Gosden v Valuer-General
[2013] QLC 7
•5 March 2013
LAND COURT OF QUEENSLAND
CITATION: Gosden & Anor v Valuer-General [2013] QLC 7 PARTIES: Michael Thomas and Irene Gladys Gosden
(appellants)v. Valuer-General
(respondent)FILE NOS: VLA372-10 and VLA373-10 DIVISION: General Division PROCEEDINGS: Appeals against annual valuations DELIVERED ON: 5 March 2013 DELIVERED AT: Brisbane HEARD AT: Dalby PRESIDENT: CAC MacDonald ORDER: 1. Appeal VLA373-10 is dismissed.
2. The unimproved value of Lot 97 on M606 in the County of Lytton, Parish of Macalister, as at 1 October 2009, is affirmed at Twelve Thousand Dollars ($12,000).
3. Appeal VLA372-10 is allowed.
4. The unimproved value of Lots 94 - 96 on M606 in the County of Lytton, Parish of Macalister, held under Term Lease 211021, as at 1 October 2009, is determined at Forty-five Thousand Dollars ($45,000).
CATCHWORDS: Valuation - unimproved value - residential land - sales evidence - defects of subject land - valuation deemed to be correct.
Valuation - unimproved value of leasehold land - sales evidence - defects of subject land.
Valuation of Land Act 1944
APPEARANCES: Mr MT Gosden in person, for the appellants
Mr P Prasad, Senior Lawyer, Department of Natural Resources and Mines, for the respondent
This decision deals with two appeals by Michael Thomas and Irene Gladys Gosden (the appellants) against annual valuations of two properties, as issued by the Valuer-General (the respondent), as at 1 October 2009, under the provisions of the Valuation of Land Act 1944 (the Act).
The appeals were heard together in Dalby where Mr M Gosden, one of the appellants, appeared for and gave evidence on behalf of the appellants. The respondent was represented at the hearing by Mr P Prasad. Mr S Doyle, a registered valuer employed by the Valuer-General, gave evidence on behalf of the respondent.
Before the hearing, I carried out an inspection of the subject properties in the presence of Mr Gosden, Mr Prasad and Mr Doyle. I found that the inspection assisted me in my understanding of the evidence.
Although the appeals were heard together and the sales and some other evidence were common to both appeals, it is convenient to deal with each appeal separately and to consider appeal VLA373-10 initially.
VLA373-10
This appeal concerns a parcel of freehold land described as Lot 97 on M606, County of Lytton, Parish of Macalister, having an area of 1012 m².
Mr Doyle described the property as comprising near level black soil country cleared to grass. It is situated on an unnamed road off Macalister-Wilkie Creek Road, Macalister, approximately 25 kms radially north-west of the Dalby Post Office. The land is zoned "Small Town" under the planning scheme for the former shire of Wambo, which took effect on 22 April 2005.
Mr Doyle said that access to the property is gained by an unformed road. The access is fair in dry weather, but poor in wet weather. He also said that electricity and telephone services were available for connection to the property, although the availability of electricity was disputed by Mr Gosden. This is discussed further below. Mr Doyle said that the land appeared to have had little recent use as it was covered in long grass at the time of inspection. Two sheds are located on the land.
Mr Doyle's valuation was made by direct comparison with unimproved values derived from sales of vacant residential properties in the locality. He assessed the value of the subject property as at the relevant date at $12,000.
In the notice of appeal, the appellants estimated the value of the subject property as at the date of valuation at $3,500. However, at the hearing Mr Gosden said that he thought that the property was worth $3,000.
Mr Doyle relied on three sales in support of his valuation of the subject property. Each of the sales properties is in close proximity to the subject property.
Sale 1 comprised three 1,012 m² lots with a total area of 3,036 m². The sale took place on 3 May 2006 and the property was sold for $88,500. Mr Doyle analyzed the sale to an unimproved value of $79,500 and applied a value of $67,000.
The sale is located on an unnamed road, approximately 150m south-east of the subject. Electricity was not connected at the time of sale. Telephone services were available for connection. Mr Doyle described the access to the property as via an earth road to the front and a gravel lane to the rear. He said that the property comprised three near level adjoining rectangular residential allotments, each of which was similar in size and zoning to the subject.
Mr Doyle said that the sale is superior in location, services and access, as compared with the subject. Overall he considered the sale to be superior to the subject.
Sale 2 is a 1,012 m² property in the same unnamed road at Macalister which sold on 13 July 2006 for $29,500. Sale 2 lies one lot away from Sale 1. Mr Doyle analyzed the sale to an unimproved value of $26,500 and applied a value of $24,000 to the sale property.
