Ashton v Department of Natural Resources and Mines
[2003] QLC 73
•30 October 2003
LAND COURT OF QUEENSLAND
CITATION: Ashton v Department of Natural Resources and Mines [2003] QLC 0073 PARTIES: Tracey Liane Ashton
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO:
AV2002/0355
DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 30 October 2003 DELIVERED AT: Brisbane HEARD AT: Coolangatta MEMBER Dr NG Divett ORDER: The appeal is dismissed, and the unimproved value of Lot 235 on RP 31999 in the sum of One Million, One Hundred and Fifty Thousand Dollars ($1,150,000) is affirmed. CATCHWORDS: Valuation – Method of valuation – Bottom up approach – Assessment of added value of rock retaining wall not relevant.
Valuation – Sales evidence – Use of sales – Whether comparable – No scarcity evident in comparable sales.APPEARANCES: Mrs TL Ashton appeared for the appellant
Mr G Smith for the respondent
Background:
This matter relates to land at 37 Jefferson Lane, Palm Beach, Gold Coast, and described as Lot 235 on RP 31999, Parish of Tallebudgera. The subject land has an area of 410 m², and is located about 16 kilometres south of the Bundall Gold Coast Mail Centre. Access to the subject land is good from Jefferson Lane, which is a bitumen sealed two-lane carriageway with concrete kerbing and channelling. All normal urban utility services are available. The subject land is zoned Resort Residential 1 under the Gold Coast City Council Town Plan of 24 February 1994, effective at the date of valuation of 1 October 2001. The key issues are the nature of the land, impact of a rock retaining wall and comparisons of sales.
On 25 February 2002 the Chief Executive issued a valuation of the subject land at $1,150,000. Following an objection the Chief Executive confirmed that unimproved value on 25 June 2002. The appellant has now appealed claiming the unimproved value should more properly be $560,000.
Tracey Liane Ashton appeared and gave evidence on her own behalf, also calling evidence from Mr Trenton Gay, an experienced project manager and developer. Mr G Smith, senior legal officer appeared for the respondent, calling evidence from Gregory Patrick Crowley, the departmental senior registered valuer responsible for determining the valuation. With the consent of both parties a court view of the property was undertaken.
Nature of the Land –
Mrs Ashton argues that the ocean front subject land is not a flat building site, and because of its sloping nature towards Jefferson Lane, it presents some additional construction problems not evident on the many flat similar parcels in that area. The subject land rises from Jefferson Lane for about half of its depth, then flattening to a level building site at the eastern half of the parcel. Mr Crowley does not disagree with those comments, but argues that the sloping nature of the subject land also presents some opportunities for the construction of car parking below the current building level. He sees the sloping nature of the land as not a significant problem, and he has allowed for those features in his comparisons with the flatter sales sites that he has analysed. He also notes that the higher building area at the eastern end of the parcel is above the lower beach level.
Mrs Ashton also questions Mr Crowley’s understanding of the width of the subject land at its eastern frontage to the ocean. She advises that a recent builder’s report for her notes the width of the parcel at only 10.7 metres, compared to the 11.8 metres adopted by Mr Crowley in his valuation report. (Exhibit 3, page 5). Mr Crowley advises that he has determined that width from the original survey plan, a copy of which is included in Exhibit 3. It is noted that the survey plan confirms the width of Lot 235 at 59.1 links, or 11.88 metres.
Mrs Ashton also argues that because of its proximity to the beachfront, and a formed walking track immediately to the east of the subject land, the appellant has had repeated intrusions upon the land. Mrs Ashton attributes those illegal intrusions to the close by presence of a Centrelink Office about 200 metres to the north. That office fronts the Gold Coast Highway, but appears to attract many disadvantaged people, some of whom see the subject land as a private through access to the beachfront. The appellant has had to install locked gates on the Jefferson Lane frontage to try and discourage transgressions upon the land. Mr Crowley was not aware of those intrusions, but questions why the subject land should be any more attractive to such disadvantaged people, than say other similar beachfront parcels also in that area.
