Flynn v Department of Natural Resources and Mines

[2003] QLC 72

LAND COURT OF QUEENSLAND

CITATION:	Flynn v Department of Natural Resources and Mines [2003] QLC 0072
PARTIES:	Charles Flynn (applicant)
v.
Chief Executive, Department of Natural Resources and Mines (respondent)
FILE NO:	AV2002/0251
DIVISION:	Land Court of Queensland
PROCEEDING:	Appeal against annual valuation under the Valuation of Land Act 1944
DELIVERED ON:	30 October 2003
DELIVERED AT:	Brisbane
HEARD AT:	Point Lookout
MEMBER	Dr NG Divett
ORDER:	The appeal is dismissed, and the unimproved value of Lot 2 on Plan A 33913 as determined by the Chief Executive in the sum of One Hundred and Eighty-Seven Thousand Dollars ($187,000) is affirmed.
CATCHWORDS:	Valuation – Use of sales – Sale of subject land – Relative to market level. Statutory valuation – Method of valuation – Jurisdiction of court – Does not extend to matters of revenue raising
APPEARANCES:	Mr C Flynn for the appellant. Mr G Smith, Senior Legal Officer for the respondent

Background:

1. This matter deals with land at 3 Claytons Road, Amity Point, Stradbroke Island, and described as Lot 2 on Plan A 33913, Parish of Stradbroke.  The subject land has an area of 673 m² and is zoned as Residential B under the Town Plan of the Redland Shire Council of 20 February 1988, effective at the date of valuation of 1 October 2001.  The land is identified as Urban Residential under the Redland Shire Strategic Plan.  The subject land has good access to Claytons Road which is bitumen sealed with formed earth shoulders, but there is no concrete kerbing or channelling.  All normal urban utility services are available.  The key issues are the nature of the land and the method of valuation.

2. On 25 February 2002 the Chief Executive issued a valuation of the subject land at $187,000.  Following an objection the Chief Executive confirmed that figure on 16 July 2002.  The appellant has now appealed claiming the unimproved value should more properly be $25,000.  An unsuccessful court supervised Preliminary Conference was held on 11 March 2003.

3. Charles Flynn appeared and gave evidence on his own behalf.  Mr G Smith, Senior Legal Officer appeared for the respondent, calling evidence from George Dudek the departmental registered valuer responsible for determining the valuation.

The Nature of the Land –

1. The subject land is a semi-regular shaped parcel with frontage to Claytons Road, and parallel side boundaries of about 29 metres on the western side, and 40 metres on the eastern side.  The land is almost level with a slight cross-fall towards the foreshore, which is about 100 metres to the west.  There is the potential for ocean views from a two level dwelling.  However those advantages are offset by nuisance problems of noise and lack of privacy associated with parklands, and a public toilet structure immediately across Claytons Road from the subject land. 

2. Mr Flynn advises that the parkland and toilet block are regularly the scene of drunken behaviour, which has worsened in recent years since he first resided there about 30 years ago.  He notes also that Claytons Road is the only access to Amity Point township, and traffic noise is a growing problem.  Mr Flynn also argues that the caravan park across Claytons Road also generates noise, as does another park a bit further away.  There is also an industrial rubbish bin about 30 metres from the subject land.  Mr Dudek accepts those disabilities, and advises that they were allowed for in his valuation.  Mr Dudek also agrees that erosion of the waterfront land is an ongoing problem, as noted in his analysis of his comparative Sale 4, discussed later.  Access to the mainland is via a local bus and taxi service to Dunwich, and then water taxis to Cleveland.

The Method of Valuation –

1. Mr Flynn advises that he purchased the subject land for $30,000 about 1976.  He argues that until the property is again sold to a new owner, there should be no change in the unimproved value of the subject land, which should continue to remain at the same value.  However he does not explain how he now concludes an unimproved value at 1 October 2001 of $25,000.  Mr Flynn however agrees that if he were to sell the property, then the land value would rise to at least $187,000, but that would then be a matter for the new owner.  He argues that the subject land continues to have the same value to himself as when he acquired it in 1976.  At present he has no intention of selling the property.

