Finlayson & Anor v Valuer-General
[2013] QLC 23
•23 May 2013
LAND COURT OF QUEENSLAND
CITATION:Finlayson & Anor v Valuer-General [2013] QLC 23
PARTIES:Lasharn Finlayson and Michael Allt
(appellants)
v.
Valuer-General
(respondent)
FILE NO:LVA637-12
DIVISION:General Division
PROCEEDING: Appeal against annual valuations under the Land Valuation Act 2010
DELIVERED ON: 23 May 2013
DELIVERED AT: Brisbane
HEARD ON: 9 April 2013
HEARD AT:Brisbane
MEMBER:Mr WA Isdale
ORDERS:1. Appeal allowed.
2. The Valuer-General’s valuation of 37 Mandalay Street, Fig Tree Pocket, Lot 228 RP 130430 Parish of Indooroopilly, Property ID 1263841 at 1 October 2011 is reduced from One Million One Hundred and Fifty Thousand Dollars ($1,150,000) to Nine Hundred and Fifty Thousand Dollars ($950,000).
CATCHWORDS: Land Valuation Act 2010, ss 19(1), 169
Sales Evidence of Value ― comparable sales ― Expert Evidence
R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13
Brisbane City Council v The Valuer-General (1978) 140 CLR 41, 5 QLCR 283
Burnett v Department of Natural Resources and Water [2010] QLC 57
Enright Hendy and Partners Investments Pty Ltd as trustee v Valuer-General [2012] QLC 38
Franklin & Ors v Valuer-General (1978) 5 QLCR 181
WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44
Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327
Lawson v Valuer-General [2012] QLC 27
JL and I Qualischefski v Valuer-General (1979) 6 QLCR 167
NR and PG Tow v Valuer-General (1978) 5 QLCR 378
APPEARANCES: Ms L Finlayson appeared for herself and Mr Allt
Mr I Pepper, lawyer, appeared for the Valuer-General
Background
The appellants are the owners of the residence at 37 Mandalay Street, Fig Tree Pocket. The land is Lot 228 on RP130430, Parish of Indooroopilly. The land has an area of 1,017 m² and is zoned for low density residential use in the Brisbane City Plan 2000. There is no dispute between the parties that the highest and best use of this site is for single unit residential purposes.
In accordance with the obligation imposed under the Land Valuation Act 2010 (the Act), the Valuer-General has valued the land as at 1 October 2011. The valuation issued for this land was $1,150,000.
The appeal
The appellants are dissatisfied with this valuation and have appealed to this Court. In the Notice of Appeal, Exhibit 2, they state that the valuation ought correctly to be $768,935. For convenience, this was rounded during the hearing to $769,000. Section 169 of the Act provides that the appeal must be limited to the grounds stated in the notice of appeal and that the appellants have the onus of proof for each of the grounds of appeal.
The evidence
The appellants prepared a written report of their valuation, which became Exhibit 1. Both appellants gave oral evidence and their report was admitted through Ms Finlayson. They jointly authored the report. Ms Finlayson is qualified as a market analyst and Mr Allt is a civil engineer. Neither is qualified as a valuer of real estate but both have experience as purchasers of it. It became clear that Ms Finlayson is skilled at drawing together and deriving conclusions from data and had a great deal to do with the preparation of Exhibit 1, which Mr Allt, as co-author, fully supported.
The core of the appeal
The substance of the appeal, was that the land the subject of the appeal was not absolute river frontage land but was, the appellants’ complain, being compared with land that did have absolute river frontage. Additionally, land in locations closer to the City of Brisbane was being used for comparison when that land is in more favourable locations, with access to superior services.
It is noteworthy that the appellants were not simply making these criticisms of the Valuer-General’s valuation but, in Exhibit 1, provided their justifications for the valuation which they contended for.
