Hamilton v Chief Executive, Department of Lands; Suita v Chief Executive, Department of Lands
[1996] QLC 157
•6 December 1996
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BRISBANE
6 DECEMBER 1996
In the matters of appeals against valuations
Valuation of Land Act 1944
Valuation Roll No.: 31793 (AV95-213)
Local Authority: GCCC-Albert
Kathleen BS Hamilton
v.
Chief Executive, Department of Lands
Valuation Roll No.: 31793/20000 (AV95-238)
Local Authority: GCCC-Albert
Hirochiyo Suita
v.
Chief Executive, Department of Lands
(Hearing at Coolangatta)
D E C I S I O N
The appellant in the Suita appeal has appealed against the valuation of $215,000 placed on land owned by the appellant by the Chief Executive pursuant to the provisions of the Valuation of Land Act 1944 as at a relevant date of 1 January 1995. In her Notice of Appeal the appellant said that the land should be valued at $148,500, however, in evidence expressed this somewhat differently saying that the valuation should be no greater than $165,000.
In the Hamilton Notice of Appeal the appellant said the value which ought to apply to the land should be $85,000, however, evidence was led to the effect that the valuation should be not greater than $100,000. The Chief Executive had applied a valuation of $130,000 to this land.
The parties agreed that both matters would be heard together with the evidence being directed mainly towards the Hamilton land to set a benchmark, as it were and for the valuation thus struck to be multiplied by a factor of about 1.65 to arrive at the valuation on the Suita land. Both parcels of land are located in Carrara Road, Carrara, in the local authority area of the Gold Coast City Council. The Suita land comprises Lots 8 and 9 on RP 136653 and has an area of 2,246 m². The property is used for residential purposes, has a residence constructed on one of the lots with the other being applied to a garden and recreation area. Accordingly, the joint allotments were valued by the Chief Executive as a single residential site in accordance with the provisions of s.17(1) of the Act:-“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.”
The Hamilton land is also used for residential purposes and is described as Lot 7 on RP 136653, having an area of 1315 m².
Both properties are situated in the suburb of Carrara about 6 km west of the Broadbeach Post Office and surf beaches. Carrara Road is a full-width bitumen sealed road with concrete kerbing and channelling and provides easy access to these lands. Overhead power supply, town water, sewerage and telephone are available to the properties.
The Suita land comprises two rectangular shaped lots with a 40.8 metre frontage to a tidal canal off the Nerang River. Frontage to Carrara Road is also 40.8 metres. The block has been filled and has a revetment wall constructed along the water frontage. The Hamilton land comprises a rectangular shaped lot with frontage to the same tidal canal of 23.9 metres, the same distance as the frontage to Carrara Road. This block has also been filled and has a revetment wall constructed along its water frontage.
It is useful at this stage to make reference to some matters of general principle and law which guide certain important aspects of my considerations. Section 45(4) of the Valuation of Land Act 1944 provides with respect to a notice of appeal:"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." (emphasis added)
The grounds of appeals in these matters were set out comprehensively and I will not repeat them here, however, they generally constitute the matters raised in evidence and with which I deal in detail in the body of this decision.
Section 3(1)(b) of the Valuation of Land Act provides a definition of “unimproved value” which is applicable in the subject case:“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.”
The manner in which improvements are to be treated on a piece of land to be valued for the purposes of the then New South Wales Legislation which included provisions similar to s.3(1)(b) mentioned above is expressed in Toohey’s Ltd v. Valuer-General (1925) AC 439. At page 443 of this case the Privy Council said:
“Now, what he (that is, the valuer) has to consider is what the land would fetch as at the date of the 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 had never existed.”
Having regard to the law that I have outlined above, I am to proceed as if the subject house, and other improvements were not there and, in fact, had never been there and to consider the appeal and the value of the notionally vacant or unimproved land on that basis. I must, however, consider the improved environment in which the subject land is located, both in terms of the advantages and disadvantages of that environment.
