Cooper v Chief Executive, Department of Natural Resources
[1999] QLC 6
•12 February 1999
[1999] QLC 6
LAND COURT,
BRISBANE
12 February 1999
Re: Appeal against Annual Valuation –
Valuation of Land Act 1944 –
Valuation Roll No: 129-664
Local Government: GCCC-Gold Coast
(AV98-142).
George R and Doreen A Cooper
v.
Chief Executive, Department of Natural Resources
(Hearing at Coolangatta)
D E C I S I O N
Background:
This matter relates to a property located at 12 The Esplanade, Paradise Point, and described as Lot 2 on RP 78424, Parish of Barrow. The subject land is located about 400 metres south of the Paradise Point Post Office, and about 9 kms north of the Southport Central Business District. The subject has an area of 506 square metres, and is zoned “Residential – Duplex Dwelling” under the Gold Coast City Council Town Planning Scheme of 11 February 1994, and is designated as “Semi-Detached Housing” under the Strategic Plan Map also effective at the date of valuation of 1 October 1997. The key issues are the comparison of sales, relativity, the nature of the land, and the method of valuation.
The subject is an irregular-shaped level corner lot with Broadwater Esplanade and Errol Avenue frontages. There are very good views to the Broadwater both easterly and northerly across The Esplanade and adjoining park areas. All major services are connected to the subject, which has good access from both The Esplanade and Errol Avenue, both of which have full bitumen sealed carriageways with concrete kerb and channelling.
On 2 March 1998, the Chief Executive, Department of Natural Resources, issued a valuation for the subject at $215,000. Following an objection the Chief Executive confirmed that figure on 11 May 1998. The appellants have now appealed that figure claiming the correct unimproved value should be $170,000.
Mr GR Cooper appeared for the appellants, calling evidence from Mrs DA Cooper. Mrs T Johnson, Legal Officer from Crown Law, appeared on behalf of the respondent, calling evidence from Mr AJ Dalgarno, the Departmental Registered Valuer responsible for determining the valuation.
The Evidence:
Mr Cooper argues that the evidence adopted by the respondent in valuing the property is inappropriate, and in contravention with the general nature of the property market in that area. He also argues that there is inconsistency between the unimproved values of surrounding parcels and the unimproved value applied to the subject.
(1) The nature of the land -
There is agreement that the subject has a good corner location, with good views of the Broadwater and adjoining parklands, although trees on the parklands partially obscure the distant views of the water. Because of the public facilities provided by Gold Coast City Council on the parklands, those areas, and adjoining parking areas, are likely to be well-patronised, particularly on weekends and holiday periods.
Mr Cooper claims that he has difficulty in accepting that nearby sales used as evidence have been afforded reductions in the valuations because of earlier filling, while the subject has not been afforded similar treatment. However, Mr Dalgarno advises that such information was obtained from the records of the Gold Coast City Council, which disclosed that general filling of the Paradise Point area occurred many years ago with the exception of a small higher area surrounding the subject land.
Mr Cooper agrees that the views from the subject are good towards both the east and the north. He notes that the northern aspect occurs as a result of the intersection of the alignments of The Esplanade and Errol Avenue, which ensures that the opposite corner property (Lot 38 on RP 78424) is set well back towards the west of the subject. Because of the virtual setback arrangement, the parcel to the west of the subject (Lot 3 on RP 78424), in Mr Cooper’s opinion, also virtually has uninterrupted views of the Broadwater towards the north.(2)Methods of valuation –
In seeking comparisons with surrounding properties, Mrs Cooper argues that there are very few sales of vacant lands in the area, and she has relied upon sales of improved properties. She argues that, from Mr Cooper’s personal extensive experience as a real estate agent, the appellants have developed a keen sense of market conditions in that area. The appellants are aware that there have been several sales, including the subject, where developers/purchasers had initially intended to redevelop the site into multiple residences (duplexes). Following a reconsideration of the market, those purchasers had subsequently decided to re-sell the properties in order to avoid further losses.
