Ferguson v Chief Executive, Department of Natural Resources and Mines
[2001] QLC 112
•12 October 2001
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BRISBANE
12 October 2001
Re: Appeal against annual valuation
Valuation of Land Act 1944
Property ID No: 9015496
Local Government: BCC-Belmont
(AV2000-0359)
Paul J and Rebecca L Ferguson
v.
Chief Executive, Department of Natural Resources and Mines
J U D G M E N T
Background:
This matter relates to land at 132 The Promenade, Camp Hill and described as Lot 138 on RP 90054, Parish of Bulimba. The subject land is located about 6 kilometres radially east of the Brisbane GPO, and has an area of 645m2. There is good access from The Promenade which is bitumen sealed with concrete kerbing and channelling. All normal utility services are available, and the subject land is zoned Residential A under the Town Plan of the Brisbane City Council (the Council) of 13 June 1987, effective at the date of valuation of 1 October 1999. The key issues are the nature of land, comparison of sales and relativity.
On 27 March 2000 the Chief Executive issued a valuation of the subject land at $109,000. Following an objection the Chief Executive confirmed that figure on 27 June 2000. The appellants have now appealed claiming the unimproved value should more properly be $90,000.
Paul Jason Ferguson appeared and gave evidence for the appellants. Ms R Trigge, Senior Legal Officer, appeared for the respondent, calling evidence from Ross Brian Cranstoun, the departmental registered valuer responsible for determining the valuation.The nature of the land -
It is agreed that the subject land is a regularly shaped elevated parcel, falling about 3 metres from west to east and about 1 metre from the road to the rear to the north. There is a sewer line traversing the parcel about 30 metres from the front boundary. Mr Ferguson, who has experience as an engineer in the building industry, argues that the existence of the sewer line is not an insurmountable obstruction to building operations. Mr Cranstoun also agrees that subject to appropriate bridging of the sewer main, building operations may extend across the sewer line. However Mr Cranstoun notes that any such bridging of the sewer pipe would add to the cost of building, and was likely to be a matter considered by an owner when valuing the land.
In seeking comparisons with other lands Mr Ferguson notes that the effective available building envelope of the subject land would be about 465 m2, after allowing for the appropriate building setback requirements of the Council. Both parties agree that there is no sewer manhole upon the land.
Mr Ferguson argues that the subject land is predominantly located among post-World War II homes, with some existing older Queenslanders, generally where lots have areas of about 607m2. It is agreed that there are good views and prevailing breezes generally from the east to the south-east. There is a local school bus service along Nurstead Street to the east of the subject land. The nearest public transport to the City is located in Stanley Road about 0.7 kilometres to the south.
Comparison of sales -
To support his estimate of the unimproved value of the subject land, Mr Ferguson relies upon the following sales:
Sale 1 – (66 The Promenade, Camp Hill - Lot 2 on SP 117768). This is a vacant battle axe rear parcel of area 646 m2 located about 0.4 kilometres south-west of the subject land.
The sale sold in January 2000 for $85,000, and is seen as overall comparable to the subject land.
Sale 2 – (19 Akala Street, Camp Hill - Lot 163 on RP 13179). This is a common sale with the respondent, and is seen as overall superior to the subject land. The sale has an area of 405 m2 and sold in May 1999 for $115,000.
Sale 3 – (132 The Promenade, Camp Hill - Lot 138 on RP 90054). This was the sale of the subject land as an improved parcel. The existing dwelling is a post-war building of about 110 m2, and was estimated to have a depreciated value of $55,000, plus additional site works of $4,000, and a deck and laundry estimated at $5,000.
The sale sold in April 1999 for $156,000, and was analysed at $92,000.
Mr Ferguson sees his Sale 1 (66 The Promenade) as located in a superior precinct among a combination of older Queenslander style homes and post-war homes. He draws similarity between the permissible building envelopes of Sale 1 (445 m2) compared to the subject land (465 m2). Mr Ferguson sees the existence of considerable mature trees upon Sale 1 as a measure of the additional privacy afforded that sale, and therefore an attractive feature in the market place of that parcel. He concedes that Sale 1 also has two sewer lines across that parcel, and he provides a contour map of the parcel (Exhibit 3).
Mr Ferguson relies upon the surface levels shown on the sewerage connections on Exhibit 3 to estimate the fall across Sale 1 of about 1.5 metres north to south, and 2 metres from east to west. The contour mapping of that parcel would generally support those estimates of the slope of Sale 1. However Mr Cranstoun sees the natural shape of the contours as suggesting that Sale 1 would tend to be located towards the natural fall of surface waters across the land. By comparison he notes that the location of the subject land is towards the watershed between two watercourses. Mr Ferguson rejects that 66 The Promenade is significantly impacted by the natural flow of waters. Mr Ferguson submits that the increase in the valuation from the previous year by 33 percent from $81,000 to the current $109,000 is not supported by the market place.
