Galloway v Chief Executive, Department of Natural Resources
[1997] QLC 90
•12 June 1997
LAND COURT BRISBANE 12 JUNE 1997
[1997] QLC 90
Re:Appeal against Annual Valuation Valuation of Land Act 1944 - Valuation Roll No: 5358
Local Government: Warwick (AV96-538).
Peter S & Heidi W Galloway v.
Chief Executive, Department of Natural Resources (Hearing at Warwick)
DECISION
Background:
This matter relates to a property in Poinsettia Street, Town of Killarney, situated about
1.3 km south of the Post Office. The land is described as Lot 48 on RP 844565, has an area of 2 ha, and is zoned “Rural B” under the former Glengallen Shire Town Plan of 8 March, 1985, and effective at the date of valuation at 1 January, 1996. Poinsettia Street is bitumen sealed, and there is good access to the subject, although there is a watercourse on the eastern side of the property running south to north-west. The key issues were the comparison of sales of comparable properties, and the sale of the subject.
The property is undulating with an easy to moderate ridge sloping towards the north. It has extensive rural views. The Chief Executive, Department of Natural Resources on 11 March, 1996 issued a valuation to $43,000. Following an objection the Chief Executive amended the valuation, and on 11 September, 1996 reissued the valuation at $37,000. The appellants have appealed that valuation claiming the figure should more properly be $26,000.
Mr F R Grayson, a real estate agent in Killarney, appeared for the appellants, providing evidence for the appellants in support of their written statement to the Court. Mr D Coe, Senior Valuer, appeared for the respondent, calling evidence from Mr Anthony B Cowley, the Departmental Registered Valuer responsible for the valuation, which was originally determined by another valuer subsequently transferred to Rockhampton.
Evidence:
Mr Grayson argued that the value is inappropriate as an unimproved value as the owners have been unsuccessful in marketing the land as an unimproved site for an amount less than $37,000. Mr Grayson also noted that any possible potential for the land to be considered
for subdivision is mitigated against by the watercourse down its eastern side. There was no room to build a house east of the watercourse on the subject. He claimed the subject only had value as a large single residential lot, with a building site only either in the middle of the lot or towards the western boundary. The watercourse was about 4 metres wide and 1.5 metres deep. While the watercourse is not steep, it is currently traversed by a pipe culvert and a formed gravel crossing. The subject was the balance area of a subdivision to the south of the subject into 17 large homesites on top of the ridge surrounding Condamine Street. While the better land was in those homesites, the subject has extensive views covering a 200 degree vista.
Mr Cowley argued that while sales of vacant land had been very slow, he had based his valuation upon two sales of comparable land:
Sale 1 - (Poinsettia Street, Killarney - Lot 48 on RP 844565)
This was a sale of the subject to the current appellants in October 1993, for $40,000. After allowing for improvements the sale was analysed to an unimproved value of
$37,000, and an applied unimproved value of $37,000.
Sale 2 - (Kurrajong Street, Killarney - Lot 3 on RP 844565)
This is a 1733 m2 lot about 170 metres north of the subject, and zoned as “Residential”. The sale slopes towards the north and has concrete kerbing and channelling. The sale is similar in location, inferior in elevation, outlook and area. Overall the sale is inferior to the subject. The sale sold in August 1995 for $14,000, which after allowing for improvements provided an analysed unimproved value of $13,300, and an applied value of $12,000.
In comparison to those sales, Mr Grayson provided evidence of recent lots sold in the vicinity.
Parcel 3 - (Cedar and Olive Streets and Waterflood Road, Killarney - Lot 1 on RP 91913).
This is a hatchet shaped lot with an area of 1.873 ha, sloping from Cedar Street towards the east. There is a gully running through the sale from Waterflood Road to Olive Street. The parcel is approximately 440 metres east of the subject. The parcel fronts 3 streets, and has the potential for future subdivision, and has an old dwelling upon it. There are more extensive views towards the east and south-east, but less views than the subject to the west. Overall the parcel is seen as slightly inferior to the subject. Mr Grayson provided no details of the sales.
Parcel 4
This parcel is in north Killarney on a hill on the northern part of the town, with 360 degree views. It is used for cattle grazing, and Mr Grayson was not aware whether Parcel 4 was subject to a concessional valuation under s.17(2) for farming purposes. It was confirmed by Mr Cowley that this was a concessional valuation under s.17(2). Mr Grayson provided no details of the sale.
Parcel 5 - (Oak Street, Killarney - Lot 1 on RP 25362).
This parcel is located about 1350 metres east of the subject. The parcel has an area of 2023 m2, and has 360 degree views. Both parties agree this was a “special” property
because of the extensive views, special elevation, and its level topography. Mr Cowley was aware of the sale and had not used it in his determination in view of the date of the sale at $20,000 on 19 September, 1996, as this was after the date of issue of the valuation.
Both parties agreed that the sales in the Warwick Shire have been slow, but Mr Cowley noted that the recent sale of Parcel 5 in Oak Street confirmed that the market had not fallen overall. In comparing the subject to the sales, Mr Cowley argued that Sale 2 does not have the same views as the subject, but although it was lower in elevation it would still have good views to the north. He agreed with Mr Grayson that while the subject was about 3 times the area of Sale 2, there was a similar comparison between the values of the two parcels.
