Land and Environment Court of New South Wales CITATION : Coleman & Anor v Valuer General of New South Wales [2007] NSWLEC 26 APPLICANT Heather K Coleman and Phillip C Coleman PARTIES : RESPONDENT Valuer General of New South Wales FILE NUMBER(S) : 30746 and 30747 of 2006 CORAM: Hoffman C KEY ISSUES: Valuation of Land :- Valuation of two properties at the Base Date 1 July 2005 LEGISLATION CITED: Valuation of Land Act 1916 Wyong Local Environmental Plan 1991 DATES OF HEARING: 18/12/2006 DATE OF JUDGMENT: 23 January 2007 APPLICANT Heather K Coleman and Phillip C Coleman, litigants in person LEGAL REPRESENTATIVES: RESPONDENT Mr G. Newport, barrister JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Hoffman C 23 January 2007 30746 of 2006 Heather K Coleman and Phillip C Coleman 30747 of 2006 v Valuer General of New South Wales JUDGMENT 1 These are two Class 3 appeals on adjoining allotments. Appeal No. 30746 of 2006 is in regard to No.8 Burrawong Street, Bateau Bay, valued at $360,000 by the respondent, and the applicant H. K. Coleman, places a figure of $245,000 on it as at the Base Date of 1 July 2005. This land has an existing brick house and 2-car brick garage. 2 Appeal No.30747 of 2006 is in regard to No.10 Burrawong Street, Bateau Bay, valued at $345,000 by the respondent, and the applicant P.C. Coleman, places a figure of $245,000 on it as at the Base Date 1 July 2005. This land has an existing timber framed "fibro" house. 3 The respondent's evidence was heard from Mr R Maundrell, consultant registered Real Estate Valuer No.1773 who had filed a report in Exhibit 1 with Basic Facts of each case and the applicable planning statute in Exhibits 2 to 4. 4 The applicant Mr P. Coleman self-represented in his case and also represented Heather Coleman in her case. He tendered a number of documents in exhibits A to H. 5 No.8 is approximately rectangular with a frontage of 17.37 m and a depth of 50.22 m giving an area of 866.3 sq m. The land slopes down gradually from the road towards the north. There are mature trees on the land and the neighbouring and nearby lots. 6 No.10 is approximately rectangular but tapers to the rear. It has a frontage of 17.04 m and a rear boundary of 15.78 m. The side boundaries are 49.16 m and 50.22 m giving an area of 815.7 sq m. This land also slopes down gradually to the north from the road. There is a grove of mature trees at the rear. 7 Burrawong Street has centre tar seal, and grass verges with table drains and at driveways either a culvert crossover or a concrete spoon drain in line with the table drain. The town services available are: water, sewerage, land-line telephone, and electric power. The respondent said natural gas is also available but the applicant submitted that it is only at the next cross street, and is not extended into Burrawong as none of the residents want it. 8 The lots are about 150 m from Reserve Road to the east, which is the boundary of Wyrrabalong National Park that fronts the ocean. Burrawong "T" intersects with Reserve. Although the land in the area is elevated, the gradual slope and the vegetation gives no views. The respondent says that one can discern a little of the ocean and beach to the north through the trees from the subject lots. If one follows Reserve Rd to the north one comes to Bateau Bay Beach through the trees about 450 m from the lots. 9 To the west of the land about 50 m is Hilltop St that "T" intersects with Burrawong. About another 50m west Burrawong "T" intersects with Bateau Bay Road. The main coastal road, called The Entrance Road, is about 4 city blocks further west with suburban houses and some parks in between. A large shopping centre and sports facilities and high school are about 2 km away along the main road to the north. 10 The objectives and permissibility's of the Residential 2(a) zone are: Zone No. 2(a) (Residential Zone) 1 Objectives of zone The objectives are - (a) to provide land primarily for detached housing generally not exceeding a height of 2 storeys and with private gardens in an environment free from commercial and other incompatible activities and buildings. and (b) to provide for other uses, only where they: (i) are compatible with the residential environment and afford services to residents at a local level, and (ii) are unlikely to adversely affect residential amenity or place demands on services beyond the level reasonably required for detached housing, and (c) to provide for home based employment where such will not: (i) involve exposure to view from any public place of any unsightly matter, or any raw material, equipment, machinery, product or stored finished goods, or (ii) have a material adverse impact on residents. 2 Without development consent Home occupations. 3 Only with development consent Advertisements: bushfire hazard reduction: childcare centres: communications facilities: community facilities: detached dual occupancies: drainage: dual occupancy buildings: dwelling-­houses: education establishments; exhibition homes: flood mitigation works; general stores: group homes: home businesses: hospitals: nutrient control facilities; palliative day care centres: places of worship: recreation areas: transitional group homes: utility installations. 