Lyons v Chief Executive, Department of Natural Resources; Roberts v Chief Executive, Department of Natural Resources

[1997] QLC 192

[1997] QLC 192

 

  LAND COURT

BRISBANE

12 December 1997

Re:                 Appeals against Annual Valuations
Valuation of Land Act 1944
  City of Townsville.
  (AV96-579 and V96-791).

Zilla Margaret Lyons
  v.
  Chief Executive, Department of Natural Resources

and

George Vivian Roberts and Dalva Ellen Roberts
  v.
  Chief Executive, Department of Natural Resources

(Hearing at Townsville)

D E C I S I O N

These are two appeals by land owners of adjoining properties against the determinations of unimproved values by the respondent Chief Executive.
           Mrs ZM Lyons is the owner of land situated at 24 Cleveland Terrace, Melton Hill, Townsville, described as Lots 3 and 4 on Registered Plan 701633, County of Elphinstone, Parish of Coonambelah, containing an area of 1,897 square metres.  Under the provisions of the Valuation of Land Act 1944 ("the Act"), the respondent determined the unimproved value of that land as at 1 January 1996, at $220,000.  Following an objection by Mrs Lyons, the respondent reduced that unimproved value to $210,000.  Mrs Lyons then appealed to the Land Court, advising that her estimate of the unimproved value was $145,000.
           Mr GV and Mrs DE Roberts are the owners of the adjoining land situated at 26 Cleveland Terrace and described as Lot 1 on Registered Plan 722451 and Lot 2 on Registered Plan 701633, containing an area of 1,879 square metres.  As at 1 January 1996, the respondent determined the unimproved value of that land at $160,000, but subsequently amended the valuation to $200,000.  Mr and Mrs Roberts unsuccessfully objected against that valuation and appealed to the Land Court, advising that their estimate of the unimproved value was $115,000.
           The appellants in these matters were represented by Mr GW Eales, a registered valuer in practice in Townsville, who also gave evidence.  The respondent was represented by Mr R Vize, of Counsel.  Mrs Lyons and Mr Roberts also gave evidence, while valuation evidence on behalf of the respondent was given by Mr RA Noakes, a registered valuer employed by the Department of Natural Resources.
           The appeal lands are located on Melton Hill, an older residential area of Townsville, comprising a mixture of renovated Queenslander and colonial-style dwellings and modern and older units and flats.  An outstanding characteristic of the Melton Hill area is its views over Cleveland Bay, the harbour and the city.  The city centre and recreational facilities along the Strand and the foreshores of Cleveland Bay are within easy walking distance.
           Mrs Lyons' property comprises a large rectangular-shaped allotment which originally sloped from the eastern boundary to the western boundary, with a fall of up to 1.5 metres.  The site has been cut and filled to provide a near-level allotment, except that in the south-east corner is a large rock outcrop which rises up to three metres above the remainder of the site and is lost to effective use.  Access to the property is from Cleveland Terrace, which is bitumen-sealed with concrete kerbing and channelling. 
           The Roberts' property is a large rectangular-shaped allotment which originally sloped from the eastern boundary to Armati Street, with a fall of approximately 1.8 metres.  The allotment has been cut and filled, the excavation on the eastern boundary being 1.2 metres deep and retained by a rock wall located on the boundary line.  Access is available both from Cleveland Terrace or Armati Street, which is also bitumen sealed with concrete kerbing and channelling.  Both appeal properties have additional access by way of a bitumen-sealed lane along the rear boundary, known as Herbert Street.
Both properties are zoned "Residential 3" under the Townsville City Council Town Plan of September 1994. Although this zoning allows for the development of units with Council consent, the subject lands are used for single dwelling house purposes and must be valued under the provisions of section 17 of the Act. Therefore, any enhancement in their unimproved values for potential use for any other purposes must be disregarded.
           In addition, both properties are located within Precinct 2 - Melton Crest - of the Townsville City Council Development Control Plan No. 2 - Melton, Stanton and North-East Castle Hill Slopes.  It is intended that this precinct be reinforced as a high quality, low rise, residential area where residents may take advantage of views in many directions.  While a mix of single dwellings and more intensive residential uses are envisaged, development should be of a style which will blend visually with the historic character of the precinct and not intrude upon any historic buildings, which should be retained as part of Townsville's heritage.
           Mrs Lyons gave evidence that the improvements on her property comprise the colonial residence "Selhurst", which is National Trust listed.  It adjoins the State Heritage listed property "Warringa", owned by Mr and Mrs Roberts.  She explained the historical significance of Melton Hill, one of the oldest and first settled areas of Townsville.  She went on to say:

