Kelly v Department of Natural Resources and Mines
[2007] QLC 1
•31 January 2007
LAND COURT OF QUEENSLAND
CITATION: Kelly v Department of Natural Resources and Mines [2007] QLC 0001 PARTIES: Michael Joseph Kelly
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO.: AV2005/0666 DIVISION: Land Court of Queensland PROCEEDING: Appeal against an annual valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 31 January 2007 DELIVERED AT: Brisbane HEARD AT: Mackay MEMBER Mr RS Jones ORDER: The appeal is allowed and the unimproved value of Lot 5 on Registered Plan 713050, Parish of Bassett, County of Carlisle is determined in the amount of $490,500 as at 1 October 2004. CATCHWORDS: Statutory valuation – s.33 Valuation of Land Act 1944 – presumption of correctness of statutory valuation - comparable sales – unacceptable sales. APPEARANCES: Mr M J Kelly in person for the appellant
Ms C Liu, Senior Legal Officer, Department of Natural Resources and Water for the respondent
Michael J Kelly has appealed against the assessment of the unimproved value of his land by the Chief Executive, Department of Natural Resources and Mines, the respondent to the appeal.
The unimproved value determined by the respondent pursuant to the Valuation of Land Act 1944 as at 1 October 2004 (effective as at 30 June 2005) is $545,000. In his notice of appeal, Mr Kelly's estimate of the unimproved value was $232,875 but at the hearing of the appeal contended for a value in the order of $360,000.
Mr Kelly represented himself at the appeal. The respondent was legally represented by Ms C Liu a senior legal officer employed by the respondent and relied on the evidence of Ms Robyn Merritt a registered real estate valuer also employed by the respondent. Ms Merritt was not the valuer originally responsible for the assessment of the unimproved value assigned to the land, however, after carrying out her own enquiries and investigations, it was her professional opinion that the valuation appealed against was fair and reasonable.
Background
This appeal concerns land located at 46 Bourke Street, Blacks Beach, more properly described as Lot 5 on Registered Plan 713050, Parish of Bassett, County of Carlisle. Blacks Beach is a northern beaches suburb of the city of Mackay and is approximately 15 kilometres from the Central Business District of that city. All of the usual urban services and amenities are reasonably available to the land.
The land comprises an area of 1,996 m² and is generally of a long narrow rectangular shape with its eastern most boundary fronting the esplanade to Blacks Beach. The land is zoned "Comprehensive Development" under the Mackay City Council Town Planning Scheme. Under the "Comprehensive Development" designation multi unit development is an "as of right" use. Notwithstanding the zoning of the land at the relevant date of valuation it was (and is) being used for single unit residential purposes.
Issues in the Appeal
As the land is "improved land" for the purposes of the Valuation of Land Act 1944 (VLA), s.3(1)(b) of that Act requires that it is to be valued on the assumption that, at the time as at which the value is to be determined, the improvements did not exist. I am satisfied that this requirement of the VLA has been met. Also, because of its use at the date of valuation, pursuant to s.17 of the VLA, notwithstanding any potential the land might have for multi unit or other higher order development that potential is to be disregarded. On balance, I am also satisfied that this requirement of the Act has been satisfied.
Pursuant to s.33 of the VLA, the valuation appealed against is deemed to be correct and therefore the appellant bears the burden of proving that it is wrong. In Brisbane City Council v Valuer General[1] the High Court considered that the presumption in favour of the correctness of the statutory valuation may be rebutted where it can be shown that the valuation was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method. Also of relevance in appeals such as this is that pursuant to s.45(4) of the VLA the appellant is limited to the grounds stated in his notice of appeal and bears the burden of proving each and every ground of appeal relied on.
[1](1977-78) 140 CLR 41 at 56-57: See also G Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331-332 (LAC).
To my mind one of the most important features of the land is its beach location. At page 2 of her report[2] under the heading "Nature of Land" Ms Merritt describes the land in the following terms:
"The survey plan shows the property having frontage to an esplanade, which appears to have eroded completely to below to high water mark. As a part of an erosion control measure, a rock wall has been built on the ocean side of the property. It is difficult to determine whether or to what extent the rock wall encroaches onto the subject land, without the benefit of a survey by a registered surveyor.