4 Prohibited Any purpose other than a purpose included in item 2 or 3 of the matter relating to this zone. 11 The minimum lot size for a detached dual occupancy is 700 sq m. 12 The minimum lot size for an attached dual occupancy is 550 sq m. 13 Both lots are zoned Residential 2(a) under the Wyong Local Environment Plan 1991 which permits, with consent, a dwelling house, a dual occupancy, or an exhibition home with home office/occupation on each lot. There are other permissible uses listed, but the parties agree the above are the most likely "best use". 14 Mr Coleman says that putting any value on the potential for dual-occupancy is not warranted as none of the nearby houses is a dual occupancy. It seems to me that any prudent purchaser would be aware of potential uses even if it is not intended to build that use. The best way to establish a valuation is to find, if possible, a vacant land sale of a comparable lot to the subjects, where the sale is close to the Base Date. 15 It would be ideal to find such a lot in the same street, and while there is such a sale in evidence, it has a house on it. In the absence of a vacant land sale, the evidence revolved around what deduction from the sale price, should one make for a dwelling. This involved the evidence in looking at a number of other sales in the locality, in order to arrive at an appropriate deduction. 16 This introduces two other aspects: that lots in different positions in the locality have advantages or disadvantages compared to the subjects, and that has to be considered. Also, that sales of those lots, if not close to the Base Date, have to be "adjusted" to compensate for changes in the real estate market. The parties agreed that prior to the end of 2004 land prices had been rising, but during 2005 they leveled off and in some cases dropped slightly. 17 Some of these aspects that create the need for "adjustment" are: Mr Coleman noted that the access to Bateau Bay Beach from the subjects, is only via steps through trees, there is no car access, and it is a small bay with no surf and no lifesaver patrol. Shelly Beach, the next one north, and close to some of the comparable sales put by the respondent is a full surf beach with patrols. Mr Coleman said a lot close to Shelly Beach will command a premium over the subjects, and be more likely to have a dual occupancy, or a large luxury house. A purchaser there would have greater financial capacity to pay the premium whereas a purchaser in Burrawong would not. 18 This is related to Mr Maundrell's evidence of a lot and house sold in 29 Bateau Bay Rd, where the house was "knocked down" to build a new large house, and therefore Mr Maundrell said the "land only" value became the sale price, because the original house must have been of "no value" to the purchaser. Several others of the comparable sales he used are "Knock-downs". 19 It seems to me that it is useful to look at the range of possible values based on the sales of vacant land close to the Base Date. 20 Mr Maundrell tended a table of sales he looked at. 21 Mr Coleman tendered a Lands Department Benchmark Report he had obtained for lots in Bateau Bay East of the Entrance Road adjusted for the Base Date 1 July 2005. 22 Mr Coleman also tended Statutory Valuations fixed by the Valuer General at the Base Date for the properties Mr Maundrell had reviewed. 23 One of the vacant sales is No. 44 Bataan Crct and the parties focused on it. This land as can be seen from the tables sold about two months before the Base Date. It is on the west side of The Entrance Road, in a new subdivision. Orientation is similar to the subjects, and it appears to be of similar convenience to transport, shopping, formal sports and education facilities. However it is remote from the beach and national park, and being 648 sq m in area could only have attached dual occupancy potential, not detached. Mr Maundrell said it must be of a lesser value than the subjects. 24 At a sale price of $285,000 it calculates to $439 per sq m. Applying that rate to the subjects, No.8 at 866.3 sq m calculates to $380,998. The same rate for No.10 calculates to $358,437. These figures are very close to Mr Maundrell's valuations of the subjects and would indicate he has been as he said, conservative. That means he put a figure on the low side of the scale, he had not tried to exaggerate the value. 25 At the other end of the scale is No.29 Bateau Bay Rd, which is opposite a caravan park and near to Shelly Beach, within about 200 m walking. There is car access to shelly Beach but I was told it is one-way OUT; to use a car one has to drive a greater distance, also the street is a busy one compared to Burrawong. The lot size of No.29 is smaller than the subjects at 701.9 sq m, it has similar orientation and it was a "knock-down" with a substantial new house erected on it. The original house Mr Maundrell had said was very old, Mr Coleman said it was comparable because it had a better location to attractive facilities including the formal sports grounds, large shopping centre and schools as well as the beach, but had some disadvantages mentioned above, that balanced the comparison.. 