Macefoil Pty Ltd v Chief Executive, Department of Lands
[1996] QLC 122
•18 September 1996
|
LAND COURT
BRISBANE
18 September 1996
Re: Appeal against a determination of Chief Executive,
Department of Lands
(AV95-324)
Macefoil Pty Ltd and Robsan Investments Pty Ltd
v.
Chief Executive, Department of Lands
(heard in Gladstone)
Introduction
Macefoil Pty Ltd and Robsan Investments Pty Ltd (the “appellants”) own Lot 3 on RP607085, Parish of Gladstone.
The respondent Chief Executive determined that the unimproved value of the subject land was $177,500 at 1 January 1995. The appellants objected against that valuation. Their objection was allowed and the amount was reduced to $150,000 (an overall increase of approximately 33%). The appellants then appealed to the Land Court. Their Notice of Appeal nominated a valuation of $113,000. At the hearing, however, they contended for a value of $135,000.
The grounds of appeal were as follows:
The unimproved value assessed is not supported either by unimproved land sales or analysed improved sales evidence.
The unimproved value assessed is not in relativity with either applied 1995 values or values amended following consideration of Notices of Objection.
The unimproved value assessed does not take into consideration the disadvantages and the disabilities of the land.
The application of an overall percentage increase is unrealistic and does not follow market evidence or trends.
The appellants were represented at the hearing by Mr P Little, a solicitor, and valuation evidence was given on their behalf by Mr MD Sheehan, a registered valuer. The respondent was represented by Mr B O’Connor and valuation evidence was given by Mr RG Hewitt, a registered valuer employed by the Department of Lands (now the Department of Natural Resources).
This case was one of five appeals against annual valuations of land in or near to the main commercial district of Gladstone. The cases raised the same issues and were heard successively. The appellant in each case drew on a common set of information about properties in that area prepared by Mr Sheehan (Exhibit 5). The respondent relied on sales evidence drawn from a common set of information prepared by Mr Hewitt for these proceedings. The parties relied on many of the same sales when making their respective submissions.
The law
The legal principles to be applied in this case were usefully summarised in Grahn v TheValuer General (1992) 14 QLCR 327. In its reasons for judgment, the Land Appeal Court relied on decisions of the High Court of Australia and the Land Appeal Court as authority for a series of propositions which, in summary (updated to reflect legislative and administrative changes) are as follows:
(a)It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable land should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis.
(b)The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land.
(c)Section 33 of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Chief Executive in his notice of valuation is correct.
(d) Once it is shown that:
(1) in making the valuation the Chief Executive acted upon a wrong principle, or made a serious error of fact; or
(2) the valuation was made by a method fundamentally erroneous,
the presumption created by section 33 is rebutted.(e)Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence.
(f)If possible, the Chief Executive should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error.
The subject land
The subject land is situated on the north-eastern side of the Gladstone City Mall in Goondoon Street, which is within the central business area of Gladstone. Goondoon Street in this area has been converted into a narrow vehicle/pedestrian mall area. There is a one-way paved carriageway with concrete kerbing and channelling past the subject land. Restricted kerbside carparking has been installed.
Restricted access is available to the subject land. The land has easement access from Roseberry Street through land held by the Westpac Banking Corporation. Onsite carparking is available for four to five vehicles.
The land is an easy sloping inside allotment at road level falling away from the Goondoon Street frontage to the rear eastern boundary. It has an area of 720m² and is zoned Comprehensive Development. It is used for commercial purposes, with a two storey building on it. Electricity, water, sewerage and telephone services are connected to the land.
Sales evidence
The appellants contended that the unimproved value assessed by the respondent is not supported either by unimproved land sales or analysed improved sales evidence. They provided detailed evidence of vacant land sales as well as evidence of improved land sales and rental.
Specific sales unimproved land: The vacant land sales evidence related to the sale of various blocks of land in or near the main business area of Gladstone. Four of the five sales were also relied on or referred to by the respondent. The salient information about the five sales is set out below, in the order in which the properties are described in Mr Sheehan’s report.
Sale 1 (respondent’s Sale 3) Lot 132 on CP843037: The land is an easy sloping inside lot rising from Goondoon Street to Oaka Lane on the rear eastern boundary. Good access is available from both streets, each of which has good bitumen strip carriageway.
