Land and Environment Court New South Wales Medium Neutral Citation: Wu v Valuer General (No 2) [2013] NSWLEC 1160 Hearing dates: 8 and 9 July 2013 Decision date: 09 July 2013 Jurisdiction: Class 3 Before: Moore SC Decision: In matter 30177/2013 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2005 is determined to be $1,375,000. In matter number 30212/2012 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2006 is determined to be $1,660,000. In matter number 30215/2012 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2007 is determined to be $1,836,000. In matter number 30214/2012: (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2008 is determined to be $1,836,000. In matter number 30213/2012 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2009 is determined to be $1,500,000. In matter number 30211/2012: (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2010 is determined to be $1,600,000. In matter number 30210/2012: (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2011 is determined to be $1,500,000. In each of the matters, the exhibits are returned. Catchwords: Statutory valuation Legislation Cited: Valuation of Land Act 1916 Cases Cited: Maurici v the Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111 Ulan Coal Mines Ltd v Mudgee Shire Council (Bignold J - unreported, 11 January 1988) Wu v Valuer General [2013] NSWLEC 56 Category: Principal judgment Parties: Mr Pei Long Wu (Applicant) Valuer General (Respondent) Representation: Applicant in person Ms M Carpenter, barrister (Respondent) Crown Solicitor's Office (Respondent) File Number(s): 30177 of 2012 31210 - 15 of 2012 Judgment 1SENIOR COMMISSIONER: These seven appeals concern statutory valuations for the years between base date 1 July 2005 and base date 1 July 2011 for a property known as Lot 2506 in Deposited Plan 752038 located in the suburb of Belrose within the local government area of Warringah Shire. The site is one that has an area of 1.64 hectares. It has an irregular shape. Approximately the front forty per cent or so fronting the bitumen sealed Linden Avenue is cleared and there is an additional smaller area of clearing that extends along the northern boundary following the line of an electricity transmission easement that provides that northern boundary. It has a slight slope towards the north west (as observed during the course of our site view). 2During the course of the site (view which took place on the first day of the hearing), I observed the location of a pegged out (to be inferred as pegged out by a surveyor) house site on the land which the applicant, Mr Wu, informed me had been pegged out prior to the lodgement of a development application in 2008, one made to Warringah Shire Council. 3It was Mr Wu's evidence that the extent of the clearing also predated that time. Those are potentially matters that might become relevant if it were necessary for me to determine whether or not development consent had lapsed with respect to the site. 4Mr Wu has lodged objections for each of the years and has appealed to the Court with respect to the result of each of those seven objections. In four of the objections, they being for the 1 July 2005, 2006, 2007 and 2008 valuation years, the objections did not result in any alteration to the value. That was a determination made by the Valuer General after considering a review undertaken by Mr T S Webster, a licensed valuer of considerable experience. On the basis of Mr Webster's review, the Valuer General amended three of the valuations downwards, however Mr Wu remains dissatisfied with the resultant valuations and has appealed to the Court. He contends for statutory valuations for each year, the citation of the year being by reference to a base date of 1 July in that year (without needing to repeat that on each occasion), of $228,000 in 2005, $228,000 in 2006, $219,000 in 2007, $251, 500 in 2008, $247,500 in 2009, $630,000 in 2010 and $647,500 in 2011. 5Section 40 of the Valuation of Land Act 1916 does two important things with respect to each of these seven proceedings. 6First, in s 40(1), it gives me, amongst other things, a general power (provided I have proper reasons for doing so) to substitute my opinion for that of the Valuer General. It also leaves me, amongst other things, with the option to leave the Valuer General's statutory valuation undisturbed. 7Importantly for these proceedings, s 40(2) expressly makes it clear, as I pointed out to Mr Wu at the commencement of the court hearing, (doing so because he is a self represented litigant and is therefore entitled to procedural assistance from me), that the burden of proof falls squarely on him to justify why each of the seven valuations should be upset in some fashion, rather than placing any burden on the Valuer General to justify the valuations that have been determined by that officer. 8I was also obliged to assess all of the seven sets of proceedings on the basis of evidence that is properly before me and that has some relevant probative value and is permitted to be taken into account by earlier decisions of the Court that provide either binding authority on me or guidance as to how I should undertake the tasks with which I am now charged. 