It is her contention that there is no real demand for units in a higher price range in that area, which could justify the redevelopment of the current improved sites. As a consequence the developers have abandoned their plans to develop the existing properties. From her observations she argues that sales of improved properties have in fact declined in recent years in that area. Mrs Cooper also argues that the small size of the subject (506 square metres) further mitigates against the potential redevelopment of the subject, because of Council building setback requirements as a result of the corner location. She concludes that the adjoining vacant lot to the south of the subject (Lot 1 on WD 6705) with an area of 676 square metres provides much greater potential to redevelop as a duplex development site.
By comparison Mr Dalgarno has adopted the method of comparing vacant sales, where they are available. He concedes that there are very few vacant lots in Paradise Point, particularly on The Esplanade. Because of the premium that attaches to parcels fronting The Esplanade, he sees little value in comparing other types of lands. Because of the absence of any vacant lots fronting The Esplanade, he has adopted two sales where the improvements have been demolished and new buildings constructed. Details of all sales are considered later.
In considering the impact of zoning upon both the sales and the subject, Mrs Cooper argues that the additional potential applying to “Residential C” lands, compared to “Residential B” lands, occurs as a result of the higher usage applicable to the “Residential C” lands under the Town Plan. Mr Dalgarno agrees with that statement in respect of analysing the sale price of “Residential C” lands. However he argues that, in comparing “Residential C” lands under section 17 of the Valuation of Land Act, where that site is used as a “single dwelling house”, he is required in his valuation to ignore the impact of the extra potential as a result of the higher zoning. However, because of the higher use, he would seek to compare like with like, and he would not compare sales of the “Residential C” land with the subject.
A matter of difference between the parties is the approach taken in comparing the sales, and surrounding parcels, to the subject. Mrs Cooper seeks comparison on the direct basis of area, noting the various rates paid per square metre. She argues that there is a considerable variation in the rates per square metre for the unimproved values of parcels in the area, concluding that many of those unimproved values applied by the respondent must be incorrect. Mr Dalgarno rejects such an approach, noting that comparisons of single unit dwelling sites are compared basically upon a site basis, and not on a per square metre basis. He acknowledges that there may be some additional premium paid for extra size in a parcel, but he argues that any increase is certainly not pro rata. It is also his conclusion that in areas which have a highly prized feature, such as Broadwater views, then the most important characteristic is the location of the parcel, and not its size.
Mrs Cooper also argues that it is unrealistic and incorrect for the respondent to virtually disallow any value for the improvements upon the subject. She argues that such an approach by the respondent makes the same error previously adopted by the developers, who subsequently decided to re-sell, rather than redevelop certain sites. Just as the conclusions of the developers, that the improvements had no residual value, had proved to be incorrect, in her opinion so also is the decision of the respondent.
Mrs Cooper seeks relativity with the parcel opposite the subject at 14 The Esplanade (Lot 38 on RP 78424), where the respondent apparently has allowed for a residual value of $25,000 for a building of similar age to the subject dwelling. On the basis of that comparison, and noting the former difference ($23,000) between the unimproved value of the subject ($187,000), and the sale price ($210,000) in 1995, the appellants have concluded a residual value for improvements on the subject at $40,000.
Mr Dalgarno rejects such comparisons as discussed later.
(3) Comparison of sales -
In support of her estimate of the unimproved value, Mrs Cooper has analysed the following sales of improved lands:· Sale 1 – (12 The Esplanade, Paradise Point – Lot 2 on RP 78424)
This is the subject which was purchased in March 1995 for $210,000. The lot has an area of 506 square metres, and includes a 2-bedroom fibro-clad low-set dwelling, which was rented from the previous owner/developer Nemad Pty Ltd for $170.00 per week. The property had been formerly purchased by Nemad Pty Ltd some six years previously for redevelopment purposes for $210,000.
