Hennessy v Chief Executive, Department of Natural Resources
[2000] QLC 69
•3 November 2000
|
BRISBANE
3 November 2000
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 5120 -
Local Government: Esk Shire.
(AV99-702).
Dale E and Heather A Hennessy
v.
Chief Executive, Department of Natural Resources
(Hearing at Brisbane)
D E C I S I O N
Background:
This matter relates to land at Braemore Lane, Toogoolawah, and described as Lot 16 on RP159097. The subject land has an area of 16.02 hectares, and is located on the Brisbane River about 8km north of the Town of Toogoolawah. Telephone, electricity and mail services are available, and access is fair via Braemore Lane which has a gravel carriageway. Water is available from the Brisbane River. The subject land is zoned as "Rural A" under the Town Planning Scheme of Esk Shire Council (the Council) of 19 June 1992, and effective at the date of valuation of 1 October 1998. The key issues are comparison of sales, and the impact of a permit to extract gravel. The land is used as a rural residential site.
On 22 March 1999, the Chief Executive issued a valuation of the subject land at $83,000. Following an objection the Chief Executive confirmed that figure on 2 July 1999. The appellants have now appealed claiming the unimproved value should more properly be $55,000.
Dale Edward Hennessy appeared and gave evidence for the appellants. Mr R Vize, counsel of Crown Law, appeared for the respondent, calling evidence from Peter Bentley Shoecraft, Senior Technical Officer (Stream Management), Department of Natural Resources, and Edwin George Ridley, the Departmental registered valuer responsible for determining the valuation.
The Evidence:
(1) The Nature of the Land -
It is agreed that the subject land is generally moderately sloping forest country, with 13 hectares of loamy surface soils over brown to grey-brown clay subsoil. The balance is loamy surface soils over brown to black clay subsoils along the Brisbane River. The land has direct frontage to the river, and provides a good dwelling site on high land towards the river, where views of the water are available.
The subject land was purchased in 1992, and a Queenslander-style dwelling was relocated to the site just prior to the valuation (August 1998). The current homesite has about 700 metres of internal access road to Braemore Lane, and is about 50 metres from the river. Electricity was installed when the subject land was purchased, and that added value was reflected in the purchase price at that time.
At the date of valuation there was evidence of old gravel extraction workings on the far bank of the Brisbane River, immediately opposite the subject land, and about 100 metres from the existing dwelling.
(2) The Extraction of Gravel -
The key issue in this matter is the potential for quarrying of materials by extraction under an existing permit at the date of valuation (GQM300), in the name of Hitec Resources Pty Ltd. While that permit was being used spasmodically at the date of valuation, its history of extractive use in previous years has led to a level of uncertainty in the community about the possible impact of noise and dust intrusion into the amenity of the area.
Mr Hennessy argues that between 1992 and 1997 he visited the subject land over weekends at least every second week, prior to his retirement in July 1997. Until early 1997 there had been no appreciable mining activity, but that changed and extraction activities started to increase. Mr Hennessy provided those dates from memory, conceding that he had not maintained a diary of the periods of extraction from the river. However he advises that there was a general level of complaint about the noise and dust during 1997, and that he personally complained to the council at that time.
Prior to 1997 Mr Hennessy had personal experience of the extraction processes occurring further upstream of the subject land, however those actions were of no great impact upon the subject land. During 1997 Mr Hennessy personally observed extraction immediately opposite the subject land, often for continuous periods all day for seven days a week. He was aware that extraction operations were prohibited outside 6a.m. to 3p.m. on Saturdays, and all day on Sunday. However those restrictions did not appear to concern the operator, who appeared to be able to proceed unhindered by any authority. It was that apparent lack of respect for the permit conditions which heightened concerns in the area.
