Dagg v Department of Natural Resources and Water
[2009] QLC 105
•30 June 2009
LAND COURT OF QUEENSLAND
CITATION: Dagg v Department of Natural Resources and Water [2009] QLC 0105 PARTIES: Andrew S and Megan R Dagg
(applicants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2007/0255 DIVISION: General Division PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 30 June 2009 (ex-tempore) DELIVERED AT: Warwick HEARD AT: Warwick MEMBER: Mr PA Smith ORDER: The appeal is allowed and the valuation of the subject property as at 1 October 2006 is determined in the amount of Seventy-Five Thousand Dollars ($75,000). CATCHWORDS: Unimproved valuation – principles to be applied – building covenant - relativity – ‘evidence from the bar table’ – equity and good conscience APPEARANCES: Mr Dagg appeared on his own behalf
Mr P Prasad, Lawyer, Legal Services, Department of Environment and Resource Management, appeared on behalf of the respondent
Background
This is an appeal by the appellants against a valuation by the respondent pursuant to the Valuation of Land Act 1944 (the VLA), which valued the appellants' property situated at 20 Rodeo Drive, Warwick, in the sum of $79,000 as at 1 October 2006. I note that the valuation was originally $82,000 but that it was reduced to $79,000 following a preliminary conference. The appellants contend for a valuation of $52,000.
The subject property is located approximately 2.5 kilometres north-east of the Post Office in the city of Warwick. The property is serviced by electricity, rubbish collection, mains water, sewerage, telephone, mail delivery services and has a sealed road with kerb and channelling. The access to the subject is from Rodeo Drive which is a relatively narrow street and notably the subject property is towards the top end of Rodeo Drive which has an awkward T-shaped cul-de-sac very close to the subject property. In fact the subject property is next door to the commencement of the cul-de-sac which is comprised of four properties surrounding the cul-de-sac.
The property comprises a near rectangular regular shaped property. It is elevated from the road. In effect the land to the side of the road where the subject is located is all on the higher side of Rodeo Drive and the slope of this land, although there is some slope with some small cut and fill required for slab construction on the block, is generally of a more consistent nature than the land on the other side of the road, particularly as you fall further down Rodeo Drive where the fall from the front to the rear of blocks becomes more significant and, according to the topographical map supplied, results in a fall of some 10 metres over those blocks. The land has what is referred to as city glimpses. The issue of the view of the city and surrounding areas that can be obtained from the subject, and indeed other properties, on Rodeo Drive is something I'll deal with later when evaluating the evidence of the parties.
The land is zoned Service Commercial under the Warwick Shire Planning Scheme gazetted on 29 September 2000. Although it is zoned as such as Service Commercial it is used for residential purposes. I note from the valuer's report that there is a proposal to change the zoning back to Residential Purposes but that has not as yet occurred. However, pursuant to s.17 of the VLA the highest and best use of the land is treated as being a residential block, so in the circumstances of this matter the fact that it is zoned for a potentially higher and better use than that of residential is not taken into account.
A further matter to note with respect to this property is that it, as well as Lots 11, 12, 13 and 14, are subject to a restrictive covenant as set out in Exhibit 5. I will also deal further with this covenant when dealing with the evidence provided in this matter.
The Hearing
The appellants were represented by Mr Dagg who gave evidence at the hearing on his own behalf. I note that Mr Dagg does not have any legal or valuation qualifications. The respondent was represented by Mr Prasad a legal officer employed by the respondent and relied upon the evidence of a registered valuer, Mr J Bomford.
Legislative Provisions
I will now look at the relevant legislative provisions that apply to this matter. Pursuant to s.13 of the VLA the respondent is required to determine the unimproved value of the land. Relevantly s.3(1) of the VLA says as follows
"For the purposes of this Act unimproved value of land means – (a) in relation to unimproved 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; and (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 note that the subject land in this matter is improved. Accordingly, put simply, the task of the court is to find the market value of the land on the assumption that none of the improvements are on the subject land. An assessment is then undertaken as to the highest and best use of that land. As the then President Trickett said in the case of Fairfax v. Department of Natural Resources and Mines[1],
"The principles for determination of the 'market value' of land were established by the High Court in Spencer v. The Commonwealth [1907] 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property. (See Griffiths CJ at 432 and Isaacs J at 441). It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land. In Waterhouse v. The Valuer-General [1927] 8 LGR (NSW) 137 at 139 Pike J said, 'Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but - as with other commodities - the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales.'"
I respectfully agree with these observations and presumption of correctness of valuation.
[1] [2005] QLC 11 at paragraphs 11 and 12
I now turn to s.33 of the VLA which states as follows:
"Status of Valuation. 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."
This section was considered by the High Court in the case of Brisbane City Council v. Valuer-General for the State of Queensland[2] where Justice Gibbs, as he then was, made the following observations[3],
"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle or made a serious error of fact, the presumption created by s.13(7) is rebutted."
It should be noted that s.33 of the VLA is in essentially the same terms as what was then s.13(7) of the Act.
Issues in the Appeal.