9The obligation is to assess what is the valuation of the land for its highest and best use. 10Because Mr Wu is a self represented litigant, I explained to him, during the course of the site inspection, the difference between evidence and submissions and I indicated to him (with the concurrence of Ms Carpenter who appears as counsel for the Valuer General) that I did not require Mr Wu to differentiate between evidence and submissions but that I would do so in the course of my deliberations and that it would assist him, in the presentation of his material, if he did not need to make that distinction. 11It is Mr Wu's proposition that the highest and best use of the land is as vacant land. Whilst there is some authority in the Newcastle Hospital case that holding land as vacant land can constitute a use, it has been held by Bignold J in Ulan Coal Mines Ltd v Mudgee Shire Council (unreported, 11 January 1988) that a passive use such as holding land as vacant land will be displaced if there is an actual use - such as there being something that has been applied for but not necessarily commenced, that being development consents for houses, matters to which I will return shortly. 12However it is Mr Wu's contention that, as a consequence of several refusals of development applications for business use of the land and because of what he considers to be the affectation of the land because of its proximity to the Belrose Waste and Recycling Centre, the best use of the land for his purposes is to leave the land vacant until the Belrose facility operated by Waste Service New South Wales closes - if it does, as anticipated, in 2014. 13This is because of what Mr Wu regards as the unacceptable odour and dust impacts on the land rendering it unable to be developed profitably for residential purposes. 14If I were to conclude, he says, that residential is the appropriate highest and best use, he says that I should have regard to the statutory valuations of Lots 2593 and 2505, being parcels of land immediately adjacent or one removed to the north and northeast of the property. 15In a bundle of documents that were tendered at the commencement of the proceedings and became exhibit A, he tendered (and I permitted the tender over objection by Ms Carpenter) amongst other things a range of statutory valuations for those and other properties. 16In Flack v the Valuer General (1952) 18 LGR 157, Sugarman J dealt with the question of whether or not one should have regard to other statutory valuations in dealing with appeals of this type. He said, in those proceedings, that it was not appropriate to have regard to other statutory valuations but that it was preferable to have regard to comparable sales. 17The High Court, in Maurici v the Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111, has endorsed the proposition that the preferable method of undertaking a valuation is to have regard to relevant comparable sales. 18Indeed, as Mr Webster conceded during the course of his evidence, the High Court has confirmed that even a single comparable sale can provide a sufficient basis for undertaking an appropriate valuation assessment. 19Whilst there are other appropriate valuation methodologies that arise in other circumstances (such as the capitalisation of rents or the hypothetical development model), neither of those is the appropriate model to be considered in the present circumstances. 20I have proceeded on the basis of considering this range of appeals on the comparative sales evidence basis upon which Mr Webster has given evidence. 21As I will return to later, Mr Webster has analysed a range of sales with respect to each of the relevant base date years and has for the years 2006 through to 2011 relied on sales in the Belrose locality for that purpose. For 2005 he had no relevant Belrose sales available to him, he having concluded - as he said in response to a question from Mr Wu - that a sale at 18 Wyatt Road relevant to the 2005 base date year was not an arm's length transaction and was not appropriate to be considered, although a subsequent resale of this site relevant to the 2008 base date year was taken into account by him. He also provided a range of sales at other localities, a matter to which I will return shortly. 22Section 6A(1) of the Valuation of Land Act requires: ...a determination of the capital sum which the fee simple of the land might be expected to realise if offered for sales on such reasonable terms and conditions as a bona fide seller would require, assuming that improvements if any thereon or pertaining thereto other than land improvements and may be required by the owner or the owner's predecessor's in title had not been made. 23That is the basis upon which I turn to consider the highest and best use of the land, that being the foundational assumption necessary for undertaking a s 6A(1) valuation. 24Mr Wu presses the proposition that the site does not comply with the minimum allotment standards contained in the Warringah Local Environmental Plan 2000 and that, as a consequence, it is not appropriate to regard the highest and best use of the land as being for a residence, that being the assumption upon which Mr Webster's evidence is founded. Mr Wu sought leave of the Court to adduce expert town planning evidence on this point, (that is on the interpretation of statutory planning instruments). That application was heard and refused by Craig J on 26 April 2013, (see Wu v Valuer General [2013] NSWLEC 56). His Honour's decision was based on the proposition that it was the role of the Court to interpret statutory instruments and not the role of an expert witness to provide evidence on such matters. 