Dwyer & Fisher v Chief Executive, Department of Natural Resources and Mines
[2002] QLC 38
•21 May 2002
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BRISBANE
21 MAY 2002
Re: Appeal against an Annual Valuation
Valuation of Land Act 1944
City of Gladstone
AV2001/0277
Geoffrey P Dwyer and Carol J Fisher
v.
Chief Executive, Department of Natural Resources and Mines
(Hearing at Gladstone)
D E C I S I O N
This is an appeal by landowners in the City of Gladstone against the unimproved value applied to their property by the Chief Executive, Department of Natural Resources and Mines (the respondent), under the provisions of the Valuation of Land Act 1944.
Background
Mr GP Dwyer and Ms CJ Fisher are the owners of land described as Lot 204 on Plan CL4059, Parish of Toolooa, County of Clinton, containing an area of 32.37 ha. As at 1 October 2000, the respondent applied an unimproved value of $96,000 to that property. The owners objected against that valuation and succeeded in having it reduced to $85,000. However, the owners still considered the valuation to be excessive and appealed to the Land Court, advising that their estimate of the unimproved value was $65,000.
The owners' grounds of appeal were that they considered the valuation to be unfair and inequitable, because of the relativity with the valuations of neighbouring properties.
The Subject Land
The property, the valuation of which is subject to this appeal, is situated at 10 Cuppitt Road, approximately 11 km south of the Gladstone Post Office. According to the report of the respondent's expert witness, Registered Valuer Mr B Haks, Cuppitt Road is a formed earth and gravel single-lane road, which connects to Meyers Road about 100 metres from the subject land; Meyers Road is a bitumen strip, with gravel shoulders and no kerbing and channelling. According to Mr Haks, the access to the subject land is easy, safe and direct and considered to be all weather.
Meyers Road connects to the Gladstone-Benaraby Road, approximately 350 metres to the east of the subject land. The Gladstone-Benaraby Road is a major distributor road joining several outer suburbs of Gladstone, as well as connecting Gladstone to the town of Benaraby and the Bruce Highway. The road carries large volumes of both domestic and commercial traffic at all hours.
Mr Haks described the subject land as a large, regular shaped, rural residential block, mostly level to gently undulating, with areas of moderate to steeply sloping ridges along the northern, western and southern boundaries. It comprises moderately timbered forest country, with mainly ironbark, gums and wattle. The subject land is also bisected by several small natural gullies, which flow easterly after rain. There are several areas of wet ground along these gullies.
Mr Haks went on to say that the subject land basically forms a valley between two ridge lines and has good areas of level to gently sloping country up through the middle of the block, gently sloping up to the ridge along the western boundary. Improvements on the subject land have been constructed on this gently sloping area, about 350 metres from the eastern boundary. The property has good rural and water views along the elevated ridge lines, but these areas are very difficult to access. Another area in the south-eastern section of the property is well elevated, with water views and while it is easier to access, it would not be desirable to construct a dwelling in this area as it is very close to the residence on the neighbouring land.
The subject land is located approximately 500 metres west of the South Trees Inlet, which is saltwater and provides access to the harbour. There are large areas of mangroves along this Inlet, which constitutes a sand-fly problem at certain times of the year. During extreme king tides, there is some saltwater inundation up a small gully into the frontage of the subject land.
The subject land is zoned "Rural Non Urban" under the Town Planning Scheme for the City of Gladstone, which was gazetted on 15 June 1997. It is improved with a single-unit dwelling and associated sheds and is serviced by reticulated town water, overhead electricity and telephone services, while a daily mail delivery service and garbage collection services are also provided. However, there is a high voltage electricity easement crossing the subject land between the eastern boundary and the buildings.
The land has been valued as a large rural residential site.
The Respondent's Valuation
Mr Haks relied on five sales of basically unimproved land to support the respondent's valuation of $85,000. He explained that his Sales 1 to 4 are situated in a new estate, in reasonably close proximity to the west of the subject land, but because of the steepness of the topography there is no direct access from the subject land to that estate; access can be obtained only via Gladstone, travelling south on another road. Each of the sale lands is very irregular in shape, because this estate is a new concept as far as Gladstone is concerned. It seems that all watercourses and gullies have been surveyed out of each allotment and have become public open space. This has resulted in the peculiar shape of the allotments in the estate.
Mr Haks was of the view that the estate could be called "prestigious", as purchasers in the area had erected high quality dwellings. However, he went on to say that the owners are not particularly happy with the new concept. It appears that they have no control over who uses the public open space reserve and the Council's management of it, which seems to have resulted in intrusions on their privacy and security. Furthermore, the estate has no reticulated town water, but it otherwise enjoys similar services to the subject land, except that access is inferior.
