Drinkwater & Schultz v Chief Executive, Department of Lands
[1996] QLC 17
•23 February 1996
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BRISBANE
23 FEBRUARY 1996
In the matter of an appeal against a valuation
Valuation of Land Act 1944
Valuation Roll No: 2976
Local Government: Gladstone
AV95-313
Rex C Drinkwater and Darren Brett Schultz
v.Chief Executive, Department of Lands
(Hearing in Gladstone)
DECISION
This is an appeal against the annual valuation of Lot 48 on Plan G14148 in the Parish of Gladstone. The land, which is the subject of a Crown lease, is located at Herbertson Street, Gladstone. The land is valued annually to determine its unimproved value for rental and rating purposes. The respondent Chief Executive assessed the unimproved value of the subject land as at 1 January 1995 to be $32,500. Mr Drinkwater objected. The respondent disallowed the objection so Mr Drinkwater appealed to the Land Court, contenting for the value of $25,000.
Preliminary issue
Early in the hearing on 6 February 1996, in the opening of his evidence and in answer to a question from the Court, Mr Drinkwater stated that he was no longer the owner of the property but had sold it to Mr Darren Brett Schultz. Settlement of the sale took place on 18 December 1995.
The Valuation of Land Act 1944 (the "Act") provides for appeals against annual valuations of land by the respondent. Section 46 of the Act provides for the situation when there is a change of ownership of land before the objection and appeal process has been completed. Subsection (2), which is the only part of the section relevant to these proceedings, states:
"If an ... appeal ... was ... instituted by the former owner prior to the change in ownership then the new owner shall have the right to carry on in the new owner's name that ... appeal but the new owner shall not be entitled in that case to himself or herself ... institute a fresh ... appeal."
There was every indication that, at the time of the hearing, Mr Schultz was not aware of Mr Drinkwater's appeal. The respondent's representative on 6 February, Mr Coe, did not oppose the hearing of Mr Drinkwater's appeal. He submitted that, although section 46 conferred rights on the subsequent owner of the subject land, the section did not operate to deprive Mr Drinkwater of his rights to have his appeal heard and determined.
Mr Drinkwater said that he attempted to contact Mr Schultz during court adjournments on the morning of 6 February 1996. He was unsuccessful. With the consent of the parties the matter was adjourned to the following morning so that attempts could be made to contact Mr Schultz and alert him to the fact of the proceedings and to the contents of section 46.
At the resumption of the hearing on 7 February 1996, Mr Drinkwater informed the Court that he had spoken to Mr Schultz on the previous evening. Mr Drinkwater produced to the Court a written statement signed by Mr Schultz giving Mr Drinkwater "full authority to act on my behalf and interest" in relation to these proceedings. By consent of Mr Drinkwater and the respondent, through his representative Mr O'Connor, Mr Schultz's name was added as another appellant in these proceedings.
Statutory provisions
Section 45 of the Valuation of Land Act 1944 provides that:
(a)an owner of land who has objected against a valuation made by the chief executive may, if dissatisfied with the decision of the chief executive upon objection, appeal to the Land Court against the valuation;
(b)a notice of appeal shall state the grounds of appeal;
(c)the appeal shall be limited to those grounds of appeal;
(d)the burden of proving any and every such ground shall be upon the owner.
Section 33 of the Act provides:
"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."
As the High Court has observed, the Act creates a presumption that the value in money terms shown by the chief executive in his notice of valuation is correct. Once it is shown that:
(a)in making the valuation, the chief executive acted upon a wrong principle or made a serious error of fact; or
(b)the valuation was made by a method fundamentally erroneous,
the presumption created by the section is rebutted (Brisbane City Council v The Valuer-General) (1978) 140 CLR 41 at 56-7). Clearly, the task for an appellant is not an easy one and, in order to succeed, an appellant would usually have to provide relevant evidence to the Court.
Courts have often stated that the best basis for the assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land.
Grounds of appeal
The grounds of appeal were as follows:
"Increase since yr 1990 overall 255% compared with the increase in land rental last 2 yrs of 97% is outrageous. As we are constantly bombarded by media outlets, political adverts, not to mention, in recent weeks, electoral literature, that the inflation and CPI figures as released by government are in order of approx 3% their own official statements. Since 1/1/95 note big downturn throughout Qld property values, real estate business down 30% Real estate prices, land, land & dwell'g packages have fallen due to overall downturn in demand. Rentals have fallen. Unoccupancy rates are grow'g. Projections for next 12 months are more of the same. Value is far too high under current prevailing conditions."
In effect, the appeal is based on the grounds that:
(a) the increase in value of the subject land is too great when compared with inflation and CPI increases; and
(b)there has been a fall in real estate prices since the relevant date of valuation.
