Keyworth v Chief Executive, Department of Natural Resources

[1997] QLC 196

[1997] QLC 196

 

  LAND COURT

BRISBANE

12 December 1997

Re:     Appeal against Annual Valuation
Valuation of Land Act 1944
  Valuation Roll No 17013
  Local Government: Gold Coast-Gold Coast
  (AV97-104).

EAC and P Keyworth
  v.
  Chief Executive, Department of Natural Resources
  (Hearing at Coolangatta)

D E C I S I O N

Background:

This matter relates to a parcel at 9 St Andrews Avenue, Isle of Capri, Gold Coast, and described as Lot 386 on RP 103815.  The subject is located just south-west of the main Surfers Paradise shopping centre, and is in a well-established residential location which was generally established during the 1960s.  The dwelling upon the subject was erected in about 1965, and the subject is a dry lot with no direct access to the surrounding river.  The key issues are the comparison of sales, the value of improvements, and inconsistency with the state of the national economy.
           On 10 March 1997, the Chief Executive issued a valuation for the subject at $122,000.  Following an objection the Chief Executive confirmed that valuation on 10 June 1997.  The appellants have appealed that figure claiming the valuation should more properly be $105,000.
           The appellants are elderly with a state of health which inhibits their capacity to attend the Court.  By a letter to the Court of 13 November 1997, the appellants advised that they wished to proceed with the appeal, but would be unable to attend personally because of ill health, and could not afford professional representation.  As a consequence of that request, and with the consent of the parties, the Court heard the evidence of the appellants and conducted the hearing in chambers by telephone.  Because of the difficulties of his remoteness from the Court, Mr Keyworth's case proved quite onerous, made all the more so by the decision of the respondent not to lead further evidence to support his case.
           Mr EAC Keyworth represented the appellants, and gave evidence.  Mr P Grennan appeared for the respondent, calling evidence from Mr D Treston, the Departmental Registered Valuer responsible for determining the valuation.

Evidence:
           The appellants argue that the rise in the unimproved value of the subject is not supported by evidence of any comparable rise in the property market on the Isle of Capri.  Mr Keyworth bases his arguments upon the need for consistency across the area and notes that normal land parcels without frontage to water are being adversely affected by the sale of a few prime waterfront lots which have sold for very high prices.  He claims that only the prime sites are selling, and often the new purchasers then demolished the existing dwelling to make way for a new prestige property.  He also argues that if that approach is pursued indefinitely, then the value of all land would become equivalent to the full value of the current improved properties, as the existing dwellings would have no value.
           Despite a telephone conference with Mr Treston in seeking to rationalise the matter, Mr Keyworth can still not reconcile some of the evidence being adopted by the respondent.  In determining his estimated valuation at $105,000, Mr Keyworth noted that there had been an approximate increase of about 10% from the previous valuation.  He challenges that assumption as he feels that on his evidence there was no rise in inflation, and he also relies on the latterly protracted slump in the property market continuing.  For these reasons he has concluded that the previous valuation at $105,000 should remain.  He accepted that former valuation at that amount, and did not appeal on that occasion.  Mr Keyworth argues that the current restricted access to reliable information places an appellant at a distinct disadvantage in preparing their case.  In his matter he sought evidence from local real estate agents in respect of sales of comparable properties.  He found evidence that properties originally were listed at say $280,000, and then had been progressively reduced in asking price to $220,000, and still remained unsold.  He also had personally not seen any movement in the property market, and he therefore concluded that property values were at least static.
           In discussions with Mr Treston, Mr Keyworth became aware of a sale at 53 Amalfi Drive, on 22 April 1996, for $170,000.  His understanding of that sale was that the lot contained a dwelling, which was subsequently demolished and a new building has been erected.  His only other knowledge of sales were two dwellings opposite the Surfers Paradise School and a third dwelling which was constructed next to those dwellings about eight years ago.  Other than those three properties, and the riverfront parcels being redeveloped for prestige houses, he is unaware of other sales in the area.
           In support of his valuation Mr Treston argues that the Isle of Capri is a very strategic location near to the main surfing beaches and also to Surfers Paradise.  He confirms that the land is being re-developed, generally starting with the riverfront land.  Such sales often involve subsequent demolition of the existing dwellings to make way for the new structures.  This practice was also occurring with dry lots on the island.  Mr Treston confirmed that there are no existing vacant lots on the island, but contends that the demand for improved parcels in order to later demolish the improvements for subsequent building purposes, is in effect evidence of what purchasers will pay to acquire a building site.  In those type of cases, the value of the improved site, plus the costs of demolition of the existing structure, virtually equate to the site value of the land.
           In response to Mr Keyworth's assessment of the local improved property market, Mr Treston advised that he had based his valuation upon sales of sites where subsequent demolition had provided a new building location.  He did not feel it was relevant to investigate the market for other improved properties.  In respect of a letter from a local real estate agent (Exhibit 2) claiming that the real estate market had been at its lowest level for the past six years, Mr Treston responded by noting that he relied entirely upon the evidence of sales, and not upon newspaper articles.
           In respect of the one sale supplied by Mr Keyworth, Mr Treston confirms that the sale at 53 Amalfi Drive did contain an old guest house which was later demolished.  In determining his comparison of that sale with the subject, Mr Treston had analysed the sale as follows:
  Location - 53 Amalfi Drive
  Description - Lot 35 on RP 93582.
  Area - 529 square metres.
  Date of Sale - 22 April 1996
  Price - $170,000
  Less Improvements - $8,600
  Plus Costs of Demolition - $4,000
  Analysed Value - $165,400
  Applied Value - $147,500

