Devin v Chief Executive, Department of Natural Resources

[1999] QLC 92

[1999] QLC 92

 

LAND COURT

BRISBANE

3 SEPTEMBER 1999

Re:     AV97-481

An appeal against an unimproved valuation -

Valuation of Land Act 1944 -

Local Government:  Townsville

Neville J and Diane J Devin

v.

Chief Executive, Department of Natural Resources

(Hearing at Townsville)

D E C I S I O N

The Chief Executive placed a valuation of $90,000 on land owned by the appellants as at a relevant date for valuation of 1 October 1996.  A value $100,000 had initially been placed on the land, however, following objection that figure had been reduced to the figure now appealed against.  The appellants included a figure of $70,000 as their estimate of the unimproved value of the land in the Notice of Appeal to this Court, however, led evidence to a figure of $75,000 before me. 
           Neville John Devin, a qualified engineer and economist and the holder of a MBA degree, appeared on behalf of himself and the co-owner and gave evidence in support of the appeal.  Robert Arthur Noakes, a registered valuer of many years' experience including experience in the Townsville area, provided valuation evidence in support of the Chief Executive's figure.
           The grounds of appeal were as follows:

"Revised valuation at $90 000 does not maintain relativity to market prices or valuations in the local area and it does not reflect block detractions eg service pits on front of block, block size and army flight path, orientation of block."

I should point out immediately that there was no mention in the evidence of the "army flight path" possibly because any disability associated with that fact would have impacted equally upon the comparable properties referred to by the parties. 

The land, the subject of this appeal, is situated at 3 Pajingo Court, Annandale, which is described in Mr Noakes' valuation as a "prestigious river-front suburb" about 8 km westerly of the Townsville City Centre. The land has an area of 798 m² and is used for residential purposes.  The subject land is situated towards the end of a cul-de-sac, which is bitumen sealed and has concrete kerbing and channelling.  All services within the City of Townsville are available on the subject land and are supplied as underground services.  The subject land is regular in shape and occupies an inside position, one block removed from a reserve which fronts the Ross River.  The cul-de-sac is constructed as a dead end and the street fans out as it reaches the river end, probably to afford easier vehicle turning.  This street end arrangement might be contrasted with a cul-de-sac design which has blocks of land arranged around it in such a way that each block accesses the end of the cul-de-sac.  The subject land is situated at street level and is generally level in topography.  Mr Noakes said that the land's frontage had a north-easterly aspect with "restricted views of the river" across the fan shape of the Court that I have described above.  Mr Devin took issue with two aspects of this description:  the suggested north-easterly aspect and the suggested restricted views of the river. 
           Mr Devin said that the subject land has an easterly aspect rather than the north-easterly aspect suggested by Mr Noakes.  Mr Noakes was of the view that the aspect was more north-easterly than easterly, but said that the difference in view between himself and Mr Devin on that point was not a matter of major significance in his valuation.   Mr Devin said that he had rotated the house on the subject land somewhat in order to provide for a blank western wall and the fact that he was able to do this reveals to me that the aspect of the land is such that the western sun is able to be readily managed.  In passing I note that in reference to Lot 5 Pajingo Court across the road from the subject land and lying in a similar direction, Mr Devin expressed the view that the rear of that parcel had a north-easterly aspect.  In short, it seems to me that there is nothing much between the parties on the question of fact, that it is not a matter of significance in carrying out the valuation and that such difference as there is need not, therefore, be resolved by me. 
           Mr Devin's comment on the claimed "restricted views of the river" mentioned in Mr Noakes' valuation report is less concerned with the fact that restricted views might have been available at the relevant date, but is more concerned with the prospect that those views may be inhibited in the future.  He said that if the neighbour on the adjoining land which fronts the river was minded to plant trees along the boundary fronting Pajingo Court, views from the subject land would be affected.  He said that garden beds had been constructed on the river-frontage land on the opposite side of the Court and that this supported the proposition that trees might be planted on the frontage of the land adjoining the subject land.  I note that the location of the garden beds referred to by Mr Devin could, if populated with dense foliage, afford some protection from the western sun to the benefit of that particular property.  In the case of the adjoining land, however, no utilitarian advantage was identified in the evidence which would have invited the planting of trees along the road frontage of the block.  This is not to say that the planting of trees might not take place, however, it is best viewed as a risk rather than a probability.  It was Mr Noakes' view that even that risk could be managed by the construction of a two-storey house on the subject land.  On all of the evidence, I find that the description by Mr Noakes of the views from the subject land towards the river being "restricted" is an appropriate description.
           Mr Devin said that there were two Telstra pits, two power boxes, one fire water tapping point and one mains water valve access pit on the footpath outside the subject land or located at a point on the footpath aligned with the side boundaries of the land.  He said that there were no other lots in Annandale with this number of services outside the land and that the developers, when attempting to sell him the property, noted these services as something that may be of concern to a purchaser.  Mr Noakes said that the number of services was not greatly dissimilar from other blocks in the subdivision and that there was no evidence of such services influencing the value of land.  He contrasted that with a circumstance where, for example, a large electricity transformer might be located near the frontage of a parcel of land and which would have a deleterious effect on value.  I doubt that it would be possible to analyse the market evidence in such a refined way that the influence on value of such service points might be able to be discerned.  I think that, nevertheless, the presence of such services would be seen by the prudent purchaser to be a minor disability which would be taken into account in determining a purchase price.
           Mr Devin's comparable valuation evidence consisted of the purchase by the appellants of the subject land by contract on 22 February 1996 and in the sale of Lot 5 across the road from the subject land.  I will first discuss the subject sale.
           The land had been listed for sale by the developer at $75,500, however, the appellants were successful in negotiating a purchase price of $75,000.  Mr Devin said that other sales in Pajingo Court had already taken place and that the subject land was the last block available apart from the two expensive river-front blocks at the end of the Court.  He said that he did not have any particular position of strength in negotiating the purchase and that the purchase price therefore reflected the value of the land.  He noted that 8 Pajingo Court had sold for $76,000 and at 847 m² was larger than the subject land.  Number 9 Pajingo Court at 898 m² was also larger than the subject land and sold for $72,000.  These sales comprise Sales 6 and 7, respectively, in a schedule of sales provided by Mr Noakes.  Mr Devin said that the larger areas of these sales would have made these sale lots more attractive than the subject land and that, in particular, the comparison between 8 Pajingo Court and the subject indicated that people in the marketplace treated the subject land as being a comparatively inferior property.  Had they thought it to be superior at its price it would have sold first, in his view.