Mr Doyle said that the sale property is located approximately 250m south-east of the subject. Electricity was not connected at the time of sale. Telephone services were available for connection. Mr Doyle described the access as via an earth road.
Mr Doyle said that the sale consisted of a near level rectangular residential allotment which was similar in size and zoning to the subject. In his opinion the sale is superior in location, services and access as compared to the subject, and, overall, he considered the sale to be superior to the subject.
Sale 3 is a 1,012 m² property on the same unnamed road at Macalister which sold on 22 November 2006 for $29,500. Sale 3 adjoins Sale 2. Mr Doyle analyzed the sale to an unimproved value of $26,500 and applied a value of $24,000.
Mr Doyle said that the sale property is located approximately 230m south-east of the subject. Electricity was not connected at the time of sale. Telephone services were available for connection. Access is via an earth road.
Mr Doyle described the sale as a near level rectangular residential allotment which is similar in size and zoning to the subject. Mr Doyle said that the sale is superior in location, services and access as compared to the subject. In his opinion the sale is, overall, superior to the subject.
Comparison between subject and sales properties
The sales properties and the subject suffer from a number of disadvantages which impact on their value. Mr Doyle conceded that many of the disadvantages impacted more severely on the subject than on the sales properties but, he said, he had made allowance for the differing degrees of disability in his valuation of the subject property. Mr Gosden contended that sufficient allowance had not been made for the disadvantages suffered by the subject property.
Location
The subject property and the sales properties are all located one residential lot behind the Warrego Highway, between Dalby and Chinchilla. Traffic on the highway, particularly heavy traffic, is increasing because of the increased resource activities in the Surat Basin. All of the sales properties and the subject are severely affected by the noise of heavy traffic as vehicles travel at speed along the highway. Mr Gosden said that residential use in Macalister is not to be recommended because of proximity to the trains and the highway. However, it appears that the subject and sale properties would be equally impacted by traffic and rail noise and dust.
There are grain silos located across the Warrego Highway from the subject property and, when the silos are in operation, the subject property is adversely affected by both noise and dust from the facility. It is agreed that the sales properties, which are located further away from the silos, are not disadvantaged to the same extent as the subject by the silos.
Similarly there is a coal handling facility down the road from the subject which impacts more severely on the subject than on the sales properties.
In addition, there is a small silo on the property immediately adjacent to the subject to the east. That silo also generates dust and noise, which adversely impact the subject. The sales properties are affected by that operation to a much lesser extent.
Use
Mr Gosden contended that the subject property has no use as a residential lot and that no-one would buy it for that purpose. The subject is located immediately to the east and south of a large leasehold property which is the subject of the other appeal dealt with in this decision, VLA372-10. In Mr Gosden's opinion, the subject freehold and the leasehold property should be valued as one property.
There is no provision in the Valuation of Land Act enabling freehold and leasehold land to be valued together. In any event, the subject lot has a different use from the leasehold property as discussed further below. It follows that the subject property must be valued separately as a freehold residential lot.
Access
On the face of it, access to the subject property and the sales properties is similar, that is, access is from the Warrego Highway via, initially, a gravel road and then via an unformed road, to the respective properties. As the properties are located in black soil country, access becomes difficult in wet weather. However, Mr Gosden's evidence, which I have accepted, was that the access to the subject property is worse than the access to the sales properties, because of two drains causing water impacts on the subject property. In wet weather the water is channelled along an unformed road to the west of his property and spreads out from there to the subject property. By contrast, in recognition of the fact that the sales properties are located in the "town", their access road has been built up to some extent and the sales properties therefore suffer less severely in wet weather.
Electricity
Mr Gosden challenged Mr Doyle's evidence that electricity was available to the subject property. Mr Gosden said that a power line would have to be brought across from the silo facility on the far side of the Warrego Highway to the subject property and that this could only be done at some considerable expense. It appears that an electricity connection was available to the sale properties as at the date of the sales.
Conclusions
Section 13 of the Act requires the Chief Executive to decide the unimproved value of the land to be valued for the Acts under which local authorities are established.
Section 3(1)(a) provides that, for the purposes of the Act, unimproved value of land means "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".
In NR and PG Tow v Valuer-General[1], the Land Appeal Court said:
"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 overanxious parties."
[1] (1978) 5 QLCR 378 at 381.
