Massey v Chief Executive, Department of Natural Resources
[1999] QLC 104
•29 September 1999
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BRISBANE
29 September 1999
Re: Appeal against Annual Valuation –
Valuation of Land Act 1944 –
Valuation Roll No 1995
Local Government: BCC-Taringa
(AV98-772)
Leslie N and Doris M Massey
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
Background:
This matter relates to land at 14 Equinox Street, Taringa, described as Lots 21 and 22 on RP 23620, Parish of Indooroopilly. The subject land has an area of 810 square metres, a frontage of 24 metres, and is zoned as "Residential A" under the Town Planning Scheme of the Brisbane City Council, effective at the date of valuation of 1 October 1997. Access to the subject land is good, and all normal services are available. The land is elevated, with a northerly aspect, it has a good outlook, and falls moderately to steeply from west to east. The land was valued under section 17 of the Act as a single unit residential dwelling. The key issues are relativity and comparison of sales.
On 9 March 1998 the Chief Executive issued a valuation of the subject land at $126,000. Following an objection the Chief Executive confirmed that figure on 8 September 1998, against which the appellants have now appealed claiming the correct unimproved value should more properly be $100,000.
Mr L Massey appeared and gave evidence for the appellants. Mr D Rylands, the Departmental Senior Valuer responsible for the valuation appeared and gave evidence for the respondent.
The Evidence:
The appellants argue that the increase in the unimproved value from $110,000 to $126,000 is excessive, and is not supported by sales of comparable vacant lands in the locality. The appellants note that increase followed an increase from $100,000 to $110,000 at the valuation at 1 October 1996, against which they omitted to appeal. The appellants concede that there have been some sales of improved properties to developers in the area, but they argue those sales do not represent a bona fide purchaser for single dwelling use, which is the current use of the subject land. The developers have then developed the lands for new dwellings for speculative gain.
Mr Massey also draws attention to the undesirable nature of the row of 16 inferior lower-standard houses immediately opposite the subject land, on the northern side of Equinox Street. Those dwellings are not owner-occupiers, and tend to be tenanted to University students, who create noise problems and nuisance to the locality. Parking at those 16 houses is confined to Equinox Street, and is a problem for other residents. The lack of suitable public transport also adds to the disability of the subject land. At the date of the valuation at 1 October 1997 there was a Council temporary depot site at the end of Equinox Street in Taringa Parade, however this has since been removed.
Mr Massey concedes that, due to its elevated position, the subject land has a view to the north to undeveloped lands behind the 16 houses opposite. Mr Massey also concedes that if the subject land was redeveloped it was possible to get good views to the south-east, but views to the south-east are currently obstructed by adjoining dwellings. Some local concern has been expressed at the date of valuation about a proposed new development of some 31 townhouses on the vacant site, behind the 16 houses opposite, however Council did not approve that project to proceed. That vacant land is subject to local flooding in times of heavy rainfall.
Mr Massey also draws attention to problems with buildings and fences upon the subject land, as a consequence of soil movement. However he was unable to demonstrate that the cracks and movements were other than as a result of longevity of the buildings, or whether they were specific only to the subject land. In the end those disabilities were not seen to justify any special reduction beyond what might have also been relevant to other properties in that locality. The extent of clearing of the subject land was also raised, although Mr Massey could not quantify the costs of that clearing, or whether those costs at current rates, would exceed the allowance made in the comparative sales ($1,000) adopted by the respondent.
And finally Mr Massey claims that the increase in the valuation bears no relationship to the Consumer Price Index (CPI), which he believes is the recognised standard measure of inflation in the community. For those reasons he believes the percentage change in the valuation is excessive.
In support of his valuation Mr Rylands has sought comparisons with sales of vacant or lightly improved lands in the locality as follows:· Sale 1 – (82 Payne Street, Indooroopilly – Lot 185 on RP23667)
This is a 405 square metre "Residential A" parcel, in an elevated position, located about 500 metres south-east of the subject. The sale faces north, and slopes gently to moderately towards the south. The sale has a good outlook to the south, and is smaller, and is seen overall as inferior.
The sale sold in December 1996 for $125,000 which, after allowing for clearing and improvements, was analysed at $123,000, and applied at $109,000.
· Sale 2 – (10 Goldsborough Road, Taringa – Lot 6 on RP23616)
This is a 440 square metre "Residential BR3" site located about 600 metres east of the subject land. This is an elevated lot, facing north, and sloping steeply towards the rear. It has a good outlook to the south, is smaller, and is seen as overall inferior.
The sale sold in April 1997 for $117,000 which, after allowing for clearing, was analysed at $116,000, and applied at $115,000.
· Sale 3 – (18 Equinox Street, Taringa – Lot 24 on RP23620)
This is a 405 square metre "Residential A" north facing parcel two lots removed to the west from the subject land. The sale is an elevated lot, and is gently sloping with a good outlook to the south. Overall it is similar but smaller than the subject, and is seen overall as inferior.
The sale sold in February 1998 for $130,000 which, after allowing for clearing and improvements, was analysed at $128,000, and applied at $108,000.
All three sales and the subject land are at comparable elevations. Mr Massey concedes that the adjoining Lots 23 and 24 to the west sold for $208,000 in March 1997, and Sale 3 is a resale of part of that property. Mr Massey also feels that Sale 2 at 10 Goldsborough Road had been developed as a multiple development, and it is also closer to shops and public transport. Mr Rylands confirmed that Sale 2 was subsequently developed as a single residential dwelling, in spite of its higher zoning.
