Johnson v Department of Natural Resources and Mines
[2003] QLC 42
•19 June 2003
LAND COURT OF QUEENSLAND
CITATION: Johnson v Department of Natural Resources and Mines [2003] QLC 0042 PARTIES: Graham Johnson
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0063 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 19 June 2003 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER DR NG DIVETT ORDER: The appeal is upheld. The determination of the Chief Executive is set aside, and the unimproved value of Lot 70 on RP 12134 and Lot 1 on RP 53453 is determined in the sum of One Hundred and Ninety Thousand Dollars ($190,000). CATCHWORDS: Valuation – Unimproved value – Nature of land – Relativity – Adjoining Childcare Centre – Valuation of Land Act 1944 APPEARANCES: Mr Johnson for the appellant
Ms R Trigge for the respondent
Background:
This matter relates to land at 6 Park Road West, Dutton Park, and described as Lot 70 on RP 12134 and Lot 1 on RP 53453, Parish of South Brisbane. The subject land has an area of 496 m² and is located about 2.5 kilometres south of the Brisbane CBD. Access is available to Park Road West which is bitumen sealed with concrete kerbing and channelling. All normal urban utility services are available. The subject land is zoned Character Residential under the Brisbane City Plan 2000 effective at the date of valuation of 1 October 2001. The key issues are the nature of the land, relativity, changes in the valuation and comparison of sales.
On 25 February 2002 the Chief Executive issued a valuation of the subject land at $230,000. Following an objection the Chief Executive amended that figure, and on 28 May 2002 issued a revised unimproved value of $200,000. The appellant has now appealed claiming the unimproved value should more properly be $120,000. At the hearing on 24 March 2003 leave was granted for the appellant to amend his estimate of the unimproved value to $130,000, which is the figure now argued for.
Graham Joseph Johnson appeared and gave evidence on his own behalf. Ms R Trigge, Senior Legal Officer appeared for the respondent, calling evidence from Arend Boudewyn Van Hees, the departmental registered valuer responsible for determining the valuation.
History of the Valuation -
This matter follows a previous appeal to this Court for the valuation of the subject land at 1 October 1998 (AV99-316). In that matter similar evidence was given in respect of the nature of the subject land, and also the presence of the adjoining child-minding centre (Koolyangarra). In that matter the decision of the learned Member of 27 April 2000 reveals that the subject land had been initially valued at $104,000, which was subsequently reduced by the Chief Executive on objection to $98,000, a figure then upheld by the Court. In that matter Mr Johnson also drew attention to differences between the localities of Highgate Hill, where the comparable sales were located, and Dutton Park where the subject land is located.
In explaining the current process of valuation of the subject land, Mr Van Hees advises that initially an unimproved value of $230,000 had been determined for the subject land as part of the mass appraisal approach to the current valuation. Following the objection, and noting the objector’s advice in respect of the irregular shape of the parcel, and the impact of the adjoining child-minding centre, the unimproved value had then been reduced to $200,000 to allow for those disabilities.
The Nature of the Land –
The subject land is an irregular shape parcel, which includes a 407 m² regularly shape parcel, and an adjoining 89 m² parcel located along part of the western boundary of the subject land. The 407 m² parcel has a width of 10 metres, but the adjoining 89 m² affords an overall frontage to Park Road West of 17.5 metres.
It is agreed that the subject land is well below Park Road West, and falls in what Mr Van Hees concedes is a waterlogged gully. The evidence confirms that natural seepage in the form of a spring is evident upon the subject land. Mr Johnson advises that complaints to the Brisbane City Council have confirmed that the surface waters during heavy rains arise from the natural spring, and not as a consequence of any leaking water pipes in the area. As such it is seen as an inherent consequence of the low nature of the subject land.