Features of the land
The subject land, about 12.5 kms radially south-west of the centre of Brisbane, is located in the suburb of Fig Tree Pocket, an area where the Brisbane River is a prominent feature. The area has water, sewerage, stormwater drainage, electricity and telecommunications services available to it and the land is located on a bitumen sealed street with concrete kerbing and channelling. There is no dispute that there is direct and easy vehicular access to the site. The land backs on to a strip of Council owned land between it and the river. This grassy strip of land provides space for people to walk and is used as a dog off-leash area. The Council maintains it as it sees fit and its existence prevents the land having the potential to be enhanced by the addition of a pontoon or other means of access to the river, such as a boat ramp or jetty.
The appellants’ suggested valuation approach
The appellants state that their land should be compared to sales of land in the same area. In addition, as set out in Exhibit 1, they have approached the valuation of the subject land in a number of ways. Objection was made, on behalf of the Valuer-General, to so much of Exhibit 1 as consisted of opinion when its authors were not qualified to give evidence of opinion in relation to the value of the land. This was met with the argument that no opinion was being expressed, the data was simply speaking for itself. This highlights a fundamental divide between the parties as the Valuer-General called evidence from a registered valuer, Ms EM McNabb who, by virtue of her qualifications, is permitted to give expert opinion evidence. The report prepared by Ms McNabb became Exhibit 3.
The appellants pointed out some features of their land, such as its slope towards the river, the use of the Council land at the rear by over 100 pedestrians per day over the last Easter period, and noise from aircraft, from trains across the river, boats and jet skis. Its location in the catchment area of a state high school was also considered to be less advantageous compared to properties located in the catchment areas of high schools of perceived superior merit.
By analysis of data for the years 2003 to 2011 the appellants sought to demonstrate that by consideration of riverside sales, absolute riverfront sales, and sales of vacant land and land with a house, a number of conclusions could be drawn. Firstly, that for Brisbane riverside properties in 2011 the average premium paid for a house and land unit was 44% of the total price. Applying this to the purchase of the subject property for $1,350,000 it was deduced that the improvements could be valued at $590,625 and the land at $759,375. It will be observed that this is an exercise where the conclusions are drawn from all sales in Brisbane so there will necessarily be a broad range of properties. It must be borne in mind that the appeal before the Court is in relation to this parcel of land rather than a hypothetical average parcel.
Flooding
It was not in dispute that the land was subject to flooding from the Brisbane River. The extent of the flooding is not in dispute and the 2011 flood came to within about 600 mm of the floor level of the house. The land was subjected to significant flooding.
Further data analysis methodology
The appellants compared the subject land to properties with a similar riverside esplanade location and used a rate per square metre comparison of the Valuer-General’s site valuations of that land. Proceeding this way resulted in a conclusion that the subject land, allowing for its size of 1,017 m², should have a site value within the range of $804,588 to $807,760. Using data relating to the suburb of Chelmer, a value of $606,350 could be deduced. Using 25 Morley Street, Chelmer, as a comparison, the value deduced therefrom for the subject land would be $725,417.
Appellants’ consideration of Sales
The appellants considered the sale at 53 Robertson Place, Fig Tree Pocket, on 31 March 2012, with an area of 3,042 m² which sold for $2,300,000. The sale price was calculated at $756/m². Applying this figure, at the square metre rate, to the subject land results in a deduced value for it of $768,852, which can be, for convenience, rounded to $769,000. During the January 2011 flooding, the rear two-thirds of this block flooded. Its contours lie between 3.8 metres and 20.4 m above datum and the flood level on this land was recorded as being 12.0 m. The respondent’s valuer, Ms McNabb, considered this land superior to the subject due to its larger size and wider street frontage.
The appellants considered the sale, on 4 October 2012, of the house and land at 72 Botticelli Street, Fig Tree Pocket for $1,100,000. It has an area of 1,464 m². They deduce a rate of $751/m² as the value of this property. Applying that rate to the subject land supports a value of $763,767 for it.
