Davies v Chief Executive, Department of Lands
[1996] QLC 97
•19 July 1996
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LAND COURT BRISBANE 19 July 1996
Re: An appeal against a valuation
of the Chief Executive, Department of Lands Gladstone City Council (AV95-314)
Trevor J and Cynthia R Davies v.
Chief Executive, Department of Lands (heard in Gladstone)
Introduction
Trevor John Davies and Cynthia Ruth Davies (the “appellants”) own 1.012 hectares of land described as Lot 5 on Plan CTN528, Parish of Gatcombe, on the southern tip of Facing Island to the east of Gladstone.
The respondent Chief Executive determined that the unimproved value of the subject land to be $37,500 as at 1 January 1995. The appellants objected against that valuation. Their objection was disallowed and they appealed to the Land Court. Their notice of appeal nominated a valuation of $12,500.
The grounds of appeal were in summary:
the valuation of the subject land is out of relativity with the valuations of neighbouring properties;
certain specified special disabilities were not fully considered when making the valuation and work against any reasonable justification for a 200% increase in valuation;
the valuation is not supported by sales evidence;
use is restricted by zoning;
the decision is inconsistent with the decision on a similar notice of objection in 1989; and
no evidence has been given to the owners that real consideration was given to their objection.
The law
The legal principles to be applied in this case were usefully summarised in Grahn v The Valuer General (1992) 14 QLCR 327. In its reasons for judgment, the Land Appeal Court relied on decisions of the High Court of Australia and the Land Appeal Court as authority for a series
of propositions which, in summary (updated to reflect legislative and administrative changes) are as follows:
(a)It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable land should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis.
(b)The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land.
(c)Section 33 of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Chief Executive in his notice of valuation is correct.
(d)Once it is shown that:
(1)in making the valuation the Chief Executive acted upon a wrong principle, or made a serious error of fact; or
(2)the valuation was made by a method fundamentally erroneous, the presumption created by section 33 is rebutted.
(e) Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence.
(f)If possible, the Chief Executive should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error.
The appellants bear the onus of proving the grounds of appeal (section 45(4)). Evidence was given at the hearing by Mr Davies and by Mr RG Hewitt, a valuer employed by the Department of Lands (now the Department of Natural Resources) in Rockhampton.
The subject land
The land is situated approximately 13 kilometres east-south-east of the Gladstone Harbour and Marina. It is located at the southern tip of Facing Island and formerly was a lighthouse reserve comprising hard stony coastal forest country, since cleared with excellent views. Access is by sea and, due to prevailing winds, can be difficult.
The land is zoned Rural Non-Urban and, at the time of the hearing, was not being used. There are various sites suitable for houses but there are gullies on both sides.
Mr Davies stated that a 150' esplanade adjoins the subject land. It is not possible to land a boat in front of the subject land.
The appellants contended that the subject land suffers certain disabilities, namely:
(a)the land is on an island with no public vehicular access;
(b)there is no road access to the property;
(c)there is no gazetted road access to the property;
(d)no boating facilities are provided (that is, no marina, no jetty and no breakwater);
(e)direct access is on the windward side of a very rocky shore (and their vessel has been swamped three times in the past five years despite all precautions);
(f)there is no power supply, no reticulated water, no sewerage, no rubbish removal, and no other services or facilities are provided by the Council;
(g) The present use of the land is for weekend recreational use. One of the great difficulties of the location is that access depends on tide and weather. According to the appellants, it is frequent that months on end go by when it is too uncomfortable or dangerous to have
access to the land because of windy conditions.
Sales evidence
The appellants contended that the valuation of the subject land is not supported by sales evidence. Although they bore the onus of proving that ground of appeal, no sales evidence was given by or on behalf of the appellants.
In support of the respondent’s valuation, Mr Hewitt provided a valuation report which referred to the sale of land on Turtle Island and Witt Island (both of which are west-north-west of the subject land) and a block on the north of Facing Island.
Sale 1: Turtle Island, with an area of 9.409 hectares (more than 9 times the area of the subject land), was sold in March 1994 for $300,000. The land was vacant at the time of sale. Its analysed unimproved value was $300,000 but its applied unimproved value was $225,000. At the time of sale, the land had approval for resort development. The purchasers, however, bought the island for residential purposes only and have had this approval revoked. They have since constructed a residence on the land. The fact that the approval was in place at the time of sale is the reason for the conservative application of the sale price.