"The Townsville City Council, the National Trust and the State Government Heritage Department have recognised Melton Hill as an historic precinct of significance in Townsville and our State.  Melton Hill is particularly significant for its preservation of styles of colonial homes occupied by leading merchant bankers and professional people from the 1880's onward.  "

Mrs Lyons explained that the area is also sought-after by developers for the construction of flats and home units.  What she believed should have been preserved as a single unit residential area was now inter-mixed with multi-storey unit developments and "unsympathetic modern structures".  These structures box-in or dwarf historic structures in the precinct.
           When she purchased the property in 1987, it had the potential for the development of 13 units and, she said, the purchase price at the time reflected that potential use.  Its listings now prevent that type of development and effectively restrict it to use applicable to "Residential 1" zoning, that is as a single unit dwelling house.  However, the surrounding blocks without heritage listing can be developed for units.
           Mrs Lyons explained that because Melton Hill is already heavily developed with flats and units, cars permanently line Cleveland Terrace and traffic is constant, noisy and often dangerous, as it detours via that street to and from the Strand, the Casino and Flinders Street East.
           Mrs Lyons went on to explain the disadvantages suffered by the subject property because of the neglected state of many blocks on the neighbouring Herbert Street, where inappropriate and substandard development has been allowed.  In addition, she estimated that the large rocky outcrop on the subject land makes approximately one-third of that land unusable.  She explained that the possible removal and levelling of the outcrop was investigated when the property was purchased, but engineering advice was to the effect that the possibility of substantial damage to neighbouring properties and the expense involved made such a project not viable.
           She considered that the presence of the outcrop seriously detracted from the visual appeal of the property.  I might comment here that Mr Noakes disputed the area of the rocky outcrop, regarding it as affecting no more than 10% of the area of the property.  Mr Eales was prepared to accept Mrs Lyons' estimate.
           Mr Roberts gave evidence that under the Council's "Residential 3" zoning, a mix of accommodation types is envisaged, including dwelling houses, dual occupancy, multiple dwellings, accommodation buildings, community dwellings and welfare premises.  It is the only zone that caters for such a mix of uses.
           He said that living at the subject property on Melton Hill has a number of disadvantages.  He outlined the circumstances of a number of crimes of violence and burglary which have been committed against persons and property at Melton Hill since he and his wife purchased the property.  He went on to say that under no circumstances would he and his wife have purchased the subject property if it had not been for the present home situated upon the land.  He claimed that the other owners of historic homes at Melton Hill had, like themselves, been attracted by the homes, rather than any other attributes of the area, such as location and views.
           Mr Roberts contended that the views from Yarrawonga allotments are far superior.  The Yarrawonga subdivision had been designed so that every allotment had a good view. 
           Mr Roberts explained that the present seaward views towards Magnetic Island are considerably obstructed by trees and rubbish bins on the opposite side of the street.  He feared that the present zoning will permit unit development of up to three storeys on the allotments opposite, which would further impede the views.  This also applied to the views to the rear, where unit development would restrict the view over the city and to the south towards Mr Stuart.  In addition, multi-storey unit development in the area would affect the privacy of the home, the living area of which consists of a large courtyard and open verandahs.
           Mr Roberts endorsed the evidence given by Mrs Lyons concerning the parking and traffic problems in the area. 