Put in the terms just summarised, the appeal must fail. First, if there is a change from year to year in the unimproved value of land that change is to be determined by reference to the state of the market for unimproved land during the relevant period. That market may vary in ways which bear no relationship to such things as the annual average rate of inflation or the consumer price index, each of which is calculated by reference to a wide range of matters other than sale of unimproved blocks of land.
Second, the land is to be valued as at 1 January 1995. That valuation must be made having regard to evidence of sales of comparable land in the year or so before that date, though some slightly later sales may be admissible in certain circumstances. If there has been a fall in real estate prices since the relevant date of valuation, then that fall should be reflected in the valuations as at 1 January 1996. It cannot influence retrospectively the valuation as at 1 January 1995.
Strictly speaking, it would be possible to dismiss the appeal at this point. Mr Drinkwater adduced no evidence of sales of comparable blocks of land in an unimproved or lightly improved state. The respondent's valuer, however, gave evidence of the way in which the valuation was determined and, in particular, referred to sales of land in the vicinity of the subject land. It is appropriate to review that evidence in light of statements made by Mr Drinkwater.
The valuation of the subject land was defended by a valuer employed by the Department of Lands, Mr RG Hewitt, who relied on sales of three blocks of vacant land to support the amount of the valuation. He stated that the Crown lease did not restrict the highest and best use of the land for residential purposes. Mr Drinkwater was not familiar with any of the sale blocks but was familiar with the areas in which they are located.
The subject land is a rectangular block with an area of 830 square metres. It faces Herbertson Street, a full width bitumen sealed carriageway with single opposing lanes and concrete kerbing and channelling. The land is an easy sloping inside lot at road level with limited views. It is zoned Residential A and is used for residential purposes. Town water, sewerage, electricity and telephone are connected.
Sale 1 is a 782 square metres block of Residential A zoned land at 25 Rigby Crescent, Gladstone. It was sold in March 1994 for $38,000. It is a moderate to steeply sloping inside lot falling away from the road with reasonable to good westerly views. Although the land is inferior to the subject land in its contours (making it more difficult to build on than the subject), the land has superior views and location. Accordingly, Mr Hewitt described the sale land as slightly superior to the subject. The unimproved value applied to the land was $34,000.
Mr Drinkwater suggested that the property was sold when the market was buoyant. In his opinion, however, the sale was reasonable and would not have been out of place in the market at that date.
Sale 2 is a 634 square metres block of Residential A zoned land in Patterson Street, Gladstone. It was sold in September 1994 for $41,500. It is an easy sloping inside lot with reasonable to good views. Although smaller than the subject land, the sale land has superior views and a slightly superior location. Overall, Mr Hewitt described the sale land as slightly superior to the subject. The unimproved value applied to the sale land was $33,000.
Mr Drinkwater noted that the sale property is in close proximity to a business area, school, airport and racecourse (although the shopping area may not be in easy walking distance, unlike the smaller shopping area about 150 metres from the subject land). He could understand a premium price being paid for the land, but considered that the price paid was rather high. The valuation of $33,000 (or 81% of the analysed unimproved value of the land) lends some support to that opinion.
Sale 3 is a 631 square metres block of Residential A land in Piper Street, Gladstone. It is an elevated, level to easy sloping lot with excellent views. At road level to the Piper Street cul de sac, it drops vertically to Smith Street. It was sold in December 1994 for $89,000. The land is superior to the subject block in most respects except area. Although Mr Hewitt assessed it as overall superior to the subject land, he considered the sale price to be high (particularly as a nearby lot has failed to sell for $50,000). The unimproved value applied to that land was $44,000, or 54% of the analysed unimproved value of the land.
The sales evidence is credible and no real attack was made on it. It supports the valuation of the subject land at $32,500. Consequently, having regard to the statutory presumption of correctness and the onus of proof, the appeal must be dismissed.
Finally, it is worth noting that Mr Drinkwater sought to place much reliance on the results of an auction of blocks of vacant land in October 1995, nine months after the relevant date of valuation. He stated that none of the blocks were sold at auction, two were sold after the auction at a reduced price and the other blocks remain for sale at prices which are negotiable. In Mr Drinkwater's submission, that situation provides evidence of a falling market and supports his attempts to gain a reduction in the valuation of the subject land to $25,000. Mr Hewitt acknowledged that Crown blocks had been available for auction and that the market had slowed in 1995. Any significance which may be drawn from those sales is relevant to the valuation of land as at 1 January 1996 but is not relevant to the valuation as at 1 January 1995.
For the reasons set out above, the appeal is dismissed and the valuation of the Chief Executive is affirmed.
GJ NEATE
MEMBER OF THE LAND COURT
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