The Environment Protection Agency advised there are no building restrictions in place limiting the location of buildings on the land. A study carried out by the EPA advised the subject property may be prone to erosion for a distance of 150 metres from the high tide level – this study was based on a 50 year planning cycle."
[2] Exhibit 2.
The beach location and its associated problems lay very much at the heart of the appellant's objection to the valuation appealed against. The appellant particularly identified:
i.the recurring expense associated with maintaining the rock wall which acted as a "beach front buffer" against the sea;
ii. the risk of storm and tidal surge damage;
iii. the difficulty in finding the sales of land truly comparable to the subject land.
The Sales Evidence
In her valuation report Ms Merritt refers to sales of three lightly improved parcels of land located at Slade Point and Eimeo and to two further sales in her "Supplementary Schedule of Sales". In Appendix A to her report, reference is also made to other sales of land which occurred between 2002 and 2005. At page three of her report Ms Merritt points out that the sales information contained in her "Supplementary Sales Schedule" was not relied on by her in arriving at her opinions concerning the value of the subject land. It is also clear in my opinion that the sales information referred to in Appendix A played little or no part in her valuation exercise. Accordingly, I do not consider that any of the sales data referred to in the supplementary sales schedule and/or Appendix A of Exhibit 2 is of any assistance in the circumstances of this appeal.
During the conduct of the appeal the appellant tended a schedule (Exhibit 1) which in part referred to a number of "beach frontage" sales and "non-beach frontage" sales. In circumstances where no attempt was made by the appellant to explain how the non-beach frontage sales were of any material assistance I cannot give them any weight in the determination of the unimproved value of the subject land.
Turning for the moment to the three lightly improved sales relied on by Ms Merritt, Sale 3 is for various reasons not really comparable to the subject land at all. As much was effectively agreed by the appellant and Ms Merritt. The lack of any meaningful comparability is, in my opinion, also borne out by the fact that the unimproved value attributed to this sale property is less than half of that attributed to the subject land.
As to the "beach frontage" sales relied on by the appellant I do not consider that any of those sales are of assistance in the determination of this appeal. The location of Sale 2 in relation to the subject land was not satisfactorily explained to me. Also, the sale price of only $195,000 for 2,280 m² of land suggests strongly to me that it is unlikely that the land is truly comparable and/or that there may well have been some circumstances surrounding the sale which would make its bona fides highly questionable. According to Ms Merritt the land involved in this sale did not have beach frontage. Sale 4 is clearly distinguishable for a number of reasons including area and shape. More importantly however, by reference to the map extract in Appendix B of Exhibit 2, this sale involves land which seems to be situated not in Bourke Street but Carroll Street and has no beach frontage and I do not know the extent of the ocean views, if any, from it.
In his analysis of his Sale 5 the appellant attributed a value of $320,000 to the improvements on the land and the existing development approvals over the land. At the date of sale the evidence is that, consistent with its zoning of Comprehensive Development, the land was approved for the development of 12 units. According to the appellant the house has since been removed (or demolished) to make way for the construction of 12 "resort" type units. In these circumstances there has to be a real prospect that the purchaser saw little if any value in the existing improvements on the land. Also, the value attributed to the development approval seems to me to involve a fair degree of speculation. Turning to Sale 1 it is similar in area and shape to Sale 5, lies only one lot removed from Sale 5 and, as I comprehend the evidence, is also zoned Comprehensive Development. In the absence of evidence to the contrary, which in my opinion does not exist, it would not be unreasonable to conclude that the land involved in Sale 1 had, at the date of sale, a real and immediate or short term potential for unit development. If that were the case the value assigned to the improvements on the land associated with this sale would be in as much doubt as that for Sale 5.