25In these proceedings, the Valuer General has tendered copies of three notices of determination of development applications resulting in development consents being granted by Warringah Council for development of a single residence on the site. 26The first of those was a determination made on 11 October 2004 granting Development Consent 2004/0389DA operating from 11 October 2004 and lapsing on 11 October 2009. That consent was not acted upon but during its currency, on 12 March 2009, Warringah Council gave a development consent in Development Application 2008/1000 for the construction of a dwelling on the site with that consent to operate from 24 March 2009 to 24 March 2012. Relevantly, the 2009 consent overlaps that consent, that is the granted consent but not acted upon that was given in 2004. 27The 2009 consent was also not acted upon and a further development application was made, Development Application 2009/1024 that was determined by the Council on 30 March 2010 for a single dwelling on the site. That development consent operated from 8 April 2010 and has a date of lapsing of 8 April 2013. 28I am satisfied that the effect of those three development consents is that continuously, for all seven relevant base dates in these proceedings, there has been a development consent alive for this site that permits the erection of a dwelling on it. 29I am satisfied, as a consequence of that continuum of development consents, that the highest and best use for the site is as a single residential dwelling in a semi rural setting, that being the opinion of the highest and best use that is expressed by Mr Webster. 30However, the question then arises is to how one should embark on analysis of the valuation by using the comparable sales method, including whether or not sales outside the Belrose area should be regarded as sufficiently comparable to be taken into account when there are sales within the Belrose area or, for the 2005 base date year, whether there is a sufficient consistency of pattern in the valuations to infer that the deduced value adopted by Mr Wester for 2005, is sufficiently consistent with the pattern of valuations thereafter to adopt the 2005 deduced value without there being a sale to provide a foundation for it. 31Mr Wu has tendered an extract from a website that profiles house price rentals by suburb that shows that: * Duffy's Forest, one of the areas relied upon for comparable sales by Mr Webster, ranks 23rd; * Terrey Hills, another location relied upon by Mr Webster, ranks 179th; * whilst Belrose ranks 251st. 32I have also been involved in a variety of planning appeals in these areas over the years and thus know that there is a distinct socio-demographic difference (as I think was inferentially conceded by Mr Webster) between the Belrose area and those other areas. 33Although Mr Wu has questioned Mr Webster closely about several sites in Beacon Hill and Mr Webster also gave evidence about sites in Oxford Falls, I am satisfied that, for the purposes of these proceedings, it is safer to use (and appropriate to confine myself to using) the values of the sales adjusted by Mr Webster within the Belrose area - it being, as I understood it, Mr Wu's submission that I should so confine myself. 34Mr Webster produced, at my request, a rate per hectare for the site for each of the valuations that are contained in the statutory valuation notices and he also has enabled me, by the way his report is set out, to extract the comparable rates for the other Belrose sales. Base Date Land Value Rate per ha Other Belrose rates per ha 01/07/2005 $1,475,000 $899,390 18 Wyatt not at arms length 01/07/2006 $1,760,000 $1,073,170 7 Morgan Road - $2,397,000 01/07/2007 $1,936,000 $1,180,487 213 Forest Way - $1,600,000 219 Forest Way - $1,930,000 01/07/2008 $1,936,000 $1,180,487 18 Wyatt Avenue - $1,375,000 01/07/2009 $1,600,000 $975,610 7 Morgan Road - $2,176,000 01/07/2010 $1,700,000 $1,036,585 33 Hilversum Cres - $1,072,000 4 Morgan Road - $2,586,000 01/07/2011 $1,600,000 $975,610 171 Forest Way - $1,382,000 173 Forest Way - $1,864,000 35I have carefully considered the location of each of those sales compared to the location of Mr Wu's property. The closest of them would appear to be a half of kilometre or so away at 219 Forest Way - then going to 213 Forest Way - then the cluster of the Wyatt Avenue, Morgan Road and Hilversum Crescent sales and, finally, 173 and 171 Forest Road are the furthest away. All of them are at some considerable distance from the Belrose Waste and Recycling Centre operated by Waste Service New South Wales. 36At the close of the first day of the hearing, Mr Wu sought to tender three documents relating to the operation of the Belrose Waste and Recycling Centre. They are three documents that date from and relate to 2004 (as to one of them) and 2006 (as to two of them). They are relied upon by Mr Wu as demonstrating that they provide evidence of dust and odour emanating from the Belrose Waste and Recycling Centre impacting on his property. 