Sale 1 is situated in Haddock Drive and contains an area of 8.615 ha. It is zoned "Rural Non Urban" and sold in October 1999 for $78,500. That sale was analysed to show an unimproved value of $76,000 and as at 1 October 2000, the respondent had applied an unimproved value of $72,000 to that property. Its access is by means of a 250-metre earth track over an easement from the formed earth and gravel Haddock Drive, which connects to the bitumen sealed Glenlyon Road.
Sales 2 and 3 are situated on Glenlyon Road, but on the formed earth and gravel section of the road, with approximately 1 km to the bitumen sealed road. Both are zoned "Rural Non Urban" and Sale 2 sold in November 1999 for $94,000, which analysed to show an unimproved value of $90,000. As at 1 October 2000, the respondent had applied an unimproved value of $78,000 to that property. Sale 3 sold in July 1999 for $85,000, which was analysed to show an unimproved value of $80,000 and as at 1 October 2000 the respondent had applied an unimproved value of
$74,000 to that property.
Sale 4 is situated on Mt Rollo Road, contains an area of 14.84 ha, is zoned "Rural Non Urban" and sold in February 1999 for $80,000. That sale was analysed to show an unimproved value of $76,000 and as at 1 October 2000, the respondent had applied an unimproved value of $74,000 to that property. Mt Rollo Road is a formed earth and gravel road with approximately 2 km to the bitumen road.
Mr Haks described each of the Sales 1 to 4 as well elevated moderately sloping sites, with good building sites and rural (Sale 1) or water and rural views (Sales 2 to 4). In each case the sales had slightly inferior or similar building contour to the subject land but were inferior in shape, size and access. In addition, they lacked reticulated town water and overall he considered each of the sales to be inferior to the subject land.
In addition, Mr Haks relied on a further sale (Sale 5) situated in Kirkwood Road, Toolooa, containing an area of 1.397 ha. That property is also zoned "Rural Non Urban" and sold in February 2000 for $46,700. That sale analysed to show an unimproved value of $44,700 and as at 1 October 2000 the respondent had applied an unimproved value of $42,000 to that property. According to Mr Haks, Sale 5 comprises an elevated, gently to moderately sloping corner site, having an irregular shape and fair building contour. Its access is by means of a formed earth and gravel track, within 200 metres of a bitumen sealed road. It has similar services to the subject land, including reticulated town water. It is located approximately 2 km north of the subject land.
Mr Haks considered the sale to be inferior to the subject land; it had inferior building contour, size and shape and while it had similar services, it was in a slightly superior location, but had inferior views and aspect.
The Case for the Appellants
Ms CJ Fisher appeared and gave evidence on behalf of the appellants. Ms Fisher explained that the owners had purchased the property in 1990 for $40,000, at which time the land was totally unimproved. They purchased it because it was close to where they worked and they hoped to be able to use the land for some rural purpose in the future. The property is surrounded by mountains on three sides and the house is built in a valley. She concedes that it is in a nice spot, but there are better views from the higher areas of the property. However, because of the steepness of the hills and rocky nature of the land and the black volcanic soil it is difficult to access the areas with better views. She agreed with Mr Haks that while there was one site on the property with good views, it was directly behind the house on the neighbouring property, which would defeat the purpose of having a large rural residential site.
They built the house on the most accessible spot, about 350 metres from the road. Their access road runs under the high voltage electricity cables on the electricity easement. Ms Fisher concedes that there is good access to the subject land. The property is within 200 metres of the bitumen road.
Ms Fisher was in general agreement with the report submitted by Mr Haks. However, she did not agree with the comparability of the sales that had been used to value the property, as they were in a totally different environment to the subject land. However, while she had not inspected any of the sale properties, she thought that they would not experience the severe sand-fly and mosquito problems experienced by the subject land. In addition, she thought that they would all have water views and, while the subject land did have water views, they also had views of the Boyne Smelters, Queensland Alumina and other large industrial complexes with smoke pouring out of the stacks; while it was possible to see saltwater and mangroves on South Trees Inlet, she considered that the unattractive views of the industrial area balanced this out.
Ms Fisher was of the opinion that a much better comparison for the valuation of the subject land was the sale of a property situated just to the south of the subject land. That property, described as Lot 10 on RP 861649, containing an area of 33.763 ha, had been valued by the respondent as at 1 October 2000 at $94,000. That property sold in April 2000 for $125,000. Ms Fisher asserted that the property was improved by a highset dwelling, had been fenced and cleared and a small orchard established. In her view, the improvements on the land would be worth much more than $31,000, which would indicate that the unimproved value of that land should be much less than $94,000. By inference, if that land was to be valued at less, then the subject land should be valued at only $65,000.
Ms Fisher went on to explain that the property had previously been owned by Mr and Mrs Woods. When Mr Woods died, Mrs Woods moved away and had put the property on the market. It had, she thought, been on the market for approximately two years with an asking price of $150,000. However, Mrs Woods eventually accepted $125,000 for the property. Mr Dwyer and Ms Fisher had estimated that the value of improvements on that land would be about $60,000, but while Mr Dwyer had been on the property, Ms Fisher had only seen it from the road.
