Land and Environment Court of New South Wales CITATION : National Australia Trustees Ltd atf Industrial Property Trust v Valuer-General [2004] NSWLEC 324 APPLICANT National Australia Trustees Ltd atf Industrial Property Trust PARTIES : RESPONDENT Valuer-General FILE NUMBER(S) : 31574 of 2003 CORAM: Talbot J KEY ISSUES: Valuation of Land :- Land Value - objector onus not discharged LEGISLATION CITED: Valuation of Land Act 1916 s 6A(1), s 37 CASES CITED: DATES OF HEARING: 16/06/2004, 17/06/2004 DATE OF JUDGMENT: 06/25/2004 APPLICANT Ms J M Jagot (Barrister) SOLICITORS Mallesons Stephen Jaques LEGAL REPRESENTATIVES: RESPONDENT Mr G J Bartley (Barrister) SOLICITORS State Crown Solicitor's Office JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 31574 of 2003 Talbot J 25 June 2004 National Australia Trustees Ltd atf Industrial Property Trust Applicant v Valuer-General Respondent Judgment Introduction 1 The applicant is the owner of lot 1 DP 856215 which is an island site comprising 32,552m2 bounded by Benson Avenue, Lamerton Crescent and College Avenue within the Shellharbour City Centre and is known as Lot 1 Benson Avenue, Blackbutt ("the subject land"). 2 The subject land is in the valuation district of Shellharbour. The Valuer-General determined Land Value under s 6A(1) of the Valuation of Land Act 1916 ("the Valuation of Land Act") at the base date of 1 July 2001 in the sum of $3,600,000. Through its valuer, Angela C Parker, the Valuer-General now supports an amount of $125.00m2 to arrive at a Land Value of $4,000,000, based on sales evidence, thereby justifying the land value of the subject land at $3,600,000 on the base date of 1 July 2001. 3 The applicant lodged an objection on the basis that the Land Value was too high. The applicant's valuer, Grant Jackson, has assessed the Land Value of the subject land to be $2,440,000. 4 The subject land is basically rectangular shaped and is located at the highest and most prominent point of the Shellharbour City Centre. There is a fall across the land of 10 metres. 5 Shellharbour Square Shopping Centre has been developed on land that adjoins the subject land to the northeast and commercial entertainment and community facilities, including a cinema, have been built within the City Centre location to the northwest in a pattern consistent with Shellharbour City Centre Development Control Plan 2001 ("the DCP"). 6 The DCP divides the City Centre into precincts and encourages development in accordance with the 1998 Shellharbour City Centre Master Plan ("the Master Plan") that identifies a strategy for future development in the 3(a) - Mixed Use Commercial zone under the Shellharbour Local Environmental Plan 2000 ("the LEP"). The subject land is part comprised within precinct G and part precinct H, whereby the preferred land uses include the following:- § Entertainment/Cultural/Retail to the corner of Lamerton Crescent and College Avenue; § Retail to the northern Lamerton Crescent frontage; § Commercial Office to the eastern Lamerton Crescent frontage; § Predominantly Residential/Mixed use to the rear of the site fronting Benson Avenue; and § Support Retail/Commercial/Showroom to the College Avenue frontage. 7 Part of the subject land included in precinct G has been nominated as part of a future possible City Square connecting Shellharbour Square Shopping Centre with Main Street. 8 Building heights for the subject land are designated as three storeys, although taller buildings will be permitted on approximately one-third of the site, which is identified as a focal or icon point. 9 Mr Jackson relies upon a report, prepared by Jeffery and Katauskas Consulting Geotechnical Engineers on 26 March 1996 ("the Jeffery and Katauskas report"), to identify a potential problem for a developer in respect of a considerable level of rock at varying levels, which will require significant excavation. Mr Jackson also regards the gradient decline of 10 metres as a substantial fall, which extends from the middle of the subject land to its northern frontage. Whilst she does not dispute the gradient, Ms Parker notes that the fall is over a substantial area and should be regarded as a gentle rise towards a knoll. Ms Parker does not discern the Jeffery and Katauskas report as raising a significant issue and that, in any event, she says the amount of high strength rock and cost of excavation required to develop the subject land has not been determined. The sales evidence 10 The primary sale relied upon by Mr Jackson is of land having a frontage to Durgadin Drive and the Princes Highway in an area zoned 4(a) Light Industrial within the Central Business Park Light Industrial Subdivision approximately one kilometre from the subject land in a westerly direction ("the Durgadin Drive sale"). The area of the sale is 31,600m2, which compares to the subject land and has a significant frontage to the Princes Highway. However, I do not agree with Mr Jackson that the land itself is highly prominent, being set in a hollow well below the level of the highway adjacent to a roundabout. It has a wider exposure than the subject land, due to its proximity to the Princes Highway, but access is by a circuitous route along Durgadin Drive. Small light industrial premises