2. Mr Flynn also understands that the unimproved value of the subject land relates only to the land itself within its boundaries, and he rejects any considerations of views from the site, or any other external features such as utility services etc.  Mr Flynn also rejects the current application of the Valuation of Land Act 1944 to the subject land.  He argues that while the Act in its current form may have relevance to major companies and businesses, its direct application as applied by the respondent to private residential use is inappropriate.

3. Mr Flynn explains that the current very high unimproved value of the subject land at $187,000, has resulted in an intolerable burden upon him as owner in respect of rates charges to the Redland Shire Council.  He advises that he currently has to pay the equivalent of four of his 26 annual pension payments as rate charges to the Shire Council.  He argues such a scenario is completely unfair to individual property owners, as he notes that a more recent sale of a property only 150 metres from the subject land, sends warning signals that the land values may increase much higher than the current $187,000 now appealed against.  Mr Flynn repeats that in his opinion the unimproved value of the subject land should remain the sale value as when it was purchased, which then sets the value of the land.  Mr Flynn argues that the Valuation of Land Act 1944 is outdated, and should be amended in line with his opinion of values for residential lands.

4. Mr Flynn also sees inconsistency in the implementation of the Act, where surrounding properties may have different levels of value to the subject land.  He argues that as services are similar in the area, then there is no reason why different levels of rate changes should apply to different parcels.  Mr Dudek rejects such a view of relativity between parcels, and advises that his examination of surrounding unimproved values indicates that adjoining relativities are generally appropriate.

5. In respect of the valuation of the subject land, Mr Dudek has sought comparisons with sales of vacant or lightly improved properties acquired for single residence purposes.  However he advises that it is not possible to allow any concessional valuations for single residence sites under s.17 of the Act.  He argues that lands sold for either single residences, or for higher use such as duplex structures, are both equally valued in the marketplace at Amity Point.

Comparison of Sales –

1. Mr Flynn provides no evidence of any sales of land, as he argues that only the sale of the subject land itself is proof of the value of the land.  To support his valuation Mr Dudek provides the following sales:

   ·    Sale 1 – (40 Kindara Street, Amity Point – Lot 9 on SL 810057).  This is a 796 m² vacant parcel located about 350 metres east of the subject land.  The sale is regular in shape, and without any views of the ocean.  The sale is seen as inferior to the subject land, and sold in January 2001 for $150,000, was analysed at $148,000, and applied at $134,000.

[12]

·    Sale 2 – (55 Gonzales Street, Amity – Lot 27 on SL 12800).  This is a 700 m² vacant parcel located about 0.9 kilometres north-east of the subject land.  The parcel has no ocean views, and was filled to a depth of about 1 metre at a cost of about $10,500.  The sale is seen as inferior to the subject land, and sold in January 2001 for $155,000, was analysed at $143,000, and applied at $133,000.

1. ·    Sale 3 – (Llewellyn Street, Amity – Lot 26 on A 33913).  This is a 744 m² vacant parcel located adjoining the subject land to the rear to the north.  The sale is level, and has the potential for ocean views from a second level dwelling.  The sale is seen as slightly inferior to the subject land, and sold in May 2001 for $203,000, was analysed at $201,000, and applied at $182,000.

2. ·    Sale 4 – (4 Mirrimar Street, Amity – Lot 9 on A 3395).  This is a 718 m² improved parcel located about 160 metres north-west of the subject land.  The sale is level and is virtually an ocean front parcel due to erosion of lands to the west of the sale.  Improvements to the sale include an older style dwelling of estimated added value of $80,000, and a partially concreted reinforced rock retaining wall of added value of $20,000.  The land continues to experience potential future erosion, as the locality has had a history of severe erosion of ocean front properties.  The sale sold in July 2001 for $380,000, was analysed at $280,000, and applied at $269,000.  The sale is seen as superior to the subject land.

3. ·    Sale 5 – (11 Gonzales Street, Amity – Lot 6 on SL 12799).  This is a 700 m² vacant parcel located about 0.6 kilometres north of the subject land.  The sale is a level parcel with no ocean views, and is seen as inferior to the subject land.  While an after date sale, Sale 5 is seen as a support sale in this matter.  The sale was developed with about 1 metre of fill at an added value of $10,500.  The sale sold in February 2002 for $200,000, was analysed at $188,000, and applied at $140,000. 

