May v Department of Natural Resources and Mines
[2005] QLC 55
•18 November 2005
LAND COURT OF QUEENSLAND
CITATION: May v Department of Natural Resources and Mines [2005] QLC 0055 PARTIES: John S & Cintia G May
(appellants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2005/0396 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation of land under the Valuation of Land Act1944. DELIVERED ON: 18 November 2005 HEARD AT: Brisbane DELIVERED AT: Brisbane MEMBER: Mr RS Jones ORDER: The appeal is dismissed. CATCHWORDS: Valuation – comparable sales – treatment of clearing as an improvement – Section 3 of the Valuation of Land Act 1944. APPEARANCES: Mr J May, in person for the appellants
Mr M Heather (Senior Legal Officer), Department of Natural Resources and Mines, for the respondent
Background
This appeal concerns land located at 11 Rachow Street, Thornlands, more properly described as Lot 8 on Registered Plan 84253, Parish of Cleveland. The land is located approximately 5 kilometres south of the Cleveland Business District and about 28 kilometres south east of the Brisbane Central Business District. Access to the land is via Rachow Street which is a dual lane bitumen carriageway with earth shoulders. The usual urban services and amenities are available to the land.
The land comprises an area of 6.039 hectares and is generally of a rectangular shape measuring approximately 160 metres in frontage and 380 metres in depth. The land is zoned "Rural/Non Urban" under the Redland Shire Council town planning scheme and is designated to fall within the ”Emerging Urban Community" zone in the proposed draft Redlands planning scheme. Consistent with its zoning, the structures on the land are restricted to those typically associated with rural residential dwelling uses. The land has also been extensively cleared which is a matter of significance in this appeal.
The appellants have appealed the respondent's assessment of the unimproved value of the land determined as at 1 October 2004 (effective as at 30 June 2005) in the amount of $580,000. The unimproved value of the land as at 1 October 2004 had originally been assessed at $760,000 but was reduced to $580,000 following a review of the valuation pursuant to s.68 of Valuation of Land Act 1944 (VLA). In their Notice of Appeal the appellants estimated the unimproved value of the land to be $375,000.
The appellants were represented by Mr J May in person. [1] The respondent was legally represented by Mr M Heather, a senior legal officer employed by the respondent and relied on the evidence of Mr G Dudek, a registered real estate valuer also employed by the respondent.[2]
The Issues in the Appeal
[1] Exhibit 2, Statement of Evidence of Mr May.
[2] Exhibit 3, Valuation Report of Mr Dudek.
Pursuant to s.33 of the VLA, the appellants have the burden of proving that the valuation appealed against is wrong. Further, pursuant to s.45(4), the burden of proving every ground of appeal relied on lies with the appellants. The presumption in favour of the correctness of the statutory valuation may, however, be rebutted where it can be shown that the valuation is based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method. Brisbane City Council v The Valuer General;[3] G Cominos & Co v Chief Executive, Department of Lands.[4] In this appeal, the appellants assert that the valuation under appeal is fundamentally flawed as it fails to have proper regard to the meaning and effect of s.3(1)(b) of the VLA which provides:
"3.(1) For the purposes of this Act –
unimproved value of land means –(a) ……….
(b) in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.
[3] (1977-78) 140 CLR 41 at 56-57.
[4] (1996-97) 16 QLCR 311 AT 331-332 (LAC).
The first limb of what I understand the appellants' primary argument to be, is that the clearing of their land is an improvement for the purposes of s.3(1)(b) and, as such, has to be treated as if it did not exist at the relevant date for the purposes of the valuation exercise. The second limb of the argument is that the land must therefore be treated as being timbered at the relevant date and that, given the zoning of the land and its designation as "Special Intent Area No. 4" under the Redland's town planning scheme, clearing of the land would be significantly restricted thereby reducing its value.[5]
[5] see at T7 L40; T8; T20 L20-27 and T21 L36 to T22 L1.