Mr Gay agrees that construction costs are likely to be dearer on a sloping parcel of land, compared to a flat site, due mainly to the additional costs of retaining excavations in sand, which has a shallower angle of repose than normal earthworks. There was also some evidence of subsidence of the sand along the driveway in recent times. Mr Gay also advises that there has been some storm surges across the parcel in past years, although he agrees that a similar surge was also likely on other lands along Jefferson Lane.
The Rock Retaining Wall –
Mrs Ashton argues that Mr Crowley has failed to provide for the existence of a granite boulder wall across the beach frontage of the subject land. She advises that wall was constructed in 1996 to overcome serious beach erosion at that time. The frontage had been previously protected by another rock wall built in the late 1970s. The cost of the more recent boulder wall was estimated at a cost of about $60,000. Mr Gay confirms that figure as he worked on the wall for his father, who commissioned the engineering design and the contractor’s performance. Mr Gay senior had apparently had an initial quotation of about $80,000, but the project had been completed satisfactorily for $60,000 at that time. Mr Gay senior is an experienced developer.
Mr Trenton Gay now estimates that a similar wall, if constructed in isolation at the relevant date in 2001, was likely to cost in the order of $100,000 to $110,000. He agrees that cost is on the high side, but argues that such a cost would be required in order to replace the current standard of the existing boulder wall. Mr Gay explains that the existing boulder wall is about 9 metres deep, 11 metres wide, and has a width of about 5 metres at the top, and a few metres at the base. He speculates that the actual boulders would reflect between 400 to 500 cubic metres, while the excavation during construction would have extended for about 2,200 cubic metres to allow for construction activities. The wall would also need to extend for about 4 metres either side of the subject frontage in order to provide lateral protection from erosion. The inspection confirmed that some adjoining properties where such rectification had not proceeded, are now showing signs of major subsidence.
Mr Crowley questions the need for such costs of the rock wall, as he notes current competitive quotations for other owners in the area suggest a cost structure of about $180 to $200 per square metre are available. However he concedes that style of rock wall would be of a lesser quality. Mr Crowley accepts that a cost of $60,000 at 1996 would be reasonable, but disagrees that construction costs have increased to $110,000 at 2001. He notes that costs remained relatively stable between 1996 and 2001, because of the availability of rock materials following the major highway construction. Mr Crowley concedes however that construction costs have more recently increased since 2001 by about 15% to 20%.
Mr Gay agrees that similar bolder walls could be constructed for about $6,000 per lineal metre, if the wall was about 100 metres in length. However he confirms that for a small wall of 11 to 15 metres in length, allowing for the appropriate earthworks, that would cost of the order of about $10,000 per lineal metre for a depth of 9 metres. Mr Crowley advises that all rock retaining walls along that area of the official regulation building line, extend right along Palm Beach, and must be certified by a qualified engineer, and such certifications have a life expectancy of 10 years. On that basis Mr Crowley agrees that rock retaining walls are an ongoing problem for ocean front lands in that area. To his knowledge there are also similar erosion protection measures in front of all of the sales compared later.
Mr Crowley advises that previous relativities between ocean front parcels had made allowance for the respective rock retaining walls in front of those parcels. He advises that he has continued those relativities in his revaluations. Because of uncertainties about the specific nature of the rock walls, Mr Crowley has sought comparisons on a basis of a “bottom up” approach, which avoids any uncertainties in determining site values. In respect of the potential risk for all ocean fronting parcels in that area, it is agreed by both parties that there is relatively more erosion near South Palm Beach, compared to the lesser erosion nearer to the Currumbin Rock groin at the northern end of Palm Beach.