The land is located to the north of the main business area, is zoned Comprehensive Development and has an area of 2,400m². Auckland Inlet is reasonably close and the land has restricted views over the Inlet.
The land was sold in November 1994 for $162,000. The analysed unimproved value was $158,000 and the value applied by the respondent was $142,000 (or 90%). The applied figure was calculated as follows:
31.24 metre frontage at $3,750/m
plus, extra depth of 16% and rear access of 5% = $141,751
adopt: $142,000
Neither party placed much reliance on this evidence. Mr Sheehan noted that the applied value is equal to $59.17/m². In his opinion, the land will not be developed for commercial purposes (except a motel) and is too remote to be relevant to the valuation of the subject land. Mr Hewitt described the land as far inferior to the subject in position as it is not part of the main commercial development in Gladstone. In his opinion, the sale land is overall inferior to the subject land.
Sale 2 (respondent’s Sale 5) Lot 5 on RP606125 and Lot 3 on RP617715: The land comprises two rectangular blocks, one of which has a frontage to the Goondoon Street Mall and the other has a frontage to Central Lane in the main business area. The blocks are zoned Comprehensive Development and have a combined area of 1,630m² (about 2.25 times the area of the subject land). They are easy to moderately sloping inside lots falling away from Goondoon Street to Central Lane on the rear western boundary.
The land has good exposure to the Goondoon Street vehicle and pedestrian mall. Restricted kerbside parking is available in the mall area. Central Lane has a narrow bitumen strip carriageway with concrete kerbing and channelling. Good access is available. The rear allotment provides rear access to the front allotment and provides off-street carparking.
The land was sold in March 1995 (some 10 weeks after the relevant date of valuation) for $250,000. The analysed unimproved value was $225,000 and the value applied by the respondent was $200,000 (or 89%). The applied value was calculated by Mr Hewitt as follows:Goondoon Street lot - 14.02 metre frontage at $10,300/m ($144,406)
plus, Central Lane lot - 925 m² at $60/m² ($55,500) = $199,906adopt: $200,000.
Both valuers considered the front land to be more valuable with the rear land being for carpark use. Mr Sheehan, however, analysed the sale differently. He adopted $65,000 (or approximately $70/m²) for the Central Lane lot and $135,000 for the Goondoon Street lot (or approximately $9,630/m frontage).
In Mr Sheehan’s opinion the sale price was high, even with an applied value of $200,000. The land had remained vacant and the owner was having difficulty attracting a reasonable rental for it. There was no evidence that the sale was other than an arm’s length market transaction and it is apparent from the value applied by the respondent that he did not consider it to have been significantly out of line with the market. (By comparison, see the discussion of the appellants’ Sale 3 below.) Consequently, there is no reason for the Court to treat it as unusual.
Because the sale land is on the western side of Goondoon Street, it is not affected by the afternoon sun and there is a higher volume of pedestrian traffic in the afternoon.
Mr Hewitt relied primarily on this sale because the land was vacant when sold, is opposite the subject land and is the sale block most comparable to it (particularly because of its position and frontage to Goondoon Street). The subject is further towards the peak of the hill and is slightly inferior to the sale land.
Mr Sheehan noted that, by comparison, the subject land does not have adequate car parking space and so contributions for that purpose have to be made to the Council. He also noted that allotments on the eastern side of Goondoon Street have no area available for off-street carparking or rear access. If rear access were to be provided, commercial frontage would be lost and so there would be a loss of ground floor rental space. Consequently, the Council would require a monetary contribution in lieu of off-street carparking so that land in the vicinity could be purchased for that purpose.
Sale 3 (respondent's Sale 1) Lot 10 on RP619101: The block of Special Business zoned land has an area of 1,551 m² and is located on the corner of Goondoon and Bramston Streets. It has an easy slope from slightly below Goondoon Street road level down to the rear eastern boundary. No access is available from Goondoon Street. Good access is available from Bramston Street, a full width bitumen carriageway with concrete kerbing and channelling.
The land was sold in August 1994 for $256,000. The analysed unimproved value was $246,500 and the value applied by the respondent was $180,000 (or 73%). The applied figure was calculated as follows:
32 metre frontage at $5,400/m
plus, corner of 10% for 20 m and less shallow depth of 2% = $179,928
adopt: $180,000.