4. Mr Dudek advises that his knowledge of the purpose of the sales was from discussions with one or other of the parties involved.  He notes that while Sale 3 had been purchased with the intentions of building a single dwelling, that parcel had subsequently been resold for a higher price.  Mr Dudek advises that several of his sales have subsequently been developed for single residences, or even as a duplex structure.  He also advises that, while not evidence in this matter, there has been a further sale in that area in excess of $300,000. 

Decision:

The Method of Valuation –

1. Before considering the evidence, I turn to the legislation and note that the meaning of the “unimproved value” of the subject land is defined by s.3(1)(b) of the Valuation of Land Act 1944 which states:

   “3.(1)  For the purposes of this Act –

   ‘unimproved value’ of land means –

   (b)in relation to improved 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, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.”

2. In seeking to understand the test of the value of land, I note guidance provided by the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 where Griffith CJ said at 432:

   “In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’  It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural.  The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.”

3. In that matter Isaacs J also said at 441:

   “To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration.  We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”

4. The message from those directions by the High Court is that the value of land is measured by what well informed parties see as the appropriate cost to transfer a parcel from one owner to another.  The test of that level of value is whether those parties see their agreement as being in line with what others are prepared to agree to in respect of other similar or comparable parcels of land.  That raises the issue of the market level of the land.  The test of a market level for land is best considered by comparisons with sales of other comparable parcels at the appropriate period of time. 

5. Courts at all levels have considered the methods of determining the unimproved value of land, and have concluded that where there are comparable sales of vacant or lightly improved lands in the general locality of the subject land, that provides the most direct method of seeking the unimproved value of a parcel of land.  That was clearly defined by the Land Appeal Court in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where it said at 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.”

6. That was also followed in the matter of PH Clough v Valuer-General (1981-82) 8 QLCR 70 at 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 Sale of the Subject Land -

1. That then leads to Mr Flynn’s argument that it is not really possible to determine the true value of a parcel of land until it has again been resold to another owner.  Now it has long been accepted by the courts that the sale of the actual parcel of land itself, if it exists at the relevant date, may well be the best evidence of the value of the land.  That was noted in the matter of Jowett v Federal Commissioner of Taxation (1926) 38 CLR 325, where in the High Court Rich J said at 329:

   “A sale of the subject land, or of comparable land, affords the best means of arriving at the fee simple value of any land … .”

2. I note also the findings of the Chief Executive, Department of Lands v J and L Lorenzen (AV93-22) 1 June 1994, unreported, where the Land Appeal Court said at 4:

   “Whilst we agree that a sale of the subject land should always 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 must 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 land.”

3. The matter of the relevance of adopting a sale of the subject land was also clearly defined by the President of this Court in Determination of Rents and Unimproved Values for Conversion Purposes – Perpetual Lease Selections and Grazing Selections – Goondiwindi District (1974) 1 QLCR 45, where he said at 48:

   “… whilst a sale of a subject property around the relevant date in normal circumstances is cogent evidence of its value, it is always necessary to check the analysed value against the standard reflected by other sales of comparable properties to ensure that it conforms to the ‘norm’ of the market.  If the sale does not so conform caution must be used in its application and it may be even proper to reject it if it is shown to be a sale out of line with the market ‘norm’.  This check becomes vital, in my opinion, in times of a varying market be it rising or falling or in times of an erratic market.  One cannot assume, ipso facto, that the analysed sale figure equates fair market value for the subject purposes.”

Comparison of Sales –

1. Whilst Mr Flynn is correct in noting that the unimproved value of the subject land relates only to the land itself within its current fence lines, it is not correct to seek to exclude from such an analysis any considerations of features beyond the parcel itself.  An explanation of the process to be undertaken when determining the unimproved value of land was clearly espoused in the matter of Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, where the Land Appeal Court said at 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 and E Grahn v. The 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.’”

1. The matter of unimproved value was also explored in the findings of the Privy Council in Tetzner v. Colonial Sugar Refining Company Limited (1958) AC 50, where Their Lordships said at 57:

   “What in Their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation.  The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it.”

