Souter v Valuer-General

CASES CITED: Souter v Valuer General [2006] NSWLEC 588 Pyramid Pacific Pty Limited v Ku-ring-gai Council NSWLEC 522 [2006]

APPLICANT Mr J. Souter, litigant in person

LEGAL REPRESENTATIVES: RESPONDENT Ms I. Ryan, barrister Instructed by Mr B. Row of Crown Solicitors Office

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

8 February 2008 30227 of 2007: Souter, John v Valuer-General

JUDGMENT 1 COMMISSIONER: This Appeal is against the unimproved land value assessed by the Valuer General at Base Date 1 July 2005 for 5 Silver Strand Circle, Hyams Beach. The site 2 The site is: o 5 Silver Strand Circle - Lot 22 DP 847268 - the site has a frontage of 9.41m to Silver Strand Circle and other boundaries of 10.485m, 33.5m and 33.51m giving a total site area of 334sq m. 3 The site is located approximately 200m west of the southern section of the beach front of Hyams Beach. The undulating topography of the Hyams Beach area provides for a largely consistent rise in elevation from the beach front westerly to the town boundary with the adjoining national park. The site contains a semi detached dwelling over two levels, with a covered car space beneath a front raised deck, and appears to be used for short term holiday lettings. No significant trees appear to be located on the site, which rises significantly from the street frontage to the rear.

Relevant planning controls 4 The site is zoned 2(a1) under Shoalhaven Local Environmental Plan 1985. The objectives of the Zone are stated as follows: … to provide an environment primarily for detached housing and to ensure that the range of other development permitted in a residential area is compatible with the residential environment. 5 Development that requires consent includes the following: Bed and breakfast accommodation, childcare centres, childcare welfare centres, community facilities, drainage, dual occupancy development, dwelling houses, educational establishment, general stores, home activities, hospitals, open space, places of public worship, professional consulting rooms, roads, utility installations (other than gas holders or generating works) The land values 6 The land value of the site, as assessed by the Valuer General for rating purposes as at the Base Date 1 July 2005, was $504,000. After appeal to the Valuer General, the land value as at the Base Date 1 July 2005 was reduced to $400,000 as set out in letter of 15 December 2006 from the Valuer General to the Applicant.

7 The land value of the site as now assessed for the Valuer General by Mr Peter Dempsey, a valuer registered under the Valuers Act 2003, in accordance with s.6A of the Valuation of Land Act 1916, is $360,000.

8 If the appeal is dismissed, the Valuer General sought the Court to impose the unimproved value of $360,000 deduced by Mr Dempsey rather than original values sought by the Valuer General.

9 The land value of the site as submitted by the Applicant is $310,000, however no expert evidence was provided by the Applicant to support this contention. The Applicant provided the Court with his lay views which were well researched although not expert, and appropriate weight was given to his evidence. 10 The Valuer General was represented by Ms I. Ryan, counsel, and the Applicant represented himself, as a litigant in person.

11 It was submitted by Ms Ryan that the Court did not have any expert evidence against that provided by the Valuer General's expert, Mr Dempsey. It was further submitted by Ms Ryan that the onus lies with the Applicant in terms of s.40(2) of the Act to demonstrate that the land value at Base Date 1 July 2005 should be disturbed. Nevertheless, in an earlier objection by the Applicant to the land value at Base Date 1 July 2004, Murrell C in Souter v Valuer General [2006] NSWLEC 588, referred to a judgement of Preston CJ in Pyramid Pacific Pty Limited v Ku-ring-gai Council NSWLEC 522 [2006] in respect of expert evidence, where His Honour states: the factual foundation and the reasoning process for the opinions established in the expert evidence can be used legitimately by the parties either to support the conclusion expressed by the expert or to derive an alternative conclusion to that reached by the expert. The Court can similarly use the factual foundation established in the expert evidence and the reasoning process from the factual foundation to arrive at the same or different conclusions to that expressed by the expert. The evidence 12 The parties identified a number of sales in Hyams Beach, however Mr Dempsey relied primarily upon four sales being 50 Tulip Street, 22 Tulip Street, 9 Hyam Road and 7 Hyam Road. The Applicant relied primarily on the sale of a 50% share of 5a Silver Strand Circle which is the immediately adjoining semi-detached dwelling to the subject property.