Mr Sheehan described Sale 3 as a high sale. He suggested that the percentage of the analysed value applied to the land by the respondent demonstrated that the respondent considered it to have been a high sale price. The respondent did not dispute that suggestion, Mr Hewitt acknowledging that it was slightly out of line with the market. Consequently, there had been a very conservative application of the analysed unimproved value.
In his oral evidence, Mr Sheehan stated that the purchaser (Superwash) required the site and the purchaser's offer was accepted by the vendor. On that basis, he suggested that the sale had no relevance to this case. Mr Little submitted that the sale was tainted.
Mr Hewitt described the sale land as far inferior in position to the subject, because it is not in the Mall. As it is below road level, access from Goondoon Street would be difficult. Although the land is a corner block and so has good exposure, he described the sale land as overall inferior to the subject.
Sale 4 - Lot 1 on RP618681 and Lot 4 on RP604599: The land has an area of 2,020 m² and is zoned Comprehensive Development. It has a frontage to Roseberry Street and to Oaka Lane. Roseberry Street has a full width bitumen carriageway with concrete kerbing and channelling. Oaka Lane has a narrow bitumen strip carriageway with concrete kerbing and channelling. Good access is available from both streets.
The land is above street level with a medium to steep cross slope from west to east. It is in the main business area, although not as centrally located as the subject land.
The land was sold in June 1993, nearly 18 months before the relevant date of valuation. The sale price was $300,000 and the analysed unimproved value was $298,000. At the relevant date of valuation the applied value was $205,000 (or 68.8%).
Mr Sheehan applied $100,000 to one block and $105,000 to the other, corner block. He suggested that the respondent considered the sale price to have been too high. He noted that the owner has been unable to attract tenants at a rental to make the proposed project viable, and had failed to sell the lands. Mr Hewitt did not rely on the sale as it was not in the relevant year. He commented, however, that the sale price was far too high and that opinion was reflected in the application of 68.8% of the analysed value. For those reasons, little weight can be given to it in these proceedings.
Sale 5 (respondent's Sale 2) Lots 13 and 14 on Plan G141: The land comprises two almost square lots with a total area of 1,520 m². It has a frontage to William Street, near the intersection with Goondoon Street Mall, and is zoned Comprehensive Development. William Street has a full width bitumen carriageway with concrete kerbing and channelling. There is regulated kerbside parking and good access is available.
The land was originally moderate to steeply sloping, rising from William Street to the rear. It has been excavated to provide a level site.
The land was sold in October 1994 for $150,000. The analysed unimproved value was $114,150 and the value applied by the respondent was $111,000 (or 97%). The applied figure was calculated as follows:50.3 metre frontage at $3,500/m
less, shallow depth of 20% and excavation of $30,000 = $110,840
adopt:$111,000.
Mr Sheehan acknowledged that the land had been cleared and levelled. He mistakenly thought that the analysed value was $145,000 (with the applied value being 76.55% of that amount) and on that basis argued that the respondent considered that the sale price was high. I accept the respondent's analysis of the sale.
Mr Hewitt described the sale land as being far inferior to the subject in position not being located in the main street and in the Mall, and overall as inferior to the subject.
In his oral evidence, Mr Sheehan said that Sales 2, 3, 4 and 5 were the main sales on which the appellants relied. Of those, Sale 2 (the respondent’s Sale 5) was the primary sale. As I have indicated, there are sound reasons why little weight should be given to Sale 4.
The respondent, as well as relying on sales 1, 2, 3, and 5 in the appellants’ valuer’s report, referred to two others listed as Sales 4 and 6 in Mr Hewitt’s report. Details of those sales are as follows.
Respondent's Sale 4: The block of Special Business zoned land has an area of 686 m² and is located on the corner of Lord Street and Central Lane, to the north-west of the main business area. It is a generally level to low lying allotment.
The land was sold in February 1995 (some 6 weeks after the relevant date of valuation) for $47,500. The analysed unimproved value was $46,000 and the applied value was $43,000 (or 93%). The applied figure was calculated as follows:18.53 metre frontage at $3,000/m
plus, corner of 10%, less easement allowance 17.5% and shallow depth of 12%
less, fill of $1,500 = $43,250
adopt: $43,000.
