Kann v Department of Natural Resources, Mines and

[2004] QLC 38

LAND COURT OF QUEENSLAND

CITATION:	Kann v Department of Natural Resources, Mines and Energy [2004] QLC 0038
PARTIES:	Burnett W and Florence F Kann (appellants)
v. Chief Executive, Department of Natural Resources, Mines
and Energy (respondent)
FILE NO:	AV2003/0201
DIVISION:	Land Court of Queensland
PROCEEDING:	An Appeal against an Annual Valuation in the City of Hervey Bay
DELIVERED ON:	20 May 2004
DELIVERED AT:	Brisbane
HEARD AT:	Hervey Bay
MEMBER	Mr JJ Trickett, President
ORDER:	The appeal is dismissed and the valuation of the Chief Executive is affirmed.
CATCHWORDS:	Unimproved value - Unimproved value of improved land - Method of valuation - Comparable sales - Relativity - Valuation of Land Act 1944
APPEARANCES:	Mr BW Kann (one of the owners) for the appellants Mr GJ Smith, Senior Legal Officer, Department of Natural Resources, Mines and Energy) for the respondent

[1]               This is an appeal by landholders in the City of Hervey Bay against the unimproved value applied to their land under the provisions of the Valuation of Land Act 1944 (the Act).

Background

[2]              Mr and Mrs Kann, (the appellants) are the owners of land described as Lot 3003 on Plan PV16013 (the subject land), containing an area of 716 m². As at 1 October 2002, the Chief Executive, Department of Natural Resources, Mines and Energy (the respondent) valued the subject land at $150,000 under the provisions of s.37 of the Act. Following an objection against that valuation, the landowners appealed to the Land Court advising that their estimate of the unimproved value at that date was $125,000. The grounds of their appeal essentially relate to the relativity of the valuations applied to other allotments and the valuation applied to the subject land.

The Subject Land

[3]              The following details appear in the statement prepared by Mr DR Gaedtke, a registered valuer who gave evidence on behalf of the respondent. The land is situated at 16 Mant Street, Point Vernon. Mant Street has a bitumen sealed carriageway, with concrete kerbing and channelling and provides good access to the subject land. The land has an easy fall below road level, with good views of Gatakers Bay and parklands to the rear. The land is zoned "Residential-Low Density" under the Town Plan for the City of Hervey Bay and is used for residential purposes. The usual services of reticulated town water, sewerage, power and telephone are connected to the property.

The Relevant Legislation

[4]              The responsibilities of the respondent are set out in the provisions of the Act. The respondent is required to make annually, or periodically, a valuation of all land in a local government area: s.37. For the purposes of the Act, the valuation of each parcel of land is to be the "unimproved value" of that land, which is defined to mean 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 the improvements on that land did not exist: s.3(1).

[5]              The Act thus requires the respondent to ascertain the unimproved market value of each parcel of land as at the date of valuation, assuming that there were no improvements on the land, but also assuming the existence of all present facilities and amenities external to the land, such as roads, power and other services.

[6]              It has been well established that unimproved market value is ascertained by reference to the prices that have been paid for similar parcels of unimproved land. As Pike J said in Waterhouse v Valuer-General (1927) 8 LGR (NSW) 137 at 139 that:

"Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it, but - as with other commodities - the best way to ascertain the market price is by finding what lands comparable to the subject land were bringing in the market on the relevant date - and that is evidenced by sales."

The Approach of the Respondent's Valuer

[7]              Mr Gaedtke gave evidence that the subject land had been valued by direct comparison with three sales of vacant land in the Point Vernon area. All three sales are situated on the Esplanade with sea views, but each of them has a different outlook. According to Mr Gaedtke, the general sales evidence indicated that waterfront properties in the Point Vernon area with unrestricted views of the water had increased in value considerably, while internal blocks, such as those referred to by Mr Kann, did not show the same levels of increase in value.

[8]              The first of the comparable sales referred to by Mr Gaedtke (Sale 1) contains an area of 610 m² and is situated towards the north-eastern point of Point Vernon, with good views to the north over Hervey Bay. According to Mr Gaedtke, in its natural state the land had a gully running through it which has been filled and revetted to provide a level building site. That allotment sold in December 2001 for $160,000. Mr Gaedtke analysed the sale to show an unimproved value of $140,000 and as at 1 October 2002 (the relevant date of valuation) an unimproved value of $130,000 had been applied to it by the respondent. Mr Gaedtke considers that land to be inferior to the subject land because of its topography (in its natural state) and its size.

[9]              The second comparable sale referred to by Mr Gaedtke (Sale 2) contains an area of 1,098 m² and sold in April 2002 for $186,500. That sale was analysed by Mr Gaedtke to show an unimproved value of $185,000 and as at the relevant date of valuation, 1 October 2002, an unimproved value of $175,000 had been applied to it by the respondent. That land is situated on the Esplanade some distance to the south of the subject land, with an outlook to the north-east. Mr Gaedtke described it as a level corner site, with water views towards Fraser Island. However, he described those views as restricted due to vegetation on the opposite side of the road.