In comparing the subject to Parcel 3, Mr Grayson agreed that, as there was a house on the parcel, the land had been valued as a single residence, and not for its subdivisional value. He also agreed that as Parcel 3 was at a lower elevation than the subject the views from Parcel 3 were not as extensive. Mr Cowley confirmed that the subject had been valued as a single homesite and not for primary production purposes. He also confirmed that while the subject did have some “exposure” to the west, that was more than counterbalanced by the excellent views to the west.
Decision:
In respect of any relativity between the subject and Parcels 3 and 4, I note that the appellants have sought to draw a comparison to show that the current valuation at $37,000 is too high. However Mr Grayson was unable to quantify his valuations for either Parcel 3 or Parcel 4, and the physical descriptions of the nature of the parcels is of no help to me in arriving at an appropriate value for the subject. It may have been helpful had the appellants been able to identify the actual unimproved values of Parcels 3 and 4. However as Mr Cowley pointed out Parcel 4 is valued with a different land use classification (farming) to the subject, and any direct comparison is therefore inappropriate.
I turn now to the comparison of sales of comparable properties supplied by Mr Cowley. I note basically that he has really only supplied one inferior comparison in Sale 2 ($14,000) and the actual sale of the subject in October 1993 at $40,000. In respect of whether weight should be applied to the analysis of Parcel 5, I note Mr Cowley’s conclusion that the sale occurred after the date of issue of the valuation, and is therefore not applicable to the 1996 valuation. In this matter I seek guidance in RG Murray v. The Valuer-General (1983) 9 QLCR 35 where the Court found at p.36:
“As is stated in the decision handed down by the learned President, the Land Court, and on appeal the Land Appeal Court, can only consider the primary production activities carried on on the land between the date of the valuation (31st March,
1980) and the date of the issue of the valuation (12th February, 1981).”
While the sale of Parcel 5 has been noted as a sale of a “special” parcel in Killarney by both parties, it’s date of sale precludes the sale from being considered in this case.
While evidence was supplied that the building lots in Condamine Street to the south of the subject were the prime building lots in the area, because they were at the top of the ridge, there was no evidence supplied of any relevant sales or unimproved values of those lots. For this reason I must confine my considerations to the weight that should be applied to the sale of the subject to the appellants. This is really the key to the determination.
In considering the sale of the subject I am drawn to the conclusion in The Chief Executive, Department of Lands v. J and L Lorenzen (AV93-22) (LAC), 1 June, 1994 (unreported), where the Land Appeal Court found at p.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 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 land.”
The matter of the weight to be placed upon a sale of the subject was also discussed in
Inez Investments Pty Ltd v. J L Dodd (1979) 26 The Valuer No.6 at p.505:
“Where a valuation of a piece of real estate is sought as at a particular date the most relevant information for analysis is the sale of that very property, if there be one, at or close to that date. --- A prime matter for investigation when a valuation is sought is to ascertain whether there is current a contract for sale of the property and, if so, to make an analysis of that sale to see how it complies with the test of value as laid down in Spencer’s case. Failure to carry out these functions is to risk ignoring the best evidence of value.”
That decision drew heavily upon the High Court of Australia in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418, where Griffith CJ said at p.432:
“In my judgement 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, ie 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.”
The Spencer test has long been seen as the benchmark for all comparisons of bona fide
sales. The key to that test is the understanding of what constitutes a prudent transaction.
From the evidence it is agreed that the subject is really only a large homesite, and has been valued accordingly. Sales of other single residence sites have been supplied, all within a range up to $20,000, even the sale in Oak Street which was seen as a “special” site by both parties. Had there been evidence say of sales within the Condamine Street area just south of the subject, this may have been helpful in determining whether the sale of the subject at $40,000 was out of line with the market for large homesites. Any such sales, had they existed, may have either supported the sale of the subject, or confirmed it’s lack of relativity with surrounding parcels. It is also noted that the sale of the subject occurred in October 1993, prior to the relevant period for determining the 1996 valuation.
While I have no evidence that the sale to the appellants in October 1993 was anything other than an arms length normal transaction, the supporting sales evidence appears to indicate that the appellants may have paid a high price for the land at that time. However it is not the role of the Court to speculate on these matters, and I must accept the evidence supplied, unless it has been discredited by the appellants. In this case the appellants have not done so.
Summary:
In determining amendments or alterations to the valuation, the onus of proof rests upon the appellants under s.33 of the Valuation of Land Act 1944:
“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.”
In summarising, I believe that the appellants have failed to satisfy that the Chief Executive has failed to take full consideration of all of the factors affecting the subject in accordance with the Act. In this regard I believe the appellants have not sought to challenge the weight which should be placed upon the sale of the subject, nor sought support in other sales that may have indicated whether that sale was in line with the market.
Conclusion:
After having considered the whole of the evidence, the appeal is dismissed, and the unimproved value of Lot 48 on RP 844565, as determined by the Chief Executive, Department of Natural Resources, in the sum of Thirty-seven Thousand Dollars ($37,000) is affirmed.
DR N G DIVETT MEMBER OF THE LAND COURT
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