Land and Environment Court of New South Wales CITATION : P J George & Anor v Valuer General [2006] NSWLEC 298 APPLICANT Paul John George and PARTIES : Paul George Pty Limited RESPONDENT Valuer General FILE NUMBER(S) : 30970 of 2005 CORAM: Hussey C KEY ISSUES: Valuation of Land :- LEGISLATION CITED: Valuation of Land Act 1916 CASES CITED: Brewarrana Pty Ltd v Commissioner of Main Roads (1973) [No. 1] LGRA 240 DATES OF HEARING: 29/05/2006 DATE OF JUDGMENT: 06/02/2006 APPLICANT Mr H. Wright, barrister for Brennan Tipple Partners LEGAL REPRESENTATIVES: RESPONDENT Mr S. Lloyd, barrister for Crown Solicitor JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Hussey C 2 June 2006 30970 of 2005 Paul John George & Anor v Valuer General JUDGMENT Background. 1 This matter involves an appeal under s 38 of the Valuation of Land Act 1916 against the Valuer Generals refusal to allow an objection to the value of a property situated at 85 Avoca Dr, Avoca Beach. Particulars of valuation. 2 The valuation is made under Section 6A of all the Valuation of Land Act 1916. + Base Date: 1 July 2004. + Land Value: $3,400,000. + Legal description: Lot 1,DP 708641. + Area: 897.8 sq m. Zoning. 3 The subject land is zoned Residential (Beach Frontage) 2 (f) under the provisions of the Gosford Planning Scheme, as amended. General Description. 4 The property is located on the north east corner of Avoca Drive and Vale Ave, at the southern end of Avoca Beach. Its back boundary (eastern) abuts onto the western side of a beachside carpark which is shared by Avoca Surf Club and the general public; this park has a capacity of about 40 vehicles, plus 40 on either side of Vine St, allowing parking for about 80 vehicles. 5 Adjacent to the beachfront is a strip of 6(a) Open Space land, approx. 7m wide, which legally restricts direct access to the beach. Therefore legal access is obtained via the adjoining carpark. 6 In 1998 a consent was granted for the construction of a two-storey retail/commercial building on the site, which was subsequently constructed. The Evidence. 7 For the respondent, Mr M Dick (Registered valuer No 1241), prepared a detailed valuation report (Exhibit 1). From his analysis, he concluded the value of land is $2,500,000, and accordingly the VG adopted this figure for the purpose of the appeal. 8 Mr B Shaw (Registered valuer No. 1157), presented an alternative valuation report (Exhibit A) and concluded that the value of the land is $800,000. Although during the hearing he conceded other adjustments may be appropriate, which gives a land value in the order of $1m - $1.2m. 9 Both valuers based their assessments on the comparative sales method and provided a list of recent sales to support their conclusions. Somewhat surprisingly, there are no common sales in the respective lists because the valuers have adopted fundamentally different approaches to the recent sales evidence. 10 Mr Smalls approach relies on the following 3 recent sales: Sales 1 Property: Lot 140 in Deposited Plan 9359 at No 71 Avoca Dr. Avoca Beach Sale price: $1,750,000 Contract date: 15 September 2002 Area & Dimensions: 1024.00 sq m. Avoca Dr. 18.5 Vine St. 18.0 x Depths 59.0 & 50.2 m Zoning: 2(f) Residential (Beach Frontage) Parties: Starr to Norbel Enterprises Pty Limited Comments: A large residential block of land with streets at front and back purchased by Norbel Enterprises P/L which owns the picture theatre property adjoining. 2 Property: Lot 1 in Deposited Plan 1072113 at No 118A Avoca Drive, Avoca Beach Sale price: $800,000 Contract date: 13 July 2004 Area & Dimensions: 398.4 sq m 15.25/15.225 x 26.38/25.955 m Zoning: 2(a) Residential Parties: Werrington P/L & Clan Investments P/L to Cook Comments: A block of land on western side of Avoca Drive sloping very steeply up from the front to the back boundary; from the block there are panoramic views of the beach and ocean. 3 Property: ` Lot 442 Deposited Plan 1064475 at No 21A Ascot Avenue, Avoca Beach Sale price: $955,000 Contract date: 1 May 2004 Area & Dimensions: 467.00 sq m 18.99/18.295 x 23.95/27.43 m Zoning: 2(a) Residential Parties: Hart to Cormack Comments: An elevated block of land on the higher side of the street from which there are extensive ocean and coastline views located in a high quality residential area. 11 From his comparison of these sales, Mr Shaw makes the following allowances, so as to conclude that the value of the subject land is $800,000. In particular he considers the subject land is inferior because of its loss of privacy and exposure to disamenity from the adjacent road and carpark; To Lot 140 in DP 9359 at 71 Avoca Drive. Avoca Beach -adjusted value $1,175,000 No 71 is 14% larger than No 85 and has a frontage of 18.5 m compared to 13.4 m; in addition it has frontages to streets at front and back and there is a strong