Before considering the respective arguments in this matter, I turn to briefly examine the legislation under which the valuation was made.
The Relevant Legislation
The responsibilities of the respondent are set out in the various provisions of the Valuation of Land Act 1944. The respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. For the purposes of the Act, the valuation of each parcel of land is to be the "unimproved value" of that land, which is defined to mean 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, assuming that improvements on that land did not exist: s.3(1). However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time at which the value is required to be ascertained: s.3(2).
The "value of improvements" means the added value which the improvements give to the land, irrespective of the cost of the improvements. However, the added value shall in no case exceed the amount that should reasonably be involved in effecting improvements of a nature and efficiency equivalent to the existing improvements: s.5. The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that the improvements on the land had not been made, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power and other services, and assuming also that the adjoining land and the environs are in their existing condition.
The test of "market value" was laid down by the High Court in Spencer v. The Commonwealth (1907) 5 CLR 418. The High Court found that the market value of land at a particular date is the amount that would have been paid for that land if it had been sold by a willing but not over-anxious seller to a willing but not over-anxious purchaser, both of whom are fully acquainted with the land and aware of all the circumstances which might affect its value, either advantageously or negatively.
It is well-settled law that sales of vacant or unimproved land provide the best basis for the assessment of unimproved value: see Grahn v. The Valuer-General (1992) 14 QLCR 327.
Conclusion
Mr Haks originally valued the subject land by increasing the unimproved value by 20% from the $80,000 which had been applied at the date of the previous valuation, 1 October 1999. However, following an objection by Mr Dwyer and Ms Fisher, he had further considered the disabilities suffered by the subject land and reduced the valuation to $85,000, which constitutes an increase of only 6% over the previous valuation.
Mr Haks relied on the sales in the new estate because they were rural residential properties and had several features which were similar to those of the subject land. He readily conceded that most of them had better water views and that the whole estate had been developed with high quality dwellings. However, they had no reticulated town water and, in many cases, had inferior access to the subject land. He went on to say that the purchasers in that estate were not happy with the concept of having public open space surrounding their allotments. They had no control over persons using that public open space. Furthermore, they were dissatisfied with the management by the Council of emergency services in the area. In his view, although the sales enjoyed certain advantages over the subject land, they were considerably smaller and he considered each of them to be inferior to the subject property, which at least enjoyed the advantages of isolation and size.
His other sale (Sale 5) was included to show what a small area located in the vicinity of the subject land, with similar services and access, would sell for.
Unfortunately, Ms Fisher has not inspected any of the sales. She preferred to rely on the comparison of the recent sale of Lot 10, situated just to the south of the subject land. She and Mr Dwyer had estimated that the value of improvements on that sale property would amount to at least $60,000, which would leave an unimproved value of only $65,000 for that land, compared with the $94,000 applied by the respondent. On that basis, she considered that the value of the subject property would also be $65,000.
It is unfortunate that neither Ms Fisher nor Mr Haks has inspected that sale and analysed the value of improvements. While it may sound reasonable that the value of improvements would exceed $31,000, an aerial photograph tendered by the respondent showed that only a very small area of the sale property had been cleared, while a mountainous area seems to divide the front land from the back of that property. Mr Haks had driven past the sale and had noticed that there was a highset dwelling on the land which had not been enclosed underneath.
Without a detailed analysis of the sale it is not possible for me to make any judgment as to whether the value of improvements exceeded the sale price. Ms Fisher said that she had heard (probably from Mr Dwyer) that the house needed some repairs. It is therefore not inconceivable that the depreciated value of improvements at the date of sale would not be great.
There is one further aspect concerning this sale which gives me some concern. Ms Fisher said that the land was originally for sale for $150,000, following the death of Mr Woods. Although Mrs Woods had rented the property out for some time, it had been on the market for about two years with an asking price of $150,000. Eventually Mrs Woods accepted $125,000. While there is no evidence on this matter, it may well be that Mrs Woods was an over-anxious vendor in being prepared to accept less than the asking price. If that was so, then the sale does not fulfil the requirements of the test of market value set out by the High Court in the Spencer case. It could not be said to be a transaction between a willing but not over-anxious vendor and a willing but not over-anxious purchaser.
However, be this as it may, I cannot accept the evidence of the sale of Lot 10. There is simply too much conjecture about the transaction. There was no evidence from Ms Fisher concerning any other sales.
The sales used by Mr Haks can hardly be called directly comparable. However, he explained why he adopted those sales and in the absence of any evidence to rebut his reasoning, I accept that his reasoning is sound. In my view, the relationship of the values applied to the sale properties and the subject land seems reasonable. Therefore, the appeal must be dismissed.
Order
The appeal is dismissed and the unimproved value of the subject land as at 1 October 2000 is affirmed at Eighty-five Thousand Dollars ($85,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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