The appellants additionally considered the sale of 602 m² of vacant land at 7 Choice Close, Kenmore on 5 October 2012 for $337,500. It was valued at $395,500 as at 1 October 2011. This sale was calculated to show a value of $657/m² and a sale price rate of $560/m². The appellants considered sales at 7 Sandringham Place and 28 Ramada Place, Fig Tree Pocket. These improved sales were, in the valuer’s opinion, so improved as to not be able to be reliably analysed to disclose the site value. The sale at 46 Mandalay Street, Fig Tree Pocket on 12 January 2012 for $360,000 was of 632 m² of land. A level, rectangular parcel, it is on the southern side of Mandalay Street with no views of the river. With contours between 8.4 m and 9.3 m above datum, it was flooded to a level of 10.8 m. The valuer considered it inferior to the subject due to its smaller size, lack of river views and greater flooding in 2011. It was given a 25% allowance for flooding.
The methods applied by the appellants showed a range of values for the subject land between $725,000 and $807,000 depending on which of their five methods was used. For the purposes of the appeal, they contended for a valuation of $769,000.
The case for the respondent
The case presented on behalf of the Valuer-General was contained in the evidence of registered valuer Ms McNabb and the report, Exhibit 3, which she prepared.
The valuer valued the subject land in accordance with s.19(1) of the Act, assessing its site value. The report acknowledges the valuer’s duty to the Court which overrides any obligation to the respondent. In that context the valuer has expressed her opinion that the land has, at the 1 October 2011 valuation date, a site value of $950,000. This is $200,000 below the value issued by the respondent. If the Court accepts that opinion, the result would be that the appeal would be allowed and the valuation set at that figure. The appellants contend that this evidence should not be accepted.
The valuer has inspected the land and describes it as a rectangular shaped allotment, about three quarters of which is level with the road, the balance falling steeply to the rear. The land was partially flooded in January 2011. The land offers wide and uninterrupted views of the river that can never be built out. This was not contested. After the January 2011 flood the Valuer-General made a 10% allowance for the flooding. This reduced the value of the land.
The site value of the land was arrived at by the method of direct comparison with bona fide sales of vacant or lightly improved land. The valuer inspected all of the sales relied upon. In cross-examination, the valuer was challenged on the basis, inter alia, that she had used sales outside of the area for which she was responsible for valuing the land. Her response was that she analysed the sales used and it did not matter that they were in an area where she had not been responsible for valuations, applying sales was a matter independent of this.
Challenged on her use of sales at Chelmer, closer to the city, the valuer stated that prior to the 2011 flooding Chelmer had higher values but due to its lower elevation compared to Fig Tree Pocket there had been a greater flood impact in Chelmer. Ms McNabb had been present at the Bar Table throughout the appellants’ case and, from my observation, appeared to be paying close attention. She gave evidence that she had read the appellants’ Exhibit 1 and that it did not require her to change her opinion. Asked about the sale of 53 Robertson Place, Fig Tree Pocket, she expressed the view that it was three times the land area of the subject, had a wider street frontage and was overall vastly superior. The sale of 72 Botticelli Street, Fig Tree Pocket on 4 October 2012 was not available at the valuation date and the land is improved with a highset dwelling. Asked about 7 Choice Close, Kenmore, the valuer pointed to the sale date of 5 October 2012, well after the valuation date, and the size of 602 m², which is significantly smaller than the subject. She stated that it has steeper contours than the subject and inferior views as well as an access easement over it.
Sales comparisons used on behalf of the Valuer-General
Sale 1, at 142 Hargreaves Avenue, Chelmer was of 496 m² of vacant land zoned for low density residential use. It sold on 29 October 2011 for $900,000. It is narrower and smaller than the subject and has direct river frontage with similar river views, services and surrounding development. With lower elevation and greater flooding potential than the subject it was considered to be inferior to it. Its site value was $800,000 with the 25% category 3 flooding allowance and $1,070,000 without it.