· Sale 2 – (22 The Esplanade, Paradise Point – Lot 71 on RP 78424)
This is a corner lot (The Esplanade and Milton Avenue) of area 663 square metres and zoned “Residential C”. The lot has a brick dwelling with a separate flat, and was purchased by a developer for redevelopment purposes in 1995 for $290,000. Redevelopment did not occur, and the property is again on the market at $300,000.
· Sale 3 – (6-8 Milton Avenue, Paradise Point – Lot 44 on RP 899104 and BUP 3130).
This comprises two lots and was purchased by the Queensland Housing Commission from Nemad Pty Ltd in 1995 for $290,000. The land has now been developed as 10 QHC flats which appear to have inadequate carparking arrangements on site. The resulting street parking by tenants is seen as a local problem, which detracts from the amenity of the area. The land is zoned “Residential C”.
· Sale 4 – (4 Errol Avenue, Paradise Point – Lot 3 on RP 78424)
This lot adjoins the subject to the west, has an area of 531 square metres, and is zoned “Residential B”. It was purchased in January 1998 for $205,000, from the previous owner who bought the property in 1997, with the intention of redeveloping the site into two townhouses. It has a current unimproved value of $86,000.
· Sale 5 – (14 The Esplanade, Paradise Point – Lot 38 on RP 78424)
This is a corner lot (The Esplanade and Errol Avenue), and has an area of 663m². It is zoned “Residential C”, and was purchased in 1995 for $250,000, with the intentions of redevelopment. The current unimproved value is $225,000, suggesting that the residual value of the improvements is $25,000).
· Sale 6 – (16 The Esplanade, Paradise Point – BUP 12674)
This is a recent multiple five unit development called “Crystal Shores”, which currently has a unit offered for sale at $198,000. The use of this property was really only to demonstrate that units for sale in this complex have been slow, and indicate a slow turnover in the marketplace in that price and in that area. It is an inside lot.
· Sale 7 – (112 The Esplanade, Paradise Point – formerly Lot 38 on RP94850)
This is a corner site (The Esplanade and Eider Avenue) which has been subsequently redeveloped as two large townhouses, which are currently for sale at $300,000 and $340,000 respectively. At the time of Sale 7 in July 1997 for $250,000, the property had an existing dwelling and was zoned “Residential – Duplex Dwelling”. The sale has an area of 587 square metres.
· Sale 8 – (Cnr The Esplanade and Azalea Avenue, Paradise Point – Lot 574 on RP 93920).
This is a 506 square metre “Residential B” site which sold in February 1997 for $250,000. The site has subsequently been redeveloped into a single unit dwelling. The appellants believe that sale is more closely related to the Runaway Bay area, although Mr Dalgarno points out that it is formally situated as being in the suburb of Hollywell. It is quite close to the Runaway Bay boat facilities.
· Sale 9 – (82 The Esplanade, Paradise Point – Lot 690 on RP92678)
This is a 625 square metre corner lot (The Esplanade and Teal Avenue), which was purchased by a developer in March 1998 for $295,000. The property is back on the market at a listed price of $325,000.
· Property 10 – (10 The Esplanade, Paradise Point – Lot 1 on WD6705)
This is the adjoining property to the south of the subject, which has an area of 676 square metres, and is zoned “Residential B”. It is noted as the only vacant lot fronting The Esplanade in that area, and is believed to be unofficially on the market, subject to offers. The land currently has an unimproved value of $205,000, which increased in the 1997 valuation by only $5,000, compared to an increase in the subject of $28,000. The property was provided to represent relativity between the unimproved values.
In support of his valuation, Mr Dalgarno has provided the following sales:
· Sale 1 – (1 Azalea Avenue, Hollywell – Lot 574 on RP 93920)
This is the same property as Mrs Cooper’s Sale 8. Services and features of the sale are similar to the subject except the sale has a more regular shape. The sale also fronts The Esplanade, but is seen as superior due to its closer proximity to the water and lack of a wide park area on The Esplanade fronting the sale. However, records from Council disclose that the sale area was subject to about 1 metre of filling during development, at an estimated cost of $5,000. The sale is 1.2kms closer to the Southport CBD, after allowing for demolition costs and improvements the sale was analysed at $250,314, and applied at $230,000.