Mr Treston noted that the new owner of the sale was an Australian citizen who came from the north coast area of New South Wales. As such it was reasonable to conclude that he had a fair understanding of the local real estate market. This information had been obtained following an interview with the new owner after he had erected his new dwelling upon the sale. Mr Treston argues that the applied valuation at $147,500 provides a fair comparison with the subject, as the sale is also a dry lot, located one street removed from the water. However, the sale is seen as superior to the subject, because it is surrounded by higher quality homes, and the sale is slightly nearer to the river. The new dwelling on the sale is expensive, perhaps totalling $1 million to construct. In applying his valuation, Mr Treston claims he has followed principles outlined in the Valuation of Land Act.
           In summarising his case Mr Grennan argues that the appellant has failed to produce specific evidence which seriously challenges the valuation of the Chief Executive.  The appellants' one sale at 53 Amalfi Drive has been applied conservatively by the respondent, and the evidence of the appellant has not successfully challenged that conservative figure in any way which would lead to a lower value.  Mr Grennan also argues that in relying on evidence of a generalised nature from a real estate office, Mr Keyworth offers no sustainable evidence in law.  Mr Grennan argues that the onus of proof rests with the appellant and, in his opinion, that has not effectively been discharged.  Mr Keyworth argues that the one sale at 53 Amalfi Drive does not support an increase in the valuation.

Decision:
           In considering this matter I move first to examine whether any apparent lack of growth in the general economy would appear to be in conflict with the valuation.  I note that Mr Keyworth has relied upon his own observations of the property market, as well as statements in the press by a variety of commentators.  I note also that Mr Treston discounts that evidence as unreliable, and has relied upon recorded sales of comparable properties in the area.  In seeking to understand this matter, I am reminded that the duty of this Court is clearly defined in respect of the consideration of the relevant evidence.  This was confirmed by the Land Appeal Court in NR and PG Tow v. The Valuer-General - Redland Shire (1978)(LAC) 5 QLCR 378, at page 381:

"Subject to certain statutory requirements as to the onus of proof and the restriction of the appellants to the grounds of appeal specified in their notice of appeal, the duty of the Land Court and of this Court is to make determinations of unimproved values based on the evidence presented to it by the parties and conforming to the aforementioned statutory formula.  "

In the Tow case, the appellants argued that the large rise in the valuation was out of line with the general growth in the marketplace.  However, the Land Appeal Court found at page 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.  "   