Sale 2, at 25 Morley Street, Chelmer was of 805 m² of vacant land zoned low density residential. It sold on 13 April 2012 for $950,000. It is a narrow, rectangular-shaped allotment with a moderate fall from the road to the river. It has direct river frontage and similar river views, services and surrounding development to the subject. Its narrow width is a disadvantage and the 2011 flooding impacted the entire site, a significantly greater impact than what the subject land experienced. The land’s ground level ranges from an elevation of 1.1 m above datum to 9.7 m above. The flood level here was 10 m above datum and the Valuer-General allowed the 25% allowance for the highest category, category 3, of flood influence on the land. This land is at a lower elevation than the subject land. The valuer’s evidence was that this was the most comparable sale of those used for the present valuation. It was considered inferior to the subject due to its smaller size, narrow shape, lower elevation and greater flooding potential. The valuer considered it to be the most comparable sale to the subject land. Its site value was $870,000 with the 25% category 3 flooding allowance and $1,160,000 without it.
Sale 3, at 21 Longman Terrace, Chelmer was of 1,366 m² of vacant land zoned for low density residential use. It sold on 29 February 2012 for $1,700,000. It is a long, narrow allotment, the front third is generally level with the road and the balance falls moderately to the river. It is about 8 km radially to the central business district of Brisbane. The Valuer-General has made a category 3, 25% reduction in value, flood allowance for this land. The site is less than 200m west of the Indooroopilly bridges and is affected by road and train noise. The property varies between 0.2 m and 11.8 m above datum and the flood level here was at 9.4 m. This sale is larger than the subject land and it has direct river frontage and wider river views. It has comparable services available to it. It was affected more significantly by flooding than the subject. It is considered by the valuer to be superior to the subject due to its larger size, wider river views, character residential surroundings and direct river frontage. Its site value is $1,400,000 with the 25% Category 3 flooding allowance and $1,870,000 without it.
Sale 4, at 73 Goldieslie Road, Indooroopilly, was of 951 m² vacant land zoned for low density residential use. It sold on 10 November 2011 for $825,000. The property is elevated with river views over the roofs of nearby houses. It is affected by road and train noise from the Indooroopilly bridges. It did not flood in 2011. It is a hatchet shaped block with narrow access. It is smaller than the subject, further from the river with more limited river views and has been considered by the valuer to be inferior to the subject due to its size and shape, inferior views and noise exposure. The valuer was of the opinion that the subject could not be worth less than this sale block, with its site value of $800,000.
The valuer’s opinion of the appellant’s methodology
Ms McNabb expressed the view that for valuing land the method of using comparable sales was more appropriate than the valuation exercise conducted by the appellants. She pointed out that the data they used will include properties with features at the extremes of a broad range. In relation to the use of a square metre rate she pointed out that the appellants had derived their rate from a block much larger than the subject and that a per m² rate does not take into account all the characteristics of the land being valued. When cross-examined, she stated that the Valuer-General does not use a per m² rate for valuing land of the nature of the subject, a residential parcel, while it is used for other valuation purposes, such as where a gross floor area is being considered.
Relativity considerations in the appellants’ case
The valuer stated that she valued the subject on the basis of direct comparison with sales, not on a rate per m² basis. The appellants’ comparisons were, she stated, distorted by flood category allowances which ranged from 10% to 25%. She had not considered herself bound by those reductions, made by the Valuer-General, but had directly considered Brisbane City Council flooding information when considering each parcel of land.
The applicable law
This Court is not an investigating tribunal and must rely on the evidence put before it by the parties. In J.L. and I. Qualischefski v Valuer-General (1979) 6 QLCR 167, the Land Appeal Court in its judgment said, at page 172:
“Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This role is in contradistinction to jurisdiction conferred under the Land Act.
In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.”
This Court’s place in the judicial system is below the Land Appeal Court, the decisions of which are binding on it. That Court has considered the method of valuation most likely to provide the best indicator of land value. In N.R. and P.G. Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said, at page 381:
“Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.”