Thus, where possible, the unimproved value of the subject land is to be determined by sales of comparable unimproved properties on the open market. It follows that the unimproved value represents the market value of the unimproved land as at the date of valuation. Mr Gosden apparently thought that the market value of the subject was different from the unimproved value. That is not the case for a valuation made under the provisions of the Valuation of Land Act. Mr Doyle selected sales of properties that are similar to the subject and therefore the methodology he has adopted, is, in principle, the appropriate way in which the unimproved value of the subject, as at the relevant date, is to be ascertained.
The sales relied on by Mr Doyle lie very close to the subject property and are zoned for similar use. Further, Sales 2 and 3 are parcels of land of the same size and use as the subject, whereas Sale 1 comprises an aggregation of three individual lots each of which is the same size as the subject. Because of their proximity, use and general location, I consider that the sales are properly described as comparable with the subject.
However the sales took place in 2006, some three years before the date of valuation. In my view, sales transacted that length of the time before the date of valuation must be treated with some caution. Mr Doyle's evidence was that there were no other sales comparable with the subject in a better timeframe. Further, Mr Gosden was unable to point to any better sales evidence.
Mr Doyle also said that the market had continued to improve in the period between the dates of sale and the valuation date. While it is accepted that the market did improve between 2006 and 2009 in the general area of the subject, it is difficult to know whether that increase applied in Macalister, given that there were no sales in that particular locality. Similarly, of course, there were no sales to demonstrate that the market had decreased in Macalister in that timeframe. It appears to me that the market in Macalister probably remained stable between 2006 and 2009 and, therefore, I have accepted that it is appropriate to rely on Mr Doyle's sales evidence for the purpose of this valuation.
Mr Gosden produced no sales evidence to support his estimate of value of the subject at $3,000. His main submission was that Mr Doyle had not made sufficient allowance for the disadvantages suffered by the subject property as compared with the sales properties.
Mr Doyle applied the sales evidence as follows - Sale 1 at $67,000, Sale 2 at $24,000 and Sale 3 at $24,000. He has applied a value of $12,000 to the subject property. That is, Mr Doyle has made an allowance of some 50%, in comparing the subject with Sales 2 and 3, for the additional disadvantages suffered by the subject property as compared with those sales. In the absence of any valuation or sales evidence demonstrating that that is an insufficient allowance, I have accepted Mr Doyle's professional opinion as a valuer that that is an appropriate allowance.
It is noted that s.33 of the Act provides that any valuation made under the Act by the Chief Executive shall be deemed to be correct until proved otherwise. Mr Gosden has not established that the valuation is incorrect.
Accordingly, the appeal must be dismissed and the valuation issued by the respondent of the subject land at $12,000, as at 1 October 2009, affirmed.
VLA372-10
This appeals concerns a parcel of leasehold land described as Lots 84-96 on M606, in the County of Lytton, Parish of Macalister, held under Term Lease 211021. The lease was granted for commercial/business purposes for a term of 20 years commencing on 8 August 1998 and has a total area of 1.3156 ha.
Mr Doyle described the subject property as near level black soil country, lightly timbered with scattered trees. The property is situated on the Warrego Highway, Macalister approximately 25 kms radially north-west of the Dalby Post Office. The property adjoins Lot 97 on M606, which is owned by the appellant and is the subject of the appeal in VLA373-10.
The subject land is zoned "Small Town" under the planning scheme for the former Shire of Wambo which took effect on 22 April 2005. Mr Doyle said that the land is currently used for business purposes which use is permitted under the Town Planning Scheme.
Mr Gosden's evidence was that the subject property suffers similar disadvantages to those of the subject in appeal VLA373-10 in relation to location, use, access and electricity supply.
Mr Doyle said that access to the subject property is gained from the Warrego Highway which is bitumen sealed. Alternative access is available from an unformed road at the rear of the property. Mr Doyle's opinion was that reasonable access is available to the land. However Mr Gosden challenged this evidence because he had made enquiries both of the local authority and the Main Roads department and had been advised that under no circumstances would access be allowed from the highway. Accordingly, in Mr Gosden's opinion, access to the subject would only be possible via the unformed road at the rear of the property. That road becomes impassable in wet weather.
I have accepted Mr Gosden's evidence that his advice was that direct access would not be allowed from the Warrego Highway to the subject. Accordingly I consider that the only likely access to the subject is via the unformed road at the rear of the property, with all its disadvantages.
Apart from the difference between the parties as to access to the subject, the other physical disadvantages suffered by the subject are the same as those discussed above in relation to appeal VLA373-10. It is unnecessary to repeat that evidence here. As with VLA373-10, Mr Doyle said that he had made allowances for the additional disabilities suffered by the subject, as compared with the sales.