· Sale 2 – (112 The Esplanade, Paradise Point – Lot 38 on RP 94859)
This is the same as Mrs Cooper’s Sale 7. Services and features are similar to the subject, but the sale has a regular shape. The sale has about 1 metre of fill placed during development at an estimated current cost of $5,000. The sale is 1km north of the subject, and is seen as comparable to the subject. After allowing for demolition costs and improvements the sale was analysed at $250,828, and applied at $225,000.
(4) Relativity –
The appellants seek relativity with the following sales:
Sale/Property Lot Area Zoning Unimproved value 4 (4 Errol Ave) 3 531m² Residential B $ 86,000 5 (14 The Esplanade) 38 663m² Residential C $225,000 10 (10 The Esplanade) 1 676m² Residential B $205,000 Subject 2 506m² Residential B $215,000 Mrs Cooper agrees that her Sales 2, 5, 7, 8 and 9 are all corner properties facing The Esplanade. However while she agrees that the other sales were all inside lots, some facing streets other than The Esplanade, she claims that her Sale 4 (4 Errol Avenue) has a comparable vista of the Broadwater to the subject, due to the setback of the road alignments.
In comparing Sale 5 (Lot 38) Mr Dalgarno sees that as inferior to the subject in respect of views as it does not have the northerly aspect of the subject, although it is larger. However, because of its higher zoning, he sees Sale 5 as having some higher sale value because of the potential for multiple use. As he seeks always, where possible, to compare like with like, he would not analyse Mrs Cooper’s Sale 5 in order to assess the unimproved value of the subject, in view of its higher zoning. If Sale 5 was not used as a single unit dwelling, he argues the unimproved value of that parcel would be higher than its current unimproved value of $225,000 under section 17 of the Act.
Mr Dalgarno argues that in comparing Property 10 (Lot 1) with the subject he has valued that parcel as an inside lot with Broadwater views only to the east. He believes that the corner influence of the subject (506m²) more than compensates for the larger area of Property 10 (676m²), as he believes that the key feature affecting the value is the views of the Broadwater.
(5) Changes in the market –
There was reference by the appellants that opinion within the real estate industry indicates that there had been either a stagnation, or a downturn, in the market for the last 5 or 6 years. However the only evidence of any downturn was provided in the subjective analysis of the submitted sales. Mr Dalgarno refutes that claim, suggesting that the impact had been more of a slowness in sales, rather than any fall in the values.
Mr Cooper argues that a stagnation in the market is demonstrated by the number of developers who, possibly because of a lack of any anticipated growth in the market, had subsequently decided to withdraw from redevelopment of their sites. However, while that may reflect the common perception in the industry, it provides little hard evidence of the actual condition of the market, which is best demonstrated by concluded sales.Decision:
(i)The nature of the land –
I turn first to the nature of the land and note that the only differences between the parties lies in the nature of filling upon the selected sales, the impact of views from certain sales, and the impact of variations in the sizes of the lots.
In respect of the amount of filling allowed upon the sales, I can understand the appellants’ concerns that there is no apparent superficial evidence of filling to be seen at present. However, Mr Dalgarno has researched Council records and determined that filling occurred across the general area, except near the subject at the initial development stage of the area. In the absence of other evidence I will accept Mr Dalgarno’s determination.
However it should be noted that in comparing the unimproved values of Mr Dalgarno’s Sales 1 and 2 he has reduced those two values by some $5,000 each, which further reduces the compared unimproved value of the subject by a comparable amount. The fact that a further reduction for fill could not be allowed on the subject reflects the history of that site.