Although the land has exposure to Lord Street, access from Lord Street is difficult and two way access can be gained from Central Lane. There is no parking on Lord Street, but parking is available elsewhere and any liability to pay Council contributions for parking spaces would depend on the type of development proposed for the land.
Mr Hewitt described the land as being far inferior to the subject land, not being located in the main street and the Mall. The area is also low lying and subject to flooding. Overall, the sale land is inferior to the subject.
Respondent's Sale 6: The land comprises three lots to the north-east of the main business area. They are zoned Comprehensive Development and have a combined area of 2,332 m². The land is moderate to steeply sloping, rising from Flinders Parade to the rear.
The land was sold in March 1995 (some 10 weeks after the relevant date of valuation) for $255,000. The analysed value was $220,000 and the applied value was $191,000 (or 87%). The applied value was calculated as follows:34.5 metre frontage at $3,400/m less shallow depth of 10% = $105,570 (adopt: $106,000)
23.1 metre frontage at $3,400/m plus extra depth of 8% = $84,823
adopt:$85,000
Total value = $191,000.
Mr Hewitt described the land as overall inferior to the subject as it is not located in the Mall and is not part of the main commercial development.
Of the six sale properties described in his valuation report, Mr Hewitt relied primarily on Sales 5 and 2 (the appellants’ Sales 2 and 5 respectively) and to a lesser extent on Sale 1 (the appellants’ sale 3) which he said is relevant though more distant from the subject land. He noted that for all sales other than Sale 1, the applied unimproved values were in the range of 87-97% of the analysed unimproved value calculated from the sale price. He described the valuations as consistent and conservative, but conceded that Sale 1 (with an applied value of 73% of the analysed unimproved value) was slightly out of line. The reason for the very conservative valuation of that block was that the sale price was, in his opinion, above the market.
After date sales: It is appropriate to note at this stage the Sale 2 on Mr Sheehan’s schedule of sales, and Sales 4 and 6 on Mr Hewitt’s schedule, occurred after the relevant date of valuation.
For annual valuation purposes, the best sales evidence concerns sales of comparable blocks of unimproved land which occurred within a year before the date of valuation. Some support for the use of subsequent sales can be drawn from the following passage from Williams J in McCathie v Federal Commissioner of Taxation:
“Values must be calculated in the light of circumstances which existed on the material date, ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale supervening events occur which alter the condition previously existing, the subsequent sales would not be comparable and would be useless.” ((1994) 69 CLR 1, at 16).
In GA Nichol v the Valuer-General (1961) 28 QCLLR 161 the Land Appeal Court rejected a submission that sales after the effective date of valuation should be ignored. Having quoted the dicta of Williams J in McCathie, the Court noted that his Honour had stated the rationale for the approach as being the tendency of courts “to admit evidence of any events prior to the date of the trial which will throw any real light on the issues” (69 CLR at 16 and authorities cited there). In the opinion of the Land Appeal Court, “there appears to be no sound reason why a Court or any of the parties should be denied the assistance of sales of comparable land occurring after the effective date, provided market conditions or other relevant conditions have not materially altered” (at 292).
The statement by Williams J has been applied by other courts. In Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, Bowen CJ stated that, if evidence of subsequent events is available which shows that the possibility of an event occurring has become a reality, it is proper for the Court to have regard to the actual events when assessing the position as it was at the relevant date (at 18 per Bowen CJ, see also Deane J at 19). In the same case, Fisher J referred to the limitation on the principle stated by Williams J, namely that subsequent events can only be used to determine the weight to attach to circumstances which existed at the relevant date. The subsequent event cannot create an expectation which was not in existence at the relevant date (at 25 quoting from John Martin (Elizabeth) Limited v Commissioner of Land Tax (1965) SASR 217, at 225 per Bright J).
In the present case this Court can only have regard to later sales evidence to confirm the circumstances which applied at the relevant valuation date. In some annual valuation cases, the date of sale may be so far after the relevant date of valuation, and so close to the next date of valuation, that evidence about the sale should be disregarded or given very little weight. In Eastwell Pty Ltd v The Valuer General (1978) 11 QLCR 169, the appellant submitted that only one sale presented by the Valuer-General in that case could be used as a basis for valuation because the other sale was an after date sale. The Court considered that the sale in issue had occurred “a mere 26 days after the relevant date” and there was no suggestion that there was any change in the market place in “that short space of time”. It held that the valuer quite properly had had regard to the later sale (see (1987) 11 QLCR at 173, 176-177).