That virtual uncontrolled type of operation continued until late 1997, when the operation ceased, presumably as the result of a civil court action in another place. It is argued that Hitec Resources Pty Ltd was obliged to cease mining operations as part of a settlement with another material supplier. The operations opposite the subject land continued to remain suspended throughout 1998, and have done so until the present time. During this time the appellants relocated their Queenslander dwelling on site in August 1998. However the licence permit remains current, and covers a bend in the Brisbane River extending some 1.8km upstream and downstream of the subject land. (Total 3.6km). There has been some minor extraction further upstream from the subject land. Mr Ridley agrees that at the date of valuation in October 1998 there was no quarrying occurring opposite the subject land.
Mr Hennessy argues that he would be prepared to accept a higher unimproved value than his estimate of $55,000, if there was some certainty that mining operations would not again commence. However, because of that uncertainty, he argues that the risk of the intrusion should be reflected in the unimproved value.
Mr Shoecraft explains that it has been his responsibility to visit the area regularly at least since 1993, in order to monitor sand and gravel extraction. Mr Shoecraft provides records of maximum volumes permitted under the 14 permits for the area which have issued since 1993. He also provides records on a 6-monthly basis of actual materials removed, as required under the permit. The maximum volumes permitted were originally unspecified, but were subsequently progressively decreased to 36,000 cubic metres (October 1996), 18,000 cubic metres (October 1997) and 11,560 cubic metres (July 2000).
The actual volumes removed have declined from 38,016 cubic metres (1994), to 6,281 cubic metres (1997), 73 cubic metres (1998), 48 cubic metres (1999) and 3,201 cubic metres (2000). (Exhibit 7). Mr Shoecraft suggests that the reduced maximum volumes allowed probably reflect the Department's desire to more closely match actual volumes removed, and in keeping with the then developing policy of reducing extraction from the river.
Mr Shoecraft provides a Riverine Quarry Material Management Plan for the Upper Brisbane River, Lockyer Creek and Buaraba Creek (April 2000). That management plan defines a regime of progressive reduction in extraction limits (Phase 1) towards improved management (2000 to 2002); (Phase 2) towards sustainable management (2002 to 2005); and (Phase 3) long-term sustainable management (2005 onwards). During Phase 1 the allocations will be gradually reduced, but current operators will maintain their percentage share. Final allocations are to be defined by July 2002, and operations will be progressively reduced to meet those final allocations by 2005 during Phase 2. Subsequent to 2005 (Phase 3), it is expected that allocation limits will be small and only adequate to support local demand. The management plan is to be reviewed in 2005.
Mr Hennessy is now aware of the management plan, but notes that the proposal to review the plan in 2005 provides little definitive assurance that extraction will cease, and in fact it is planned to allow some minor extraction to continue in the future. He argues that the uncertainty of where that could occur, must impact the mind of a prudent purchaser of the subject land. Mr Hennessy notes that the problem for riverfront owners in that area appears to be that extraction from the river downstream has stopped, and dredging has now moved upstream.
The local council supports moves that create employment opportunities in the Shire. Public meetings of local objectors have so far been unsuccessful in swaying the Council against improving mining. When the extraction ceased in 1998 there was some level of wishful optimism that it would not again commence. However there is no certainty of such an outcome. In fact extraction from the river upstream of the subject land recommenced after June 1999, and Mr Shoecraft concedes that annual volumes up to 11,560 cubic metres may be recovered as at the date of hearing.
Mr Vize notes that during the relevant period for the current valuation, the small quantities extracted would represent only about five to ten truckloads over 1998. However, while such workings would not be of major impact upon the adjoining lands, there was no estimate of the extent of washing and screening that could have been associated with those workings. Mr Shoecraft confirms that washing and screening facilities had existed during the busy period in 1997 but that those facilities had been subsequently removed. However Mr Vize notes that permits do not cause detriment, but it is the activities associated with the permit that cause the detriment.
(3) Comparison of Sales -
Mr Hennessy provides no direct evidence of sales to support his estimate of the unimproved value, agreeing that sales of riverfront lands in that area are scarce. Mr Hennessy also agrees that to his knowledge only one sale of riverfront land had occurred during the relevant period (Lot 14 on RP 159097). He notes that there had been sales of lands removed from the river, at prices well below the riverfront lands.