13 These sites were inspected on the morning of the hearing. The main details of these sales are: Sale 1 - (Dempsey) - 50 Tulip Street, Hyams Beach Sale price: $600,000 Sale date: 29 April 2005 Area: 499.9 sq m Improvements: Timber cottage on corner block, but vacant land at time of sale, considered by Mr Dempsey to have good side water views and close to the general store. The Applicant concurred. Adjusted land value - $600,000

Sale 2 - (Dempsey) - 22 Tulip Street, Hyams Beach Sale price: $925,000 Sale date: 9 June 2005 Area: 734 sq m Improvements: Substantial brick cottage on corner block, considered by Mr Dempsey to have corner block advantage with views that could not be built out. The Applicant concurred. Adjusted land value: $675,000 Sale 3 - (Dempsey) - 9 Hyam Road, Hyams Beach Sale price: $750,000 Sale date: 7 January 2004 Subsequent Sale price: $675,000 Subsequent Sale date: 23 November 2006 Area: 835 sq m Improvements: Derelict asbestos cottage, considered by Mr Dempsey to be of minimal value, but land with good elevated views to east. The Applicant concurred that the land had expansive views but suggested that the improvements had some value. Adjusted land value (7 January 2004): $750,000 (23 November 2006): $675,000

Sale 4 - (Dempsey) - 7 Hyam Road, Hyams Beach Sale price: $780,000 Sale date: 23 February 2004 Area: 835 sq m Improvements: Renovated asbestos clad cottage, considered by Mr Dempsey to have good corridor views down street but significantly lower and more restricted than No 9 Hyam Road. The Applicant disagreed, stating that the views were "not much different to No. 9" Adjusted land value: $700,000.

Sale 5 - (Dempsey) - 20 Tulip Street, Hyams Beach Sale price: $685,000 Sale date: 2 April 2007 Area: 607 sq m Improvements: Low set cottage, considered by Mr Dempsey to be a "redevelopment site" which will always have corridor views. The Applicant considered that views could be "improved substantially by redevelopment upwards". Adjusted land value: $610,000 Sale 6 - (Souter) 5a Silver Strand Circle, Hyams Beach Sale price: $230,000 Sale date: 24 November 2005 Area: 319 sq m Improvements: Semi-detached modern dwelling very similar to Applicant's adjacent property, but only a 50% interest purchased which was considered by Mr Dempsey to have only "secondary" evidentiary value. The Applicant disagreed relying upon this sale almost exclusively to support his objection. Adjusted land value: $130,000 (Dempsey) The Applicant was of the view that the overall land value should be $270,000, presumably using the 50% sale as the basis of this calculation. 14 In company with the parties three other properties in Cyrus Street (81, 83 and 85) were viewed, and both Mr Dempsey and the Applicant agreed that these sales revealed a decline in the Hyams Beach property market. Findings 15 Clause 40(2) of the Valuation of Land Act 1916 states that "on an appeal, the appellant has the onus of proving the appellant's case". In considering cl 40(2) I am not satisfied that the Applicant has not discharged this onus.

16 Both Mr Dempsey and the Applicant adopted the approach of adjusting land values where considered necessary in the various sales selected as evidence. This approach accords with accepted valuation practice, and enables valuers to have evidentiary comparable values which with adjustment account for varying levels of development, location and inherent site qualities.

17 Because properties are rarely totally similar, this approach is obviously necessary, and yet caution requires that adjustments should be as few as possible to ensure the reliability of the sale when compared to the property being valued. Further, additional caution needs to be taken where large adjustments are required, and I am satisfied that the adjustment process adopted by Mr Dempsey has been undertaken with this necessary level of caution. I am not satisfied that the Applicant who in any event is not an expert valuer, has assumed this level of caution in adopting the sale at 5a Silver Strand Circle as a pivotal comparable sale.

18 The comparable sales utilised by Mr Dempsey in deducing adjusted land values to arrive at a suitable land value for the Applicant's property at the Base Date 1 July 2005 have been chosen with some care from the raft of sales available in Hyams Beach. . 19 I do not accept the Applicant's lay view that the sale of 5a Silver Strand Circle is comparable to his own property, and in this regard I accept the evidence of Mr Dempsey that this sale should be treated as being of only "secondary evidence".

20 Indeed, the overarching reliance by the Applicant on this sale ignores the established view that the proportionate value of the fee simple may not directly determine the value of the proportionate fractional interest. Simply, 50% of the value of 5a Silver Strand Circle may not necessarily be the value of a 50% interest in that property. This is determined by a number of factors, hence the doubts rightly expressed by Mr Dempsey under significant cross-examination.

21 The negotiations between the parties to this sale appear to have not always been amicable, and according to Mr Dempsey's evidence he records that the purchaser previously described the negotiations as "quite harrowing". The Applicant contends that notwithstanding, the sale should be given weight as it was conducted at "arms length", and hence "the most comparable".

22 In Mr Dempsey's evidence he questioned whether the sale of the 50% interest could be regarded as relevant as the property had not been "put to the open market". Under cross examination he further opined that "if it had been put to the open market, I really do not know what the result would be", casting further doubt upon the comparability of the sale. Orders 23 The Orders of the Court for Appeal No. 30227 of 2007 are: 1. The appeal is dismissed. 2. The land value of the site as at Base Date 1 July 2005 in accordance with s 6A of the Valuation of Land Act 1916, is $360,000. 3. The exhibits are returned.

      J Sheehan
      Acting Commissioner of the Court

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