In the present case, the three sales were sufficiently proximate to the relevant valuation date and the fact that they were after-date sales is not a reason to disregard them. It will be apparent from the evidence about those sales that Sale 2 is important to the resolution of this appeal, but the respondent’s Sales 4 and 6 are of relatively little significance.
Sales and rental of improved land: Mr Sheehan also said that he had looked at sales of improved land and rentals evidence for checking purposes.
Of those properties, the appellants relied, in particular, on Lot 1 on RP608171. The land has a with a frontage to Goondoon Street, in the main business area. It has an area of 253m² and is zoned Comprehensive Development. It was sold in October 1995 (more than 9 months after the relevant date of valuation) for $290,000. Mr Sheehan analysed the sale, by reference to such items as the building value and the Council’s carparking requirements, to reach a land value of $65,000. With the revaluation as at 1 January 1995, the unimproved value was increased from $55,000 to $80,000 (an increase of 45.45%). Upon objection, the valuation was reduced to $67,000 (an increase of 21.8%). The appellants argued that the reduction in valuation can be supported by the analysis of the later improved sales evidence.Although there appears to be a consistency between Mr Sheehan’s analysed figure and the amount applied on objection, the sale of that improved land can be given little, if any, weight, for the purposes of this case. First, there was no evidence to show the basis on which the valuation of the sale land was reduced after objection. Consequently, there is no way of checking whether Mr Sheehan’s analysis is consistent with the basis on which the respondent made the reduction. Second, it was a sale of a highly improved block and such sales are always regarded with considerable caution when ascertaining the unimproved value of land.
There are numerous court decisions which point to the difficulties in gaining an accurate estimate of the unimproved value of land from the analysis of sales of highly improved blocks where so many factors (apart from land value) can influence the sale price. For example, in Barnwell v The Valuer-General (1989) 13 QLCR 13 at 17 the Land Appeal Court quoted with approval the following passage from an earlier decision of the Land Appeal Court:“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 an unimproved value. The reason is obvious. In applying such sales there is no room for error in analysing the value of the improvements.” (Clough v The Valuer-General (1981-2) 8 QLCR 70 at 76)
Third, the sale was considerably after the relevant date of valuation, particularly in the context of annual valuations. Fourth, there was no shortage of sales of unimproved or lightly improved sales which provide a much firmer basis for determining the unimproved value of the subject land.
Mr Sheehan also gave written and oral evidence about other improved blocks. In summary, his evidence was to the effect that:
an analysis of improved Sale 2 (which was not a sale but a comparable building on a block of Special Business zoned land in Goondoon Street) based on current rentals and returns shows a land value of $70,000, which is lower than the respondent’s determination of the unimproved value of $93,000;
an analysis of improved Sale 3 (Special Business zoned land in Goondoon Street with three shops and a house) based on current rentals and returns shows a land value of $75,000, which is lower than the respondent’s determination of the unimproved value of $102,000;
an analysis of improved Sale 4 (Comprehensive Development zoned land in Goondoon Street with an office complex) shows little or no increase in the existing unimproved value (indeed, the analysis suggests that the building is worth more than the amount for which land and improvements were sold), yet the value was increased from $65,000 to $116,000 (after objection) in 1995;
an analysis of improved Sale 5 (Comprehensive Development zoned land with a two storey building) would justify a 1994 valuation of about $100,000 but, even though commercial values and rental levels have not increased, the 1995 valuation of the land was (after objection) determined to be $167,500; and
in more general terms, the unimproved values of land in Goondoon Street cannot be sustained when all these sales are analysed.
In my opinion, it is neither necessary nor appropriate to deal with that evidence in detail. As noted earlier, there was sufficient evidence of sales of unimproved or lightly improved blocks for a decision to be made in this case without having to rely on that other evidence. Many of the sales of unimproved land were relied on by both sides, and both valuers were able to give their opinions about the comparability of the sale blocks and the subject land.