In the matter of views to the north from Sale 4 (4 Errol Avenue) I accept that Sale 4 can partially experience the same panoramic views of the Broadwater to the north as from the subject. This is because of the nature of the setback of the road alignment along The Esplanade towards the north-west. However, it is not accurate to conclude that northerly views from both Sale 4 and the subject are totally comparable.
In seeking comparisons between the sizes of the subject (506m²) and Sale 4 (531m²) and Sale 10 (676m²), I acknowledge Mr Dalgarno’s opinion that the key characteristic is the views of the Broadwater. I acknowledge also that the corner location of the subject adds to its value. However I believe some of that advantage in the subject is counterbalanced by its small size, and tapering shape fronting The Esplanade. The limitations imposed upon further buildings as a consequence of Council Building Line Setback Restrictions, must counterbalance some of the former influences. Although, as Mr Dalgarno agrees, in order to capitalise on such a small site at the current valuation it would almost become necessary to build a two-storey dwelling (transcript p.27).
However it would also be reasonable to allow for some additional value to a purchaser in order for him to acquire a larger site such as Property 10 (676m²). The question to be decided is whether the lack of views of the Broadwater to the north from Property 10, compensate for the smaller building area of the subject, with its more expansive views. Mr Dalgarno believes the subject is the better land at $215,000, with Property 10 at $205,000. A matter also for consideration, in view of the high values of the land and potential for further improvements, is the relatively small areas of the parcels anyway.
(ii)The method of valuation –
It is agreed that the market for Esplanade-fronting land is restricted in that area, with only about 100 parcels existing in that special segment of the market. It is therefore a logical consequence that there is likely to be a paucity of sales of vacant land.
I note that Mr Dalgarno seeks always to compare sales of vacant lands where they are available. The appellants argue that comparison of improved properties, after allowing for depreciated improvements, is a more realistic method of deciding the unimproved value, because of the paucity of sales. In comparing the resulting land components the appellants seek comparison on a per square metre basis, noting inconsistencies in the respondent’s valuations of those sales as follows:
Sale 4 (4 Errol Avenue) = $162/m²
Sale 7 (112 The Esplanade) = $383/m²
Sale 8 (1 Azalea Avenue) = $454/m²
Property 10 (10 The Esplanade) = $303/m²
Subject = $425/m²
If I consider the method applied by the appellants, I am aware that advice provided to property owners by the Chief Executive in fact does suggest such an approach. However the preference of the courts in these matters has always been to prefer the use of sales of vacant sites for residential land where possible.
I note for instance in PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, the Land Appeal Court said at page 76:
“It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc. to the subject parcel, if they are available, are to be preferred as the best guide for arriving at an unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements. ”
That principle was also followed in R and MM Barnwell v. The Valuer-General (1990-91) 13 QLCR 13 where the Land Appeal Court said at page 18:
“It remains for us to consider the proposal that the subject valuation is excessive when looked at from a value per unit area (per square metre) point of view. It again is well established that when valuing homesites, then the best method of comparison is on a site to site basis. Mr Skinner, using this method, proceeded in the valuation of the subject land, and no criticism of it on that basis is justified. ”
A similar approach was also followed in respect of rural homesites in DF and M Ward v. Valuer-General (1983) 9 QLCR 48, where the Land Appeal Court said at page 50:
“Sites are valued overall and not on a rate per hectare basis. The experience of the market place reflects the former not the latter practice. ”
Other references are also to be found in AT Dewar v. The Valuer-General (1980-81) 7 QLCR 112, at page 115: WM and TJ Fischer v. Valuer-General (1983) 9 QLCR 44, at page 46; and NR and PG Tow v. The Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court at page 381:
“Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.”
On the above precedents there is nothing to discredit Mr Dalgarno’s selected method of using sales of vacant land. However, by comparison the appellants’ use of improved sales has certain disabilities which, if not undertaken effectively, can lead to an ill-informed outcome. I note that such an approach is often referred to as the “summation or cost method” of valuing the land. I note that the “summation method” is commonly used for valuing house properties, where any comparison of other direct sales are not relevant. (See Land Valuation and Compensation in Australia by RO Rost and HG Collins, 3rd Edition, Reprint 1996, page 106.) That test also confirms that the preferred method is to compare the subject with sales of vacant land, but if sales do not exist, the “summation method” involves:
“…an addition of the values of the constituent parts of a property to arrive at its total value.”
