Handley v Chief Executive, Department of Natural Resources and Mines
[2001] QLC 60
•22 June 2001
LAND COURT BRISBANE 22 June 2001
[2001] QLC 60
Re: Appeal against Annual Valuation Valuation of Land Act 1944
Property ID No: 1220738
Local Government: BCC-Toowong (AV00-516)
Patricia Handley v.
Chief Executive, Department of Natural Resources and Mines
D E C I S I O N
Background:
This matter relates to land at 12 Howard Street, Paddington, and described as Lot 53 on RP 19655, Parish of Enoggera, and has an area of 450 m². The subject land is located about 3 kilometres west of the GPO, about 0.8 kilometres west of the Milton Railway Station, 100 metres west of the Milton Primary School, and 250 metres south of the Rosalie Village local shopping centre.
There is good access to Howard Street which is bitumen sealed with concrete kerbing and channelling. The subject land is zoned Inner Residential under the Brisbane City Council (“the Council”) Town Plan of 13 June 1987, effective at the date of valuation of 1 October 1999. The property is located in a character residential area under the current Town Planning scheme of the Brisbane City Council of 30 October 2000. The key issues are the character of the area, impact of noise and traffic, comparison of sales, and the method of valuation.
The subject land is used as a single residential site, with a high set 1910 Queenslander style building, which has subsequently been refurbished in 2000. On 27 March 2000 the Chief Executive issued a valuation of the subject land at $175,000. Following an objection the Chief Executive confirmed that figure on 1 July 2000. The appellant has now appealed claiming the unimproved value should more properly be $130,000.
Patricia Handley appeared and gave evidence on her own behalf. Ms R Trigge of counsel appeared for the respondent, calling evidence from George William Knight, the departmental registered valuer, responsible for determining the valuation.
The Evidence:
The Nature of the Land –
The appellant argues that recent changes have occurred in the amenity of the area of the subject land which are now impacting its value. Ms Handley draws specific problems with noise at night from the Rosalie Shopping Centre, where licensed restaurants cause loud music which intrudes the once pleasant environment. The Rosalie Shopping Centre is located at the corner of Baroona Road and Nash Street. Ms Handley also notes that there are also problems with vehicles parked by patrons of the shopping centre and a nearby RSL Club facility, as well as cars associated with the nearby primary school. Because of heavy vehicle movements in the area, Ms Handley sees difficulties in accessing the subject land. Mr Knight argues that parking at the subject land is no more difficult than at the sales he compares.
Ms Handley also notes the increasing trend for the development of medium density units, which further detract from the character of the area. Ms Handley argues that some of those later developments have removed some of the wonderful old trees which had given character to the locality. Ms Handley concedes however that Howard Street continues to be a very pleasant outlook, which she agrees is why buyers are now seeking to locate there and, in her opinion, are paying “quite insane prices for blocks of land”.
Ms Handley also notes that part of the parking problem has been accentuated by failure, until recently, of the developer of the Rosalie Shopping Centre to provide adequate onsite parking at that venue. Ms Handley also notes proposals for further street parking in the divided carriageway further to the west along Howard Street at a nursing home. Ms Handley notes that those moves to detract from the amenity of the area are being resisted by local long-term residents, who see the large rise in values as unfair in respect of the resulting impact upon rates and charges.
Ms Handley advises that her insurers advise that a higher security risk now applies in that area, where she is now facing additional costs for home security purposes in order to obtain adequate insurance cover. She speculates that is likely to have been associated with a higher proportion of property renters rather than owners.
Mr Knight agrees that there has been a significant surge in development in Howard Street in recent years. He notes that the street maintains a tree-lined leafy ambience of pre-war development character which is highly regarded. Mr Knight argues that Howard Street is regarded as one of the better examples of such development, and properties containing “character houses” further to the west in the
higher parts of Howard Street, have been sold at prices in excess of $0.5 million and have subsequently been extensively renovated. Mr Knight argues that sales of old “character houses” are common at prices of $200,000, after which a further $200,000 has been paid to refurbish the old dwelling.
Ms Handley agrees that such sales and refurbishing has occurred, but argues that many of those properties in the higher parts of Howard Street have views of the city centre. Mr Knight advises that if the subject land had views of the city, he argues its unimproved value would be about $275,000.
History of the Appeal –
In her grounds of appeal Ms Handley draws support from a sale of a 485 m² parcel which sold in Auchenflower for $135,000. That sale had been discussed with Ms Handley by Mr Ryland during a previous without prejudice conference, and she understood that sale to have some relevance to the current matter, although she could not identify the specific property. However, subsequent evidence discloses that sale referred to a previous valuation of the subject land at 1 October 1997.
