000 for a house on the site. Mr Veris then made explicit percentage adjustments for differences with the subject property of +10% for market movements over time, -15% for road noise, -15% for site area and shape and -5% for sewer pipe to derive a rate of $865psm, rounded down to $850psm, for application to the subject property at the Base Date. 50I note that the adjusted analysed rates psm land value for application to the subject property may be summarised as follows: Address Applicant Mr Veris $psm $psm 249 Stanmore Road, Petersham $692 $800 11 Audley Street, Petersham N/A $850

51I note that, while occurring after the Base Date and not analysed by the Applicant, the comparable sales at 23 Jarvie Avenue, Petersham and 12A Cook Street, Lewisham were analysed by Mr Veris and provide support for the above. 52Concerning the adjustment of the directly relevant comparable sale at 23 Jarvie Avenue, Petersham, Mr Veris made explicit percentage adjustments to the sale price for differences with the subject property of -10% for market movement since the Base Date, -15% for road noise, -15% for site area and shape and -5% for sewer pipe to derive a rate of $950psm for application to the subject property at the Base Date. 53Concerning the adjustment of the relevant comparable sale at 12A Cook Street, Lewisham, Mr Veris made explicit percentage adjustments to the sale price for differences with the subject property of -10% for market movement since the Base Date, +5% for location, -5% for road noise, -5% for aircraft noise, -15% for site area and shape and -5% for sewer pipe to derive a rate of $872psm, rounded down to $850psm, for application to the subject property at the Base Date. 54Having regard to the directly relevant and relevant comparable sales and to his analysis of other comparable sales evidence, Mr Veris considered the appropriate rate psm land value for application to the subject property to be $775psm as at the Base Date. 55I note that Mr Veris then concluded the Land Value as at the Base Date to be $370,000, equating to $770psm. 56Having regard to the directly relevant comparable sale and to his analysis of other comparable sales evidence, the Applicant considered the appropriate rate psm land value for application to the subject property to be $651psm as at the Base Date. 57I note the Land Value as at the Base Date claimed by the Applicant of $315,000 equates to $655psm.

Findings 58Accepted valuation practice permits both explicit and implicit adjustment for differences, such as in location, area and time, to enable valuers to have evidentiary comparable values which, following adjustment, account for the various differences with the subject property. Such adjustment is generally based on a reasoning process drawing on the skill and experience of the valuer and undertaken to derive an opinion of value through a deductive process (per Biscoe J in Holcim (Australia) Pty Ltd v Valuer General [2009] NSWLEC 225 ( Holcim )). 59Because properties are rarely identical, explicit and/or implicit adjustment for differences is obviously necessary but caution is required through making as few adjustments as possible, in a consistent manner, to ensure the reliability of the comparable sale when related to the subject property, with too much adjustment potentially rendering the comparable sale unsafe to use. Caution is, therefore, required where large adjustments are to be made. Reflecting the significant roles of skill, experience and personal assessment in the adjustment process, the scope for differences in the quantum and direction of adjustment between valuers can be considerable (per Biscoe J in Holcim ). 60Such adjustment process should work forwards from the comparable sales to derive an opinion of value, rather than working backwards to justify an opinion of value previously formed (per Jagot J in Graham Trilby Pty Limited v Valuer General [2008] NSWLEC 217 at paragraph 25) 61Explicit adjustment was preferred by Bly C in Jessica Investments Pty Ltd v Valuer General [2008] NSWLEC 1375: [6] Also, in my opinion, if a valuer does not have a final land value in mind, the detailed percentage adjustment approach could be utilised and revealed in an attempt to provide transparency. Otherwise the valuer's less transparent approach would be to identify a range of factors that distinguish in one way or another, the comparable sale from the subject property and, based on the valuers own judgment simply assert the land value. 62This view was echoed by Pepper J in T omago Aluminium Company Pty Limited v Valuer General [2010] NSWLEC 4 : [45] To this it may be added that it is necessary to make explicit adjustments for differences so that the adjustment process is sufficiently logical. An implicit process comprising a single adjustment, rather than separately itemised and reasoned adjustments, risks rejection for want of transparency. 63I note that under s 40(2) of the Act, the Applicant has the onus of proof. 64I note that Mr Veris undertook an explicit adjustment process in a consistent manner, so providing a transparent valuation process. 65I consider the adjustments made by Mr Veris to be conservative and note that less conservative adjustments would result in higher adopted rates for each comparable sale and may result in a higher assessed land value. 66I also note that Mr Veris rounded down at three stages in his analysis and adjustment process, comprising the adopted rate for each comparable sale, the adopted rate for application to the subject property and the assessed land value for the subject property. The absence of such rounding down may result in an assessed land value considerably above $370,000. 67Accordingly, I consider the Respondent's claim of $344,000 to be supported by the directly relevant and relevant comparable sales evidence provided. 68Having regard to the evidence tendered and information presented, I consider that an analysis of the directly relevant and relevant comparable sales and an adjustment of the analysed rates for application to the subject property do not support the assessment of value of $315,000 claimed by the Applicant. 69Having regard to the evidence tendered, I consider that the Applicant has not sufficiently proved the Applicant's case as required by section 40(2) of the Act.

Orders 70The orders of the Court: (1)The Appeal is dismissed. (2)The Land Value for the property known as 69 Livingstone Road, Petersham as at the base date of 1 July 2009 is $344,000. (3)No Order is made as to costs. (4)The exhibits are returned. Dr David Parker Acting Commissioner of the Court DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 August 2011