2. That also followed the findings of the Privy Council in Tooheys Limited v. The Valuer-General (1925) AC 439 where Their Lordships said at 443:

   “Now, what he has to consider is what the land would fetch as at the date of valuation if the improvements made had not been made.  Words could scarcely be clearer to show that the improvements were to be left entirely out of view.  They are to be taken, not only as non-existent, but as if they never had existed.”

   In simple terms the land is to be treated as if all improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant.

3. It is therefore appropriate for Mr Dudek to take note of such features of the subject land as its proximity to the ocean front, any possible ocean views, and services to the parcel.  It is also appropriate to consider any impacts upon the subject land from disturbances and activities on the public parklands and toilets opposite the subject land.  Mr Dudek advises that he has made such allowances in his comparisons with the sales evidence.

4. If I then consider the sales I find the following comparisons:

   SaleArea               Applied Value Comparison

   1796 m²            $134,000  Inferior

   2700 m²            $133,000  Inferior

   3744 m²            $182,000  Slightly inferior

   4718 m²            $269,000  Superior

   5700 m²            $140,000  Late sale

   Subject land          673 m²            $187,000  -

1. If I consider Mr Dudek’s Sale 5, I note that it occurred on 7 February 2002, about three weeks prior to the issue of the current valuation on 25 February 2002.  While it is still appropriate to consider such a sale within that time period, its later date than the formal date of valuation on 1 October 2001, in a rising market, is the reason why Mr Dudek has only applied an unimproved value of $140,000 (74%).  On that basis I accept that Sale 5 should only be accepted as supporting evidence.  Its main purpose of course is to signal the increasing level of the market at that time.

2. In respect of whether sales for single residences, or for duplexes, should be considered in this matter, I note that both land uses are accepted for the purposes of s.17 concessional valuations.  I note s.17 relevantly states:

   “17.(1)  In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.

   (2)  In subsection (1) –

   ‘single dwelling house’ means -

   (a)  a dwelling used solely for habitation by a single household;  or

   (d)a building consisting of 2 self contained units, known as a ‘duplex’ and used solely for habitation.” 

   However I accept Mr Dudek’s advice that the market at Amity does not differentiate whether for a single dwelling or for duplex units. 

3. The major concern for Mr Flynn in this matter is really the financial commitments to rate charges due to the Redland Shire Council.  While those charges reflect about 15% of Mr Flynn’s current financial resources, they are not a matter for consideration by this Court.  A similar concern was raised by the appellant in the matter of Poole Island Holdings Pty Ltd v Chief Executive, Department of Natural Resources (RV98-913) 25 June 2001, unreported.  In that matter the appellant Dr Rosanove sought to challenge the method of valuation outlined in the Valuation of Land Act 1944;  suggesting that the Act was outdated, and should be amended, a somewhat similar strategy suggested by Mr Flynn.  In rejecting such a proposal the Land Appeal Court noted at para (3):

   “The jurisdiction of this Court on appeal and the Land Court at first instance does not extend to a consideration of such matters as rates or rents, but is confined to valuations made under the Valuation of Land Act 1944.  That was made clear by the Land Appeal Court in NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said at 381:

   ‘The Valuer General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result.  Rates are fixed by local authorities and may be varied annually according to the fiscal requirements of the local authority concerned.  Any such variation may be made at any time during a valuation period and may be entirely independent of a new and increased valuation.’”

4. In the current matter Mr Flynn’s argument has no foundation, as the legislation is the direction of the Parliament.  It is within that context that all parties must seek to determine the unimproved value of the land.  It is this Court’s responsibility to ensure that the Chief Executive follows that direction.  Any amelioration of rate indebtedness to the Council lies within the power of the Council itself to provide a remedy.

Summary:

1. In summarising this matter I am reminded that s.33 of the Act 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.”

   I am also reminded that in respect of a Notice of Appeal an appellant has the onus of proving his case under s.45(4) of the Act, which states:

   “45.(4)  Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.”

   On the evidence Mr Flynn has not satisfied that responsibility in this matter.

Conclusion:

1. Having considered the whole of the evidence I am not persuaded that the appellant has proved his case.  The appeal is dismissed, and the unimproved value of Lot 2 on Plan A 33913 as determined by the Chief Executive in the sum of One Hundred and Eighty-Seven Thousand Dollars ($187,000) is affirmed. 

NG DIVETT

MEMBER OF THE LAND COURT