That matter had been appealed to this Court on 20 October 1998 (AV98-802). The unimproved value appealed against had been $127,000, and the matter was subsequently withdrawn when a Section 68 offer of $120,000 by the respondent was accepted by the appellant. In the current matter Mr Knight advises that similar properties to the sale in Agnes Street, Auchenflower, have now been revalued at in excess of $200,000, and upwards to $225,000 for 450 m². However he concedes that those parcels do have views, which increase as you proceed further west along Agnes Street.
A matter of major concern to Ms Handley is the rapid changes in the unimproved value of the subject land. Ms Handley refers to an article from the local newspaper which suggests increases in value in the inner suburbs of 82 percent over the period 1992 to 2000 (8½ years). Ms Handley notes that if she applied that percentage increase to the subject land at June 1992 of $61,000, she could conclude an unimproved value of $111,020 at the relevant date. However Ms Handley provides no direct knowledge of how the 82 percent increase had been determined, agreeing that such an approach tended to use a process of averaging in order to determine the growth pattern.
If I consider the history of the valuations of the subject land, I note that changes have occurred from $105,000 (1 October 1996), $120,000 (1 October 1997 –
section 68), $140,000 (1 October 1998 – reduced to $130,000 on objection), $175,000 (1 October 1999), and $175,000 (1 October 2000).
The Impact of Planning –
Ms Handley argues that the proposed new Town Planning constraint of “character housing” will virtually make removal of such declared houses very difficult. She concedes that the designation of the subject property as “character housing” is not directly comparable to “heritage” listing, but argues that the purpose of the Council with the “character housing” description is to retain the essential nature of the area.
Mr Knight agrees with that intention, but notes that numerous dwellings similarly designated as “character housing” have in fact been demolished back to basic structures, before being totally refurbished. On that basis Mr Knight argues that sales of such “character houses”, tend to relate to lightly improved lands, with little added value in the old structure.
Ms Handley by comparison argues that because of the value placed upon the old “character housing” structures, much of the value of improved properties in that area lies in the added value that the dwellings bring to the land. Because of this change in emphasis upon the value of the old “character housing” designation, Ms Handley argues that it is inappropriate for the respondent to use the sales of lands as if they had been only lightly improved lands. It is her argument that the reason that people buy into that area is because of the presence of the old houses, and the pleasant amenity those dwellings bring to the locality. She argues it is not just the central location of the land, but also the older character of the buildings which contribute to the higher prices now being paid in that area.
However she concedes that the “character housing” designation has been in operation in Brisbane since prior to 1998, and that owners in some cases have been able, through persistence, to gain Council approval to demolish the old buildings.
The Method of Valuation –
Fundamental to the difference between the parties is the method of valuation adopted. Ms Handley concedes that Mr Knight has adopted the method of comparing sales of vacant or lightly improved lands, which has been adopted by courts at all levels as the preferred method of determining unimproved value. However she argues that the impact of the “character housing” designation upon the sales discussed earlier now makes comparisons, where there is no actual vacant lands, less reliable.
Ms Handley is unable to further explain her reasoning, but seeks support for her conclusion in an analysis of the subject land. Adopting a valuation placed upon the subject land for renovation purposes, she concludes an unimproved value prior to renovation of $245,000. From that figure she deducts her estimate of the depreciated value of the dwelling at between $120,000 to $130,000, giving her estimate of the unimproved value of the subject land at $130,000. That figure represents the previous valuation at 1 October 1998.
A key to Ms Handley’s concern with the method adopted by Mr Knight is her understanding of the paucity of suitable sales for comparison purposes. She notes that Mr Knight has had to seek sales over an area of about 30 square kilometres in order to obtain 46 sales out of a total number of 17,500 properties in the Toowong, Taringa and Ithaca divisions. Mr Knight explains his method of analysing the market from those sales, and how he sought to ensure relativity was maintained where appropriate. From those 46 sales, Mr Knight selected his 3 sales as the most relevant to the subject land. Ms Handley argues that such a small number of sales has little statistical significance which places uncertainty upon relying upon such a small sample of sales. However it is noted that neither valuations or the market place follows scientific theory.