Turtle Island is well located in the Gladstone Harbour in close proximity to the city of Gladstone with excellent views. A reasonable landing site exists at the northern end and a very small area of beach on the south-western side.
Mr Hewitt described the sale land, which is zoned Rural Non-Urban, as superior to the subject in area, location and access, and as overall superior to the subject land.
Apparently the previous valuation of the sale land was $75,000. The applied value of the land as at 1 January 1995 was three times (or an increase of 200% on) the previous value.
Sale 2: Witt Island, with an area of 2.259 hectares of Rural Non-Urban land, was sold on
30 January 1995 for $300,000. The sale was improved with a two bedroom residence, one bedroom guesthouse, generating shed, storage shed and boat shed. Having regard to those improvements, the analysed unimproved value of the land was $152,050. The applied unimproved value was $90,000. Apparently the previous valuation of the sale land was $30,000. The applied value of the land as at 1 January 1995 was three times (or a 200% increase on) the previous value.
Witt Island is well located in the Gladstone Harbour in close proximity to the city of Gladstone with excellent views. A reasonable landing site exists at the western end and the Island has no reasonable beaches. Mr Hewitt described the sale land as superior in proximity to the city and access and slightly superior in area to the subject land. Overall he described the sale land as superior to the subject land.
Mr Hewitt noted that the sale occurred not long after the relevant date of valuation. Although he was not aware of it at that time of valuation, he said that the sale provides good evidence that the new levels of value are very conservative.
Mr Hewitt noted that there are not many properties in the sub-market for island sites in, and large residential sites by, the harbour. Because there are relatively few sales and those sales are some period apart there are substantial increases in valuations of comparable properties in those years when firm sales evidence is available. He stated that between 1986 and 1995 the valuation of such properties had increased to 375% of the 1986 valuations. Between 1986 and 1989 the increase was 25% and between 1989 and 1995 the increase was 200%. By comparison, values in Gladstone increased by 400% in the same period.
The appellants recognised that the sale of islands seemed to have been determinative in valuing the subject land. They argued, however, that an island is particularly desirable to a single owner and is quite different from a smaller portion of land on a larger island. The owner of an island, for example, has privacy which the owner of a block such as the subject land does not enjoy. They also argued that the island sales were geographically apart from the subject land, indeed were almost over the horizon.
Sale 3: A block of land in the town of Northcliffe, on the northern extremity of Facing Island and with an area of 1,012m², was sold in April 1995 for $30,000. Its analysed unimproved value was $29,750 but the applied unimproved value was only $13,000. The land is located in the town, which is a very small island community located on the north-eastern tip of
Facing Island with good views and reasonable beaches but no services.
Mr Hewitt described the sale land as inferior to the subject in area and aesthetic. Although it is comparable in proximity to the city, the subject land is more difficult to access. Overall the sale land is inferior to the subject land.
By contrast with Sales 1 and 2 land, there was no increase in the valuation of the Sale 3 land as at 1 January 1995. It is township land and, as such, is not in the same sub-market as the other two sale blocks. For that reason, little weight can be given to it for the purpose of determining this appeal.
The sale occurred about 4 months after the relevant date of valuation. Again, Mr Hewitt said that he was not aware of the sale when the valuation of the subject land was made. In his opinion, however, it provides good evidence that the new level of values are very conservative.
The appellants noted that Sales 2 and 3 were after date sales, and questioned their relevance to the valuation of the subject land as at 1 January 1996.
For annual valuation purposes, the best sales evidence concerns sales of comparable blocks of unimproved land which occurred within a year before the date of valuation. Some support for the use of subsequent sales can be drawn from the following passage from Williams J in McCathie v Federal Commissioner of Taxation:
"Values must be calculated in the light of circumstances which existed on the material date, ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale supervening events occur which alter the condition previously existing, the subsequent sales would not be comparable and would be useless." ((1944) 69 CLR 1, at p. 16).