Charles John Hamilton appeared as agent for both appellants and gave evidence in support of the appeal. Mr Hamilton tendered statements in each matter. Mr Hamilton is an export marketing consultant who lives at Carrara Road, Carrara.
I will mention first of all the concerns raised by the appellants at the level of increase in the valuation of the subject land since the previous valuation which was made in 1993. The increase was calculated at 30.3%. The concern was not simply one, however, of complaining about the quantum shift in valuation, but it appeared to the appellants that such increase was taking place in what appeared to be a depressed residential market. In regard to this concern, I must point out that it is not appropriate for this Court to direct its mind to the issue of differences between valuations at particular relevant dates in considering a specific appeal. By way of example, I refer to McMurray v. The Valuer-General (1983) 9 QLCR 35 where the Court said:“Every revaluation requires consideration of the evidence as it exists at a particular date.”
So my focus must not be on the matter of trends which may be revealed accurately or otherwise in calculations or in observations in the marketplace, but rather with those matters that indicate the unimproved value of the subject land at the relevant date. In considering the question of what a valuation is, reference to two cases may be of assistance, albeit a glimpse only of a larger canvas of the practice and law of valuation. The practice of land valuation is an exacting one involving not only professional qualifications and skills but also access to relevant market information and experience in the area under consideration.
The first authority that I will refer to is Spencer v. Commonwealth (1907) 5 CLR 418 where, in his judgment, 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, that is, 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."
Another useful case is found in River Bank Pty Ltd v Commonwealth (1974) 48 ALJR 483 where the Court said that use of sales evidence was "the conventional valuation" method and in this regard sales of similar land around the relevant date and in the same locality are clearly to be preferred.
The appellants’ view of a depressed market in the Carrara area was based on some sales of improved properties to which I was referred in evidence. No. 7 Carrara Road sold in 1993 for $275,000, then resold in 1994 at $250,000, revealing a reduction of $25,000. I was also referred to the property at 22 Carrara Road which in 1993 was passed in at auction at $410,000, then sold in 1994 for $370,000. Whilst this property was referred to as evidencing a reduction in value of $40,000, I cannot accept it as showing that as there are not in fact two transactions, but only a transaction at a lower level to that indicated by the opinion of someone who placed the reserve price on the property in 1993. The appellants contend that 22 Carrara Road has a house “replacement value” of $250,000, leaving a land value of $120,000. Similarly, reference was made to a property at 74 Fitzwilliam Street which sold in 1994 for a price of $301,000, it being suggested that the house “replacement value” was of the order of $150,000 to $180,000. The property at 50 Fitzwilliam Street was also cited, selling in 1994 for a price of $299,500 with a house “replacement value” of approximately $250,000.
Put briefly, this evidence cannot be relied upon as indicating a depressed market and even if such a depressed market existed, there is nothing to say that this applied to unimproved land sales. The reference to “replacement value” of houses on the various sale properties mentioned is not sufficient in its detail or analysis to reveal the unimproved value of the land content in each case. “Replacement value” is not consistent with what is required in the consideration of improved sales in a matter such as this where, if one is to proceed by way of the analysis of improved sales, it is the “added value” of improvements which needs to be deducted from the sale price to reveal the unimproved value and it becomes a matter of ascertaining the amount which the hypothetical prudent purchaser, fully appreciative of the state of the market, would give for the actual improvements irrespective of the cost of making them. (O’Brien Nominee Pty Ltd v. Valuer-General (1979) 6 QLCR 280 at 285.) It is, for example, a not uncommon feature of the Gold Coast real property market for houses, which are perfectly habitable, to be demolished after sale and be replaced by a more modern structure. In such instances, those demolished houses add no value to the land. (Valuer-General v. Fenton Nominees Pty Ltd
(1982) 150 CLR 160).