Mr Knight rejects Ms Handley’s assessment of the added value of the improvements upon the subject land at $120,000, which he argues is over-generous. Mr Knight argues that the market place indicates that an old Queenslander style dwelling for removal can be relocated on to stumps to a vacant site in that area for about $60,000. Mr Knight then agrees that further refurbishment of such relocated home would then involve about a similar amount to bring it to a habitable state. Mr Knight notes that the subject land was valued for the bank finance at $245,000, prior to the refurbishment. Mr Knight argues that such figures support his valuation at
$175,000, although he maintains that such an approach is not the preferred method of valuation.
Comparison of Sales –
Ms Handley supplies no directly comparable sales in the relevant period, relying upon discrediting the sales of the respondent. Ms Handley does provide statistics of a total of 278 improved house sales and 18 sales of vacant lands during 1999 in the area; and a further 198 improved house sales and 6 vacant land sales during 2000. Ms Handley was also familiar with Mr Knight’s adopted 3 sales, and as a very good knowledge of the area from her long period as a resident.
To support his valuation Mr Knight provides the following sales of vacant or lightly improved lands:
· Sale 1 – (Sawtell Lane, Auchenflower – Lot 2 on SP 110121). This is a 417 m² Inner Residential lot located about 40 metres west of the busy Milton Road. The sale has a southerly aspect, with south-east views of urban areas. The sale adjoins a 3 storey unit complex.
The sale is smaller, but has a slightly more elevated outlook, is located in an inferior street, with inferior access, and will require more extensive earthworks to develop. The sale overall is inferior to the subject land. The sale sold in September 1998 for $155,000, was analysed and applied at $155,000.
· Sale 2 – (37 Holmes Street, Toowong – Lot 11 on RP 46698). This is a 620 m² Residential BR3 site, regular in shape, above road level falling moderately to the rear and a moderate cross-fall to the east. The sale has a south-east aspect and an urban outlook over Perrin Park to busy Gaileys Road. The sale has subsequently been developed with an expensive 3 storey residence.
The sale is larger, has a wider outlook, in an inferior area, with an inferior topography requiring more extensive earthworks to develop. Overall the sale is superior and sold in November 1998 for $205,000, and was analysed and applied at $205,000.
· Sale 3 – (16 Munro Street, Toowong – Lot 2 on SP 118242). This is a 390 m² Inner Residential lot, above road level, rising to the rear. The outlook is limited to surrounding properties, some across Munro Street are old character style residences converted to professional offices (Auchenflower Medical Centre). The sale is 80 metres from busy Milton Road.
The sale is smaller, comparable in topography, but less elevated, and in an inferior locality. Overall the sale is inferior, and sold in April 1999 for
$158,000, and was applied at $150,000.
Ms Handley challenges that Sale 2 is comparable, noting the multi-dwelling zoning of that parcel, and the subsequent dwelling and separate attached unit that has been built on that parcel. Ms Handley sees no comparison with the very expensive 3 storey dwelling upon that sale, and its closer proximity to the Toowong Village Plaza.
Mr Knight argues that zoning is only one factor for comparisons, noting also the need for multiple units to demonstrate a minimum size, and frontage to depth ratios. Sale 1 does not meet those criteria and so is compared as a single home site.
He notes also multiple units can be built upon Inner Residential lands with the consent of Council.
Ms Handley also challenges whether the purchaser of Sale 1 was a prudent buyer, arguing that he paid too much for a site where access is very restricted. She further argues that where buyers purchase vacant lots which are very scarce in supply, it is unreasonable to conclude that such “special” sales should represent the market for other lands in the area. Ms Handley relies upon her statistical assessment of total sales in the area in 1999 and 2000, to demonstrate the scarcity of vacant lots. She also notes that the number of vacant lots in the area is decreasing over time. However it was noted that Ms Handley was unaware how many of the improved sales had been structurally reduced and completely refurbished.
Mr Knight also advises that his Sale 3 has subsequently been developed with a new “character” style residence similar to the subject land, while Sales 1 and 2 are in close proximity to multi unit developments. Sales 1 remains undeveloped to the present. Mr Knight argues that the amenity of the areas of the three sales have been compared to the amenity of the subject land in his comparisons, with the subject land amenities seen as superior to all three sales. He notes that the nearest units in Howard Streets are about 200 to 250 metres from the subject land.
In respect of the impact of noise, Ms Handley concedes that all three sales suffer from some vehicles noise, but argues that is less intrusive than the intermittent loud music at night from the Rosalie Shopping Centre. Mr Knight argues that noise at the subject land is no more intrusive than at his three sales.