Comparison of Sales –
Mrs Ashton disagrees with Mr Crowley’s comparisons with his two sales, which she argues are different to the subject land. To support her estimate of the unimproved value Mrs Ashton replies upon the following sale:
· Sale 1 – (79 Jefferson Lane – Lot 300 on RP 31999). This is a corner sale of area 580 m², at the corner of Palm Beach Avenue. The sale sold on 19 February 2001 for $1,132,000. The sale was developed with a modern two-level dwelling of area about 450 m², which was estimated by Mrs Ashton to reflect a construction cost of $1,000 per square metre or $450,000. Mrs Ashton sees that sale as larger, on a corner, and therefore superior to the subject land. Based upon a rate per square metre basis ($2,400 per square metre), she estimates that the subject land could only have had an unimproved value of about $900,000.
Mr Crowley disagrees with such a comparison, noting that single residential parcels are not purchased on a rate per square metre basis, as are unit lands. Mr Crowley notes that such lands are purchased upon a site value basis, where all of the features of a parcel can be fully assessed. While he agrees that 79 Jefferson Lane is a corner parcel, he notes that it only has a 10 metre ocean frontage compared to the 11.88 metres of the subject land.
However Mr Crowley advises that Sale 1 was an old sale, about 7 to 8 months prior to the relevant date. He also advises that parcel resold again on 17 February 2002, after some further renovations, for $2,130,000. Mrs Ashton was aware of that more recent resale. Mr Crowley had analysed the added value of improvements upon 79 Jefferson Lane in February 2001 at $400,000; and allowed a further $50,000 for the further renovations.
Adopting those added values, Mr Crowley determines an analysed value of the 2002 resale at $1,600,000, and applied at $1,300,000 (1 October 2001). The unimproved value of that parcel at the time of the first sale was $600,000 (1 October 2000). Mr Crowley argues that increase demonstrates the large increase in the market over one year. Mr Crowley also advises that the “Regulation Building Line” extends for about 9 metres inside the frontage of 79 Jefferson Lane, making the effective building area something less than the overall size of the parcel (580 m²). On that basis Mr Crowley argues that Sale 1 (79 Jefferson Lane) supports his valuation of the subject land.
Mr Gay supports Mrs Ashton’s estimate of the building costs on Sale 1, arguing that construction costs in 2001 were about $1,300 per square metre, compared to their current cost of $1,500 to $1,600 per square metre. He believes that the construction costs at that dwelling at 2001 would have been more like $500,000, rather than Mrs Ashton’s estimate of $450,000.
To support his valuation Mr Crowley supplies the following sales:
· Sale 1 – (410 The Esplanade, Palm Beach – Lot 85 on RP 41329). This is a 412 m² Resort Residential 1 ocean front parcel located about 2 kilometres north of the subject land. The sale is a level site, which was improved with an attached old single storey building developed as two flats, and analysed to have an added value of $100,000. The property last sold in 1993 for $142,500. The sale sold in August 2001 for $1,400,000, was analysed at $1,300,000, and applied at $960,000. The sale is seen as inferior due to its smaller ocean frontage (10 meters) and the shared easement access to the Gold Coast Highway.
· Sale 2 – (259 Jefferson Lane, Palm Beach – Lot 3 on RP 100384). This is a 427 m² Resort Residential 1 ocean front parcel located about 2 kilometres north of the subject land. The sale is a level site improved with a poor quality fibro cement dwelling of demolition value, and a rock retaining wall. The sale has a 10 metres ocean frontage, and last sold in 1984 for $120,000. The sale is seen as inferior due to its narrower frontage to the ocean front. The sale sold in May 2001 for $1,200,000, was analysed at $1,155,000, and applied at $1,050,000.
Mrs Ashton challenges the few sales of ocean frontage parcels as representative of the broader number of similar parcels. She notes that there have been annually only about seven sales of a total number of 120 ocean front parcels in that area. She argues that small sample size should not be taken as representative of the general market level. Mr Crowley rejects that assumption, as he notes that percentage of sales is generally reflective of the broader property market on the Gold Coast, and in his opinion, does not reflect any real scarcity of sales. He notes also that his adoption of improved property sales is a measure of that lack of a scarcity factor.
