Andersen v Chief Executive, Department of Natural Resources
[1999] QLC 42
•30 April 1999
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BRISBANE
30 APRIL 1999
Re: AV98-449 –
An Appeal against a Determination of Unimproved Value –
Valuation of Land Act 1944
Shire of Inglewood
J.O. and A.D. Andersen
v.
Chief Executive, Department of Natural Resources
(Hearing at Inglewood)
D E C I S I O N
This appeal is against an unimproved valuation of $11,500 as at 1 October 1997, made by the chief executive of land situated in Schwenke Road, Texas. The land is described as Lot 1 RL 6849: RL 6849 and Lots 1-2 and 10-20 on RP 4933, Parish of Texas, County of Clive, containing 3.43 ha.
The "Rural" zoned land is situated approximately 1 km south of the Texas Post Office with access via the bitumen surfaced Broadway Road. Electricity, town water and telephone are connected. A dwelling and shed are accommodated on the land which has a good underground water supply serviced by a well.
The land comprises flat to easy sloping river flats, subject to flooding.Mr WG Major acted as agent for the appellants and gave evidence on their behalf. In the Notice of Appeal the appellants' estimate of unimproved value was $8,000, which had been the previously existing valuation (as at 1 January 1996). In Mr Major's opinion, the highest and best use of the land, if unimproved, due to its susceptibility to flooding and being within a declared drainage problem area, was for the purposes of farming. Had it been so used, as defined in s.17(2) of the Valuation of Land Act, then he would have estimated its unimproved value to be $3,500 based on relativity with the valuation applied to adjoining land used for the purposes of farming. He interpreted By-law No. 5 of the Inglewood Shire Council, which relates to Drainage Problem Areas and then the historical application of that By-law by the Council, as restricting the construction of a dwelling on the land if it had been unimproved at the date of valuation. If it was required to be valued as being used for the purposes of a single dwelling, with its farming potential ignored, Mr Major suggested a nominal valuation of $1,000.
The valuation appealed against was made by Mr MW Malone, registered valuer employed by the Department of Natural Resources. Initially the valuation had been in the amount of $14,400 representing the 80% increase in rural homesite values which had been found to be warranted, based on the consistent relationship between the analyses of sales of several rural homesites throughout the Shire, and the previously existing unimproved valuations of those sale lands. However, on objection, the initial valuation had been reduced to $11,500 which is the amount now appealed against.
The basis for the valuation was suggested as being two of the sales of rural sites which had indicated the 80% increase and which Mr Malone had accepted as being representative of the level of market value for rural homesites in this locality. This appeal is one of a number in which Mr Major acted for various appellants and the two sales have been discussed in other decisions delivered today. Suffice to say here, that the sales were of a 50.17 ha block in Inglewood-Texas Road with an applied valuation of $21,000 and a 207.3 ha block in Sweedmans Road with an applied valuation of $29,000.
During his verbal evidence, Mr Malone gave details of the sale of a residential block in the Town of Texas. The sale land had an area of 1,821 m² but was affected by a gully which intersected the preferred building site. That land sold for $5,000, showing an analysed unimproved value of $3,500. A valuation of $3,000 had been applied at the relevant date.
Mr Malone said that although he was aware initially that the subject land had a flood disability, he had made further inquiries as to the extent of that disability and the relevant drainage problem By-law, when the objection was being considered and the decision made to reduce the initial valuation.
Flooding and Drainage Problem By-law
The last major flood in Texas had occurred in 1976. It appears that at that time, based on the flood level in a nearby house as indicated to Mr Major by a long-term resident, the low-set dwelling on the subject land would have been inundated well above floor level. The appellants purchased the property in 1994. There was no evidence before the Court as to the extent if any, of flood-related inquiries made by the appellants at that time. However, in a letter addressed to Mr Major, Mrs Andersen had provided the background to their purchase and the urgency involved at that time.
Mr Major tendered pages 15 and 16 of what he said was the 1994 Town Plan for the Inglewood Shire. Under para. 2.3.4 – "Flooding" was the comment – "Flood frequencies recorded on the Dumaresq River at Texas … reveal that Texas has on average a flood every five years which causes moderate flooding downstream." Then in para. 2.3.5 – "Planning Implications" was the following –"The flooding of the townships of Texas and Inglewood obviously provide serious constraint in that:-
(i)For Texas, the area south of the railway line" (the location of the subject land) "is obviously unsuitable for development in that it is low-lying, very poorly drained and floods regularly; …"
It appears that there had been no professional study made as to the effect, if any, that the construction of the Glen Lyon Dam on Pike Creek, a tributary of the Dumaresq River upstream of Texas, had on the extent of the 1976 flood at Texas. Glen Lyon Dam was completed in 1976 and Mr Major's inquiries indicated to him that, because of the potential for damage to the then still incomplete construction, water had been released when capacity of 80% had been reached. Mr Major had found a perception amongst locals that the flood level at Texas would have been higher at that time had there not been retention at Glen Lyon.