Mr Noakes said that he was mystified as to the estate pricing policy at Annandale and he referred to 8 Pajingo Court as being an indication that pricing by the developer seemed to be largely based on block size rather than block features.  That property is a regular inside allotment at street level with a westerly aspect and no view, though is marginally larger than the subject land yet sold at a price $1,000 higher than Mr Devin was able to achieve.  Mr Noakes said that the subject sale did not represent the market and that the price in his view represented "an exceptional price".  Mr Noakes said that the developer of the estate had changed hands by way of a company transfer and that the original developer had the advantage, for a period, of being able to dispose of developed lots at any achievable price.  He was not, however, aware of the details of the company transfer, its conditions nor when the arrangement took place, so I am not confident in concluding that any irrational variation in sale prices resulted from that particular situation.  In any event, it was Mr Devin's view that if it were the case that the subject land was for sale at "an exceptional price", it is notable that it did not sell earlier than other lots in the street. 
           Mr Devin referred to the sale of Lot 5 Pajingo Court, a lot that sold two months before the subject property at $74,000.  He said in unchallenged evidence that the buyers rejected the subject land primarily because of its smaller size, yet higher price.  He calculated that the subject land is about 9% smaller in area than the Lot 5 property.  Mr Noakes said that he thought that the Lot 5 sale did not represent the market and that for that reason reliance ought not to be placed on it for valuation purposes.  Mr Devin, however, introduced the Lot 5 property also for the purpose of indicating that the relativity between that land at a valuation of $80,000 and the $90,000 placed on the subject land was wrong.  His main point of comparison between the two properties was one of size and on that basis he said that the Lot 5 land was superior. 

Mr Noakes said that the size differential between the two properties was not significant, but that the real point of significance in a comparison between the subject land and Lot 5 was related to the subject's superior views.  Mr Devin conceded that the subject land did have some superiority in this regard, but not sufficient, in his view,  to make a difference in the valuation of $10,000, particularly given the larger size of the Lot 5 land.  Mr Noakes also said that Lot 5 had exposure to the west on its frontage and that this was a matter that also needed to be taken into account.  He was unconcerned about the suggestion from Mr Devin that a swimming pool could be more suitably located on the Lot 5 land than on the subject land because of the north-easterly aspect available to the rear of Lot 5.  In Mr Noakes' view the orientation of a swimming pool is not a matter of significance in the process of valuation.
           Mr Noakes' appreciation of the market in the area of the subject property is that river-front sales produce the highest value, and higher prices than average are also paid for those properties fronting reserves, though the level of price in that case cannot be said to compete with river-front allotments.  He said that the lowest prices are found along University Drive.  He provided details on 16 sales which generally supported these comments on the market:  an analysis not directly challenged by Mr Devin.  Mr Noakes said that the question of valuing the subject land is concerned with the issue of the gradation of value from the river-front lots to the more standard lots without river influence at all, which show values in the range of $50,000 to $60,000.
           Mr Noakes included two river-front sales showing prices of $165,000 (Sale 5) and $180,000 (Sale 13) respectively.  It was suggested that in relation to these sales the level of value struck by the Chief Executive in the case of the subject land was appropriate.  Sale 5 shares a corner with the subject property and was expressly said to support the Chief Executive's valuation.  I see, however, comparisons between these higher priced river-frontage blocks as requiring too much judgment in the process of comparison and consider that such sales ought not to be relied upon in circumstances where more comparable evidence is available.
           Mr Noakes said that his Sales 1 to 4, inclusive, located at Glencoe Court provided his main evidence in support of the subject land's valuation.  These properties were each inside allotments in a  cul-de-sac and with outlook down the street, but without any aspect over the river.  The sales ranged from $80,000 to $86,000 and all comprised original sales from the developer of the estate.  He said that these sales showed the gradation in values from the river-front lands towards the standard blocks which had no river influence.  I have some difficulty in endorsing the proposition implicit in Mr Noakes' reasoning and that is that sales from the developer might be selectively relied upon.  It seems to me that Mr Noakes' approach runs the risk of being criticised as one where he sought sales evidence to support a theory of gradation of values.
           Before considering the other sales included by Mr Noakes in his valuation report, I should mention that Mr Noakes produced evidence showing an increase in the market value for residential land in the area surrounding the subject land during the years 1993/94 to 1996.  Many of those increases in sale price for individual lots reveal that the initial sale from the developer was at a certain level and that later non-developer sales showed an upward trend.  One particular property at 10 Taldora Court, Annandale, sold from the developer in December 1993 for $68,500, then on-sold in February 1996 for $75,000, in March of that year for $79,000, then again in August for $100,000.  The evidence supports the proposition put by Mr Noakes that there is both an upward trend in the market and that sales subsequent to original developer sales are generally at a higher level than the original sale price.  Mr Noakes also produced evidence in the form of a graph produced by a firm of valuers in Townsville which supported his thesis concerning the trend of the market. 