Precedent for use of the “summation method”, is found in Seatainer Terminals Limited v.
The Valuer-General (NSW) 1974 29 LGRA 6, at page 12. In that matter the “summation method” adopted was unusual as it related to a determination of the value of the site of an overseas container terminal, in a situation where there were no sales of land zoned “Special Uses – Port Purposes” to allow any direct comparison to be made. (The “summation method” was also examined by Sugarman J in Marcus Clark & Company Limited v. Commissioner for Railways (1949) 29 LVR 98; see also “The Law Affecting Valuation of Land in Australia”, 2nd Edition, Alan Hyam, page 111). In that matter His Honour considered the method when it was used as a check for the purpose of comparing a valuation arrived at by another method. Sugarman J noted at page 137:
“The defects of the method do not need elaboration. As a method of comparison it appears to be less reliable than comparison of rates of capitalisation, notwithstanding the difficulties, already discussed, involved in the lastmentioned procedure.”
The difficulty in the current matter lies in Mrs Cooper’s estimate of the “added value” of the improvements. The need to determine “added value” rather than the traditional method of replacement cost as at sale date less depreciation was discussed in O’Brien Nominee Pty Ltd v. The Valuer-General (1979) 6 QLCR 280 at page 284. While the method of using improved values is not excluded (see Tooheys Limited v. The Valuer-General (1925) AC 439), the problems of determining the true added value of the improvements must be addressed.
The appropriate method of determining the added value of the improvements is likely to involve a comparison of the land with other sales of vacant land, and then deduct that from the improved value. In the context of determining unimproved value the additional steps are clearly unnecessary, hence the Court’s preference for comparisons with other vacant sales.
In noting the variations in the per square metre rate for the relevant sale, I note that those outcomes are really the result of applying an inappropriate method of valuation. This supports that such properties are in fact purchased and valued on a site basis.
However, while accepting Mr Dalgarno’s method of valuation, that is not to indicate that his assumptions in respect of his sales applied were appropriate.
Comparison of Sales –
In seeking comparison of comparable sales I note that the following sales represent Residential B corner lots fronting The Esplanade:
· the subject (506m²) $210,000 (March 1995)
· Sale 7 (587m²) $250,000 (July 1997)
· Sale 8 (506m²) $250,000 (February 1997)
· Sale 9 (625m²) $295,000 (March 1998)
I note also that Sales 7 and 8 are also common sales with Mr Dalgarno. In seeking comparison on a like with like basis I would agree with Mr Dalgarno that Sales 2, 3, 4, 5, 6 and 10 do not assist as sales evidence in view of their different locations or zonings.
I note also that only Sales 7 and 8 have in fact been the subject of redevelopment, and Sale 9 is now again on the market as a single dwelling. While the owners of Sale 9 are currently seeking offers up to $325,000, I am reminded that such offers to sell are little more than an owner’s desired return from a sale. Indeed even a formal offer to buy must be closely analysed in order to ascertain its credibility in the courts. For example, in Australian courts only binding contracts to sell and purchase have been accepted as evidence of value. The High Court of Australia considered the matter of a written offer to sell property in McDonald v. Deputy Commissioner of Land Tax (NSW) (1915) 20 CLR 231, and found at page 239:
“When the matter has reached the point of a concluded contract, there has been a definite concrete fact established, which not only evidences value, but to some extent helps to create or modify it. Where an owner has actually parted with his land for a fixed sum and a buyer has parted with his money for the land, a clear event has arisen, which, based on the ordinary instincts and impulses of human nature, indicates a consensus of opinion between two adverse parties in the community respecting the value of similar lands. ”
A similar contractual arrangement would also be required in respect of an offer to buy. On the evidence before me I reject any value in the current listing price for the resale of Sale 9.