The evidence indicates some divided thought among residents of Texas as to whether retention of flood water to the full capacity at Glen Lyon, depending on the preceding weather conditions, and level in the dam prior to flooding, will have any significant effect on flood levels on the Texas floodplain. There has not been a major flood event in the district since 1976. During flood events in 1998, the appellants were warned, on three occasions, according to Mr Major, that they should be in readiness to evacuate because the river was in danger of breaking its banks. That situation did not eventuate although Mr Major said the floodwater came within 30 centimetres of breaking out onto the floodplain.
Valuation Considerations
Mr Major attempted to analyse the purchase price of the improved property by the appellants in 1994, to show that little, if anything, had been paid for the land content. His analysis lacked precision and has been found to be of no assistance.
Mr Major submitted that the highest and best use of the land does not include residential use, due to the restrictions on development pursuant to the By-law declaration of the Drainage Problem Area. That By-law relevantly prevents, within the declared area, the erection of a building for residential purposes or the rebuilding or enlargement of an existing building used for residential purposes –
"except with the written permission of the Council and in accordance with the conditions, if any, to which such permission is subject.
The Council may in its absolute discretion –
(a)Refuse its permission under the By-law;
(b)Grant its permission under the By-law unconditionally; or
(c)Grant its permission under the By-law subject to reasonable and relevant conditions."
It seems reasonable to assume for the purposes of this exercise, that if the land was in fact unimproved or vacant, then the Council would, in all probability, refuse permission to erect a dwelling. Under those circumstances, Mr Major's submission that the land possesses value related only to its farming potential, would be logical.
However the meaning of unimproved value is contained in s.3 of the Valuation of Land Act. Relevant to the subject matter is subsection (4) which provides as follows:
"Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that –
(a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and
(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used; …"
It is seen therefore that the Valuation of Land Act requires the land to be valued on the basis that it may be used and may continue to be used for the accommodation of a single dwelling, albeit one which is subject to the significant risk of flooding and the effects thereof.
While the principle upon which the chief executive's valuation is made is found to be correct, the question of the correctness of the valuation itself, remains. Mr Major has challenged the evidential basis on which the valuation was made, with good reasons. The sales evidence clearly supports the valuations applied to the sale lands. However, the sale lands have no real comparability with the subject land except that all are broadly classified as "rural home-sties". The Department itself has placed in question the correctness of the previous relativity of values which had existed prior to the relevant date valuation between the sale lands and the subject land, by reducing the valuation of the subject land on objection.
I have not been persuaded that the basic evidence on which Mr Malone has relied, could assist in any cogent sense in determining the correct unimproved value of this land.
Mr Major has not, in my opinion, taken into proper consideration the instructions inherent in s.3(4) of the Act. He has provided no evidential basis for his opinion of value, except if the land was to be valued on the basis of being used for the purposes of farming, when he would rely on relativity with valuations made of other farming lands.
It seems to me that if correct relativity is to be established in the absence of directly comparable sales evidence, the market for a residential site on this land, assuming that a dwelling such as is constructed would be permissible and could continue to be used for residential purposes, would be dominated by comparison with levels of value in the town area. There is the evidence from Mr Malone, somewhat as an aside, that a single dwelling site of 1,821 m² with some physical constraints on building, but as I understood the evidence, not subject to river flooding, was valued in the amount of $3,000 based on its sale to show an analysed unimproved value of $3,500. It seems reasonable to assume that a level building site of comparable area within the subject aggregation, normally physically sound but on the floodplain, could not be worth more. However, how much more would a block with an additional area of in excess of 3 ha, with good underground water, alluvial soils capable of farming use, but also on the floodplain, add to the residential homesite value? It was Mr Major's evidence that adjoining farmland containing 13.83 ha had been valued by the Department in the amount of $14,000 and that evidence was not challenged. He suggested a straight pro-rata value should be applied to the subject land although it is much smaller in area.
I have the benefit of having heard evidence as to the Department's valuation of a site of 7.554 ha with lagoon areas and good quality flooded flats, but with a flood-free homesite, also situated on the edge of the town. The decision on an appeal in that matter (AV98-459 – MJ Weber v. Chief Executive, Department of Natural Resources), will be delivered today. That decision is seen to have some bearing on the relativity question which has been considered in this matter.
Doing the best I can, and mindful of the fact that this decision will cause the chief executive to once again closely examine valuations of other flooded homesites, specifically as a result of the flooding potentiality and the existence of the declared Drainage Problem Area By-law, I have decided to adopt an unimproved valuation for this land in the amount of $8,500.
Finding
The appeal is allowed, the determination of the chief executive set aside and the unimproved value determined in the amount of Eight Thousand Five Hundred Dollars ($8,500).
RE WENCK
MEMBER OF THE LAND COURT
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