Mrs Ashton challenges that the easement access is any disadvantage to Sale 1, which she notes also is not shown to include any rock retaining walls, as occurs on the subject land. Mr Crowley rejects that rock walls do not exist on either of his Sales 1 or 2, as he understands that such buried walls do exist along that ocean frontage. However to overcome any uncertainty about the rock walls, Mr Crowley has sought his comparisons on the “bottom up” approach, thus excluding direct considerations of the added value of any retaining wall.
In respect of the access of Sale 2 to Jefferson Lane, Mr Crowley notes that the lane is very narrow at that location, and parking in the street is very limited. He also notes that his Sale 1 is nearby to public beach showers, and thus is likely to incur similar public intrusions as occur on the subject land.
Decision:
Method of Valuation -
Before considering the evidence, I turn to the legislation and note that the meaning of unimproved value of land is defined by s.3(1) of the Act which states:
“3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(b) in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.”
I also note that the meaning of “value of improvements” is defined in s.5 which states:
“5(1). The ‘value of improvements’ means, in relation to land, the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this Act, irrespective of the cost of improvements, including in such added value the value of any hotel licence the value of which has been included in the improved value.
(2) However, the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this Act, improvements of a nature and efficiency equivalent to the existing improvements.”
The meaning of “added value” of improvements needs to be considered in the context of the particular improvements concerned. In the current matter the rock retaining walls along the Building Regulation Line are by nature both stable, and yet unstable. The rock granite boulders are durable and therefore not subject to major deterioration. However their placement in a shifting sand environment is always likely to failure of their engineering competency, as evidenced by the 10 year limit upon the engineer’s certification.
Because of uncertainties in respect of the nature of any rock walls on the selected sales evidence, Mr Crowley has adopted a method of valuation which seeks to exclude any influence of such retaining wall. That approach is defined as a “bottom up” method of valuation, and was favourably considered in the matter of Queensland Turf Club v The Valuer-General (1979) 6 QLCR 180, at 187. In that matter the difficulties of determining the added value of the existing improvements followed uncertainty about the original nature of the Eagle Farm Race Course site.
The complexities of determining the true “added value” of improvements, was also addressed in Morrison & Ors v Federal Commissioner of Land Tax (1914) 17 CLR 498, where in the High Court, Griffith CJ said at 503:
“Then, by way of supplement, the term ‘value of improvements’ is defined to mean ‘the added value which the improvements give to the land at the date of valuation irrespective of the cost of improvements.’ It seems plain enough that that means that the value of improvements is the present enhancement of the value of the land attributable to the operations of man upon the land the benefit of which still continues, including also in some cases improvements not actually affected upon the land itself, to which qualification it is not necessary to refer for present purposes. What operations of man are improvements? When I say ‘operations of man’, I think the term should be limited to what is done by the owner for the time being, that is, after the land has ceased to be Crown land. Any operation of man on land which has the effect of enhancing its value comes with the definition of ‘improvement’.”
In seeking to understand the definition of the meaning of improvements, I note that is defined in s.5(1) of the Act to be the value of improvements “irrespective of the cost of the improvements”. That definition was also noted in Morrison, and later followed by the High Court in the matter of Fisher v Deputy Commissioner of Land Tax for New South Wales [1915] 20 CLR 242, where Isaacs J said at 253:
“Morrison’s (17 CLR 498) decided inter alia ‘that where existing improvements owe anything to the operations of nature extending over a period of time, any deduction from the improved value made for the purpose of arriving at the unimproved value must take the effect of those operations into account, including the time necessary for effecting them.”
It is also noted that Morrison confirmed that any added value relates only to any “enhancement of the value of the land”. (p.503).