[10]            In Mr Gaedtke's view, although that allotment is larger and has superior topography, its outlook is inferior to that of the subject land. However, overall Mr Gaedtke considers it to be superior to the subject land.

[11]            The third comparable sale referred to by Mr Gaedtke (Sale 3) has an area of 1,004 m² and is situated on the Esplanade towards the northernmost tip of Point Vernon. That allotment sold in March 2002 for $190,000. That sale was analysed by Mr Gaedtke to show an unimproved value of $185,000 and as at the relevant date of valuation, 1 October 2002, the respondent had applied an unimproved value of $165,000 to that land.

[12]            Mr Gaedtke described the allotment as level and although it has water views, they were affected by vegetation on the opposite side of the road. Therefore he regarded the outlook as inferior to that from the subject land. However, he considered the allotment to be superior to the subject land because of its topography and its area.

The Case for the Appellants

[13]            The appellants' principal argument was based on what they consider to be the lack of relativity between the unimproved value applied to their land and the unimproved values applied to other lands in the area. They contend that the valuation applied to their land relates more to land situated on the Esplanade rather than to allotments in Mant Street, where properties have lower unimproved values, which did not increase to the same extent as that applied to the subject land.

[14]            In particular, in his oral evidence Mr Kann referred to the unimproved value of $83,000 applied to the allotment situated at 10 Mant Street, which has an area of 698 m². Mr Kann expressed the opinion that this land has better views than the subject land. However, it does not have access to the Esplanade as there are allotments behind it, which themselves front the Esplanade.

[15]            Mr Kann also referred to the allotment situated at 4 Spence Street, which has an area of 764 m². Spence Street is immediately to the south of Mant Street and the allotment is situated close to the corner of Spence Street and the Esplanade. According to Mr Kann, that allotment has good views overlooking parkland and the sea. It was valued at the relevant date at only $78,000.

[16]            While conceding that the subject land has virtually unrestricted sea views to the north (or as he put it, to the north-north-west), in Mr Kann's opinion, views to Fraser Island are superior. He said that anyone who comes to Hervey Bay wants to see Fraser Island and the activity in the water. Some of the sales relied on by Mr Gaedtke have such views.

[17]            Mr Kann was also concerned about the extent of the increase in the valuation of the subject land. He thought that the increase of $53,000 from the previous valuation was excessive. However, he did not disagree with Mr Gaedtke's description of the land and he did not know of any other sales of vacant land in the area. Under cross-examination, he somewhat reluctantly conceded that the subject land would sell for $150,000 if it was offered for sale in its unimproved state at the date of valuation.

The Issues
[18]	The principal issue is with regard to the relativity between the valuation applied to the subject land and the lower valuations applied to other lands in the area. Mr Gaedtke explained that the slope of the subject land towards the rear from its frontage to Mant Street, provides a good outlook over parkland and across to the beach and Gatakers Bay. Its view is unrestricted and it cannot be built out as there are no allotments between it and the beach. On the other hand, internal allotments like No. 10 Mant Street, have views either around, between, or over rooftops of properties beside or below them. While they have water views, there is always the risk of a neighbour extending a building or growing trees, which would impact on those views.
[19]	Mr Gaedtke said the situation was similar with the Spence Street property, which had a view to the west. However, that view for at least half of each day was over tidal mud flats. There is also vegetation between Spence Street and the water which could grow and obscure the views. In Mr Gaedtke's opinion, the views from those blocks are not of the quality as the unrestricted views from the subject land.
[20]	While Mr Gaedtke had emphasised the proximity of the subject land to the beach on Gatakers Bay, he conceded that the beach is not a good swimming beach, it is rocky rather than sandy.
[21]	Mr Kann did not take issue with any of the sales or comparisons made by Mr Gaedtke, except to express the opinion that Sales 1 and 3 could also have views of Fraser Island. Mr Gaedtke pointed out that the two sales faced north and had sea views, but he conceded that they may have glimpses of Fraser Island to the east. However, Mr Gaedtke was of the opinion that sea views were not inferior to Fraser Island views. He said it depended on what a particular purchaser was looking for.
Conclusion
[22]	In my view the valuation of $150,000 applied to the subject land is well supported by the sales referred to by Mr Gaedtke. Although Mr Kann was concerned about the extent of the increase in the valuation over the previous valuation, I accept the evidence of Mr Gaedtke that the sales demonstrate the demand for properties with good sea views.
[23]	There remains the issue of relativity. Certainly there is a significant difference between the values applied to the allotments in Mant Street and Spence Street referred to by Mr Kann, and the higher value applied to the subject land. However, in my view, Mr Gaedtke successfully explained why there is such a difference in the values. It is logical that a prudent purchaser would pay more for a property with an unrestricted view, even if somewhat obstructed by vegetation such as Sales 2 and 3, than for those allotments in Mant Street and Spence Street.
[24]	In the circumstances, I am satisfied that the valuation applied to the subject land is not excessive. Therefore, the appeal must be dismissed.
Order
The appeal is dismissed and the valuation of One Hundred and Fifty Thousand Dollars ($150,000) applied by the respondent to the subject land as at 1 October 2002 is affirmed.

JJ TRICKETT
PRESIDENT OF THE LAND COURT