While not fully analysing a further sale, Mr Hennessy notes that the adjoining land to the subject land (Lot 15) had recently sold in May 2000 for $145,000. However that was an improved sale, with a farmhouse and extensive sheds. That property had been on the market for four years, and the owner had accepted a reduced offer in order to relocate overseas.
Mr Ridley is aware of that sale, noting that it occurred well after the relevant date. Mr Ridley also notes the nature of that improved sale, and argues that it could be considered in the next revaluation at 1 October 2000, particularly if the current paucity of vacant riverfront lands continues. There had been no revaluation at 1 October 1999.
In support of his valuation Mr Ridley relies upon the following sale:· Sale 1 - (Linke to Goode - Braemore Lane - Lot 14 on RP159097)
This is a 28.15 hectare "Rural A" parcel, located about 100 metres north of the subject land. The sale has a very narrow frontage to a cul-de-sac at the end of Braemore Lane, and is moderate to steeply sloping forest country. It is watered by small gully dams and from the Brisbane River. The best building site adjoins the river, and access has to cross several gullies.
The sale has similar services, location, water and access, but though larger, has inferior steeper slopes. Overall the sale is seen as inferior due to problems of access to the suitable building site.
The sale sold on 28 October 1998, for $101,000 which, after allowing for clearing and improvements was analysed at $76,680, and applied at $70,000.
Mr Ridley concedes that when he analysed the sale he was unaware of the existence of the gravel permit in the adjoining Brisbane River. However he argues that he has been more than generous in the added value of the improvements that he deducted from the purchase price, when he analysed the sale. There was some difference in respect of the understanding of whether a structure was a fettler's cottage or a shed, but that has no impact upon the added value of the improvements. Mr Ridley also allowed for the stockyards and loading ramp in his assessment.
Mr Ridley saw the problem of extending electricity as common to both the sale and the subject land, although he concedes that power is connected to the subject land, while the new owner of Lot 14 (Ms Goode) currently relies upon solar power. The sale has a smaller frontage to the Brisbane River. Ms Goode relocated an old Queenslander-style dwelling on to Lot 14 with minimal problems subsequent to the sale.
Both Mr Hennessy and Mr Ridley confirm that Ms Goode was unaware of the existence of the gravel permit at the time of the purchase of Lot 14. Mr Ridley notes that at the time of the sale that property was not impacted by any noise from gravel extractions. Mr Ridley argues that the impact of gravel extractions tends to affect the adjoining properties, and therefore can impact some but not all properties along the riverfront to the permit area. However Mr Hennessy provides a statutory declaration from Ms Goode (Exhibit 3), which advises that had she been aware of the extraction permit, then she would not have completed the transaction. However there was no evidence that Ms Goode currently planned to sell Lot 14 at this time. Ms Goode had been advised by the agent prior to the sale that the former gravel extraction permit had been revoked.
Mr Ridley notes that the former vendor of Lot 14 (Mr Linke) had subsequently relocated to another improved riverfront parcel (Lot 2 on RP853091 - 2.745 hectares), further upstream of Lot 14 in October 1999, at a cost of $100,000. However Mr Ridley notes that sale is well after the relevant date, and more properly related to any subsequent valuation.
Mr Ridley concedes that if gravel extraction was to recommence on the river opposite to the subject land, then some allowance would be made for any disability. However, as operations have been suspended in the immediate locality, then Mr Ridley argues that the subject land should be valued as having the peace and tranquillity that currently prevails. Mr Ridley however does concede that Ms Goode may not have fully met the total requirements of a prudent purchaser as defined in the Spencer test, but as the sale was his only test of the market, Mr Ridley had to do the best he could with that sale. In fact Mr Ridley argues that it would have been remiss of him to have totally rejected the sale of Lot 14 in view of the paucity of other sales.
Mr Hennessy argues that the sale of Lot 14 should be disregarded as unreliable as a test of a fully informed market transaction. As such he argues that the unimproved value at the previous valuation at 1 October 1997 of $57,000 should be maintained.
Decision:
I turn first to the key issue in this matter which is the impact of the permit.