It is agreed that access from the subject land to Park Road West is very steep, between 1 in 4 and 1 in 5 grade, and access by motor vehicles needs caution. A detailed analysis of those features was explored in the previous matter of AV99-316, and Mr Van Hees concedes their impact upon the valuation. The presence of the 4.7 metre high concrete block retaining wall along the western boundary adjoining the child-minding centre, was also noted at the previous valuation, although it had been constructed subsequent to that relevant date in 1998. It was also agreed that there was a certain lack of privacy on the subject land due to the presence of five adjoining properties, which all tend to overlook the lower subject land. Mr Johnson provides a photograph (Exhibit 3) to show the relatively lower topography of the subject land compared to the properties adjoining to the west and to the north. However Mr Van Hees agrees with the previous valuer that, subject to suitable building design, it would be possible to erect a suitable dwelling upon the subject land, as evidenced by the existence of the current building. All of those features were acknowledged and considered in the current valuation.
In respect of the adjoining child-minding centre to the west of the subject land, Mr Johnson now confirms that, while he has no record of serious disturbance from noise from that centre, its presence is a matter that would affect the value of the land in the market place. He concedes that the children’s playing area is more to the western side of that parcel near Louisa Street. However he argues that parking of vehicles associated with the centre is also occasionally a problem outside the subject land in Park Road West. It is agreed that the operations of the centre is restricted to normal working hours from Monday to Friday. Mr Johnson rejects that the dividing fence provides an effective buffer from noise at the centre.
In allowing for added value of the retaining wall along the western boundary, which is shared with the child care centre, Mr Van Hees has allowed $5,000 as a half share cost of that wall in his valuation of $200,000 for the subject land. Mr Van Hees also confirms that the child care centre provides a day service to 28 children. It is his opinion that the centre causes little inconvenience from noise from the children, although he agrees that there is some parking of vehicles by staff at the centre. He sees that as normal for residential areas, although he concedes that there was likely to be a higher level of noise from the 28 children, than on a normal residential parcel.
In respect of the irregular 89 m² shape virtually attached to the south-western frontage of the subject land, Mr Van Hees has allowed any benefit for that extra frontage to be counterbalanced by the child care centre adjoining. He argues that had that additional frontage continued for the full depth of the subject land, then the unimproved value could have been higher. He believes that the extra frontage does add to the aesthetics of the subject land, however he agrees that the further distance to the adjoining land to the east of the subject land would reduce the impact of noise from the centre at that site.
In valuing the subject land Mr Van Hees has assessed the land as having no City views at all. In that matter Mr Van Hees agrees that the subject land would be comparable to a previous sale in October 1997 at 30 Jones Street, Highgate Hill, which was used for comparisons in the 1998 valuation in AV99-316. However he advises that because of the age of that sale at 30 Jones Street, in a rising market at Dutton Park and Highgate Hill, he could not use that now outdated comparison. The 30 Jones Street sale is nearby to his current Sale 1 at 41 Middle Street. The 30 Jones Street sale was applied at 1 October 1998 at $95,000, compared to the subject land at that date of $98,000. However there is no evidence of relativity with 30 Jones Street in the current valuation.
Changes in the Valuation –
While he has no evidence to support his conclusion that the rapid increase in the valuation of the subject land must be connected pro rata to its relative area, Mr Johnson advises that the change in values supports that outcome. He notes that the increase to $230,000 reflected a rise of 109%, prior to the reduction after the objection, which still reflects an increase of 82% from the previous year at $110,000.
He argues that was inconsistent with the general level of values in the area as suggested by some media reports. Mr Johnson notes that it was reported that on average the median price for properties in Dutton Park tended to reflect a level of value between $20,000 and $30,000 less than the median price of properties in Highgate Hill. On that basis he rejects comparisons directly between those two adjoining suburbs. Mr Van Hees rejects the use of any averaging process, which he argues is fraught with difficulties in comparing suburb to suburb. He argues that comparisons should only be made on a direct site to site basis, and not by using any averaging method. Mr Van Hees advises that residential parcels are valued on a site basis, and not on a per square meter basis.