26 The sale price was $415,000 only one month after the Base Date. If I accept Mr Maundell's position that the original buildings are of "no value" then it calculates to $591 per sq m site area. Applying that rate to No.8 it gives a value of $512,201, and applying the same rate to No.10 it gives $481,664. These represent the upper end of the scale. 27 This supports the respondents case that Mr Maundrell's valuations are at the very conservative end of the scale, with No.8 at $360,000 and No.10 at $345,000. He has placed them at a lesser value per square metre than even the Bataan Crct lot. 28 In commenting on Bataan Crct, Mr Coleman said that the subjects should be less than it because: o At the Base Date the subjects were still perpetual Crown leases (as were many lots in the ocean-side subdivision) whereas Bataan has always been freehold. o Bataan is a level block off the road whereas the subjects slope down. o The subjects have large trees that the council would not easily let be removed, whereas Bataan is cleared. o Bataan is fully kerbed, guttered and has paved footpaths, whilst Burrawong does not. o Although the subject lots are bigger than Bataan, their restrictions would not permit any greater development. 29 Mr Maundrell said that Bataan is inferior to the subjects because: o It is a low flat site, not up on a rise above the ocean. o It is 2.2 km west from the site away from the ocean and gets no summer breezes o Being away from the ocean makes it less attractive to purchasers o It is close enough to The Entrance Road to get main road traffic noise and not have the quiet location of the subjects. o Having kerb and gutter at Bataan Vs Burrawong makes little difference to the value given the advantages of the subjects, and the gentle hill slope makes table drains and wide grass verges quite practical for drainage. 30 There had been a sale at No.5 Burrawong on 2 March 2005, only 4 months before the Base Date, for $400,000 and Mr Maundrell had not used it as a primary comparable. He said because the house had not been a "knock-down". 31 He was asked if the best comparable sites would be the ones closer to the subjects and the Base Date. He said yes. He agreed most of his comparable sites were "knock-downs" on superior sites/locations to the subjects. Also his comparables were all sites that could potentially have a dual occupancy on them, or a big house that required a larger lot. 32 In assessing No.5 Burrawong it is interesting that at the Base Date, it could have had a dual occupancy approved, however it is too small for that with the changes to planning controls. Mr Maundrell agreed on that basis it is a comparable to the subjects. It also is in the Crown leasehold area, but Maundrell said for valuation, one assumes freehold title. Nevertheless, it puts No.5 on the same basis as the subjects if a prudent purchaser were to be intimidated by the Crown lease. 33 It is also notable that in "adjusting" valuations for properties that were NOT "knock-downs" 5 Guyagul St and 1 Yulong St, he had discounted the sale price by $102,000 and $122,000 respectively for similar houses to that on No.5 Burrawong, for which he allowed only $60,000. Those 2 sales were in October 2005, only 4 months after the Base Date. 34 If I allow, say $120,000 for the house on No.5 as Mr Coleman suggests, the sale price adjusts to $280,000. For the 607 sq m lot that gives $461 per sq m. Applied to the subjects across the street they calculate to $399,364 for No.8 and $375,715 for No.10. 35 Once again, it makes Mr Maundrell's valuations, at $360,000 and $345,000, respectively, appear conservative. Perhaps the flattening of the real estate market and slight recession in sales during 2005 continued from the sale date of No.5 up to the Base Date and accounts for the smaller figures. 36 Mr Coleman could not understand why Nos 8 & 10 would now be valued differently when they had heretofore been the same. Mr Maundrell explained that considering the potential for dual occupancy, No. 8 being larger, could fit 24 sq m more floor area than No.10, so it would be a consideration. There are 5 new dual occupancy approvals in the locality, so there is growing potential for that to affect land value. 37 Overall it seems to me No.5 Burrawong St is the best comparable sale, and "adjustment" is less likely to error than all the other comparables raised in evidence. The calculations show that the valuations sought by the respondent are reasonable especially when the calculations show that the subjects are valued at a per sq m rate less than the Bataan Crct lot. 38 The respondent does not seek any other valuations than those put by Mr Maundrell, and so I confirm those and the appeals are dismissed. 39 Therefore the Orders of the Court are: 1. Appeals 30746 and 30747 of 2006 are dismissed. 2. The valuation for No.8 Burrawong Rd, Bateau Bay as at the Base Date of 1st July 2005 is confirmed at $360,000. The valuation of No.10 Burrawong Rd, Bateau bay as at the Base Date of 1st July 2005 is confirmed at $345,000. 3. The exhibits are returned to the parties except Exhibits A, B, 2 and 3. ___________________ K G Hoffman Commissioner of the Court ljr 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.