However, in relying on the use of comparable sales, the experienced valuer needs to ensure that he does not rely entirely upon only limited sales, where an error of judgment in applying the comparable sales could lead to an error in the final valuation. I note for example Waalt Homes Pty Ltd v. Road Construction Authority (1987) 64 LGRA 346, where Gobbo J said at page 354:
“It is well-established that the use of comparable sales is to be preferred as the primary method of valuation, and it is obvious that the hypothetical development analysis method offers many opportunities for error in its various assumptions and calculations. But this argument can be given too much weight, for one error of judgment in applying a comparable sale can readily lead to a significant error in the final valuation. Particularly is this so if there are few sales and no obviously discernible trend. ”
I note also that the use of comparable sales provides evidence in the movement of a market over a period of time, particularly where vacant land is becoming scarce and therefore the resulting prices are indicating substantial increases. This was found in Hurdis v. The Minister (1957) 2 LGRA 132, where Hardie J found at page 138:
“Another matter which would be important to a prospective purchaser was the marked upward trend in values of land in the area during the period preceding the relevant date. … That increase, particularly in the latter portion of the period, would be a significant matter for a prospective purchaser to bear in mind when considering what would be a reasonable price for him to pay for the subject land. It has another significance also, in that it demonstrates that a sale otherwise comparable and useful for the purpose of establishing values in the area at the relevant date, would lose much of its comparability and usefulness if it took place at a point of time far or substantially removed from that date.”
In adopting comparable sales I note also that minor differences between the sales and the subject do not render the sale as non-comparable. It is the skills of an experienced valuer which draw an appropriate balance between the properties.
Such guidance therefore leads me to the question of whether Mr Dalgarno’s assumptions in respect of Sales 7 and 8 (his Sales 2 and 1) truly represent the general trend in the market for purchasers to acquire improved sites in that area for the purpose of redevelopment. Mr Dalgarno concedes that the purchaser of Sale 7 has now redeveloped the site for a high quality duplex. However he argues that at the time of sale in July 1997, it was that purchaser’s stated intention to redevelop only as a single residential site. Subsequently he reconsidered his decision, and developed a duplex arrangement in order to “make more money” (transcript p.21).
While such a decision is entirely at the discretion of the owner, the change in attitude raises the issue of the “prudent” nature of the purchaser at the time of sale. It is possible that he subsequently considered that his investment of $250,000 would be better spread between two residences, suggesting that the market may not be suitable for single residences at $250,000. That assumption would fit Mr Cooper’s hypothesis that the market is not yet ready for major redevelopment for single residence sites in the area.
While it is not a matter for this Court to speculate on the intentions of the marketplace, the belated decision by the new owner of Sale 7 raises the spectre that, other than Sale 7, there was only one sale (Sale 8) used for redevelopment as a single residence. It is on the basis of the redevelopments of Sales 7 and 8 that Mr Dalgarno concludes that there is no difference in value of the “Residential B” land whether it is used for duplex or single unit developments. In the light of Waalt Homes it must be asked whether that is a reasonable conclusion.
I note that Mr Dalgarno is an experienced valuer who has followed guidelines set down by the Land Appeal Court in H and E Grahn v. The Valuer-General (AV89-246/7), 13 December 1990, unreported, which said at page 5:
“A proper valuation calls for an exercise in balancing all the respective advantages and disadvantages inherent in or pertaining to a lot.”
It has been held by previous courts that, in the absence of sales of comparable properties, it is appropriate for an experienced valuer to draw upon his experience and knowledge. For example, in the decision of King Ranch Pastoral Company Pty Ltd v. The Valuer-General (1968) 35 CLLR 255, the Land Appeal Court said at page 259:
“In not attempting to do this, Mr Walker adopted a method of valuing based on knowledge and experience rather than one lacking precedent and authority. ”
The question to be pondered in this matter is not so much whether Mr Dalgarno has applied Sales 7 and 8 correctly, but rather whether his interpretation of those sales, as demonstrating a market shift in the value of the lands in that area, was premature at that time.