Another example of the method of adopting a “bottom up” approach in valuing land was identified in the matter of Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379. In that matter the High Court considered whether a “top down” approach of valuing the Golf Club land as if it had been free of any planning ordinances of the County of Cumberland Planning Scheme would be appropriate, and then to deduct from that value a deduction to reflect the depressive nature of the restriction. Kitto J said at 391:
“I think the proper course is to inquire first what was the value of the land on the footing that there was no possibility of its ever being turned to other than recreational purposes, and then how much extra should be allowed for such chance as there was of securing permission for residential use at some future time.”
By comparison a “top down” approach was followed in the matter of AK and SS Gallagher v Brisbane City Council (1975) 2 QLCR 368. In that matter the Land Appeal Court considered the impact of zoning upon the highest and best use of the land at Mt Gravatt near Garden City Shopping Centre in Brisbane. The land had previously been zoned as Residential Use, and had been rezoned as Open Space Use just prior to the date of resumption. The appellant claimed that the land had the potential for development for commercial use subject to the consent of the Council or the Government.
The Land Appeal found that compensation should be awarded following a “top down” approach of the land value as commercial offices with shopping included, but allowing for development consent delays in obtaining the Council’s approvals. (387). But in Gallagher, the Land Appeal Court distinguished the findings of Royal Sydney Golf Club on the basis of the lesser risk of gaining the Council’s agreement to a change of use, and also that the Gallagher, matter was a compensation case, compared to the Royal Sydney Golf Club case which was a revenue matter, and where the benefits of doubt would have been resolved in the owner’s favour. (Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited & Ors (1946-47) 74 CLR 358, at 373).
In the current matter, in my opinion, Gallagher can be distinguished as there is no specific details of the actual costs of, or the existing condition of, the actual rock retaining walls; unlike Gallagher, where detailed evidence of such matters was available to the Court. With that level of uncertainty, the most practical method of valuation in the subject matter is the acceptance that the rock walls do exist on the sales and the subject land, and to compare them on the basis of vacant sites which have retaining wall protection.
I note also that a comparison of the “top down” and “bottom up” methods of valuation were considered in the matter of Taylor v The Council of the City of Rockhampton (A85-15) 13 August 1985, unreported, at 14 and 16. In that matter the learned Member (later President) found that because of uncertainties associated with gaining the Council’s approval to fill the flood prone land; and a refusal to fill adjoining lands following objections from State Government departments; a prudent purchaser of the subject land could not have anticipated minimal opposition to the filling of the land. Because of that level of uncertainty, even though Taylor was a compensation matter, then a “bottom up” approach was a more prudent method of valuation in those circumstances.
The adoption of a “bottom up” approach was also accepted by the High Court in the Crown v Murphy (1990) 71 LGRA 1. In that matter land had been resumed for a turtle rookery site at Mon Repos Beach near Bundaberg. The owners (Murphy) had sought compensation on the basis of the land having the potential for subdivision, in spite of a previous refusal of an application for that purpose. The Land Court had found compensation for such potential, but that had been overturned by the Land Appeal Court on the basis that it held that any higher value for a rezoning of other than its current rural zoning could not be anticipated.
On appeal the Full Court reversed the Land Appeal Court decision, favouring a “top down” valuation approach on the basis that it found that there was potential for subdivision, without considerations of the possible impacts upon the turtle population. The High Court reversed that approach in part, accepting the Land Appeal Court’s method of adopting the “bottom up” approach. The key issue in that matter related to whether there was any uncertainty in respect of a refusal of an application to rezone the land for subdivisional purposes. The High Court upheld that any future possible application to rezone was likely to incur “conditions designed to recognise, protect and preserve the environment”. (Page 8). On that basis it found that the value of the land reflected its existing zoning as rural use, and a “bottom up” approach was relevant in that situation.