A valuation deduced from relativities with other valuations made by the Valuer-General and that were not themselves tested in the present proceedings by reference to sales evidence cannot safely be relied upon. Where, as in the present case, the subject valuation is said to be incorrect, it would not be safe to rely on other valuations and to assume that they are correct so as to draw a conclusion about the valuation of the subject land.[1]
[1] The hazard in this approach was discussed by Member Smith in Burnett v Department of Natural Resources and Water [2010] QLC 57 at [18] and again in Lawson v Valuer-General [2012] QLC 27 at [29]. These authorities were applied in Enright Hendy and Partners Investments Pty Ltd as trustee v Valuer-General [2012] QLC 38.
The approach taken by Ms McNabb in applying sales evidence is consistent with the decision of the Land Appeal Court in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327. The relevant principles are set out in the joint judgment of Lee J, Mr Barry and Mr Neate at pages 328-329 where the Court said:
“The decision of the High Court of Australian in Brisbane City Council v The Valuer-General ((1978) 140 CLR 41, 5 QLCR 283) and the decisions of the Land Appeal Court in cases such as WM and TJ Fischer v The Valuer-General ((1983) 9 QLCR 44) and R and MM Barnwell v The Valuer-General ((1989) 13 QLCR 13) are authority for the following propositions:
(a) It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands 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. (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 16 and cases cited in it).
(b) The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p. 46; R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at p. 17).
(c) Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at p. 56).
(d) Once it is shown that:
(1) in making the valuation the Valuer-General 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 13(7) is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41, at pp. 56-7).
(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 (WM and TJ Fischer v The Valuer-General (1983) 9 QLCR 44, at p.46).
(f) If possible, the Valuer-General 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 (R and MM Barnwell v The Valuer-General (1989) 13 QLCR 13, at pp. 16-17 and cases cited in it).”
The presumption in s.13(7) of the Valuation of Land Act 1944 does not form part of the current Act so the principles in (c) and (d) in the passage quoted no longer apply. The appellants remain limited to their grounds of appeal as set out in the Notices of Appeal.[2] In the present case, this does not present them with any difficulty. The appellants have the onus of proof for each of the grounds of appeal.[3]
[2] Franklin & Ors v Valuer-General (1978) 5 QLCR 181 at 184. See also Land Valuation Act 2010, s.169(1).
[3] Land Valuation Act 2010, s.169(3).
In Grahn’s case the Land Appeal Court said:
“… 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.”[4]
[4] (1992-93) 14 QLCR 327 at 330.
Application of the applicable law
There is only one body of expert valuation evidence before the Court in this appeal. It has not been shown that the expert’s opinion was invalidated by, for example, factual error. The expert has explained the basis of the valuation opinion provided and used the methodology which the Land Appeal Court has decided will provide the best test of value. This Court is unable to place reliance upon the methodology adopted by the appellants in the face of that used by the respondent. To do so would be contrary to the precedents which govern the conduct of this Court.
It is unnecessary to decide the objection made of behalf of the respondent to the evidence led by the appellants, namely that to the extent that it contained evidence of opinion it would not be able to be admitted. The appellants’ answer to the objection was that they were reporting data rather than offering opinion. I have approached the case on the basis that the appellants’ case was fully admissible and, if that were so, considered whether it would be successful. For the reasons that I have given, in view of the legal restraints upon this Court, the appellants’ valuation method could not be preferred to that of the respondent.
Conclusion
I accept the evidence of valuer McNabb who has proceeded in accordance with the method of valuation which has been held to be productive of the best conclusion as to value. I note that, in accordance with the duty of an expert valuer to the Court, she has provided her own opinion and not sought to simply support the existing valuation of $1,150,000 as at 1 October 2011. The valuer’s valuation as at that date was $950,000. I accept that valuation and accordingly allow the appeal.
Orders
1. The appeal is allowed.
2. The Valuer-General’s valuation of 37 Mandalay Street, Fig Tree Pocket, Lot 228 RP 130430 Parish of Indooroopilly, Property ID 1263841 at 1 October 2011 is reduced from One Million One Hundred and Fifty Thousand Dollars ($1,150,000) to Nine Hundred and Fifty Thousand Dollars ($950,000).
WA ISDALE
MEMBER OF THE LAND COURT
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