Second, as Mr Hewitt explained, use of rental properties is hypothetical and fraught with problems. The amount of rent paid will be influenced by such things as the age, layout and design of the building, how the rent is negotiated, and the supply of and demand for commercial floor space in the area. In Gladstone there has been a high level of vacancies and that would influence whether there was any shift in the level of rents being paid for commercial premises. By contrast, there had been more sales of vacant land in the relevant year than in other recent years and they provided better evidence than had been available for some years.
Mr O’Connor relied on passages in the reasons for decision of the Land Court in Thirty-Fourth Philgrim Pty Ltd v The Crown (1992-93) 14 QLCR 13 at 22 and 28, and the cases there cited, for rejecting a method of land valuation based on the notional development of sites. Although the method of valuation adopted by Mr Sheehan in this case is different from that method, the basis for rejecting such methods still applies where a more direct comparison with comparable sales is available. As the Court there stated, when components such as capitalisation rates are estimated and then introduced into a valuation exercise:
“uncertainty is added to uncertainty, small errors or miscalculations are carried through and magnified in a mathematical progression, which leaves the resulting land ‘value’ or ‘residue’, as a figure in which one could have little confidence. The whole process is inwardly focused and may bear little relation to an objective assessment of what similar lands are selling for in the market place. Market value is best assessed by reference to sales of comparable land.” (at 28-9)
The need to treat with caution other methods of valuation used to ascertain the unimproved value of land was reiterated by the Land Appeal Court recently in its judgment in GE Cominos and Co Pty Ltd v Chief Executive, Department of Lands, AV93-213, unreported decision dated 15 August 1996.
The authorities which have been cited or quoted above would be well known to the parties and need not be considered in detail here. Indeed, I understood Mr Sheehan to acknowledge (at least in the case of improved Sale 4) that the unimproved value of land cannot be proved by evidence of sales of improved land.
Third, Mr Sheehan’s analysis of the evidence of the improved sales to the effect that the unimproved value applied was too high in each instance does not overcome the effect of section 33 of the Valuation of Land Act 1944 which provides that any and every valuation (or alteration of the valuation) of land made by the respondent shall be deemed to be correct until proved otherwise upon objection or appeal or until altered.
For completeness, reference is made to Mr Sheehan’s analysis of the subject land in its improved state to calculate the value of the land. The subject land was, at the relevant date of valuation, developed with a two-storey building. That building was previously used as a bank with the manager’s residence on the first floor. That floor is not used to any great degree by the current lessee. Mr Sheehan made the following analysis of the commercial building (not including the first floor area).
Building value - 299.64m² @ $600 per m² = $173,184.00
Add architects and engineers fees - 11% = $ 19,050-00
= $192,234.00
Interest for half the development period
- 3 months - 11% = $ 5,286.00
= $197,520.00
Carparking required = 12 sites - 5 are available
7 @ $5,000 = $ 35,000.00
= $232,520.00
Current rental payable - $42,558 per annum or
$3,549 per month = $ 42,588.00
Less outgoings
Council Rates $6,331
Insurance $ 870
Maintenance $ 1,000
Management NIL
Vacancies NIL
Land Tax NIL = $ 8,201.00
NET RENTAL = $ 34,387.00
Adopting a return of 10.2 per centum the market value is assessed as $337,500.
$337,500 less $232,520 = $104,980.00
By analysis:
Land Value = $104,980.00
Less Interest for 6 months @ 6% = $ 3,060.00
LAND VALUE = $ 101,920.00
SAY = $ 102.000.00
As part of the analysis, he noted that the rental payable reflects $147.55 /m per annum. That rent was, in his opinion, high and a more reasonable amount would have been about $110 or $120 /m per annum. A lower rental level of that order would indicate a lower land value than the one he had calculated. That observation is evidence of the unreliability of the method of ascertaining land value. If the actual rent is not an accurate guide, how much less reliable is an estimate, even from a person as well informed as Mr Sheehan?
Mr Sheehan’s analysis provides a land value of $102,000. On that analysis, he contended, the value of the land should not have been increased in 1995. Despite that figure (and an even lower one if a lower rental is factored into the calculation) he concluded that, based on the available evidence, the unimproved value of the land is $135,000.