In explaining how he applied his analysed sales evidence, Mr Knight argues that in an increasing market he made allowance for the relative age of the three sales. He tends to make a conservative application of the sales, and therefore applied 100 percent of the earlier Sales 1 and 2, but only 95 percent of the later Sale 3. He based his assessment of the market trend after a full appreciation of the 23 lightly improved or vacant sales in the Toowong and Ithaca divisions. He further notes that none of his three sales had been subject to objection during the valuation process.
In respect of Ms Handley’s concerns that sales with city views had been compared with the subject land, Mr Knight provides two further sales of elevated sites with city views at Lot 5 on SP 109828 (Small Street); and Lot 1 on RP 64772 (Birdwood Terrace). He notes Lot 5 (Small Street) had an area of 395 m², and sold in August 1999 for $270,000, and was applied at $250,000. He notes further that Lot 1 (Birdwood Terrace) had an area of 607 m² and sold for $400,000. The house on Lot 1
was gutted to the garage floor, for which an added value of $40,000 was allowed, giving an analysed value of $360,000, and an applied value of $325,000. Mr Knight argues those higher unimproved values reflect lands with city views, of which the subject land has not been attributed.
In her understanding of the comparison of sales, Ms Handley sought comparisons on a per square metre basis, an approach Mr Knight rejects. However, where all else is equal in that locality, Mr Knight agrees that buyers pay more for larger sites, but not on a pro rata basis. Mr Knight argues that residential sites are sold on a site basis, and not merely on an area basis. He draws some support for that comparison in two sales in Duke Street, Toowong. Mr Knight advises that with the increasing demand in the area for home sites over the last three or four years, a premium previously paid for a larger area may have represented an extra $10,000, but a similar difference is now in the order of about $30,000.
Decision:
The Nature of the Land –
I turn first to the nature and amenity of the locality, and note that Paddington is one of the inner suburbs of Brisbane which have experienced large growth over recent years. The demands of urban society, traffic growth, and a change in lifestyle have all contributed to a trend for those who have the resources to meet the market to relocate towards the Central Business District. While market forces themselves have influenced buyers to seek sites in those older suburbs, the general physical attractiveness of the areas, and persuasion from the local council, has heightened demand. It is rapidly reaching the stage where demand is exceeding supply, and property prices therefore have risen sharply in response.
However a changing population must inevitably mean a change in demand for local facilities, including a growing trend for restaurant dining and entertainment. It would appear that those changes are now not being appreciated by long term residents who see their amenity being eroded, particularly in respect of noise and traffic.
However it is not the role of this Court to draw conclusions about relative lifestyle uses of land, but rather to interpret the value that the market place places upon the lands in that locality. There would appear to be agreement that the amenity of Howard Street continues to be pleasant, and any impact by noise, traffic and multiple units, etc, must be seen in comparison to areas surrounding the representative sales. In respect of whether an increasing proportion of residents who rent properties, rather than owner occupiers, has any impact upon the personal security of the area, is
a matter of subjectivity. There is no evidence to support that conclusion, and it must be concluded that such a scenario was likely to have been contemplated when prudent purchasers chose to live in the area.
The History of the Appeal –
I note that the appellant sees the large percentage increase in the valuation as inconsistent with values of improved land. However she does not rely upon a variation in the percentage increase, but only uses that as a warning signal that the unimproved value may be incorrect.
If I compare relativities with a parcel relied upon by the appellant in Agnes Street, Auchenflower, I find the current unimproved values of parcels at $200,000 to
$250,00 do not support her case for the subject land, although those parcels in Agnes Street would appear to have city views.
The Impact of Planning –
A key part of the appellant’s argument lies in the impact of the planned “character housing” designation of dwellings under the Town Plan of 30 October 2000. While that new Town Plan did not become effective until well after the relevant date in the current matter (1 October 1999), its potential impact would appear to have been publicly known at the date of valuation. Mr Knight does not disagree that the market place would have been aware of the intention by Council to introduce “character housing” constraints to the area. Support for that approach is found in JR and DM Stubberfield v. Valuer General (1988-89) 12 QLCR 328 per the Full Court of Queensland.
Before seeking to understand the limitations placed upon sites designated as “character housing”, it is important to note that such designation is not the same as “heritage” listing, either by the State Government or by the Council under Section 22 of the Town Plan of 1987. Where a parcel is designated as “heritage” listing, then the Land Appeal Court found that the provisions of the Town Plan ran with the land and not with the improvements. The Valuer-General v ATS Queensland Club (1990-91) 13 QLCR 207; and also Ballow Chambers Ltd v Valuer-General (1992-93) 14 QLCR 422.