surround the Durgadin Drive sale. The sales analyses at $68.00m2, which Mr Jackson adjusts to take account of the more flexible zoning of the subject land and its potential as a component of the Shellharbour City Centre. After taking account of the impediment of what he says is the significant presence of rock and the lesser level of exposure he attributes $75.00m2 to the subject land. On the other hand, Ms Parker says the Durgadin Drive sale is far inferior in terms of location and development potential, it is a less prominent location with access restrictions and is out of the Shellharbour City Centre. Although the sales site is allowed an FSR of 1:1, that is not significantly different to the maximum of up to 3:1 on the subject land when taking account of the requirements to dedicate land available for parking and other public purposes in accordance with the DCP. Ms Parker, after adjusting the sale to the base date at $78.00m2, says that it is a reasonable premise that the subject land would attract a value approaching twice this amount. 11 Mr Jackson also relies on the sale of 17,311.00m2 at Nowra purchased by the former owners of Nowra Fair for the future development and expansion of the shopping centre ("the Nowra sale"). At the date of purchase the land was in the 3(b) - Business B (Transitional Zone) under the Shoalhaven Local Environmental Plan 1985, which generally provides for the sale of bulky goods. It is clear that this sale was significant to the adjoining owner by increasing the gross lettable area to a significant degree. The land is accessible only from a side street and although prominent in Nowra does not have the focal or icon features of the subject land. Mr Jackson points to the rising market in the four months after the base date to the date of the Nowra sale and the absence of any issues in relation to rock excavation to discount the rate of $127.00 shown by the sale. On the other hand, Ms Parker says that the Nowra sale, following adjustments for size and the later purchase date of the sale, shows the subject land would attract at least a similar value per square metre. 12 The sale of a property in Bristol Street, Berkeley, relied upon by Mr Jackson, and the sale of a property at 121 Princes Highway, Fairy Meadow, relied upon by Ms Parker, were also considered. Neither of these sales have provided significant assistance to the Court. Both are significantly smaller and it is difficult to make comparison to the subject land in terms of location. 13 Notwithstanding that the sale occurred some six years prior to the base date, Ms Parker refers to the purchase of the subject land at a rate of $131.00m2. This sale took place following a tender process when the under-tenderer was a rival retail developer at a price only marginally below the amount paid by the present owner as purchaser. Obviously the date of the original sale takes it outside the period for relevant consideration at the base date. However, Mr Bartley, who appears on behalf of the respondent, contends that the rate of $131.00m2 paid some six years earlier by the present objector is worthy of note, being over $20.00m2 higher than the Valuer-General valuation at the base date and $6.00m2 higher than the valuation made by Ms Parker. 14 The applicant has the onus to establish that the valuation is too high. 15 A perusal of the Jeffery and Katauskas report does not disclose any serious impediments to development of the subject land, except that excavation may be necessary through the overlying fill and natural soil profile and into the underlying tuffaceous sandstone bedrock. 16 I agree with Ms Parker that the Durgadin Drive sale is in respect of a significantly inferior site and needs to be adjusted upwards to a marked degree. The Nowra sale is in respect of land with an inferior zoning and less desirable location. It nevertheless reflects the value of adjacency to existing retail development but without the prominence of and impressive outlook across the lake from the subject land. There is no evidence to justify regarding the sale of the subject land as indicative of value at the base date but it certainly suggests that the present owner and the under-tenderer at that time considered that its value justified paying more than the value now being challenged. 17 I am not satisfied that the applicant has discharged the onus it carries to show that the Land Value determined by the Valuer-General at the base date of 1 July 2001 was too high. The respondent, on the other hand, has provided the evidence to support at least the Land Value that is objected to. I propose to confirm the determination by the Valuer-General by disallowing the appeal. 18 The appeal made pursuant to s 37 of the Valuation of Land Act is dismissed. 19 Either party has liberty to apply by notice of motion in respect of an order for costs within seven days, otherwise there will be no order as to costs. 20 The formal orders of the Court are as follows:- (1) Appeal dismissed. (2) Either party has liberty to apply by notice of motion in respect of an order for costs within seven days, otherwise there will be no order as to costs. (3) The exhibits may be returned. 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.