(i) The Impact of Gravel Extraction -
The issuing of the permit to extract gravel from the river, demonstrates that the permittee (Hitec Resources Pty Ltd) has a legal right to extract materials when, where and how he chooses, within the constraints of the permit. The limits of that extraction are confined to the declared area of the permit, and are evidence that the Chief Executive issuing the permit is aware what is to be done, and that he has given his permission for it to occur. (Lomas v. Peek [1947] 2 All ER 574, at 575, per Lord Goddard CJ). On that basis, as the Chief Executive issuing the permit is as one with the Chief Executive declaring the valuation, it follows that he should have been aware of the presence of the permit when determining the unimproved value. It is also noted that for the Chief Executive to permit a thing to happen implies the ability, authority or power to prevent it from happening. (R v. Canadian Motor Lamp Company [1967] 1 OR 484).
The evidence is that there have been occurrences since 1992 when the permittee (Hitec Resources Pty Ltd) would appear to have breached the conditions of the permit, and he has extracted materials for periods outside those permitted. Apparently complaints to the local council have proved fruitless, and responsibility for corrective action appears to the appellant to have been passed between authorities. Following this hearing the appellant is now clear as to how, and to whom, he is to bring breaches to notice in the future.
In respect of any possible impact upon the valuation by the presence of the permit to extract materials from the river adjoining the subject land, I note that the task confronting Mr Ridley could not have been more clearly defined than as in guidance to be found in Tooheys Limited v. The Valuer-General (1925) AC 439; and also (1924-26) 7 LGR 48, where Lord Dunedin said at page 49:"What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvement; what would it fetch in the market? It will be observed that the value is not what has been sometimes designated by the expression prairie value. The land must be taken as it exists at the date of the valuation. "
In that matter the Privy Council was addressing the matter of whether a licensee for the Mossman Hotel should be considered to be part of the added value of improvements, or as part of the unimproved value of the land. But the direction is clear that it is to be the nature of the land at the date of valuation which is to be assessed. That was further clarified in McGeoch v. Federal Commissioner of Land Tax (1929-30) 43 CLR 277, where Isaacs J (later CJ), when considering Lord Dunedin's directions on improvements, said at page 294:
"The only permissible way is to ascertain what the land itself would fetch in the market, not as prairie land, but as it exists at the moment of valuation. The task of the valuer is to observe and give effect to all these points. "
The overriding principle applying to this matter is the link to the realisation in the marketplace of the value of the land at the moment of valuation. In the current matter that relates to the perception of a prudent vendor/purchaser transaction at 1 October 1998.
The evidence is that at the date of the valuation, and for most if not all of the preceding year, extraction had not occurred within the permit area, and adjoining the subject land. The appellant argues that extraction of material further removed upstream of the subject land is not a disability to the subject land. In accordance then with guidance from Tooheys Limited v. The Valuer-General (supra) it is the responsibility of Mr Ridley to value the subject land in the condition that it existed at the relevant date. Mr Hennessy has no real problem with that conclusion, although he argues for a slightly lower value compared to Lot 14.
In respect of Mr Hennessy's conclusion however that a prudent purchaser would have been aware of the existence of the permit to quarry, and would have allowed for some risk in his assessment of value, I turn to Spencer v. The Commonwealthof Australia (1907) 5 CLR 418. That decision of the High Court established the classic definition of what should constitute the value of land, where Griffiths CJ said at page 432:"In my judgment the test of value of land is to determine, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e. whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."
That was further clarified by Isaacs J (later CJ) who said at p.441:
"To arrive at the value of the land at that date, we have, as I conceive, to suppose that it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."
The principles espoused in those two learned explanations define a prudent purchaser as one who would be fully aware of the nature of the land, and any business considerations that might impact upon it. If I accept Mr Hennessy's opinion that there must have been some element of risk associated in respect of any reactivation of the permit to quarry, then that risk must also be addressed in the context of what impact that would have upon the value to the purchaser.