Mr Cranstoun concedes that battle axe lots may, in certain circumstances, have the benefit of additional privacy by being removed from a busy street. However in respect of 66 The Promenade, Mr Cranstoun sees that the relatively small size of that parcel would limit opportunities for major screening from neighbours. He notes that in effect 66 The Promenade has neighbours on four sides. Mr Ferguson concedes that 66 The Promenade lacks the easterly outlook of the subject land, and agrees that the heavily treed nature of that parcel would tend to restrict views from the parcel.
In support of his valuation Mr Cranstoun provides sales of vacant lands as follows:
Sale 1 – (19 Akala Street, Camp Hill - Lot 163 on RP 13179). This has an area of 405 m2 and is a common sale with the appellant. It is located about 1.2 kilometres south-west of the subject land. The sale is seen as slightly inferior to the subject land, and sold in May 1999 for $115,000, was analysed at $113,000, and applied at $107,000.
Sale 2 – (12 Margaret Street, Camp Hill - Lot 234 on RP 13179). This has a an area of 405 m2 and is located about 1.4 kilometres south-west of the subject land. The sale is seen as inferior to the subject land, and sold in June 1999 for $107,000, was analysed at $105,000 and applied at $97,000.
Sale 3 – (80 Boundary Road, Camp Hill - Lot 2 on SP 117661). This is a battle axe parcel of overall area 861 m2, of which 760 m2 is free of the easement access. The sale is located 2.2 kilometres south-west of the subject land, and is seen as inferior to the subject land. The sale sold in May 1999 for $110,000, was analysed at $104,000, and applied at $95,000.
Mr Cranstoun argues that homes adjoining his Sale 1 (19 Akala Street) are also comparable post-war dwellings, and reflect a comparable amenity to the subject land. Mr Ferguson rejects that comparison arguing that the presentation of homes generally in that part of Akala Street is to preserve the character of pre-war homes. Photographs supplied (Exhibit 4) would tend to support that the immediate neighbouring parcels to 19 Akala Street have a level of character of Queenslander appearance.
Mr Ferguson further argues that 19 Akala Street has the benefit of glimpses of the tops of City buildings through trees. However enquiries by Mr Cranstoun from the purchaser of 19 Akala Street reveals that the new dwelling now constructed upon that parcel would appear to have placed little extra weight upon that advantage. Subsequently a more recent dwelling on the adjoining 17 Akala Street has impacted any benefit from those glimpses of the City.
In his analysis of the sale of 19 Akala Street, Mr Ferguson has allowed $3,000 for the value of existing plans and Council approval in that sale. However he was unable to confirm with the purchaser whether those plans had been of any benefit to the purchaser, or whether the existing plans had reflected any added value in the sale price. Mr Ferguson has also made his own estimate of the added value in that sale for the existence of City glimpses (10 percent or $11,200), and, in his opinion, a better location (5 percent or $5,600).
Mr Cranstoun confirms that 19 Akala Street is his key sale, being closest to the subject land. He made no allowance for any previous approval or plans, as the purchaser saw the only improvements on the sale as the old fencing. Mr Cranstoun questions Mr Ferguson’s estimate of 10 percent for the City glimpses, noting that it is difficult to so quantify the benefit of views without other supporting sales evidence. He notes Mr Ferguson provides no sales of other properties with similar City glimpses to support that conclusion. Mr Cranstoun also notes that 19 Akala Street, while an elevated parcel, has only a frontage of 10 metres compared to the 16.1 metre frontage of the subject land. Mr Ferguson rejects Sale 3 (80 Boundary Road) as too removed from the subject land to provide any real comparison.
In respect of Mr Ferguson’s use of the sale of the subject land (his Sale 3), Mr Cranstoun rejects that sale as it reflects an improved sale, with all the inherent difficulties of determining the appropriate added value of the dwelling. Mr Cranstoun argues that while there are sufficient sales of vacant lands within a reasonable proximity, then it is his practice not to use sales of highly improved land. He further argues that the market often reveals that old dwellings are subsequently removed or demolished, to make way for a new dwelling, in which case the cost of removal or demolition then become a further cost of acquiring a vacant home site.
Mr Cranstoun advises that when comparing residential properties he assesses them on a site basis, and not on the basis of allowable building areas. I note that principle was adopted by the Land Appeal Court in Hans and Else Grahn v. Valuer-General (1992-93) 14 QLCR 327 where the Land Appeal Court said at page 330:
“The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. As the Land Appeal Court said in its decision on the appellants’ previous appeal (H & E Grahns v. Valuer-General, AV89-246 and 247, 13 December 1990:
‘for the purpose of valuing residential sites, the preferable method of comparison is on a site to site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size of the lots, the situation of and access to the lots, the shape and topography of the lots etc. and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features.’”