His Sales 10, 11, 12 and 14 are located adjacent to park land and as such would have attracted a premium in the marketplace for that feature, according to Mr Noakes' evidence.  Sale 16 was included in his valuation report, but was not discussed in evidence.  This brings me to the remaining sales,  numbered 8, 9 and 15. 

Sale 8 at 2 Hoya Court, Annandale, sold in February 1995 for $85,000.  Hoya Court is near the Sale 13 property referred to earlier in these reasons and which Mr Devin said was located above the weir in the river in a fresh-water zone where bird life and water lillies are found.  According to him, that area is more attractive than that part of the river running near the subject land.  Sale 8 is a regular inside allotment at street level with a westerly aspect and no view and, in those respects, would be inferior to the subject property, however, I note that it is an early sale and that given the movement in the market, that factor would need to be taken into account.
           Sale 9 at 10 Nowranie Court, Annandale, sold in October 1996 for $77,500.  That property is an inside allotment at street level, generally level, with a north-easterly aspect and no view.  Clearly, the subject property is superior to that sale land.
           A sale of particular interest was numbered 15 on Mr Noakes' list.  That transaction involved the sale of land at Mango Avenue, Mundingburra, in November 1996 for $93,751.  That property has an area of 1,062 m², is a regular level inside allotment at street level, with a south-easterly aspect providing restricted views of Ross River over park land.  Mr Devin thought the Sale 15 property to have slightly superior views to the subject land and drew attention to its larger size.  I note the evidence that the sale property has a two-storey house on it providing greater insurance against the loss of views.  I think that the larger size of the sale land needs to be taken into account, but that the evidence from Mr Noakes does not support Mr Devin's opinion that views from the Sale 15 property are superior to those available from the subject land.  The extra land area must attract some added value, however, that value would not be calculated on a pro-rata basis, nor would it be usual for a substantial premium to be paid for a larger area.  Indeed, if I consider the sales included in Mr Noakes' valuation, including those that he included to demonstrate the market trend, it is clear to me that the size of land is not a feature which dominates the differential in pricing of land in the area.  Nevertheless, when I consider the larger size of Sale 15, its similarity in quality of views to those available from the subject land and the appropriateness of the sale date of that transaction, it seems to me that the valuation of the subject land at $90,000 is marginally high.  That value needs, however, to be higher than Sale 8 at Hoya Court which, though larger at 1,150 m², has no view. 
           All of this evidence points to a value adjustment and I think that a figure of $88,000 for the subject land more accurately reflects the value indicated by the sales evidence, apart from the subject sale.
           It will usually be the case that the sale of the property to be valued is the best evidence of value.  (Inez Investments Pty Ltd v. Dodd (1979) 26 The Valuer 501).  That proposition is, however, subject to a consideration of the level of sale price in the context of the market as a whole, and once I direct my mind to the sales evidence provided by Mr Noakes and in particular Sales 8, 9 and 15, I am left with the view that the sale price paid by the appellants for the subject land is not sufficiently reliable to indicate the value that ought to apply for the purposes of the Valuation of Land Act  as at 1 October 1996.  That conclusion is supported indirectly by the inconsistent level of prices revealed by original sales from the developer.  I employ the same reasoning to reject any reliance on the sale of Lot 5 Pajingo Court. 
           I also prefer not to rely upon the relativity between the valuation placed by the
Chief Executive on Lot 5, Pajingo Court.  The issue of relying on the relativity of Chief Executive values versus sales evidence was considered by the Land Appeal Court in Grahn v. The Valuer-General (1992) 14 QLCR 327 and at 328 the Court said:

"          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 (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p.46)."

In any event, I have formed the view that the figure of $88,000 which I have settled upon is not inconsistent with the valuation of $80,000 placed on Lot 5 by the Chief Executive.

In the result, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Eighty-eight Thousand Dollars ($88,000).

RP SCOTT
MEMBER OF THE LAND COURT