However the evidence reveals that while it is the stated intention of the Council to preserve the character of the old dwellings, it is possible for many of those structures to be replaced with modern materials, as long as the “character” of the area is preserved. Mr Knight refers to many examples where old “character housing” dwellings have been demolished virtually to their foundations, before being totally
refurbished. Such a strategy is therefore not inconsistent with Ms Handley’s thesis that it is the presence of the old dwellings which brings charm and attractiveness to the area.
In such circumstances a prudent purchaser buying into a “character housing” area, would have confidence that the ambience of the locality would be maintained, either by refurbishment of the existing structures, or by refurbishment in keeping with that character. That is also not inconsistent with Mr Knight’s approach of assessing the added value of the old structures, where those have been virtually demolished. It is therefore the nature of the area which attracts the potential buyers.
The Method of Valuation –
I note that Ms Handley concedes that in normal circumstances, when valuing land for its unimproved value, the use of sales of vacant or lightly improved lands is held to be the most relevant approach (See PH Clough v Valuer-General (1981-82) 8 QLCR 70 at 76; WM and TJ Fischer v Valuer General (19983) 9 QLCR 44 at 46; R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13 at 17; and Hans and Else Grahn v Valuer General (1992-93) 14 QLCR 327 at 330.
Because of her concern with the paucity of sales of actual vacant lands in the area, Ms Handley seeks comparisons on the basis of an assessment of the subject land on an improved basis. However she provides no comparative sales used by the valuer in estimating her property for bank security purposes at $245,000. I note also that there was no detailed evidence of the state of the old dwelling prior to the subsequent refurbishment, and that Mr Knight argues that a relocated dwelling could be obtained for considerably less than $130,000. I note also that Ms Handley’s conclusion of land value at $130,000 by that method, suggests that there had been no increase in unimproved value since 1 October 1998, while other properties appeared to be experiencing an increase in value in that period. On that basis I get little assistance from that approach.
Comparison of Sales –
I turn then to the suggestion by Ms Handley that there is no statistical significance in the small number of sales available to the respondent for comparison purposes. I note that Mr Knight, who is an experienced valuer, argues that the 23 sales available to him provides ample evidence for him to determine market trends, and reasonable comparisons to the subject land. I note also that the use of comparable sales was clarified in Brewarrana Pty Ltd v Commissioner of Highways SA (No. 1) (1973) 32 LGRA 170, where Wells J said at page 179-180:
It is general valuation practice for sales characterised as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used.
… Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances (using that word in its broadest sense) appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v The Commonwealth of Australia and in later cases to warrant a court’s reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. … there is no hard and fast rule by the application of which a valuer may, whatever the circumstances, draw the line that clearly separates the sales that are comparable from those that are not. … some adjustment is always necessary; too much adjustment will render it unsafe to use a sale, subject to such degree of adjustment, for the purpose of the reasoning process in the comparable sales method. … the assessment of the risks of adjustment is peculiarly within his (the expert valuer’s) sphere of skill.”
On that basis I accept Mr Knight’s selected sales for comparison purposes. In respect of Ms Handley’s consideration on a per square metre basis I note guidance from the Land Appeal Court in Hans and Else Grahn (supra), where the Land Appeal Court said at page 330:
“As the Land Appeal Court said in its decision on the appellants previous appeal (H and E Grahn v 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.’”
In respect of the impact of city views upon sales in the area, I accept Mr Knight’s advice that the three sales compared with the subject land do not have views of the city centre. I note also his advice that if the subject land had the benefit of city views that its unimproved value was likely to be about $275,000.
If I turn then to the three sales I note the following comparison:
| Sale | Area | Applied Value | Comparison |
| 1 | 417 m² | $155,000 | Inferior |
| 2 | 620 m² | $205,000 | Superior |
| 3 | 390 m² | $150,000 | Inferior |
| subject land | 450 m² | $175,000 | - |
On the evidence I note that Mr Knight advises that a premium of $30,000 for extra size of otherwise comparable lots in Duke Street, Toowong, would support his comparison with his Sale 2. The smaller areas of Sales 1 and 3 are also consistent with that principle. In the end I am reminded that the onus is upon the appellant under Section 45(4) to prove that the respondent has applied a wrong principle or made a serious error of fact (Brisbane City Council v Valuer General (1977-78) 140 CLR 41 at 56. I find that the appellant has not discharged that responsibility.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellant has proved her case. The appeal is dismissed, and the unimproved value of Lot 53 on RP 19655 as determined by the Chief Executive in the sum of $175,000 is affirmed.
NG DIVETT MEMBER OF THE LAND COURT
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