Although much valuation evidence was given, and most of that is summarised above, the first ground of appeal can be determined primarily by reference to the analysis of information about the sales of unimproved land referred to as Sales 2, 3 and 5 in Mr Sheehan’s valuation report. Of those, the Sale 2 land is most directly comparable. The evidence of both valuers about the features of these properties was substantially the same, but their analyses were different in some respects. It is clear that the subject land is similar to the Goondoon Street lot in Sale 2 in almost all relevant features. The main differences are that access to the subject land is by way of an easement and the subject land has limited area for carparking, whereas access to the Goondoon Street lot can be obtained from Central Lane across the other parcel which also provides parking areas for the benefit of the Goondoon Street part of the Sale 2 land.
The valuation finally contended for by the appellants is 10% less than that determined by the respondent. The relative closeness of the amounts (both in dollar terms or as a percentage of the amount determined by the respondent) does not, of itself, mean that the case must be determined in the respondent’s favour. In GE Cominos and Co Pty Ltd v Chief Executive, Department of Lands, the Land Appeal Court decided that the respondent’s valuer had arrived at a valuation 9.4% higher than it should have been. The Court stated:“In our opinion, the error amounts to a serious error of fact. We recognise that in cases such as this, what constitutes a serious error of fact is a question of degree and judgment, upon which minds may differ. That issue is not to be resolved simply by looking at percentage errors.” (unreported decision at 20)
Bearing in mind the operation of section 33 of the Valuation of Land Act 1944, the extent of agreement between the valuers on most relevant matters and the imprecision of the art of valuation, the appellants faced a difficult task in showing that the disputed valuation was wrong and that it should be replaced by the amount for which they contended.
In this case, the Court can do more than make a comparison of total figures submitted as alternative valuations of the subject land. Mr Hewitt provided his calculation of the value of the subject land, which was expressed as follows:
14.38 metre frontage at $10,100/m $145,238
plus, rear access of 5% $ 7,262
$152,500
less, excavation $ 1,200
Total value $151,300
Adopt: $152,000
The linear frontage method of valuation is acknowledged as appropriate for blocks such as this and those calculations are consistent with the sales evidence, and with his analysis of the Sale 2 (respondent’s Sale 5) block.
The appellants have not proved that, in making the valuation, the Chief Executive acted upon a wrong principle or made a serious error of fact or that the valuation was made by a method fundamentally erroneous. Consequently, the appellants have not proved the first ground of appeal.
Relativity
The appellants contended that the unimproved value assessed by the respondent is not in relativity with either applied 1995 values or values amended following consideration of Notices of Objection. No evidence (other than that discussed earlier in these reasons for decision) was given and the appellants fail on this ground of appeal.
Disadvantages
The appellants contended that the unimproved value assessed by the respondent does not take into consideration the disadvantages and the disabilities of the land. No evidence (other than that discussed earlier in these reasons for decision) was given to establish that the subject land suffered from any significant disadvantages and disabilities. Accordingly, this ground of appeal fails.
Rate of increase
The appellants contended that the application of an overall percentage increase is unrealistic and does not follow market evidence or trends.
The appellants noted that in the 1995 revaluation, the unimproved value of the subject land was increased from $113,000 to $177,500 (or 57%). On objection, the value was reduced to $150,000 (an increase of 32.74%).
In Mr Sheehan’s opinion, the respondent should have had regard to the evidence of sales of improved commercial properties and trends over the previous three to four years. In particular, he referred to the analysis of improved Sale 2 (discussed above) and provided an analysis of the commercial building on the subject land from which a land value of $102,000 was calculated. On the basis of that analysis (the details of which are set out above), and the analysis of other sales of improved land, he argued that the value of the subject land should not have been increased.
For reasons given above, the analysis of improved land sales or rentals of improved properties does not provide a reliable basis for ascertaining the unimproved value of the subject land. Apart from the numerous variables which may affect the result of any such analysis, it has not been shown that the movement (or lack of movement) in the market for improved commercial properties is in direct relationship to the state of the market for unimproved land. Furthermore, the market for comparable unimproved land supports the valuation in dispute.
The ground of appeal must fail.
Order
The appeal is dismissed and the determination of the Chief Executive in the amount of $150,000 is affirmed.
GJ NEATE
MEMBER
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