           The Roberts' property, "Warringa", has been included in the heritage register under the Queensland Heritage Act 1992. Mr Roberts contended that the inclusion of the property as a heritage property adversely affects the property in that all renovations, alterations or additions to the home must have the approval of the relevant authorities under the provisions of the Act. Any such renovation, alteration or addition to the home would have to be carried out using the design concept and material approved by the authorities, which would result in much higher costs than would be associated with work on a non-listed dwelling house. It also adds to the costs of repairs and maintenance, as all materials used must comply with the original materials or as near as practicable thereto.
           The property also suffers from seepage during the wet season.  Mr Roberts said that seepage has resulted in the subsidence of part of the house and the cost of combating the seepage is estimated at approximately $25,000.
           Mr Roberts went on to say that the residential character, the splendid outward appearance, the excellent atmosphere, beautiful views and the high level of the amenities enjoyed by the residents of Yarrawonga are far superior to those enjoyed by the residents of Melton Hill.  He produced a series of photographs to demonstrate the environment in which the subject land is situated, the traffic and parking problems and the mixed development including flats and boarding houses, all of which, he said, reduce the residential amenity of the area.
           Mr Eales produced reports and valuations contending for unimproved values of $155,000 on the Lyons' property and $145,000 on the Roberts' property at the relevant date.  To support those valuations he referred to the sales of ten residential properties in the North Ward, Yarrawonga and Castle Hill areas, as there were no sales of comparable vacant or lightly improved lands in the vicinity of the subject land.  Those sales occurred between July 1993 (No 3 Glamis Court, Yarrawonga, of 3,967 square metres for $155,000) and March 1996 (No 12 Queen Street, North Ward, of 1,948 square metres for $240,000, zoned "Residential 3").  However, the majority were mid-to-late 1995 sales of large (1,000 square metres to 2,000 square metres allotments) which sold for prices between $70,000 and $165,000.
           In making his comparisons, Mr Eales said that he had regard to the following attributes of the sales and the subject lands: access, frontage, topography, useful component, shape, drainage, view, ease of construction, environment, prestige location and services.
           Mr Eales contended that the National Trust and Heritage Act listing of the subject properties affected their unimproved values.  In his opinion allowances should be made because the owners did not have the right to use the land entirely as they wished.  The fact that any renovations, alterations or extensions to the houses would require the  approval of the relevant authorities and that maintenance and repairs were more expensive, would be matters which would adversely affect the price that a potential prudent purchaser would pay for either of them.
           Mr Eales explained that there was some difficulty in valuing the subject lands by comparing them with sales at Yarrawonga and Castle Hill, as the sales have "the major advantage" of being located in newly-developed residential areas, where there are no multi-unit developments in the immediate vicinity.  On the other hand, the subject lands are overlooked by large unit complexes and are in an environment which is much inferior to that enjoyed by allotments at Yarrawonga and Castle Hill.
           Both the sales and the subject lands enjoy good views, although the view from the Roberts' property is more restricted than the view from the Lyons' property, which is of somewhat higher elevation.  The subject lands also enjoy views to the rear over the city, although the environment of Herbert Street is not attractive.
           Mr Eales felt that the most comparable sales were his Sales Nos 6 and 9, which are situated in Glamis Court, Yarrawonga, with areas of 2,263 square metres and 3,967 square metres, which sold in July 1994 and July 1993 for $180,000 and $155,000 respectively.  Both are large elevated sites with excellent panoramic views of the ocean and the city.  However, the sales are steeply sloping and Mr Eales conceded that there would be additional costs building on those allotments compared with the subject lands.