possibility that two houses could be built on it and also that it could be subdivided into two lots. No 85 is close to the beach but abuts a busy car park and is close to a noisy surf club and it is my opinion that Lot 140 has a substantially higher value than the subject. To Lot I in DP 1072113 at 118A Avoca Drive. Avoca Beach -Sold for $800,000 No 118A is a steep block and will be expensive to build on; it is a short walk to the beach whereas the subject is very close to the beach. The subject, on the other hand, has the severe problems associated with being adjacent to a car park and a surf club. It is my opinion that the two properties are similar in value. To Lot 442 in DP 1064475 at 21A Ascot Avenue. Avoca Beach -Sold for $955,000 This property has a wide frontage and is in a quiet elevated position from which there are permanent ocean and coastline views but is some distance from the beach. The subject is close to the beach but, as a residential site, has the severe problems detailed above. It is my opinion that this property has a higher value than the subject 12 Against this, Mr Dick says recent sales of similar beachfront properties are the most comparable. On the basis of his extensive experience in the area, he says there is an exclusive market for beachfront properties and purchasers in this category would be most unlikely to purchase non-beachfronts, as presented by Mr Shaw. Accordingly he list the following sales: The following sales information provided assistance in assessing the valuation, as at Base Date 1 July 2004: 1. 36 Coral Crescent, Pearl Beach Sate Date 30 January 2004 Sale Price $4,035,000 Land Area 670.2 sq m COMMENTS Absolute beach frontage site with single storey, fibro and tile clad dwelling with detached double garage. Ground improvements are basic and presentation is average. The property was sold after an approach was made from an agent on behalf of the purchaser and it was not listed for sale and it is recognised that a premium was paid for the property. Indicates a land value of $3,950,000, although it could be argued that older style improvements add little if any value as the site may be redeveloped. However, the older style cottages do provide temporary accommodation prior to redeveloping the land. Superior to subject due to superior residential amenity and location and supports a lower land value for subject. 2. 56 North Avoca Parade, North Avoca Sale Date 22 January 2004 Sale Price $3,850,000 Land Area 878.9 sq m COMMENTS Well presented, part double storey, beach cottage located on beachfront lot towards the northern end of Avoca Beach. Excellent beach and ocean views and excellent beach frontage. Indicates land value of $3,600,000. Superior to subject due to superior location and amenity. Supports lower land value for subject. 3. 87 Ocean View Drive, Wamberal Sale Date 5 February 2004 Sale Price $3,300,000 Land Area 733.5 sq m COMMENTS Elevated. absolute beachfront allotment with older style residential dwelling. Deduced land value is $3,000,000. Superior location but exposed beachfront and lot also fronts busy road. Superior residential amenity to subject and supports a lower land value for subject. 4. 55 Ocean View Drive, Wamberal Sale Date 23 October 2003 Sale Price $4,050,000 Land Area 1062 sq m COMMENTS Tri-level timber and colorbond dwelling upon absolute beachfront site. Superior location with panoramic beach and ocean views. We note the property was previously traded in June 1998 for $950,000, which indicates the growth within the marketplace within recent years. Indicates land value of $3,600,000. Superior location and amenity. Supports lower land value for subject. 5. 33 Pacific Street, Wamberal Sale Date 19 February 2004 Sale Price. $3,500,000 Land Area 872.6 sq m COMMENTS Beachfront property located just adjacent to the intersection with Ocean View Drive and improved with older style weatherboard/galvanised iron clad dwelling. Deduced land value considered to be $3,250,000. Busier location to before mentioned sales but superior location to subject which is not an absolute beachfront. 13 After discussions, he agreed that on his evidence, the most comparable Sales would be 56 North Avoca Parade and 87 Wamberal Parade. His valuation rationale is: Having regard to the available sales evidence I consider the Direct Comparison method of valuation to be the most appropriate to assess the Land Value as at 1 July 2004. In undertaking this Land Value assessment I consider that the sales detailed previously, which indicated deduced land values ranging from $3,000,000 to $3,950,000 for absolute beachfronts, are all superior to the subject site when the subject site is considered as a residential property. In this regard this approach is considered to represent the highest and best use of the land, i.e. it results in a higher value than consideration of the site for commercial purposes, having regard to the income, which is currently being generated. All of the sales enjoy a superior residential location, are absolute beach frontage and have a superior residential amenity. Having regard to the above comments and the available sales evidence, I have assessed the Land Value in accordance with the Valuation of Land Act 1916, as at Base Date 1 July 2004, at $2,500,000. Findings. 