Jones v Chief Executive, Department of Lands

[1995] QLC 73

[1995] QLC 73

 

  LAND COURT

BRISBANE

25 August 1995

Re:     Appeals against valuations -
  Esk Local Government.
  AV94-334 and AV95-119.
Valuation of Land Act 1944.

Alan and Joan Jones
  v.
  Chief Executive, Department of Lands

D E C I S I O N

(Hearing at Toogoolawah)

There are two appeals against determinations of the Chief Executive, Department of Lands, of the unimproved value of Lot 1 on RP 121851 and part Lot 341 on Plan CSH 1945, parish of England, in the sums of:

a)$70,000 and

b)$77,000

for the purposes of the Annual Valuation of the Area as at
           a)        30 June 1993
           b)        1 January 1995.
The valuations were made under the provisions of the Valuation of Land Act 1944.
           The appellants for the respective relevant dates of valuation state a value of the land at
           a)        $35,000 and
           b)        $38,500.
           The appeals are brought on grounds that the location of the subject land to Atkinsons Dam does not rate a factor (premium) of 2 and that the determined values are well above local real estate values.
           It may be observed that in the figures applied by the parties there is no dispute as to the increase in value between the relevant dates.
           The subject land is a rectangular shaped parcel containing an aggregate area of 7.119 hectares and is situated about 14 kms west of Lowood with access via the gravel surfaced Watsons Road to which it has frontage on the southern boundary.  The lot comprises forest-type country rising gently from road level northerly towards Atkinsons Dam and affords an elevated homesite commanding views over 270 degrees including views over Atkinsons Dam.  Included within the aggregate area is an area of the foreshore of the dam (Lot 1 - the freehold - having an area of 6.399 hectares).  Electricity and telephone services are available.
           The site was purchased by the appellants in 1991 for a consideration of $105,000.  The site is described in the evidence of Mr Alan Jones who represented the appellants as being improved with a 5-bedroom brick and timber two-storied house, 3-car garage and workshop, stockyards, fencing, water and storage tanks and dam.  He says that currently Ray White Real Estate of Lowood estimates that the property as improved would be worth $120,000 which, in his opinion, if the home is valued at $80,000 shows that the determined values cannot stand.  No person from Ray White was called to substantiate the opinion given nor is there evidence from a valuer as to the added value the improvements would give the land. 
           Towards the conclusion of his statement of evidence, Mr Jones says -

"To sum up we believe the increase in our valuation from $42,500 in April 1991 to the 1994 level of $70,000, an increase of 65% in 3 years, is totally out of tune with Real Estate Values.  Our property is now worth $120,000, a real increase of only 15%.   "

Upon the assumption that the valuation of 1991 was correct and that values have increased (by whatever degree) which is admitted in the applied figures over the period between the relevant dates, the methodology used by Mr Jones in apportioning improved values leaves something to be desired. 
           Under Section 13 of the Act the Chief Executive must decide the unimproved value of lands to be valued for the Acts under which Local Authorities are established. Unimproved value is defined in Section 3 of the Act as meaning:-

"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 Toohey's Ltd v. The Valuer-General (1925) A.C. 439 P.C., Lord Dunedin at page 433 discussing "unimproved value" said:-

"Now, what he (the valuer) has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made.  Words could scarcely be clearer to show that the improvements were to be left entirely out of view.  They are to be taken, not only as non-existent, but as if they never had existed .... 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 valuation.  "

In Clough v. The Valuer-General (1981-82) 8 QLCR 70, the Land Appeal Court in considering the appropriateness of using sales of improved land for the purposes of ascertaining unimproved value said at p.76:

"The Valuation of Land Act does not specify, or provide for any particular method of valuation. Section 12(1)(a) and (b) define 'unimproved value' in relation to 'unimproved land' and to 'improved land' and stipulate that in each case it is the capital sum which the fee-simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require but adding, in the case of 'improved land', that the assumption must be made that at the time as at which the value is required to be ascertained for the purpose of the Act the improvements did not exist. The proviso which Mr Clough seeks to read as a direction as to how to value improved land, if closely analysed, merely provides a check or test in that it stipulates that unimproved value in relation to improved land shall not be less than the sum that would be obtained by deducting the value of the improvements from the improved value.  It thus, in effect, stipulates a minimum figure below which the Valuer-General should not fix a value in the case of improved land.

It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value.  The reason is obvious.  In applying such sales there is no room for error in analyzing the value of improvements.

Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement.  "

In the circumstances of the subject cases, one can understand why the methodology put forward by Mr Jones was used as there are only a limited number of lots bordering Atkinsons Dam and no sales of unimproved land.  However, were one to pursue the argument of Mr Jones and were his reasoning adopted, unimproved land fronting the dam with the amenity it has to offer could, as his figures will demonstrate, have a lesser value than lots within rural subdivisions with neither comparable outlook nor comparable general amenity.
           The subject land as described is taken from the report of Mr EG Ridley, registered valuer in the employ of the Department.  The description is not in dispute and the photographic evidence tendered by Mr Jones supports the conclusions drawn by Mr Ridley notwithstanding that the water level of the dam, due to poor rainfall seasons, is low and well below, as I observed on inspection, the boat ramps for ski enthusiasts and other recreational pursuits.  These features on the shore assist the Court and no doubt would assist any hypothetical prudent purchaser in envisaging the outlook in normal seasons.  In addition to that amenity, Mr Ridley sees the subject lot as one of the better elevated lots on the shoreline and the location as being of better standard than areas from where his market evidence was derived.
           In speaking to the 1993 valuation, Mr Ridley gave evidence of four sales to the south-east of the subject land in a fairly intense rural residential locality.  The sale lands were of areas of about 4/5 hectares with selling prices (including clearing and fencing) in a range between $38,000 to $42,000.  The applied values vary from $30,500 to $38,000.  The standard and amenity of the area is seen by Mr Ridley as inferior to the locality of the subject lot and generally speaking the sale lots have poor elevation and restricted inferior views.  Mr Ridley submits, and I agree, that whilst the value applied to the subject lot is of the order of twice the values applied to the sale lands, a factor of two as such is not applied.  Apart from the view over Atkinsons Dam, the subject lot on the evidence is superior to these sale lots in size, location, amenity and elevation.  On top of that superiority, there comes the added influence of views in normal seasons over an expanse of water (less water in drier times and less attractive) as opposed to dry land rural views.  In order to demonstrate the fact that purchasers pay for this sort of attraction, Mr Ridley compared two sales near Wivenhoe Dam, one with frontage to Lake Wivenhoe in Glen Esk Road of 1 hectare which sold for $50,000 (with clearing, water and fencing) in July 1993 and one away from the dam in the Esk-Hampton Road of 1 hectare which sold in September 1993 for $18,000.  For the later valuation, Mr Ridley again looked at sales of subdivisions to the south-east of the subject land where three lots of about 4 hectares each sold in late 1993/94 for prices of $49,000, $54,000 and $45,000.  He again compared the difference in values reflected by sales of land fronting Lake Wivenhoe and sales of land away from such frontage.  In November 1993, a 1 hectare lot with frontage to Lake Wivenhoe and with better outlook than the sale considered for the previous valuation exercise, sold for $87,000 with fencing and clearing valued at $700, whilst in June 1994 a 1.858 hectare site away from the dam in the Esk-Hampton Road sold for $30,000 with clearing.  Mr Ridley does not seek to apply the values reflected by these Lake Wivenhoe frontage lots to land overlooking Atkinsons Dam.  They are in evidence merely for the purpose of demonstrating that people in the marketplace will pay a premium for views over water.  This submission and this type of evidence is heard commonly by the Court throughout the State with respect to lands of similar or comparable outlook and I accept it.
           If one then returns to the sales of lots to the south-east, it can be seen first that they are of no use in supporting the opinions of the appellants on the unimproved value of the subject land.  The factors which have to be considered in making the comparison as unimproved land include the difference in size, elevation, amenity of the area and outlook.  These are matters best gauged by a valuer who is trained for the purpose and has the experience and expertise to weigh them in the balances.
           On the evidence I have concluded that the comparison made with sales of unimproved land supports the determined values.  Included in the evidence of Mr Jones are various details of sales and asking prices of improved lots, including a recent sale of an improved lot adjoining the subject lot for $125,000.  This lot has an area of 39 hectares and was on the market for $185,000.  The land was tenanted.  The sale was made to the tenant.  On Mr Ridley's enquiries he came to a conclusion that the sale could not be described as an "arms length transaction".  It was also an after date sale and the conclusions drawn from it by Mr Jones are contrary to the values the appellants have applied to the subject land during the respective valuation period.  Nevertheless, on the surface, the sale would say that the market has altered.  Whether that be the case can only be gauged by other sales at the relevant time and, in respect of unimproved land, from sales of unimproved lots.  On that point, Mr Ridley submits that the market for improved land and unimproved land may differ.  The Act, however, requires that the valuation of the subject land be based on its unimproved value.  Clearly then, whatever be the correct correlation between the sales, preference, as was stated by the Land Appeal Court in Clough supra, must go to the more accurate and less prone to error basis of value.  I accordingly find that the grounds of the appeal and the evidence given in support of them have not proved to my satisfaction that the applied values are incorrect.  Further the introduction of some additional evidence such as the incidence of crime throughout the area is common and with other matters of relevance is reflected in selling prices of land used for valuation purposes. 
           In the circumstances, the appeals are dismissed and the determinations of the Chief Executive are affirmed.

President of the Land Court