Mr Doyle made the valuation by direct comparison with unimproved values derived from sales of properties in the locality. The valuation issued initially at $160,000 and an objection to that valuation by the appellants was disallowed. However at the hearing of the appeal, the respondent, through Mr Doyle, led evidence to a value of $50,000.
In their notice of appeal, the appellants estimated the unimproved value of the subject land at $42,000. However, at the hearing, Mr Gosden said that he thought that the property was worth $39,000.
Mr Doyle relied on the same three sales in support of his valuation of this property as he had used in relation to VLA373-10. It is unnecessary to traverse the details of the sales in detail again, but the following is to be noted. In relation to Sale 1, Mr Doyle said that the sale is smaller in size and similar in location, services, access and zoning, as compared with the subject. Overall the sale is superior as it comprises three separate lots. He said that Sale 2 is smaller in size and similar in location, services, access and zoning to the subject. Overall he considered that the sale was inferior to the subject due to its smaller size. He made the same overall comparison between the subject and Sale 3.
The only sales evidence adduced by Mr Gosden in relation to this appeal related to an industrial property in Dalby which had sold recently for just over $200,000. That sale may have been relevant to the valuation of the subject at $160,000, but became irrelevant when the respondent contended for a value of $50,000. In any event it does not support a value of $39,000 for the subject.
Conclusions
Although the subject land is held on leasehold tenure, s.14(1) of the Act provides that, for the purpose of deciding the unimproved value of land that is not granted in fee simple, the land is taken to be land granted in fee simple. However s.14(5)(b) provides that, in making the valuation of the unimproved value of any land in a lease held under the Land Act 1994, the unimproved value of that land shall be determined having regard to and making proper allowance for any restriction or limitation of use, having regard to the purpose and condition to which that lease is subject.
Relevantly, the conditions in the lease in this case provide that the lessee shall use the leased land for commercial/business purposes. The lease also provides that the lessee shall, within two years from the commencement of the term, construct a weighbridge on the lease land. This has not been done, because as Mr Gosden explained, the use of weighbridges has become obsolete because of improved technology. The lease also provides that the provision of further access and services to the lease land will not be the responsibility of the local government or the State.
As the sales properties were described by Mr Doyle as residential land and the subject land is to be used for commercial/business purposes only, it appears at first sight that the sales are not comparable, in terms of use, with the subject property. However Mr Doyle's evidence was that the sales are zoned "Small Town" under the relevant planning scheme and that the effect of this zoning is that the sales properties can be used for commercial or residential purposes. That being the case, there is some comparability between the sales and the subject in terms of use, although the use of the subject is more restricted than the sales because the subject cannot be used for residential purposes, under the terms of the lease.
On that basis, and because there is no other relevant sales evidence before me, I have accepted that the sales may be used for the purposes of valuing the subject property. However, I consider that an adjustment must be made to allow for the differences in use between the subject and the sales.
Mr Doyle has reduced the original valuation of $160,000 to $50,000. The aggregation of the three residential lots in Sale 1 was applied at a value of $67,000. The sale is considerably smaller than the subject. Although Mr Doyle did not explain how he allowed for these differences, it appears that, in applying a value to the subject of $50,000 as compared with the values applied to the sales properties, Mr Doyle has made a substantial discount for the disadvantages suffered by the subject property. However it appears that Mr Doyle made no allowance for the fact that access is unlikely to be available to the subject from the Highway, or the restricted use of the subject as compared with the sales.
As the value contended for by the respondent in this appeal ($50,000) is not the value issued by the respondent ($160,000), the respondent does not have the benefit of s.33 of the Act. That is to say the value contended for by the respondent is not deemed to be correct.
As I have found that Mr Doyle did not allow for some disadvantages suffered by the subject, I consider that a further allowance should be made. Doing the best I can, I will allow a further $5,000.
Accordingly the appeal will be allowed and the unimproved valuation of the subject property determined at $45,000.
ORDERS
1.Appeal VLA373-10 is dismissed.
2.The unimproved value of Lot 97 on M606 in the County of Lytton, Parish of Macalister, as at 1 October 2009, is affirmed at Twelve Thousand Dollars ($12,000).
3.Appeal VLA372-10 is allowed.
4.The unimproved value of Lots 94 - 96 on M606 in the County of Lytton, Parish of Macalister, held under Term Lease 211021, as at 1 October 2009, is determined at Forty-five Thousand Dollars ($45,000).
CAC MacDonald
PRESIDENT OF THE LAND COURT
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