37There are three matters to be observed in the first instance with respect to dust. * The first is I accept that, arising from Mr Webster's evidence, the matter of dust has never specifically been raised at any point prior to the immediate proximity of the commencement of these court processes (at the best for the applicant). * The second is that it was Mr Webster's uncontradicted expert evidence that he had not observed any dust affectation when he had attended the site. * The third observation is to make that the relevant material that is contained in exhibits M, N and O, (they being the Waste Service New South Wales documents) to the extent that they relate to dust demonstrate, for example, that in March 2004 the insoluble solids forming the dust deposition were well lower than the ambient goal required for the facility. 38I did not, for my own part, observe anything during the course of the site inspection that would cause me to conclude that there is any, (and if there be any, certainly no significant) dust problem with the site that would warrant me making any adjustment for that factor in these proceedings. 39The same cannot be said for odour. 40With respect to odour, whilst the material does not demonstrate, that is the Waste Service New South Wales material, any odour mapping showing significant odour and affectation in this direction beyond the boundary of the site, there are two matters to be taken into account. 41The first is that it was Mr Webster's evidence that he as visited the site on eight occasions and had experienced odour twice during those occasions, once of them being to the rear of the property when he was inspecting the extent of the cleared area upon it and the second at its tarsealed road frontage. 42During the course of the site inspection, Mr Wu invited an inspection of the frontage of Lot 2818 which is on Crozier Road, some 150 metres to the south. It is some distance uphill from the site, it is closer to the entrance to the waste facility and it is closer to being at grade with the waste facility. 43The odour mapping contained in the December 2006 Waste Service New South Wales document makes it clear that it is more likely to be odour impacted than the site as a consequence of the extension of odour contours that go off the site in the vicinity of Lot 2818. However whilst we were undertaking that inspection it is not unfair to say that our nostrils were assailed by an unpleasant and unpalatable odour. That was primarily in the vicinity of the property at Lot 2818 but, as we returned down the hill, it was my observation that that odour persisted at least until a little distance past the southern boundary of Mr Wu's property. I am therefore satisfied that it is appropriate to have regard to odour affectation of the property. 44I am equally satisfied that, in the preparation of his written report, Mr Webster did not specifically mention the odour impact. On p 7 of his written report, when discussing the surrounding development, he makes mention of the fact that adjoining the site on its western boundary is the Belrose Waste and Recycling Centre. He discusses the question of heavy traffic in Crozier Road approximately 250 metres to the south of the property and deals with those matters and he notes other surrounding development. 45Ms Carpenter has relied, valiantly I might say but not persuasively, upon words in para 17 on p 13 under the heading Valuation Rationale, that the words "surrounding development and hazards" encompasses the question of odour. 46I note that with respect to the base date 1 July 2005, Mr Webster notes in his analysis of 90 Killawarra Road, Duffy's Forest, the presence of a gun club nearby (indeed as a neighbour to that property) and that there will be above average levels of noise affecting that property. He makes no such notation for odour on the subject site and it was only in response to questioning, both from me and from Mr Wu, that he acknowledged having experienced odour on the site during the course of two of eight visits. 47I asked Mr Webster to explain to me the adjustment factors that he had used generally, as it is my experience that there are two schools of valuation in providing this sort of evidence to the Court. There is what Mr Webster called the "old fashioned" approach, that is something that says in effect "I have analysed all of what I consider to be the relevant factors that distinguish one parcel from another, I have made, based on my valuation experience an intellectual adjustment and this is the resulting number". 48The second approach, one I confess that I find more intellectually satisfying, is one where a valuer is able to set out what is the adjustment factor, plus or minus, for each of the differing attributes between the comparable sale that is being analysed to derive an analysed land value for the site that is the subject of consideration. 