While Mr Treston did not supply details of other sales in the area which supported his valuation, he gave verbal evidence under oath that he had based his valuation upon sales of other sites, where demolition had subsequently occurred in order to provide a new building site.  I can understand that any lack of written evidence from the respondent provides little assurance for Mr Keyworth, but I am also reminded that the onus of proof in this matter lies squarely upon the appellant.
I note, for example, that in respect of any appeal the Valuation of Land Act is quite specific in Section 45(4) which states:

"45.(4).  Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.  "

In respect of whether this Court could require the supply of further evidence from the respondent, I am also reminded that the Land Court, or the Land Appeal Court, do not have any powers to direct a discovery of documents, and is constrained by the evidence led by the parties.  This was noted by the Land Appeal Court in Mt Abundance (Freehold) v. The Valuer-General (1926-27)(LAC) 11 CLLR 11, at page 16:

"We do not think that the Act, or the Rules of the Land Court or the Land Appeal Court, provide any machinery for ordering discovery of documents.  We think, however, that under section 32 of the Land Acts we can order the attendance of any witness having the custody of documents which we think should be produced.  "

That direction was later confirmed in DR Cox v. Commissioner of Water Resources (1992-93) (LAC) 14 QLCR 304, at page 326:

"For the reasons set out above we have decided that the words `governed in its procedure ... by equity, good conscience and the substantial merits of the case' in section 41(5)(a) of the Land Act 1962 when considered in terms of their ordinary meaning and their legislative history, and in light of the interpretation of comparable provisions in other legislation, do not give the Land Court power to order discovery.  "

And again in JL and I Qualischefski and Others v. The Valuer-General (1979)(LAC) 6 QLCR 156, at page 172 where the Land Appeal Court said:

"Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradistinction to jurisdiction conferred under the Land Act.

In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.  "

However, in noting those directions, I am constrained to add that, while the respondent in such circumstances, where the appellant would appear to provide no clear evidence to support his case, is legally justified in not submitting evidence to support the valuation, such a decision adds little to the appellants' confidence in the determined valuation.  As a public relations exercise the provision of supporting evidence in such matters, in my opinion, adds considerably to ensuring that not only is justice satisfied in the matter, but also that it is "seen to be done".
           I turn now to the comparison of the one sale provided, that at 53 Amalfi Drive.  I note that the parties agree that riverfront parcels are in fact being acquired in order to demolish the old dwellings, and to construct new, often prestigious properties.  I note also that Mr Treston argues that a similar approach is also being adopted for properties being removed from the water, and 53 Amalfi Drive is just one of those.  I note also that the Isle of Capri is very strategically located, and is likely to be seen as an attractive location for potential purchasers.  In such circumstances it is not uncommon for redevelopment to occur, and for prices paid for sites to increase.  In such cases, where the improved property is acquired, and the old building subsequently demolished, the cost of acquiring a vacant site can be seen to equate to the price paid for the land, plus any costs of demolition of the building.
           In the matter of the sale I note that Mr Treston has allowed for costs of demolition amounting to $4,000.  He has based that figure upon his research that, in the area, costs of demolition vary for a residence between $5,000 and $10,000.  Because of the size of the old structure and in order to allow a conservative cost of demolition, Mr Treston has only applied a figure of $4,000.  It is also noted that these costs mainly refer to the cost of transporting the old materials off-site.  On the evidence supplied I will adopt Mr Treston's comparison.
           Finally I turn to the requirements of the Act which place the onus of proof upon the appellant, and note in section 33:

"33. Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered.  "

In seeking to discredit the valuation of the Chief Executive, the appellant must demonstrate that the Chief Executive has made a serious error of fact or has adopted a wrong principle.  This was found in Brisbane City Council v. The Valuer-General (1977-78) HC 140 CLR 41, where, in the High Court of Australia, Gibbs J. said at page 56:

"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s.13(7) is rebutted.  "

In the current matter the reference to section 13(7) now relates to section 33 and I find that the appellants have not adequately demonstrated either of those points.

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 386 on RP103815 as determined by the Chief Executive, Department of Natural Resources, in the sum of $122,000 is affirmed.

Member of the Land Court