Valuation evidence on behalf of the Chief Executive was given by David Robert McKinnon, a registered valuer employed by the Department of Natural Resources, which includes the former Department of Lands. Mr McKinnon referred to a sale of a vacant block of land at 28 Fitzwilliam Street which sold in 1994 for $265,000. This evidence was produced, as I understood it, to indicate the level of vacant land values in Fitzwilliam Street and thus to challenge the value of improvements attributed to sales referred to by Mr Hamilton. There was a lengthy exchange during oral evidence concerning the question of whether depreciation ought to apply with respect to houses on the sale lands referred to by Mr Hamilton; however, it seems to me that on the evidence that I heard there is no need for me to decide this question, nor to decide the question of the value of improvements on Mr Hamilton’s sale properties. This is because Mr McKinnon referred to four sales, each of which was lightly improved, with site works only, and it is this evidence which I would express a strong preference for when confronted with the task of having to determine an unimproved value. I am supported in this view by the often-cited authority of Clough v. The Valuer-General (1981-82) 8 QLCR 70 at 76 where the Land Appeal Court said this:"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."
Before considering Mr McKinnon’s sales, however, I will refer to certain disabilities concerning the subject lands which Mr Hamilton referred to in evidence. He said that acid sulphate leachate produced as a result of land development has created a situation where the canal system is regularly subject to iron blooms, deleteriously impacting upon marine life and resulting in long periods of putrid smells. He said also that since the construction of the Southport Seaway water levels had risen significantly in the last five years, as has water velocity in tidal canals. He said that excessive river noise from boats and jet skis impacted on the subject properties. In addition to this, there is an apparently ungazetted boat ramp at the end of Carrara Road which results in heavy weekend traffic using the street and in cars parking in Carrara Road and Fitzwilliam Streets. Mr Hamilton also mentioned that Carrara Road and Witt Avenue are used by “rat runners”, that is people attempting to avoid traffic banking up at the Carrara Markets which are nearby. He also explained that there were ongoing rumours of a proposed bridge construction to link Carrara Road with Benowa Road across the river and that this had a negative impact on sales in the area. Finally, he mentioned that the subject lands, together with other lands on the same side of Carrara Road, were some 10 cm lower in elevation than other lands in the area owing to a mistake made during the development of the land. He said that this lower elevation exposed the subject lands to a threat of inundation in times of flood and he based his conclusion on a 1991-1992 DPI Flood Study and on observations made during the 1974 flood. The referred to flood study was not produced in evidence, nor was it called for by the Chief Executive’s side.
Three of the sales referred to by Mr McKinnon are in the immediate vicinity of the subject properties and each is located on a canal. Accordingly, the problems of sulphate leachate, the impact of the Seaway development, noise from the river and the impact of rumours of a bridge construction would all feature in the prices paid for the sale lands. It follows that I do not need to consider whether any specific allowance needs to be made for these matters, as these factors would be reflected in the prices paid for the land to the extent that the market consider such factors to be relevant. Sale 1 is located in Carrara Road, whilst Sale 2 is in Witt Avenue and these properties would be impacted by the “rat runners” in a similar way to the subject properties. Again, therefore, to the extent that these sales compare with the subject lands, I can put this issue aside. Similarly, Sale 1 would be impacted by the boat ramp and resultant car parking and weekend traffic, as would the subject lands. There would therefore be no call for separate consideration of these matters in the case of the subject properties, as long as Sale 1 is a suitable basis: a matter I consider further below. The question of the lower elevation of the subject lands may also be catered for in the application of Sale 1 as this property is located on the same side of Carrara Road as the subject properties are. I will, however, come to this matter in further detail.