           Also comparable in Mr Eales' opinion was his Sale No 7, situated in Braemar Crescent, Yarrawonga, with an area of 1,251 square metres, which sold in December 1995, for $165,000.  It is a large elevated irregular shaped allotment, with a fall to the rear boundary, but with panoramic ocean views.
           Those three sales are all zoned "Residential 1".  By way of contrast, Mr Eales included as Sale No 8, the sale of an allotment of 1,948 square metres, zoned "Residential 3", for $240,000 in March 1996.  That allotment is suitable for development for nine units and in his opinion demonstrates a market for a fairly level unit development site close to the city.  It is situated in Queen Street, North Ward. 
           Although Mr Eales included the details of several other sales, it is clear that they were used only as supporting evidence for the three principal sales.
           I turn now to the evidence of the respondent.
           In support of his valuations of $210,000 on the Lyons Property and $200,000 on the Roberts' property, Mr Noakes relied principally upon five sales of virtually vacant land.  His Sale No 1 is of a small 503 square metre allotment in Eyre Street, North Ward, which sold in May 1995 for $70,000.  It is substantially inferior to the subject lands and can be ignored.
           His Sale No 2 is situated at 386 Stanley Street, North Ward, has an area of 1200 square metres and sold in March 1995, for $115,000.  Mr Noakes described it as a large regular-shaped inside allotment in an elevated prestige locality, above street level and rising with a west to east cross slope.  It has an easterly aspect, with partly-restricted panoramic views.  Mr Noakes was of the opinion that the view, location and size of the subject lands made them substantially superior to Sale No 2, to which the respondent had applied an unimproved value of $100,000 as at 1 January 1996.
           Mr Noakes' Sale No 3, at 345 Stanley Street, North Ward, has an area of 1205 square metres and sold in May 1995, for $150,000.  It was also described as a large regular-shaped inside allotment, but below street level and falling to the rear.  It has partly-obscured panoramic sea views, but poor access.  Mr Noakes regarded it as considerably inferior to the subject lands.  The respondent had applied an unimproved value of $145,000 to that allotment as at 1 January 1996.
           Sale No 4 is situated in 7 Braemar Crescent and was Mr Eales' Sale No 7.  It has an area of 1251 square metres and sold in December 1995, for $165,000.  It was described by Mr Noakes as being a regular inside allotment, below street level, with a fall to the rear and with panoramic views.  He considered it to be inferior to the subject lands because of its location, size and nature of land.  As at 1 January 1996, the respondent had applied an unimproved value of $160,000 to that allotment.
           Mr Noakes' Sale No 5 is situated at 13 Little Street, Belgian Gardens, with an area of 2,046 square metres and sold in May 1996, for $265,000.  He described it as a large irregular-shaped allotment with no street frontage, but with access from Eden Street.  It falls to the rear and has a cross-fall from south to north, with restricted panoramic sea views.  He considered it to be inferior to the subject lands, because of its location, size and nature of land.  This was an after date sale to which the respondent had applied an unimproved value of only $100,000 as at 1 January 1996.  Mr Eales thought that this land was zoned "Residential 3" and had potential for unit development.
           Mr Noakes also prepared a supplementary schedule of seven sales (Sales A to G) for the purpose, he said, of providing evidence of sales in the range of $200,000 to $250,000.  Four of those sales occurred well before the date of valuation, in the period between July 1993 and December 1994, and so were known to Mr Noakes at the time he valued the subject lands.  However, it seems that those sales were regarded as high, as the respondent applied unimproved values of $170,000, $160,000 and $160,000 from sale prices of $200,000, $180,000 and $194,000, respectively.  In the case of the 1993 sale, Sale E, which sold for $155,000, an unimproved value of $160,000 had been applied.
           It seems that Mr Noakes gained more support from the after-date sales:

•Sale D at 94 Yarrawonga Drive, North Ward, of 1,612 square metres, in November 1996, for $154,000 ($150,000 applied as at 1 January 1996).

•Sale F at 4 Arundel Court, Yarrawonga, of 1,239 square metres, in April 1997, for $280,000 ($170,000 applied as at 1 January 1996).

•Sale G at 3 and 5 Melton Terrace of 1,854 square metres in January 1997, for $280,000 (occupied by an old block of flats and valued accordingly).

However, in my view, those supplementary sales do not support the valuations applied to the subject lands.  The earlier sales were generally applied conservatively and are well below $200,000.  Only the 1997 sales (Sales F and G), and Sale 5 in May 1996, are at prices over $200,000, but at the date of valuation the respondent considered that they had unimproved values well below those levels, $170,000 and $100,000 for Sale F and Sale 5 respectively.  Sale G is zoned "Residential 3", and while it seems that it may have been purchased with the intention of constructing a single dwelling house, it is common ground that with Council approval it could be developed for units.  The sale price of $280,000 would reflect that potential, rather than its value as a single dwelling house site.
           That leaves Mr Noakes with his original sales plus the uncontested conclusion that he drew from his supplementary schedule, that the sales as a whole show consistently higher prices with elevation, which provides wider and better panoramic views.
           I turn now to the principal issues between the parties. 
The first issue is whether any allowance should be made in their unimproved values for the listing of the Roberts' property under the Queensland Heritage Act and the Lyons' property by the National Trust.