In GA Nichol v the Valuer-General (1961) 28 QCLLR 161 the Land Appeal Court rejected a submission that sales after the effective date of valuation should be ignored. Having quoted the dicta of Williams J in McCathie, the Court noted that his Honour had stated the rationale for the approach as being the tendency of courts "to admit evidence of any events prior to the date of the trial which will throw any real light on the issues" (69 CLR at p.16 and authorities cited there). In the opinion of the Land Appeal Court, "there appears to be no sound
reason why a Court or any of the parties should be denied the assistance of sales of comparable land occurring after the effective date, provided market conditions or other relevant conditions have not materially altered" (at p.292).
The statement by Williams J has been applied by other courts. The law is that, if evidence of subsequent events is available which shows that the possibility of an event occurring has become a reality, it is proper for the Court to have regard to the actual events when assessing the position as it was at the relevant date (Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, at p. 18 per Bowen CJ, see also Deane J at p. 19). The limitation on the principle stated by Williams J is that subsequent events can only be used to determine the weight to attach to circumstances which existed at the relevant date. The subsequent event cannot create an expectation which was not in existence at the relevant date (Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, at p. 25 per Fisher J; John Martin (Elizabeth) Limited v Commissioner of Land Tax (1965) SASR 217, at p. 225).
In the present case this Court can only have regard to significantly later sales evidence to confirm the circumstances which applied at the relevant valuation date. In some annual valuation cases, the date of sale may be so far after the relevant date of valuation, and so close to the next date of valuation, that evidence about the sale should be disregarded or given very little weight. In Eastwell Pty Ltd v The Valuer-General (1987) 11 QLCR 169, the appellant submitted that only one sale presented by the Valuer-General in that case could be used as a basis for valuation because the other sale was an after date sale. The Court considered that the sale in issue had occurred "a mere 26 days after the relevant date" and there was no suggestion that there was any change in the market place in "that short space of time". It held that the valuer quite properly had had regard to the later sale (see (1987) 11 QLCR at pp. 173, 176-177).
In light of the authorities just mentioned, and the reasonable proximity of the date of sale and the relevant valuation date, there is no reason to ignore the evidence about Sale 2. Sale 3 need not be excluded on the basis of the date of sale, but must be given significantly less weight for other reasons noted earlier.
The respondent relied primarily on Sales 1 and 2. At the hearing, Mr Hewitt also referred to 16 sales of large vacant homesites in Gladstone in the period from 1 January 1994 to 1 January 1995. The prices of 7 blocks 1-3 hectares in size ranged from $72,000 to $130,000. Other blocks in Evandale Park, south-west of the city, were superior to the subject in terms of the
available services but did not have the unique features of the subject land. Those blocks are in a different sub-market and can provide little guidance to the value of the subject land.
The sales evidence is essentially confined to sales 1 and 2. Neither property is comparable in every relevant respect to the subject land. If one accepts, as I do, that the subject land falls within a different sub-market than say nearby homesites in the town of Gatcombe or in Gladstone, then one is compelled to look at such sales evidence as is available. I am satisfied that Mr Hewitt attempted to make due allowance for such factors as the relative size and amenity of the sale blocks as compared with the smaller subject block which does not comprise a complete island. Having regard to the respondent’s evidence, and in the absence of sales evidence from the appellants, I cannot find that the valuation of the subject land is not supported by sales evidence. Consequently, this ground of appeal must fail.
Relativity
The appellants listed the values determined in the 1995 valuation and the previous valuation of the subject land and 12 nearby properties. They noted that, although there had been no increase in the valuation applied to any of the other 12 properties, the value applied to the subject land had increased 200%. Although the appellants are prepared to have the valuation of their land tied in with the valuation of blocks in the Parish of Gatcombe, they argued that the valuation of the subject land is out of relativity with other properties.
The principles concerning relativity were summarised earlier in these reasons for decision.
The issue here is whether the other properties are truly comparable to the subject land. Each of those other blocks is in the town of Gatcombe. Although they vary in size, each can be described as a normal house block and significantly smaller than the subject. Some have higher elevation than others. Good views, similar to those from the subject land, are obtained from some of them. The blocks are surrounded by State Forest.
The town boundary is some 300 metres away from the western boundary of the subject land. Although the appellants can see neighbours from their land, it is clear enough that the town blocks have a different character from the subject land. The subject land is significantly larger than the town blocks. It adjoins Crown land and so has no neighbouring residential blocks. It has esplanade access. It falls within a different sub-market of larger residential sites.