14 Having considered the disparate valuation approaches, I am satisfied to rely on Mr Dick's approach as the most appropriate in the circumstances of this case. From the view, the subject land appears to be more comparable with the other beachfront lots, rather than Mr Shaws sites, which are generally well removed from the beachfront and require the crossing of relatively busy roads to get to the beach, notwithstanding that they have magnificent ocean views. It also appears to me that the significantly smaller lot sizes and steeper topography of the non-beachfront lots is a further distinguishing factor. 15 Also, the "beachfront" lots experience similar type of views, access to the beach and a privacy level that is dependent on beach activity. This is in contrast to the higher level of privacy achieved in the more substantive residential areas. 16 In any case, it seems to me that the sale at 56 North Avoca Parade should considered because it is of similar area and enjoys a similar extent of view of Avoca Beach as the subject site and it has similar (practical) direct beach access. In this regard, I accept appropriate adjustments be made because North Avoca is regarded as superior. But those adjustments would be made from the deduced value of $3,200,000. 17 Accordingly, the parties were requested to identify the relevant criteria that could be used to adjust Mr Dicks sales. The following criteria was identified: + Noise affectation, + Views, + Locality/postcode, + Zoning, + Access, in terms of pedestrian and vehicular convenience and safety, + Neighbourhood, + Privacy, + Absolute beachfront, + Building restrictions, + Topography. 18 As Mr Dick maintained his valuation, Mr Shaw was asked assume the beachfront sales as the most comparative and apply the aforementioned criteria. By reference to the sale at 87 Ocean View Dr (the lowest sale), he applied: + a 35% reduction in terms of the "restricted" beachfront due to the intervening open space, + 15% reduction for the neighbourhood because he considers a Wamberal address inferior to Avoca, + 5% reduction for privacy due to the more exposed location of the subject lot to the access road and carpark, + 5% reduction for noise. 19 This results in an adjustment of 60%, which gives an adjusted value of $1,200,000. 20 Insofar as I accept this hypothetical adjustment can be made, it is obvious from the evidence presented to the Court that there is no sales evidence of beachfront land in the order of magnitude (i.e. $1m – 1.2m) as suggested by Mr Shaw. Instead, I consider Mr Dicks approach is eminently more acceptable that the entry value for beachfront land is in the order of $3,000,000. I also accept his opinion that buyers in this market would consider all the localities included in his sales. 21 From this I also accept that the value of the subject land should be reduced because of noise/traffic disamenity from the road and carpark. Also some reduction is appropriate in respect of the intervening open space strip, but in reality it has no practical adverse affect on access to the beach or on the open beach outlook. 22 Mr Dicks value of $2,500,000 represents a reduction of the order of 17% from the nominated land at 87 Ocean View. It also represents a reduction in the order of 30% from 56 North Avoca, which I consider is a comparable sale due to its proximity and beachfront character with the subject site. 23 Whilst I accept that adjustments are of a subjective nature, in this case I consider Mr Dicks approach is more reliable because his sales are more comparable than the alternate non-beachfront sites. Also, Mr Shaw changed his position when he initially agreed in the joint conference that his most relevant sale was 71 Avoca Drive. From my assessment, this sale would not be more relevant than Mr Dicks sales. Therefore, Mr Dicks approach including his adjustments has greater credibility in my assessment and I accept his opinion that the value of this land is $2,500,000. Court Orders. 1 The appeal is allowed. 2 The land value of $2,500,000 for 85 Avoca Drive, Avoca Beach as assessed in accordance with the requirements of the Valuation of Land Act 1916, as amended, and at the base date of 1 July 2004, is confirmed. ___________________ R Hussey Commissioner of the Court Ljr/rjs 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.