I will now consider Mr McKinnon’s treatment of the sales evidence he relied on and, in particular, the comparison of those sales with the Hamilton land. Mr McKinnon’s Sale No. 1 is located at 8 Carrara Road, Carrara, has an area of 1123 m² and sold for a price of $135,000 in 1993. Mr McKinnon deducted $14,187 for improvements comprising filling ($10,107) and revetment wall ($4,080), revealing an unimproved figure of $120,813 which he applied at $117,000. He said that the sale property is inferior to the Hamilton land due to its smaller size, position towards the end of the canal and proximity to the Nerang/Broadbeach Road. The sale property subsequently resold in October 1994 for $185,000, however, the later transaction did not feature in establishing the Chief Executive’s valuation of the Hamilton land as at 1 January 1995. Mr Hamilton challenged the 1994 sale of this property on the basis that it reveals a high price paid for the last available block in Carrara Road and therefore ought to be disregarded. Given that the 1994 sale was not relied upon in striking the Chief Executive’s valuation, I see no need to determine this issue, however, would say as a general proposition that I do not accept Mr Hamilton’s view of the transaction, particularly in circumstances where other vacant lots are available in the marketplace. It would be a rare circumstance for a purchaser to have one choice only and therefore to be confronted with the undue pressure of competition from other potential purchasers. Putting that matter aside, it seems to me that the level of the 1994 transaction can at least be relied upon to indicate that the application of the 1993 sale by Mr McKinnon is at an appropriate level. That is, there was nothing to indicate that the 1993 sale is above market.
The second sale referred to by Mr McKinnon is located at 105 Witt Avenue, Carrara, has an area of 787 m² and sold in August 1994 for $150,000. Mr McKinnon deducted $12,266 (sic.) for improvements in the form of filling ($7,083) and revetment wall ($5,188), resulting in an unimproved figure of $137,734 applied at $124,000. Given the proximity of the sale block to the Nerang/Broadbeach Road, its smaller size and irregular shape, Mr McKinnon saw this sale as being inferior to the subject land.
Mr McKinnon’s third sale is located at 31 Goolagong Court, Cypress Gardens, having an area of 804 m², selling in August 1994 for $150,000. Mr McKinnon deducted $12,236 for site improvements, including filling ($7,236), and revetment wall ($5,000), yielding an unimproved figure of $137,764. The sale was applied at $135,000. He said that the sale property is comparable to the subject, having a smaller area, narrower frontage and exposure to the Nerang/Broadbeach Road, however, the sale property has a superior location, being located closer to surf beaches and shops. He concluded that overall the sale property was considered slightly superior to the Hamilton land.
The fourth sale relied on by Mr McKinnon has its address at 20 Coolong Crescent, Carrara, an area of 767 m², having sold in November 1994 for $172,000. Mr McKinnon deducted $11,528 for site improvements including filling ($6,903) and revetment wall ($4,625), revealing an unimproved figure of $160,472 applied at $155,000. In comparing the sale with the Hamilton land he said that whilst the sale was smaller in area, it is located on a quieter street and is opposite a park and therefore, overall, is superior.
Apart from the comments which Mr Hamilton made regarding Mr McKinnon’s first sale, his comments regarding the sales were confined to two points. First, he noted that whilst Sales 2 and 3 were proximate to and therefore affected by noise from the Nerang/Broadbeach Road, that there is a vegetated median strip separating the sale lands from that road, therefore reducing the noise impact somewhat. His second criticism was to say that the sales were “selected” and by this I take him to have meant that only sales which would support a high value were chosen, however, there was no evidence from his side to suggest that a lower level of vacant land sales existed in the area. It follows that the comparison made by Mr McKinnon with the Hamilton land remained largely undisturbed , putting aside the matters with which I will now deal. Mr Hamilton was particularly concerned at the level of value attributed to site works on the sale lands. He referred to different values for improvements which, in his view, would apply to the Hamilton land:-
Fill $25,000
Canal Wall $10,000
Canal Entrance $500
Grassing $500
Trees $20,000
Now in respect of these, neither grassing nor trees would fall for consideration as none of the sale properties were so improved: that is, in comparing like with like there is no benefit in valuing improvements on the subject land which do not feature in the sales. Insofar as canal entrance is concerned: this cost was not explained and in any event does not comprise a figure of any real impact in the totality of the subject valuations. The value of fill and the canal wall are, however, matters of somewhat more significance. By way of comparison, Mr McKinnon placed a value of about $10,000 on the revetment wall on the Hamilton land on the basis of a 23.9 metre frontage costed at $250 per lineal metre. He estimated that fill on the subject land was to a depth of about 2 metres, to which he applied a rate of $4.50 per cubic metre. The applied rates were based on the proposition of the subject land being developed as part of an overall estate in accordance with the methodology approved in Alfred Grant Estates (Surfers Paradise) Pty Ltd v. The Valuer-General (1966) 33 CLLR 1 at 7:
“It seems to us that when a development scheme is put into operation, involving the filling and top-dressing of large areas of country, and the work is carried out as one operation, the cost of developing one unit, whether an acre or a perch, should be assessed on the contractor’s price, which is applicable to the whole of the area being developed, in this case apparently 2s. 6d. per yard. It would not seen reasonable to us, in calculating the cost to a subdivider of developing one residential site, the development of which involved filling and top-dressing, carried out as part of a scheme of development, to envisage that site alone as unfilled while all around it were filled sites, and to base costs of filling the block upon bringing plant and equipment and labour specially to that site for the sole purpose of filling it and then departing.”