Some reliance was placed by the appellant on his Sale 3. Unfortunately, however I have not been able to identify the location of this property by reference to any of the material in evidence before me. Further, the evidence of Ms Merritt concerning this sale raises genuine concerns about not only its location but also its area. According to Ms Merritt she had no record of any sale at 18 Bourke Street and that the only sale in the general area for $360,000 concerned a Lot 4 which was only 999m² in area and was not located at 18 Bourke Street. In all the circumstances I have concluded that no weight can be given to this sale.
At the end of the day it seems to me that the best evidence of value of the subject land, bearing in mind the operation and effect of s.17 of the VLA, is Ms Merritt's Sales 1 and 2. Both sales involve parcels of land intended to be developed for single unit residential purposes having ocean views and proximity to the beach. The sale lots are of course significantly smaller in area to the subject land and, according to Ms Merritt, are inferior. I should mention here that the evidence of Ms Merritt was to the effect that her Sale 2 would be the most difficult to compare to the subject because of it being a part of a group title development.
The relevance of these sales was challenged by the appellant for various reasons. To my mind the most important of these being, first, the perceived difference in status between locations. Second, topography and third the risk of erosion.
As to the first of these matters, the appellant considered that Slade Point and Eimeo were significantly superior locations. However, Ms Merritt did not consider that there were any real differences between these areas. At the conclusion of the evidence I was left in a state of uncertainty about the differences, if any, between these locations and how and to what extent values being paid for parcels of land in the different locations might differ. On balance I do not accept that these sales cannot be sensibly compared to the subject because of locational differences.
The evidence of the appellant was that the description of the land by Ms Merritt as being "…generally level in nature…" was not an accurate one. According to him, in periods of heavy rainfall parts of the land were materially affected by flooding. This evidence was not seriously challenged however, the appellant did concede that given the recent weather conditions the land had not been the subject of flooding for many years. I accept the appellant's evidence about flooding.
I found the resolution of the erosion issues relatively difficult. According to Ms Merritt the subject land and her Sales 1 and 2 are all identified as lying within erosion prone areas as identified by the Environmental Protection Agency. The appellant did not dispute this but contended that his land was more susceptible to erosion than the sales relied on by Ms Merritt. This evidence was not seriously challenged and, in this context I note that Ms Merritt, at page 2 of her report (Exhibit 2) specifically refers to erosion occurring on or in the immediate vicinity of the subject land whereas it would appear that neither of the sales have been so immediately affected by erosion.
Conclusions and Order
Having regard to the relevant evidence I find as follows: first, Ms Merritt's Sales 1 and 2 provide the best evidence of the unimproved value of the subject land as at 1 October 2004. Second, it is not necessary to make any adjustment to the value of the subject land because of any perceived differences in the status of Blacks Beach when compared to Slade Point and Eimeo. Third, that while I accept that the subject land is inferior to the sales in respect of area, to an extent any of the benefits associated with a larger area may be offset by the long and narrow shape of the subject. Fourth, that in applying the sales evidence, Ms Merritt did not have sufficient regard to the issues of flooding and erosion when valuing the subject land.
As to the question of flooding I do not consider that of itself this matter would be a reason to materially discount the unimproved value of the land. The frequency and extent of the flooding mitigates against any such discount. In respect of the erosion issue any prudent purchaser would be aware that the subject and the two sale properties all lie within erosion prone areas as identified by the Environmental Protection Agency. However, in respect of the subject land the prudent purchaser would be able to actually see the physical impact of such erosion. In my opinion the physical evidence of erosion would be likely to have some negative impact on any prospective purchaser of the land.
In the circumstances I consider it is appropriate to allow some discount to the unimproved value of the land to take account of issues of flooding and erosion. However, it is my opinion that any such discount ought to be relatively minor. Doing the best that I can with the evidence before me I have decided to reduce the unimproved value of the subject land by 10% to $490,500
For the above reasons the order of the Court is that the appeal is allowed and the unimproved value of Lot 5 on Registered Plan 713050, Parish of Bassett, County of Carlisle is determined in the amount of $490,500 as at 1 October 2004.
RS JONES
MEMBER OF THE LAND COURT
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