It seems from Mr Hewitt's evidence that, although there may have been an increase in the
value of town blocks between successive valuation dates, there was no direct sales evidence for the value of such blocks other than Sale 3. Without firmer sales evidence of comparable blocks, he was not willing to speculate about the extent of any increase in their value as at 1 January 1995. It may be inferred that, although the values applied to town blocks remained the same, those valuations may not have reflected the true position. It is of course not necessary or appropriate to speculate about that. Having accepted that the subject land is within a different sub-market from those blocks, what is relevant is the relativity of value between the subject land and other blocks of that type.
Reference was also made to a 4 hectares block on a headland north-east of the subject land. There is gazetted access to the land (as compared with the esplanade access, but no vehicular access, available to the subject land). It is close to a beach. Because the subject land was the site of a light house, Mr Hewitt assumed that the best views would be obtained from the subject land. There was little evidence about how the other block was valued. Apparently it was revalued upwards by 200% at the same time as, and consistently with, the revaluation of the subject land.
The appellants have not shown that the valuation of the subject land is out of relativity with comparable blocks of land.
Disabilities
The appellants contended that the subject land suffers from certain disabilities (listed earlier) and that these disabilities had not been fully considered by the respondent when the valuation of the subject land was determined.
Two observations should be made about this ground of appeal. First, some of the disabilities are common to other blocks on the Island. Because they are not unique to the subject land, they are disabilities which would be relevant to the valuation of other comparable blocks.
Second, Mr Hewitt has visited the Island. Although he had not inspected the subject land, he demonstrated his knowledge of relevant features of the subject land.
The appellants have not shown that the disabilities were not fully considered in the respondent's valuation of the subject land.
Zoning
The appellants argued that the use of the land is restricted by its zoning. The land is zoned Rural Non-Urban (as were Sales 1-3).
Mr Davies argued that it is nonsense to describe the subject land as rural residential. In his opinion, it is recreational land. He does, however, hope to retire there.
The land has been used for residential purposes in the past. It may be so used in the future. The appellants have not satisfied me that, for present purposes, the land should be considered in any way other than Rural Non-Urban land.
1989 decision on objection
The appellants argued that the valuation of the subject land as at 1 January 1995 was inconsistent with the decision on a similar notice of objection in 1989 when the initial valuation was reduced.
On that occasion, they objected to an increase in valuation from $10,000 to $20,000. They argued successfully that the valuation should be $12,500 and felt that “the result was fair as it was relative to nearby properties”.
There was no evidence about what factors were taken into account by the Valuer-General in making the 1989 decision. Whatever those factors were, it is not possible to say whether they applied in 1995. The appeal must be determined by reference to circumstances, in particular the state of the market for large island or harbour waterfront blocks, as at 1 January 1995.
The ground of appeal must fail.
Consideration of 1995 objection
Finally, the appellants argued that no evidence had been given to them that real consideration was given to their objection to the valuation of the subject land. They said that they had difficulty getting hard data about the respondent's decision on the valuation. It was apparent that they consider themselves to have been aggrieved by the decision appealed against and the difficulty in obtaining information about the decision making process.
The appellants described telephone dealings with the Department as “courteous but defensive”. Despite repeated requests no written information was provided to them. They formed the impression that there had been many other objections to valuations, that the subject land had not been given adequate consideration and that there was no willingness or mechanism for resolving the issue other than by coming to the Land Court. By comparison with the 1989 experience, they were far less satisfied with the procedure followed and the response to their objection.
On the evidence provided in these proceedings, it is not possible to make a finding of fact
about the appellants’ concerns. Such a finding, however, would not resolve the issue in these proceedings. The review here is not of the administrative procedures adopted by the respondent or officers of the Department but of the substantive decision. This ground of appeal must fail. Even if it had been established, the result would not have been affected.
Conclusion
Although the sales evidence may not have been ideal, in the sense that it doesn't involve properties that are comparable to the subject in every respect, it provided a sufficient basis for the respondent's valuation.
The appellants have not shown that, in making the valuation, the respondent acted upon a wrong principle or made a serious error of fact, nor that the valuation was made by a method fundamentally erroneous.
Order
The appeal is dismissed and the determination of the Chief Executive is affirmed.
GJ NEATE MEMBER
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