49It is not uncommon in valuation appeals or in resumption appeals for two expert valuers to derive different adjustment factors (for example for views or for distance from transport and other facilities and the like) and for the Court to be obliged to assume whether either of them is correct and, if so, which one, or if neither is correct to adopt some alternative valuation factor for adjustment and give reasons for it. 50Mr Webster was unable to provide me with that information for any of the valuation adjustment factors in these proceedings, save one. 51When pressed, he indicated that: * First, he had taken into account odour whilst he had not mentioned it in his written report; and * Second that he had made an adjustment for that affectation of $50,000. 52I accept for the purposes of the process that I am now undertaking that he did make such an allowance and an adjustment in that amount. 53It is appropriate for me to consider, under the circumstances, whether I am satisfied that that amount is appropriate or not having regard to what we experienced during the course of the site inspection and I might reasonably assess that would impact on any arms length purchaser who might contemplate purchasing the site. 54I am satisfied that the odour impact, even if only experienced intermittently, would be a significant negative impact on any person contemplating purchasing this property. 55Indeed, I think it fair to say it would be a reasonable conclusion that if a person solely inspected the property on the day that we did and experienced the odour that we experienced that they would be unlikely to contemplate purchasing the property at all. 56On the assumption that the odour is reflective of the number of occasions Mr Webster experienced it, merely an intermittent odour that occurs on parts of the site only, it is also reasonable to assume that any prospective purchaser might make numerous trips to the site and would understand that the odour was to be experienced on an intermittent basis only. 57However, I am satisfied that it is a significant affectation of the land and that it is an affectation that warrants an adjustment greater than $50,000. 58However, because of Mr Webster being unable or unwilling to provide me with the full range of his adjustment factors, I do not have a proper comparison basis out of his evidence to compare an odour adjustment with any of the other adjustment factors for distance, distance to services, access to public transport and the like to which he has referred for various of his comparable sales. All I am left with is the reasonable conclusion that those sales, as evidenced from his analysed material elsewhere in Belrose, that distance is likely to be a significant factor. 59The land areas that are encompassed by the other sales, although analysed to a per hectare rate, do not provide me with sufficient assistance to enable me to say, for example (and I do not use this as a foundation), that an appropriate consideration of the 18 Wyatt Road sale should lead to an adjustment in some nominated sum. I am left, from first principles, to make as best I am able to from the range of valuations contained throughout Mr Webster's report in the Belrose area to conclude what might be an appropriate adjustment greater than $50,000 for this purpose. 60On the cycle of adjustments that Mr Webster has made and which were adopted by the Valuer General, it would probably be possible to go through a process and make differential adjustments for each of the years, given that there is a range of valuations between a little less than $1.5 million through to a little less than $1.95 million for the total value for the site, that is the land value for the parcel that is the subject of these appeals. I do not propose to do that - what I propose to do is to apply a uniform number across each of the years without purporting to undertake a detailed analysis that would adjust up or down by a few thousand dollars in each case. 61It is, in my assessment, a fair adoption of what might colloquially be described as a "swings and roundabouts" position for Mr Wu. I am satisfied that it would be appropriate to adjust the value by a total of $150,000 and that Mr Webster has accounted on his uncontradicted evidence for $50,000 of that. Orders 62As a consequence, the orders of the Court are: 63In matter 30177/2013 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2005 is determined to be $1,375,000. 64In matter number 30212/2012 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2006 is determined to be $1,660,000. 65In matter number 30215/2012 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2007 is determined to be $1,836,000. 66In matter number 30214/2012: (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2008 is determined to be $1,836,000. 67In matter number 30213/2012 (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2009 is determined to be $1,500,000. 68In matter number 30211/2012: (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2010 is determined to be $1,600,000. 69In matter number 30210/2012: (1)The appeal is upheld; and (2)Pursuant to s 40(1)(b) of the Valuation of Land Act 1916, the value of Lot 2506 in Deposited Plan 752038 as at 1 July 2011 is determined to be $1,500,000. 70In each of the matters, the exhibits are returned. Tim Moore Senior Commissioner Amendments 09 October 2013 - Typographical errors in matter numbers Amended paragraphs: Orders 09 October 2013 - typographical errors in numbering Amended paragraphs: orders 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: 09 October 2013