Relativity -
Of more concern to Mr Johnson is the apparent inconsistent relativity between the subject land and certain surrounding parcels. He notes for instance that a parcel at 20 Louisa Street (Lot 42 on RP 12150) has an area of 354 m², has views of the tops of the City centre buildings as well as views out to Mount Lindesay Ranges, and yet is only valued at $210,000. Mr Johnson also notes that the nearby Louisa Street is also in Highgate Hill rather than in Dutton Park, which he argues is a superior address. He notes that the adjoining lots in Louisa Street also have similar values at $210,000 on the western or higher side of Louisa Street. The contour plan in Mr Van Hees’ report (Exhibit 2) confirms that Lot 42 is about 11 metres in height above the subject land.
Mr Van Hees advises that the northern or rear boundary of the subject parcel is actually the boundary between Highgate Hill and Dutton Park, and he sees no depreciation in value of the subject land because of any perceived difference in suburb prestige. He advises that similar lands sell for similar prices in that locality, whether they are in Highgate Hill or Dutton Park. Mr Van Hees also notes that 20 Louisa Street is smaller in area than the subject land, although the latter has a more irregular shape. He also sees some advantage in the wider frontage of the subject land.
Mr Van Hees also notes that generally across the whole of Dutton Park and Highgate Hill areas, the old subdivision of long narrow rectangular parcels with highset houses predominates, and is constantly reflecting little differences in value varying between $270,000 and $300,000 for an improved dwelling. Mr Van Hees also notes that the parcels in Louisa Street at $210,000 have a similar fall to the east as does the subject land. Mr Van Hees was not aware of the views from 20 Louisa Street, but notes if City centre views are available, then that unimproved value might be too low. However he agrees that the value will depend upon the extent and quality of the City centre views.
In seeking to demonstrate the level of value that might attach to good City centre views, Mr Van Hees refers to a parcel about 80 metres south of the subject land at Rosary Crescent, Dutton Park (Lot 2 on RP 41043). He notes that property has City centre views between adjoining houses, and it sold in November 2001 for $610,000. The contour plan in Exhibit 2 shows that parcel at least 11 metres higher in elevation than the subject land. Mr Van Hees agrees that good City centre views add substantially to the value of a property in that locality. By comparison Mr Van Hees notes that a sale at 8 Louisa Street sold for $330,000, suggesting that the City centre views as noted are not as good as at Rosary Crescent.
In seeking further relativity checks Mr Johnson provides comparisons with lands at 5 to 9 Marley Street, Highgate Hill, at unimproved values between $220,000 and $225,000; lands at 74 and 76 Gloucester Street at $170,000; land at 10 Gertrude Street ($145,000) and 30 Gertrude Street ($190,000); 12 and 14 Mabel Street each at $190,000; and 25 Louisa Street at $190,000. He argues all of those parcels are superior to the subject land, yet all are valued less than the $230,000 originally applied to the subject land. However he provides no details of any of those additional parcels.
Mr Van Hees is familiar with all of those parcels, and notes that the market reveals that there are no improved parcels in the whole of the South Brisbane area, that are selling for less than $300,000 at the present time. He argues that the current valuations and relativities appear consistent with market trends. He agrees that the lands in Marley Street are nearer to the Central Business District, and also the “coffee precinct” in Boundary Street, West End. He advises that one improved parcel sold on the corner of Marley Street (Lot 47) for about $580,000 in 2000. Mr Van Hees also notes that while the subject land is near Gloucester Road which is a key busy four-lane road, so also is Marley Street near Vulture Street.
In drawing comparisons with 20 Louisa Street, Mr Van Hees notes that parcel has an area of 354 m², while the subject land has an area of 496 m². He notes that people buying on a site value basis, will pay a little more for a larger area which provides some increase building flexibility. He notes for example that a parcel about 150 metres east of the subject land at 28 Park Road West, (Lot 55) has an area of 607 m², and sold in October 2001 for $540,000. Mr Van Hees also notes that another sale at 36 Park Road West (Lot 51) had an area of only 405 m² and sold for $415,000 in January 2002. Lot 51 is only four lots east of Lot 55.