On the evidence Mr Dalgarno would appear to have concluded that two sales in a market segment of some 100 hundred lots fronting The Esplanade, are an indication of the changing pattern of future land use in that area. While his experience of other factors may have led him to that conclusion, the current evidence provides some grounds to challenge that such a pattern of redevelopment does in fact exist at this time.
(iv)Relativity –
And finally I come to the matter of relativity between the subject and adjoining lots. I note that Mr Dalgarno rejects a comparison of the adjoining Lot 3 (Sale 4) at $86,000, claiming that figure to be incorrect, and to be adjusted at some later date. While the unimproved value of Lot 3 may have certain inconsistencies in Mr Dalgarno’s opinion, the appellants in this matter should be entitled to rely upon that value for relativity purposes.
I note for instance the findings in TF and SA Shepherdson v. The Valuer-General (1992-93) 14 QLCR 83 where the learned Member said at page 87:
“Applying to this case the principles of law summarised above, it is desirable that valuations of comparable land should bear proper relativity. The appellants are entitled to rely on the valuations of properties in the vicinity of the subject land as being correct. … Although the comparable sales support a valuation in the order of that assigned to the subject land, it is appropriate that attention be given to obtaining some relativity to blocks in the same category of land. ”
In that matter the presumption of correctness of the valuations, in the ordinary course of events, was seen to be a reasonable entitlement of the appellants under section 13(7) (now section 33) of the Act. However, in that matter the Member noted at page 85:
“In the present case there was no evidence that the Valuer-General has taken steps to alter the valuation of the subject land or other blocks in its vicinity (other than Scott’s land), although there was a suggestion that relativity may be altered at the next valuation of the Area.”
However, a more important factor impacting upon the unimproved value of Lot 3 is its location on Errol Avenue, and its lack of any direct frontage to The Esplanade. As noted previously it is not correct to assume that both adjoining properties have the same aspects to the Broadwater. In view of this difference it would be unwise to draw any direct relationship between Lot 3 and the subject.
I believe however relativity between the subject and Lot 1 (Property 10) to the south is of more significance. As discussed previously the influence of the corner location of the subject, and its physical restrictions upon building areas, was considered by Mr Dalgarno to outweigh the larger area of Property 10. I believe such an approach may have inadequately allowed for any uncertainties in the valuation which, following guidance from the courts, should provide some flexibility towards the appellants.
I note that precedent for such an approach is to be found in the decision of the High Court in Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of South Australia Limited and Others (HC) 74 CLR 358, (1946-47), where Dixon J said at page 373:
“I have had the advantage of reading the judgment prepared by Williams J and agree in it. I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate. ”
Summary:
On balance I am aware that section 33 of the Act directs that the onus of proof rests upon the appellants to prove their case, as also is the burden of proof under section 45(4). In this matter I believe that the appellants have cast sufficient doubt about the general trend of purchases in that area to obtain sites for redevelopment purposes. If such a trend is now developing it is likely to be demonstrated in later valuations by an increase in the number of sales for that purpose. The inference of such an approach is that for the current valuation the existing dwelling would appear to retain some residual value as part of the total improved property.
The key to any comparison based upon relativity would then be with the adjoining properties, particularly with Property 10 at $205,000. Allowing any differences between those two parcels to be weighted slightly in the appellants’ favour, in accord with the Executor Trustee principle, I find an unimproved value of $205,000 would be appropriate.
Conclusion:
Having considered the whole of the evidence I am persuaded that the appellants have partially proved their case. The appeal is allowed, the determination of the Chief Executive is set aside, and the unimproved value of Lot 2 on RP 78424 is determined at Two hundred and five thousand dollars ($205,000).
Member of the Land Court
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