           Mr Eales contended that heritage listing affected not only the value of the improved property, but also the unimproved value of the land.  He based his argument upon the decision of the Land Appeal Court in Ballow Chambers Ltd v. The Valuer-General (1992-93) 14 QLCR 422. In that case the Land Appeal Court held that the effect of heritage listing under the provisions of the then Heritage Buildings Protection Act 1990 (the predecessor to the Queensland Heritage Act 1992), imposed constraints upon the use and development of the land which must be taken into account when valuing that land for its highest and best use, even though the Valuation of Land Act required that its improvements must be assumed not to exist at the valuation date.
           In that case the Land Appeal Court was considering the effect of the listing of "Ballow Chambers" as a heritage building upon the unimproved value of the land.  There the highest and best use of the land was for redevelopment for commercial purposes.  However, the heritage listing of the property prevented the building upon it from being demolished.  In such circumstances the heritage listing meant that the property could not be developed for its highest and best use and so had a marked impact upon the unimproved value of the land as its full potential cannot be realised and the unimproved value must reflect that restriction.
In the case of the Roberts' property, the matter is complicated by the provisions of s.17 of the Valuation of Land Act, which requires the land to be valued as a single dwelling house site, even though the "Residential 3" zoning could, heritage considerations aside, give the land potential for a higher use. There is no dispute that the land must be valued with a highest and best use as a single dwelling house site and any potential for unit development disregarded. Both valuers proceeded on that assumption.
           Therefore, in my opinion, the Ballow Chamber's decision can be distinguished.  In the present case the Heritage Act listing does not prevent single unit residential use, the basis upon which the land was valued. 
           There was no evidence to demonstrate that heritage listing of this residential property has adversely affected its improved value, far less its unimproved value. I accept that the house cannot be demolished and that any "development", as defined, can be carried out only with the approval as provided for in the Queensland Heritage Act. I also accept that repairs and maintenance would be more costly than in the case of a conventional house. However, Mr Eales has not produced any sales evidence to prove that those factors would adversely affect the price that a potential prudent purchaser would pay for the property. Mr Noakes said that his research revealed that there was a ready demand for "old Queenslander homes" and he thought that heritage listing had not affected its value.
           The onus of proving any adverse effect of heritage listing is upon the appellants.  They have not produced any proof for their assertion.  Therefore, I accept Mr Noakes' opinion that the unimproved value of the Roberts' property is not affected by the restrictions imposed by the Queensland Heritage Act.
The effect of National Trust listing on Mrs Lyons' property was not argued separately. It was assumed by Mr Eales that the effect would be similar to that of the Queensland Heritage Act. In the absence of any argument or submissions to the contrary, I will accept that assumption and make a similar finding in respect of that property.
          I turn now to consider the principal issue, whether or not the appellants have been able to prove that the sales evidence does not support unimproved values of $210,000 in the case of the Lyons' property and $200,000 in the case of the Roberts' property, as at 1 January 1996.  Mr Eales contended for unimproved values of $155,000 and $145,000 respectively.  On the other hand, Mr Noakes valued the subject lands at $210,000 and $200,000, principally because they are located close to the city and because of their views.  He relied heavily upon sales for over $200,000 and the superiority of the subject lands to the other sales which were for less than $200,000 which, while having unrestricted panoramic views, were steeper and building costs greater.  In addition, the Yarrawonga and Castle Hill sales are not as well located.
           However, Mr Eales argued that although well-located, the subject lands are in an area of increasingly intensive development, with multi-units, flats and other buildings which are inappropriate to the residential amenity of the area.
Of the sales evidence advanced by Mr Noakes, only three sales are in excess of $200,000, and none of them was known to him at the date of valuation. Sale 5 took place less than five months after the date, but the respondent had applied only $100,000 to that allotment, clearly being of the opinion that it was vastly inferior to the subject lands. Similarly, Sale F for $280,000 occurred some 15 months after the date, but as at the date of valuation the respondent had applied only $170,000 to that land, again signalling that it was considered inferior to the subject lands. I will disregard Sale G, as I accept Mr Eales' evidence that the price paid was in conformity with its potential for unit development. It is therefore suspect for the purposes of comparison with the subject properties, which must be valued under s.17 of the Act as single dwelling house sites.
           I cannot accept Mr Noakes' comparisons with Sale F and Sale 5.  As at 1 January 1996, the valid comparisons are with the values applied to those allotments, not the later sale prices.  What those later sales demonstrate was not proven.  They may simply be high sales, or they may show that the respondent was wrong in his application of the unimproved values in 1996.  Alternatively, they may be evidence of the beginning of a trend towards a higher market for properties with panoramic views.  If that proves to be the case, the respondent can take the appropriate course of action in future valuations.  For present purposes, however, the respondent has determined a relativity of values from the sales that were available at the time.
           Having regard to the other sales, I have come to the conclusion that the unimproved values of $210,000 on the Lyons' property and $200,000 on the Roberts' property cannot be sustained.  However, in my opinion the unimproved values of $155,000 and $145,000 respectively contended for by Mr Eales, are far too conservative.  In my view, the sales evidence indicates that an unimproved value of $190,000 on the Lyons' property and $180,000 on the Roberts' property as at 1 January, 1996, would be appropriate.  Notwithstanding the rocky outcrop on Mrs Lyons' property and the seepage on the Roberts' property, the attributes of the subject lands make them more valuable than the Yarrawonga sales.  However, this is off-set to some extent by the negative aspects of their environment and the amenity of the area.  Accordingly, the appeals must be allowed.
           I am fortified in the relativity of these determinations by the fact that both valuers considered Mrs Lyons' property to have a greater unimproved value than Mr and Mrs Roberts' property, because of its higher elevation and correspondingly better views.  Both also considered the property owned by Mrs M Giudes at Stanton Hill to be superior to both subject properties.  The unimproved value of Mrs Giudes' property was the subject of appeal (AV96-516) which was also determined today at $210,000, in a separate decision.

Orders:
           In the case of Appeal AV96-579 by Mrs ZM Lyons, the appeal is allowed, the valuation of the respondent is set aside and the unimproved value of that land is determined at One hundred and ninety thousand dollars ($190,000).
           In the case of Appeal V96-791 by Mr and Mrs Roberts, the appeal is allowed, the valuation of the respondent is set aside, and the unimproved value of that land is determined at One hundred and eighty thousand dollars ($180,000).

President of the Land Court