Comparison of Sales –
To support his estimate of the unimproved value Mr Johnson provides the following comparison with the sale of an improved property at 12 Park Road West that sold in July 2001 for $150,000. He notes that the sale occurred prior to public auction, and was purchased by the adjoining owner at 10 Park Road West. The sale is seen as superior to the subject land due to its additional rear access to Mabel Street, and its further distance from the child-minding centre at the corner of Louisa Street and Park Road West. Mr Johnson admits that the existing dwelling was in a very poor state of repair, but estimates its added value at at least $20,000, leaving an unimproved value for the land of $130,000.
To support his valuation, Mr Van Hees provides the following sales:
· Sale 1 – (41 Middle Street, Highgate Hill – Lot 2 on SP 122978). This is a 422 m² Low Medium Density residential vacant parcel located about 1.2 kilometres north-west of the subject land. The sale has access to Middle Street which is a narrow street with difficult parking in the street. There are some distant City centre views of the top of City buildings. Overall the sale is slightly superior due to its location, but it has an inferior street access. The sale sold in November 2000 for $229,000, was analysed at $229,000, and applied at $210,000.
· Sale 2 – (29 Strath Street, Highgate Hill – Lot 7 on SP 128743). This is a 400 m² Character Residential vacant parcel located about 0.6 kilometres north of the subject land. The sale has some City centre views and limited off-street parking due to the narrow Strath Street. However the City centre views are currently obstructed by adjoining vegetation. Overall the sale is seen as slightly superior to the subject land, and has a square shape compared to the narrow width of the subject land. The sale sold in January 2002 for $235,000, was analysed at $235,000, and applied at $220,000.
· Sale 3 – (8 Park Road West, Dutton Park – Lot 69 on RP 12134). This is an improved parcel of area 407 m² located adjoining the subject land to the east. Access is similar to the subject land, but the sale is one lot removed from the child care centre. The sale has similar topography as the subject land, and was improved with a dwelling and garage. The sale sold in December 2001 for $278,000, and the land was analysed at $213,000, after allowing $65,000 for the added value of the dwelling, which was being renovated and upgraded. The sale site was applied at $200,000 similar to the subject land, because the sale was smaller in area, but did not immediately join the child care centre.
Mr Johnson has personal knowledge of the sale at 12 Park Road West, as the purchasers are friends of his. He also notes that as part of the financing arrangement for that sale, the purchasers had a valuation of their own existing property at 10 Park Road West. That valuation by a registered valuer, valued the land and dwelling at 10 Park Road West at $220,000, which, in Mr Johnson’s opinion, discredits the Chief Executive’s unimproved value of that parcel (Lot 68) at $200,000. He notes also that the current unimproved value by the Chief Executive of 12 Park Road West (Lot 67) is $205,000.
Mr Van Hees rejects the sale of 12 Park Road West as a very low sale out of line with the market in that locality. He argues that there has been no other sales of either vacant lands or improved dwellings in that locality at prices similar to that $150,000. As a low sale he rejects its use in any meaningful comparisons. Mr Van Hees also rejects any reliance upon the valuation of 10 Park Road West for mortgage financing purposes, as he explains that such types of valuation are always very conservative, as they form the basis of security for financing arrangements.
Mr Johnson argues that it is inappropriate to compare the subject land with sales of parcels that have views of the City centre. He notes that City centre views command an additional premium for parcels where such views exist. It is agreed that there are no such views from the subject land which is in a gully.
In his analysis of the improved sale at 8 Park Road West, Mr Van Hees advises that he had estimated the added value of that old dwelling by estimating the new construction of a similar design building of floor area of about 110 m², at $1,000 per square metre ($110,000), and then depreciated that figure by 40% to allow for its condition to arrive at the added value of $65,000. Mr Johnson questions that added value as he notes that the new concrete foundations which were in existence at the date of sale (photograph in Exhibit 3) reflect a cost of about $30,000 alone. However Mr Johnson provides no detailed evidence of that dwelling to dispute Mr Van Hees’ opinion as a valuer.