Now while Mr Crowley has not specifically identified in his sales analysis whether a rock retaining wall actually exists upon his Sale 1, the inspection of those properties indicates that buried rock retaining walls actually do exist on all of the three sales, as well as the subject land. On that basis, without further details of the cost of each of the retaining walls, I accept Mr Crowley’s approach of valuation comparisons on the basis of a “bottom up” approach. There is therefore no reason to make any separate deduction for any added value of the existing boulder wall on the existing land.
However if the added value of the existing rock wall was to have been considered in any site value approach, I believe that the evidence of the appellant and Mr Gay lend credibility to a construction cost for the subject land of the figure at least equal to the $60,000 paid by the appellant in 1996. Mr Crowley does not challenge that figure. However I accept Mr Crowley’s opinion that there was unlikely to be any major cost increase in a competitive tender for such a rock wall up until the date of valuation in 2001. To provide a liberal estimate of such costs at the relevant date, I would have allowed $80,000 for the existing wall at the relevant date.
In respect of whether the existing buried rock retaining walls on the sales are comparable to the rock wall on the subject land, in the absence of evidence to the contrary, it is not for this Court to challenge this matter. This Court is not an investigating tribunal, and it is not within its jurisdiction to undertake such investigations of its own volition. That was clarified by the Land Appeal Court in the matter of JL and I Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, where it said at 172:
“The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradiction to jurisdiction conferred under the Land Act.”
A similar jurisdictional restriction is also applied under the Land Court Act 2000.
Comparison of Sales –
In adopting the three sales now argued, I find that I have the following comparisons:
SaleArea Ocean Applied Comparison
FrontageValue
79 Jefferson Lane 580 m² 10 metres $1,300,000 Supporting
410 The Esplanade 412 m² 10 metres $960,000 Inferior
259 Jefferson Lane 427 m² 10 metres $1,050,000 Inferior
Subject land 410 m² 11.88 metres $1,150,000 -
On those figures there is nothing to indicate that Mr Crowley has made an error of fact in his valuation.
In respect of whether the selected sales reflect a measure of “scarcity” in their occurrence in that area, I am conscious of the directions found in the matter of Maurici v Chief Commissioner of State Revenue and Anor [2003] 195 ALR 236. In that matter it was agreed by the parties that there had been a level of scarcity of vacant lands in the highly developed area of Hunters Hill in Sydney. The High Court directed that in such situations it was important that any scarcity factor be quantified, and that it would in such circumstances be advisable to analyse improved sales in that area, if they existed, even accepting the difficulties of such analyses.
Now while Mr Crowley was conscious of the need to ensure that any level of scarcity was identified in his sales, it is his evidence that such a situation was not evident in the current matter. In fact all of the sales compared were improved sales from which the added values of the old dwellings were allowed for in the analysis of each sale. There is therefore no reason why such sales should not be considered in this matter. As to whether the relatively limited number of sales of ocean front lands is an unacceptable representation of the true market norm for such properties, I note that each sale has been separately compared with the subject land, and there has been no averaging or aggregating of those limited sales values. The sales selected form an acceptable basis for comparison purposes.
In respect of the matter of vehicle access to Mr Crowley’s Sale 1, I agree with Mr Crowley that the easement across the adjoining “units” site is less attractive than the more direct access from Jefferson Lane to the subject land. However I believe the most important consideration for ocean front lands is their relative frontage to the ocean. On that basis I agree with Mr Crowley’s conclusion that his Sales 1 and 2 are both inferior to the subject land.
Summary:
In summarising this matter I am reminded that in respect of her Notice of Appeal the appellant is charged with the responsibility of proving her grounds of appeal under s.45(4) of the Act which states:
“45.(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.”
I am also reminded that unless that responsibility has been proven, then s.33 of the Act states:
“33. Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered.”
That follows directions of the High Court in Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41, per Gibbs J at 56.
Conclusion:
Having considered the whole of the evidence, I am not persuaded that the appellant has proved her case. The appeal is dismissed, and the unimproved value of Lot 235 on RP 31999 in the sum of One Million, One Hundred and Fifty Thousand Dollars ($1,150,000) is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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