Relativity -
In seeking relativity with surrounding parcels in The Promenade, Mr Ferguson agrees that the adjoining parcels appear consistent with each other. However he argues that the determined values are not in line with the market values of the land. Mr Ferguson also notes that the adjoining parcel to the east at the corner of The Promenade and Nurstead Road (Lot 139) is occupied by a post-war dwelling, as is also the neighbouring parcel to the west (130 The Promenade). The parcels west of the subject land increase as you rise up the slope from Lot 137 (130 The Promenade) at $109,000 to Lot 134 (124 The Promenade) at $112,000. The subject land is 1 metre wider than those adjoining parcels in The Promenade.
Mr Ferguson also supplies evidence of a parcel to the east at 84 Nurstead Road at $95,000, and at 531 Darcy Road to the north at $74,000. Mr Ferguson argues that 531 Darcy Road has a similar crossfall to the subject land, but agrees it is lower in elevation than the subject land. Mr Cranstoun submits that Darcy Road is only partly bitumen sealed and serviced with concrete kerbing and channelling on one side of the carriageway, and 531 Darcy Road (Lot 144) looks across to a large undeveloped reserve containing bushland. Because of the lesser elevation Mr Ferguson agrees that views from that parcel are inferior to the subject land. While he accepts the unimproved value at $74,000 is to be adopted for comparison purposes, Mr Cranstoun feels that value may be on the low side, and he cautions against adopting that value for relativity purposes.
Mr Cranstoun notes for example that 84 Nurstead Road has an unimproved value of $95,000, and is lower than the subject land, with lesser views and increased traffic impacts along Nurstead Road. From the contour mapping supplied (Exhibit 8) 84 Nurstead Road is about 6 metres lower than the subject land. However Mr Ferguson questions whether traffic impacts are worse in Nurstead Road compared to The Promenade. Mr Ferguson argues that the relative value of $74,000 for 531 Darcy Road better reflects market value, and comparisons with that parcel should be adopted.
Decision:There is general agreement between the parties in respect of the nature of the land. The potential impact of the sewer line is also not an issue. On the evidence I believe that the general mix of post-war and Queenslander style housing was not a major difference between the locality of the subject land nearer to Carina, and the locality of sales further to the west in Camp Hill. The general size of the lots at 405 m2 (Sales 1 and 2), tend to reflect an older survey age for those lots, compared to 607 m2 size of the subject land and its surround. On that basis alone there is likely to be a higher proportion of old Queenslanders in Akala Street and Margaret Street. However whether that has any influence upon the sale prices in those areas is not demonstrated by the evidence.
Relativity -
In seeking relativity with surrounding parcels I note that the appellants are entitled to rely upon the unimproved value of 531 Darcy Road at $74,000 under s.33 of the Act which directs:
“33. 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.”
However I also note that similar reliance should be made in respect of 130 The Promenade at $109,000, and 84 Nurstead Road at $95,000. In respect of reliance upon apparently inconsistent values, I note guidance in R and MM Barnwell v Valuer General (1989) 13 QLCR 13, where the Land Appeal Court found at page 16:
“We are conscious that it is desirable that valuations made for the purposes of the Valuation of Land Act of comparable lands should bear proper relativity, one to the other, if 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.”
In considering the respective applications of 84 Nurstead Road at $95,000, and the subject land at $109,000, I note that it is agreed that the latter is higher, with better views and breezes, and also lesser traffic impacts. It would appear reasonable to conclude that the relationship between those two parcels is appropriate. If I was to accept Mr Ferguson’s estimate of the unimproved value of the subject land at $90,000, the relativity with 84 Nurstead Road, and 130 The Promenade, would be inconsistent.
On the evidence I could not accept an adjustment of the unimproved value of the subject land only upon comparisons of relativity with 531 Darcy Road. Where inconsistency occurs I note the findings in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at page 46:
“It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence.”
Comparison of sales -
I turn first to Mr Ferguson’s reliance upon the sale of the subject land, I note that matter was considered by the High Court of Australia in Jowett v The Federal Commissioner of Taxation (1926-27) 38 CLR 325, where Rich J said at page 329:
“A sale of the subject land, or of comparable land, affords the best means of arriving at the fee simple of any land, … .”
The Land Appeal Court also considered the matter of the sale of a property itself in The Chief Executive, Department of Lands v. J and L Lorenzen (AV93-22), 1 June 1994, unreported, where the Land Appeal Court said at page 4:
“Whilst we agree that a sale of the subject land should also be considered in assessing its value we hasten to stress that such a sale is only prima facie evidence of its value. The weight which will be given to the sale is dependent upon a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable lands.”