In seeking to reject Mr Van Hees’ Sale 1 (41 Middle Street) Mr Johnson notes that the zoning of that parcel has the potential for Low Medium Density residential flat uses. However Mr Van Hees rejects that assumption, noting that the small size of that parcel at only 422 m² means that it can only be used as a single resident site, and therefore is a suitable sale for comparison purposes under s.17 of the Valuation of Land Act 1944.
Decision:
I turn first to the legislation, and note that the unimproved value of the land is specifically directed by s.3(1) of the Act, which relevantly states:
“3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(b)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.”
In seeking to understand that direction, I believe that it was very clearly expressed in the findings of the Privy Council in Tetzner v. Colonial Sugar Refining Company Limited (1958) AC 50 where Their Lordships said at p.57:
“What in Their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation. The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it. Their Lordships see no objection in the process of valuation to regarding the land as land situated in a sugar town. The valuer need not shut his eyes to the fact that there is a sugar manufacturing industry in existence, though he is not entitled to value the sugar mill and its accessory situated on the subject land. Their Lordships find themselves in agreement with an illustration given by the Learned Magistrate in his judgment. ‘If the undeveloped capital value of a city powerhouse is being assessed one does not assume a city without electricity and all the consequences of the lack of such an amenity.’”
That decision followed the findings of the Privy Council in Tooheys Limited v. The Valuer-General (1925) AC 439, where Their Lordships said at p.443:
“Now, what he has to consider is what the land would fetch as at the date of 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 never had existed.”
In simple terms the land is to be treated as if all improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant.
The Nature of the Land –
On the evidence supplied in respect of the agreed nature of the subject land, there is nothing that adds further to the very detailed examination of that matter by the learned Member in the previous appeal in AV99-316. I will therefore accept that understanding, which is agreed by both parties. Suffice to say that the subject land is a low parcel generally surrounded by higher properties, with no views of the City centre because of the topography of its locality.
However it will also be fair to note that the adjoining child care centre to the west of the subject land, is a use that was likely to convey a higher than normal level of activity and noise than normal residential properties. On that basis it is a matter that any prudent purchaser would consider when contemplating the attractiveness of the subject land. The presence of the 4.7 metre concrete block retaining wall is not, in my opinion, an attractive feature of the site. Those features of the childcare centre have been acknowledged and allowed for by Mr Van Hees.
If I look then to the shape of the subject land I find that basically it has a building envelope constrained by the basic 10 metre wide 407 m² parcel, (Lot 70). The adjoining area of 89 m² to the south-western corner of Lot 70, would appear to only add some further aesthetic value to the property in conveying the appearance of a wider frontage to Park Road West. However that 89 m² only extends for about 25% of the depth of the subject land. In seeking comparisons with other parcels or sales, I believe the parcel should more appropriately be seen as a 407 m² with some small additional area as a premium. It is therefore, in my opinion, more appropriate to compare the subject land with the land in Louisa Street on that basis.
Changes in the Market –
In considering the appellant’s concern that the unimproved value of the subject land has increased inconsistently with some overall averaging process, I note that the courts have rejected such an approach. For instance the matter of averaging of sales was addressed in Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299 at 305, where Williams J said in the High Court of Australia on 26 August 1943:
“This method of averaging to my mind is unsound. The prices obtained at comparable sales should not be aggregated and averaged, especially when the prices obtained on sales of small areas are dealt with in this way in order to obtain the value per acre of a large area. The only safe course is to compare each sale with the subject land separately.”
That principle has been upheld by lesser courts on many occasions subsequently.
If I look then at the appellant’s comparisons with percentage changes with other statistical indicators, I note that precedent has cast doubt upon the wisdom of adopting a percentage change between valuations as evidence of unimproved value. I note for instance in NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said at p.381:
“It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.”