[2] [1977-78] 140 CLR 41
[3] At p.56
As mentioned already the evidence in this matter was provided by two witnesses; for the appellants by Mr Dagg and for the respondent by Mr Bomford. I will deal first with the evidence of Mr Bomford. Mr Bomford presented to the court an exhibit setting out his valuation report and several annexures. Mr Bomford is to be commended for the preparation of his report and the detailed nature that he has gone into in the production of that report and his detailed analysis. I accept Mr Bomford's report as prepared by a professional valuer and, save for one aspect, accept all of the conclusions that he has drawn in that report.
Mr Bomford has set out a schedule of four sales. I find each one of those sales to be good evidence taking into account the authorities that I have dealt with earlier in this decision to show the market trends for comparison purposes for ascertaining the value of the subject property as at the relevant date.
I believe that Mr Bomford is correct when he states, as he did in evidence, the general valuation proposition that, all other matters being equal, land on the higher side of a road will be valued at a higher level than land to a lower side of a road. I will explain the reasons for this very briefly. For building and construction purposes, particularly for slab constructions, water runoff is a significant factor and buildings to a lower side of a road have much more difficulty with stormwater running down driveways and straight into premises and requires additional drainage and other works compared to properties that have a driveway moving up from a road even if that angle is only relatively slight. The same drainage and stormwater runoff considerations don't apply. Therefore, on a pure valuation perspective and given the totality of cases considered by the Land Court I certainly accept Mr Bomford's general evidence regarding his valuation methodology and principles regarding the fall of the land. I also accept from the inspection of the property that was conducted at the commencement of this hearing that there is a slope to some extent on the subject property which did require an amount of cut and fill for a slab construction and I also accept that the properties directly across the road from the subject property have relatively good building platforms but that those building platforms significantly deteriorate the further down Rodeo Drive that one goes, and I'm speaking specifically on the lower side of the road.
Taking that evidence into account and looking at the relativity maps provided by Mr Bomford I certainly understand the rationale for the valuations as applied on Rodeo Drive leaving aside the properties at the very end of the road subjected to the cul-de-sac.
I will now turn to the evidence of Mr Dagg. Mr Dagg presented as a confident, honest witness. I have no reason to doubt in any way that anything that Mr Dagg presented both in his statement Exhibit 2 or in his oral evidence or in his answers to cross-examination were anything but the total truth. This is in many ways refreshing for me as in the last few years I have had more than my fair share of cases when a number of witnesses, for both appellants and respondents, have been less than forthright in cases. I commend all the parties for the evidence they gave and the manner in which they approached this case; it is indeed refreshing.
There are conflicts in the evidence between Mr Dagg and Mr Bomford. One of those relates to the issue of a view from the subject. Although Mr Dagg has stated that the properties on the lower side of Rodeo Drive enjoy a superior view to those on the upper side of Rodeo Drive, what has to be remembered in dealing with these cases is that I am required to assess the unimproved value of each of the properties, so that is looking at the subject as if none of the improvements had been made on the subject but all the improvements are on surrounding properties, and that is done as one values each property in the legal fiction that is for valuation that we have to contend for in these matters.
As to the analysis of views on Rodeo Drive, in my opinion there is a similarity in views between each side of the street. As the housing has been constructed on the street, there certainly is a difference between the view that one would receive out of the house at say Mr Dagg's neighbour's property at Lot 9 compared to the view that would occur from Lot 16 or Lot 15 across the road, but that relates more to the nature of construction of the house and not so much the unimproved natural contours of the land. Returning to the original contours I think the views would be comparable for both.
That then leads to the resolution of one major issue in which Mr Dagg gave evidence and that relates to the impact of the covenant in this case. Mr Dagg's evidence was that at the time of entering into the contract in this matter neither he nor his wife were aware of the existence of the covenant and thought that they were simply purchasing a normal residential block. Indeed, I can well understand Mr Dagg's evidence and, as I said, I fully accept his truthfulness in this regard. For reasons that he detailed, relating to proximity to the cul-de-sac etc. and with a view to his having very young children and their safety aspects, despite the covenant he proceeded nonetheless with the purchase.
I accept the evidence also of Mr Bomford that the covenant that exists on the subject property does allow for the construction of a higher than single storey building but only with the consent of the Department of Main Roads and that Mr Bomford thought it would be highly unlikely, or words to that effect, that such approval would be given. In this regard I should note, and did note at the time that it occurred, that Mr Dagg gave evidence ‘from the Bar table’ during his submissions that he had sought to build a double storey house on his property but that permission was not given by Main Roads for that construction.
The Land Court by its legislation has an obligation to conduct proceedings as openly and fairly and with as little formality as possible to arrive at a just and fair result for all the parties[4]. Mr Dagg's ‘evidence from the Bar table’ cannot be accepted to the same extent of course as evidence that is provided under sworn testimony. However, in the circumstances of this matter, given the evidence by Mr Bomford and given the earlier evidence by Mr Dagg as to the existence of the covenant and the restrictions that came from that, I am prepared to find as a finding of fact the likelihood that the Department of Main Roads would allow the construction of a double storey house on the subject land to be remote.