It is Mr Hennessy's evidence that the risk associated with the existence of the permit has created a level of uncertainty in his mind. Unless he becomes assured that extraction of gravel adjoining the subject land is unlikely to occur, then Mr Hennessy has little interest in further developing the site. In fact he has made preliminary plans to divest himself of the asset. But the question remains as to what price would he be prepared to sell it. On his own evidence the current asking price is above the current market, suggesting that he continues to see good value in the land.
In respect of the presence of the permit, I would agree with Mr Vize that it is really activity associated with the permit which is important, and not the actual presence of the permit itself. Mr Ridley agrees that if extraction under the permit was to recommence adjoining the subject land, then he would reconsider the unimproved value accordingly under s.28(1)(g) which states:"28.(1) No alteration shall be made in the valuation of any parcel of land during the period during which any annual valuation relating to the area in question is in force or, in the case of an annual valuation which has not come into force, during the period between the issuing of an annual valuation notice under part 4, and the date of the valuation coming into force -
(g)unless, in the opinion of the chief executive, circumstances affecting the valuation of the land are such as to render an alteration necessary or desirable for preserving or attaining uniformity in values between that valuation and subsisting valuations of other comparable parcels of lands; "
On the evidence before me I would agree that Mr Ridley has valued the subject land correctly at the relevant date.
(ii) Comparison of Sales -
The key to the current assessment of the value is therefore whether the sale of Lot 14 was a bona fide sale for comparison purposes. I accept that Ms Goode was misinformed about the nature of the permit to quarry at the time of that sale. I also note that there was no extraction activity adjoining that sale at that time, and Ms Goode clearly saw value in that sale at $101,000 as a quiet riverfront property.
On the basis of Mr Ridley's analysis of the added value of the improvements as being generous, I can accept the unimproved value of that sale at $70,000 for that purpose. I also accept that Mr Ridley's analysis of the sale was on the basis that the permit to quarry did not exist. However on the basis of direct comparability, noting the river frontage of each parcel, the lengths of access to the building sites, and the steeper nature of Lot 14, but also allowing for the larger size of Lot 14, I can accept Mr Ridley's relativity.
I also note that Mr Linke, who was well aware of the nature of the gravel extractions in the river, particularly nearer to the upstream end of the permit area, has subsequently in October 1999 relocated on the river front in that very locality, at a cost for an improved property of 2.745 hectares at $100,000. That should also be seen in perspective with the sale of the improved adjoining Lot 15 in May 2000 for $145,000. While both of those sales are well after the relevant period, and both are improved properties with presumably a dwelling, they both indicate an ongoing interest in river front parcels, irrespective of any potential risk for reactivation of extraction operations. On that basis I accept Mr Ridley's application of the sale of Lot 14 as the best evidence of the market at 1 October 1998.
In the matter of the relative costs of providing electricity to the subject land, I also accept Mr Ridley's conclusion that electricity was available to each of the subject land and to Lot 14 in a comparable manner. That the appellants' decision to extend the power to their homesite, while Ms Goode has chosen to rely upon solar power, is a matter for the individual owners, and is not a matter for differentiation of either parcel.
Summary:
In summarising this matter I find that Mr Ridley has adopted an appropriate method of comparing vacant or lightly improved sales. (See WM and TJ Fischer v. Valuer-General (1983) 9 QLCR 44, at 46). In seeking to use his sale of Lot 14 he has made a generous allowance for the added value of improvements which results in a conservative estimate of the unimproved value of that land. The relativity between Lot 14 and the subject land appears appropriate.
On that basis there is nothing to discredit Mr Ridley's valuation at $83,000. (See Brisbane City Council v. Valuer-General (1977-78) 140 CLR 41, at 56). I further find that reliance upon the former unimproved value at 1 October 1997 at $57,000 is not supported by the evidence.
However I note that in the event of extraction of gravel recommencing adjoining the subject land, the appellants should have a very real expectation of a lesser value recognising that disability at some future time.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 16 on RP159097 as determined by the Chief Executive at $83,000 is affirmed.
(NG Divett)
Member of the Land Court
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