That was also followed by the Full Court of Queensland in C and BD Henricks v The Valuer-General (1983) 9 QLCR 59, where Macrossan J (later CJ) said at p.63:
“The appellants also relied upon a schedule, exhibit 4 in the Land Appeal Court, which shows percentage increases in the value applied by the Valuer-General to a number of selected parcels of land from the date of the preceding valuation up to the March 1979 valuation date. The percentage increase shown in the selected case was in each instance considerably less than the increase applied to the subject land as between the two valuation dates. The weakness in such a selective comparison is obvious as there could be any number of reasons why blocks in the same valuation area should increase at different rates over a period of five years.”
Clearly there could be many reasons why parcels of land could increase or decrease over a period of time. The real test is to compare the subject land with sales of comparable properties.
Relativity -
If I look then at the method by which residential parcels should be considered for comparison purposes, I note that guidance is clearly provided in the matter of Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, where the Land Appeal Court said at p.330:
“The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. As the Land Appeal Court said in its decision on the appellants’ previous appeal (H and E Grahn v. The 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 seeking relativity with surrounding parcels I note that guidance is provided in the matter of R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, where the Land Appeal Court said at p.16:
“We are conscious that it is desirable that valuations made for the purposes of the Valuation of Land Act of comparable lands should bear proper relativity, one to the other, if the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis.”
I note that guidance was also followed by this Court in TF and SA Shepherdson v Valuer-General (1992-93) 14 QLCR 83, where the learned Member said at p.87:
“Applying to this case the principles of law summarised above, it is desirable that valuations of comparable lands should bear proper relativity. The appellants are entitled to rely on the valuations of properties in the vicinity of the subject land as being correct. … Although the comparable sales support a valuation in the order of that assigned to that of the subject land, it is appropriate that attention be given to obtaining some relativity to blocks in the same category of land.”
If I look then at the appellant’s concerns with the relativity with the land at 20 Louisa Street of area 354 m² and unimproved value $210,000, I find that Mr Van Hees has assessed that comparison on the basis of the subject land having an area of 496 m². Mr Van Hees accepts that difference in size with 20 Louisa Street would be balanced by the apparent better views from that parcel. While Mr Van Hees might speculate that the unimproved value of 20 Louisa Street might be too low, the appellant should be able to rely upon s.33 of the Act, which directs that the unimproved values are correct unless proved to the contrary.
However if the subject land was to be compared on the basis of its effective area of 407 m², then it could be concluded that the difference between the 354 m² area of 20 Louisa Street property, which is about 11 metres higher in elevation and better views than the subject land, could be seen to be conservative. On that basis the unimproved value of the subject land could be slightly less than $200,000.
If I look then at relativity with the adjoining land at 8 Park Road West, which has an area of 407 m², but is further removed from the childcare centre, I find that a slightly lower unimproved value than $200,000 would not be inconsistent. That would also be consistent with the unimproved value of $205,000 for 12 Park Road West, which also has rear access to Mabel Street. Any adjustment for the effective size of the subject land would not be inconsistent with the relative differences in sale price for Lots 51 and 55 east of the subject land in Park Road West.
Comparison of Sales -
I turn then to the sales evidence and I find that precedents in the courts have long found that, when determining unimproved value, the best method is by comparisons of sales of vacant lands. That has been found on many occasions, and was clearly defined by the Land Appeal Court in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where it said at p.46:
“It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence.”
Other matters where comparisons of sales or lightly improved lands were adopted were discussed by the learned Member in the previous appeal on this property (AV99-316), and I refer to those precedents.
If I look then in the current matter I consider first the appellant’s reliance upon the sale by an adjoining owner at 12 Park Road West. In considering whether that sale represented a fair price in the then current conditions of the property market, I am reminded of the understanding of the value of land. That was best enunciated by the High Court of Australia in Spencer v The Commonwealth of Australia (1907) 5 CLR 418, where Griffith CJ said at 432:
“In my judgment the test of value of land is to be determined, not by enquiring what price a man desiring to sell could actually have obtained for it on a given day, ie whether there was in fact on that day a willing buyer, but by enquiring ‘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?’”
That understanding was further elaborated by Isaacs J who said at p.441:
“To arrive at the value of the land at that date, we have, as I conceive, to suppose 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 cognizant 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.”