[4] See S7 Land Court Act 2000
Taking what I have said into account it, is necessary to consider the impact of the covenant in light of the sales evidence provided by Mr Bomford. Mr Bomford did provide evidence, and it is consistent with the evidence provided by Mr Dagg in his Exhibit 2, as to the original sale price of the subject block which was sold for very similar money to a block further down Rodeo Drive on the same side of the road at about the same time and Mr Bomford stated that in his view this tended to show that the existence of the covenant did not have a marked impact in the market. I note though that the sales evidence provided by Mr Bomford does not refer to any sales which show the covenant as part of the sales evidence. Mr Prasad during submissions did refer to some sales evidence relating to Lot 13 at an earlier date which I also am prepared to take into account in the manner in which it was provided by Mr Prasad, but for reasons which I'll deal with in a moment, I believe that that sales evidence is consistent with the findings and conclusions I have reached in this matter as I will go on to detail.
The reason for speaking of the original sale of the subject property as compared to the sale of a property further down Rodeo Drive is that in my view, were normal valuation evidence to be taken relating to the sale of the subject to Mr and Mrs Dagg, that sale would fall within the ‘suspect’, or ‘somewhat suspect’, category of sales in which sales are often categorised when further investigation is undertaken of a sale by a valuer such as Mr Bomford. As I have indicated I accept Mr Dagg's evidence that he was not aware of the covenant and that in his view the property was worth less at its time of purchase because of that covenant, but for other reasons peculiar to his circumstances, he decided nonetheless to proceed with the purchase. This takes it somewhat outside of the normal circumstances of the willing buyer and willing seller and shows a form of ‘suspectness’ that must be applied to that sale including; the circumstances around the marketing of the property; and the actions of the real estate agents and others in negotiating the original sale price with Mr and Mrs Dagg. I don't have any of that evidence before me.
When I consider the relativity of all of the blocks, as I have indicated before, and taking into account all of the evidence that I have indicated and accepting in particular Mr Bomford's valuation evidence including his evidence relating to the impact of the covenant, in my view the disabilities suffered by Lots 12 and 13 have all been appropriately taken into account in the values that have been arrived at for those properties given their strange current zoning and being as they are adjoining commercial property as at the date of valuation; their proximity to the highway; the poor access, the strange shape of the cul-de-sac; and the fact that Lot 13 has had a significant slice removed from the back by the unmade Murphy Street. Also, importantly, both those valuations in my view properly take into account the building covenant which restricts the eave height of any residence to be under that of the soundproofing walls provided along the allotment area.
When I view the relativity of those properties and the existence of all of their disabilities with the rest of Rodeo Drive, in my view everything falls neatly into alignment except for the issue of the covenant which I believe is a matter which should be taken into account with respect to Lots 10, 11 and 14. Approaching the matter as unimproved land it is a fact that a person seeking to build on Lot 9 as opposed to Lot 10 has had one valuable component of that property removed, that being the ability to build a double storey residence. Now it may or may not be the case that people choose to build single or double storey residences and I note that a lot of the housing on Rodeo Drive is single storey and I also note Mr Bomford's evidence that many of the people who purchase and build these properties are retired people who require low housing for access, but I also note that properties on the other side of Rodeo Drive do include double storey or split level housing and of course in every community there will be a mix of people, some of whom want higher properties to obtain views, others who want lower properties. The existence of the covenant removes the ability of the subject property to have that choice able to be made.
In my view, taking all the evidence into account, and in particular looking at Lots 12 and 13 as properly taking into account the existence of the covenant and all their additional disabilities, the appropriate amount to apply with respect to the covenant, and also considering other reductions that occur because of the existence of easements, heritage components or other such deductions which are made by the Land Court from time to time, I consider a reduction for the existence of the covenant of approximately 5% to be in order. Doing a rounded calculation, in my view this would mean that the proper valuation for Lot 10 would fall to $75,000, and in my view that would be a proper relativity to be maintained in future in comparing Lot 9 and Lot 10.
By way of obiter and observation only because the matter is not before me, I would think that the respondent should consider amending the valuations of Lots 11 and 14 also because, in my view, particularly when one looks at Lot 14 and Lot 15, a deduction of only $1,000 given the odd shape of Lot 14 to Lot 15 plus the existence of the covenant shows that those properties also fall out of relativity and the Land Court is always concerned when making its decisions to ensure, as best it can, relativity remains intact. I believe that with due adjustment of Lots 11 and 14 in like manner to that which I have found to apply to Lot 10, all of the valuations on Rodeo Drive would fall within an appropriate relativity for all of the general circumstances and issues here discussed.
Order
In conclusion, the appellants have been successful in one respect in showing that not a proper or total allowance was taken into account of the impact of the covenant on the unimproved value of the subject block of land and, accordingly, the appeal is allowed and the valuation of the subject property as at 1 October 2006 is determined in the sum of Seventy-five Thousand Dollars ($75,000).
PA SMITH
MEMBER OF THE LAND COURT
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