Mr Hamilton’s treatment of the question of the value of fill on the subject land was to adopt a figure apparently provided to the respondent Department some three to four years previously by Mr Hamilton’s father, to which a slight increase to account for inflation was added. Mr McKinnon’s view was that such costs should not be inflated as they had remained stable for some years owing to technology improvements. The earlier figure was $20,000 which Mr Hamilton escalated to the $25,000 he contends for in this matter. He adopted the same source with respect to the value to be placed on the revetment wall, but he mentioned also that he had regard to repair costs for similar canal walls in other developments. No evidence of such repair costs was actually tendered.
On the evidence that I heard, I would express preference for the approach and the level of values for improvements included by Mr McKinnon. His figures were more appropriate to the current cases and revealed somewhat more discipline than the appellants’ method. The figures utilised for improvements were consistent throughout the sales referred to by Mr McKinnon and I saw nothing in the evidence adduced by Mr Hamilton which would lead me to carry out a recalculation of the analysed unimproved value in the case of each of those sales. Certainly the figures supplied by Mr Hamilton’s father to the respondent Department may have been accepted at that time, however, I must determine this case on the evidence put before me.
Having decided that I would prefer Mr McKinnon’s evidence concerning the value of site improvements, I should return to the question of the elevation of the subject lands compared with others in the area. Mr Hamilton’s evidence that the subject lands were filled to a level 10 centimetres below that of surrounding lands was not disputed in cross-examination, nor contradicted by Mr McKinnon. Accordingly, I accept that evidence. If I then take the estimates of fill value provided by Mr McKinnon and say that a further 10 centimetres of fill would need to be added to the subject lands to render them equivalent to the sales with which they are compared (apart from Sale No. 1), the Hamilton land would have a negative differential of $1,000 reflected in its value. I have seriously considered whether to adjust the value of the Hamilton land downwards, having regard to this evidence, however, I have noted that in the case of each of the sales employed by Mr McKinnon, the level of application is below the calculated unimproved value figure to greater than $1,000 in each case. I have also considered the four sales and their various attributes and have accepted the comparisons made between those sales and the Hamilton land and have formed the view that the level revealed by consideration of all of the sales is one of consistency. Accordingly, I have decided not to disturb the valuations placed on the Hamilton land by the Chief Executive and I accept the relationship between that land and the Suita land as being reflected by a factor of 1 to 1.65 as agreed by the parties. Mr Hamilton has taken on a difficult task in presenting the evidence and arguing the case in these appeals: the type of task commented on by the Land Appeal Court in Qualischefski v. The Valuer-General (1979) 6 QLCR 167 at 172:"However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. 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 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."
In these matters the appellants have not convinced me that the Chief Executive is wrong in the valuations applied to the subject lands. Accordingly, I dismiss the appeals and affirm the valuations of the Chief Executive.
RP SCOTT
MEMBER OF THE LAND COURT
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