In considering whether a sale is comparable, I am also reminded of the decision in Brewarrana Pty Ltd v Commissioner of Highways (SA) (1973) 32 LGRA 170, where Wells J said at p.179-180:
“It is general valuation practice for sales characterized 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. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to be sold, or the same thing as its true value. … Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape, slope, view, land use (actual and potential), scope for, and difficulties of, development, services and amenities; … 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 a 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 valuer’s) sphere of skill.”
In the current matter Mr Van Hees, as the only professional valuation advice to the Court, has rejected the sale of Park Road West as an out-of-line sale, being well below the general market level then applying in that area. The other sales evidence available supports that conclusion.
If I look then at the respondent’s Sale 1 (41 Middle Street), I note that Mr Van Hees argues that the current zoning of that parcel as Low Medium Density Residential does not directly imply that the land must be considered as a multi-unit site. Indeed the matter of the zoning of land was addressed by the High Court in Royal Sydney Golf Club v Federal Commissioner of Taxation [1954-55] 91 CLR 610. In that matter, the High Court, when considering the unimproved value of that land said at p.625:
“The first question in the case stated should therefore be answered that in arriving at the unimproved value under the Land Tax Assessment Act of the land the subject of the appeal the land should not be valued without regard to the provisions and effect of the County of Cumberland planning scheme.”
The principle of Royal Sydney Golf Club is that the” zoning of the land must be considered in the valuation, as it is a restriction which arises from the law affecting an area in which the land lies.”. (p.624).
However I note also directions of the Land Appeal Court in AK and SS Gallagher v Brisbane City Council (1975) 2 QLCR 368, when it said at p.381:
“Now, while the zoning of land pursuant to a town plan will always affect the highest and best use of land at a particular date, and to that extent the value, it does not create that highest and best use. It may facilitate the immediate realisation of that highest and best use or, at the other end of the scale, it may totally prevent such realisation. In between these two, zoning may work to postpone, or defer, full or any realisation of the value of the highest and best use, until some intermediate action is taken and completed.”
If I look then at the highest and best use of 41 Middle Street, I find that its small size of 422 m² is less than the minimum area required for a multiple unit development, even in an inner residential location. On that basis I agree with Mr Van Hees that 41 Middle Street is a useful comparison with the subject land as a single resident site.
If I then adopt Mr Van Hees’ sales I find the following comparisons:
Sale Area Applied Value Comparison 1 (41 Middle Street) 422 m² $210,000 Slightly superior 2 (29 Strath Street) 400 m² $220,000 Slightly superior 3 (8 Park Road West) 407 m² $200,000 Similar, but smaller Subject land 496 m² $200,000 - On those comparisons there is nothing to indicate that Mr Van Hees has made an error of fact or has followed a wrong principle. However a similar conclusion could be made if the unimproved value of the subject land was slightly less than $200,000, as noted in para [44].
Summary –
In summarising this matter I believe that a general level of value at $130,000 for the subject land cannot be supported by the evidence. However in seeking some adjustment for the balance between the closer proximity for the disabilities of the childcare centre, compared to the small premium attaching to the 89 m² of additional area of the subject land, I will allow a further reduction to $190,000 to provide any benefit of doubt to the appellant, and also to allow $5,000 for the half share of the added value of the 4.7 metre block retaining wall on the western boundary.
I note that in providing that benefit of doubt in the appellant’s favour, I am guided by the decision of the High Court in Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited & Ors (1946-47) 74 CLR 358, where Dixon J said at p.373:
“I have had the advantage of reading the judgment prepared by Williams J. and agree in it. I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.”
Conclusion:
Having considered the whole of the evidence I am persuaded that the appellant has partly proved his case. The appeal is upheld. The determination of the Chief Executive is set aside, and the unimproved value of Lot 70 on RP 12134 and Lot 1 on RP 53453 is determined in the sum of One Hundred and Ninety Thousand Dollars ($190,000).
NG DIVETT
MEMBER OF THE LAND COURT
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