However in considering the sale of the subject land as an improved parcel, Mr Ferguson is faced with the task of addressing the matter of determining the added value of those improvements, which must then be deducted from the sale price in order to arrive at the unimproved value of the land. He has sought to arrive at a conservative depreciated value of the improvements, rather than seek to ascertain the added value which the improvements bring to the property. The difficulties in this approach were explored by the Privy Council in the matter of Tooheys Limited v. The Valuer-General (1925) AC 439, where the Privy Council concluded that the improved value of a property was not an appropriate starting point for determining unimproved value, because of the existence of a licence connected with the improvements.
In the current matter there is no similar restriction upon the subject land, however, the matter of determining the added value of improvements was also explored in O’Brien Nominee Pty Ltd v. The Valuer-General (1979) 6 QLCR 280, at 284:
“The basic properties have sold at prices considerably below the value of the improvements assessed on the traditional method of replacement cost less accrued depreciation.
In such circumstances it is unrealistic to conclude that land, the commodity basic to the enterprise, has a minus or nominal value. It is logical to assume that in times of diversity and depression, when purchasers pay less for properties as a going concern, that the lesser price attaches not only to the land component but also to the improvements. The question facing valuers in analysing improved sales in these circumstances is what value is fairly to be attributed to the improvements?
It appears to us that the only tenable approach is to abandon the traditional method of replacement cost as at sale date less depreciation and to adopt an ‘added value’ concept.”
I note also the findings of the Land Appeal Court in PN and KJ Fitzgerald re Perpetual Lease Selection No. 6191 Roma District (1965) 32 CLLR 260, where the Land Appeal Court said at page 261:
“Unimproved values obtained by analysing the sale of one highly improved area do not normally provide a safe basis upon which to make determinations of value of comparable land.”
In the circumstances of the current matter I note that Mr Cranstoun has relied upon sales of vacant land, the method most preferred by Courts of all persuasion. That was also followed for instances in AC and AA Ussher v Valuer General (1986-87) 11 QLCR 169, where the learned Member found at page 176:
“I am unable to accept the submission. Courts of the highest authorities in many cases have approved the method of valuation whereby analysis of sales of comparable lands are used as a basis for comparison with the subject land, in order to determine an unimproved value. Valuation text books support this approach.”
However perhaps the clearest guidance is provided in PH Clough v Valuer General (1981-82) 8 QLCR 70, where the Land Appeal Court said at page 76:
“It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements.”
In view of a lack of further support for his estimate of the added value of the improvements upon the sale of the subject land, I reject that approach in the current matter, and rely upon the sales of vacant lands provided by both parties.
If I turn then to the analysis of the common sale (19 Akala Street), I find that Mr Cranstoun sees that as slightly inferior, while Mr Ferguson sees that sale as superior. However Mr Ferguson has analysed the sale to $95,200, while Mr Cranstoun analysed the sale to $113,000. Mr Ferguson deducts the added value of plans and building approval ($3,000), plus his estimate of premiums attached to the sale for City glimpses (10 percent) and a superior location (5 percent). However he provides no further evidence to support those conclusions.
If I consider the locality of both Sale 1 and the subject land, I find that both have a mixture of post-war and old Queenslanders, and there is nothing to support Mr Ferguson’s conclusion that Sale 1 is in a better locality. Certainly the views from Sale 1 are agreed to be good, as are those from the subject land.
I turn then to Mr Ferguson’s Sale 1 (66 The Promenade) and I find that he sees that as comparable to the subject land, while Mr Cranstoun sees that sale as inferior due to its lesser views, its more susceptibility to drainage flows, and the presence of two sewer lines and two manholes upon that parcel. On the evidence I would agree with Mr Cranstoun, and I find 66 The Promenade inferior to the subject land, although the subject land is at an elevation about 27 metres while 66 The Promenade is at an elevation about 35 metres.
If I look then at Mr Cranstoun’s Sales 2 and 3 I would agree that they are also inferior to the subject land, with less views, and an inferior easement access for 80 Boundary Road. On those analyses the relevant comparisons are:
| Sale | Applied Valued | Comparison |
| 19 Akala Street | $107,000 | Inferior |
| 66 The Promenade | $85,000 | Inferior |
| 80 Boundary Road | $95,000 | Inferior |
| 12 Margaret Street | $97,000 | Inferior |
There is nothing in those comparisons to indicate that Mr Cranstoun has made an error of fact.
In summarising this matter I am reminded that the onus is upon the appellants to prove their grounds of appeal under s.45(4) of the Act. That has not been demonstrated.
Conclusion:Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 138 on RP 90054 as determined by the Chief Executive in the sum of $109,000 is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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