Mr Rylands argued that although his Sale 3 is a late sale, after the date of issue of the current valuation, that sale demonstrates the continuing high demand for land in that area, in spite of the smaller frontage of Sale 3. Mr Rylands also notes that current relativities support the value, as the unimproved value of Lot 23 adjoining the subject to the west rose from $106,000 at 1 October 1996, to $108,000 at 1 October 1997, being for a much smaller area.
Decision:
I turn first to the appellants' concern that the percentage increase in the valuation is not supported by community trends. While I am aware that such percentage rises in values are often of concern to appellants in seeking to have confidence that their personal property has been fairly treated in any valuation, they in fact do not prove conclusively that any error has been made in the valuation process. Such rises may, at best, be an indicator to owners that they should further investigate the valuation, but there may be many reasons why a valuation is changed at what would appear to be a rate out of line with some overall statistical percentage.
This matter has been considered many times by the Courts, and I note from precedents that a large increase in itself is not evidence of some error in the valuation. I note, for example, in the decision of NR and PG Tow v. The Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said 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."
That matter was also considered in C and BD Henricks v. The Valuer-General (1983) 9 QLCR 59, where in the Full Court of Queensland, Macrossan J (CJ) said at page 63:
"The appellants also relied upon a schedule, exhibit 4 in the Land Appeal Court, which showed percentage increases in the value applied by the Valuer-General to a number of selected parcels of land from the date of the preceding valuation up to the March 1979 valuation date. The percentage increase shown in the selected cases was in each instance considerably less than the increase applied to the subject land as between the two valuation dates. The weakness in such a selective comparison is obvious as there could be any number of reasons why blocks in the same valuation area should increase at different rates over a period of five years."
As the Full Court said, there could be many reasons why parcels of land can increase at different percentage rates over a period of time. The real test is not the percentage increase in the unimproved values, but a comparison of the subject with sales of comparable sites in the vicinity of the subject at the time of the valuation. The measure of the CPI is not directly associated with the value of land, and while it may be an indication of general inflation in the economy, it is no measure of the costs of land.
I then turn to Mr Massey's concern that it is not comparable to select sales of land by developers, who then redevelop the land for a profit. As a long-term resident, who has no current intention to redevelop the subject land, or to sell it to others, it is understandable that he might see such sales as not reflecting his intentions for his own land. However the purpose of the Valuation of Land Act is to provide a mechanism for a fair and reasonable method of valuing land for rating and taxation purposes. As such, what has to be determined, is a fair value for the land in its unimproved state, accepting all of the surrounding environmental features extant in their current state. The best means of assessing the worth of all lands is to seek to identify what the land might bring if it was offered for sale in the marketplace.
The clearest understanding of that process was encapsulated by the High Court of Australia in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418, where Griffiths CJ said at page 432:"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e. whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together. "
The only reason for rejecting a sale by a developer would be if there was something that could be accepted as not at arms length in the transactions; or that the developer paid more than what others might have been prepared to pay in order not to lose the property. (Pastoral Finance Association Limited v. The Minister (1914) AC 1083, at 1088). Mr Massey has provided no evidence that there was any "special value" in the developer's sale, beyond what might be regarded as a normal transaction in the current marketplace, where many old parcels of land are now being redeveloped for closer habitation.
The marketplace is not constrained such that either developers or individual owners are precluded from competing against each other. The final test of any value for the land is whether an owner would have been prepared to sell to somebody else at a reduced price. On the evidence before me there is nothing to discredit Mr Rylands' sales on that basis.
In considering the impact of the rental properties upon the subject land, it is conceded that the subject land is elevated, and any noise was likely to be less intrusive. However Mr Rylands concedes that he had not inspected the area at night, when the noise problem tended to be greatest. However it is clear that the noise, and carparking problems, would also impact Sale 3 to a comparable degree.
If I consider the matter of relativity between the subject land and adjacent lots, I find that Lot 23 to the west at $108,000 for an area of 405 square metres, would appear to be reasonable compared to $126,000 for the subject land of area 810 square metres. That then leaves the comparison of sales adopted by Mr Rylands.
In that respect I note that comparable sales evidence is the preferred method of valuation. That was identified by the Land Appeal Court in NR and PG Tow v. The Valuer-General (1978) 5 QLCR 378, at 381; and also in R and MM Barnwell v. The Valuer-General (1989) 13 QLCR 13, where the Land Appeal Court said at page 16:"It is desirable that valuations made for the purposes of the Valuation of Land Act of comparable lands should bear proper relativity, one to the other, if 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."
I note also that this method has long been regarded by Courts as the preferred method, and note in WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, the Land Appeal Court said at page 46:
"It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels."
The principle was also clearly defined by the Land Appeal Court in PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, at page 76:
"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 unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements.
Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement."
I note that Mr Rylands' Sale 3 is a late sale, well after the date of issue of the valuation of 9 March 1998, and supplied only to demonstrate that the market has not declined. I will therefore seek comparison with his Sale 1 (applied at $109,000), and Sale 2 (applied at $115,000), both of which are smaller and seen as inferior.
In considering the evidence I am reminded that section 33 of the Act directs:"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."
I am also reminded that the onus of proof that the Chief Executive has made an error of fact, or has used a wrong principle in the valuation, lies with the appellant under section 45(4) of the Act. (Brisbane City Council v. The Valuer-General (1977-78) 140 CLR 40, at 56.
On the evidence before me I believe that the unimproved value at $126,000 is fair and reasonable, and in relativity with adjoining lands.
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 valuation as determined by the Chief Executive in the sum of $126,000 is affirmed.
(NG Divett)
Member of the Land Court
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