The appellants say further that if their interpretation of s.3(1)(b) is correct, then the best evidence of the unimproved value of their land is the sale of Lot 10 on SP 169283 and the unimproved value attributed to lots 10 and 16 on SP 169283. Both of these lots are subject to covenants[6] which significantly restrict clearing and the use of the covenanted area. The unimproved value of Lots 10 and 16 is $385,000 and $365,000 respectively according to Mr Dudek and $320,000 and $330,000 according to Mr May. I have decided to accept Mr Dudek's evidence on this issue having regard to his position in the employ of the relevant authority and that his evidence on this topic was not challenged. However, for reasons which should become clear, I do not consider that anything turns on whether Mr Dudek's or Mr May's understanding of these unimproved values is in fact correct.
[6] refer to Exhibits 5 and 6.
The respondent has no issue with the first limb of the appellants' argument however, not surprisingly, it strongly resists the interpretation of s.3(1)(b) implicit in the second limb of the argument. Also, while conceding that covenants of the kind contained in Exhibit 5 would be likely to depress the market value of land, Mr Dudek was of the opinion that the restrictions imposed under the relevant town planning regime were materially less restrictive than those imposed under the covenants being considered here. Any differences in the restrictive regimes imposed by the town plan and covenants of the kind contained in Exhibit 5 would have to be taken into account in assessing the unimproved value of the differently regulated lots.
While I have no difficulty in accepting that restrictions on land use imposed by covenant and/or town planning provisions will be likely to depress land values, I have some difficulty with Mr Dudek's opinion concerning the degree of difference between the level of restrictions imposed under the town planning regime when compared to those imposed by covenant. In no small part this difficulty is a consequence of the relevant town planning documents not being available during the hearing of the appeal.
At pages 11 to 12 of the transcript, Mr Dudek explained the differences in the following terms:
"By Mr Heather: (How) do those restrictions compare to the restrictions that are over the subject land? -- As has already been stated by Mr May in his evidence all properties in the shire are subject to the town planning Act which correctly gives some restrictions, mainly to be able to build one house. There is restriction also which would suggest that properties zoned such as the subject Rural/Non Urban are not to be cleared beyond what's been termed reasonable, mainly 2,000 square metres. However, the covenants that exist on the sale properties quoted by Mr May present further restriction and while the general restriction that applied for all the properties are of some detrimental effect on the properties, nevertheless there are (a) number of activities that are quite legal and available to the property owners for properties that are not affected by the covenants. I can give as an example properties that are not restricted by covenants can be improved with things like swimming pools, tennis courts, vegetable gardens, orchards, they can be used for the purpose of housing pets and many other activities that would not be permitted on a covenant area".
An analysis of Mr Dudek's evidence about the effect of the town planning restrictions and the terms and conditions of the relevant covenants reveals, in my view, a common intention to limit the area available for the erection of structures and to otherwise preserve flora and fauna located elsewhere on any given lot. However, notwithstanding my reservations about this issue, the only probative evidence before me is that, generally speaking, lots whose use is limited by covenants sell for less than otherwise comparable lots subjected to similar but not identical town planning restrictions on use.
Returning to the appellant's interpretation of s.3(1)(b), I do not accept that it is the proper construction to be given to that section. The purpose of s.3(1)(b) is, in my view, to prevent the taxable value of land being inflated by the inclusion of the value of any improvements on the land in the valuation exercise and thereby increasing the incidence of land tax and/or rates and rent. While the appellant's argument has a degree of attractiveness about it, in my view, it fails to take into account other important and relevant sections of the statute.
Their argument ignores s.3(2) which provides:
"(2) However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act."
And, when determining the "… value of improvements…" for the purposes of s.3(2) s.5 of the VLA which provides:
"Meaning of value of improvements
(1)The value of improvements means, in relation to land, the added value which the improvements give to the land at the time as at which the value is required to be ascertained for the purposes of this Act, irrespective of the cost of the improvements, including in such added value the value of any hotel licence the value of which has been included in the improved value.
(2)However, the added value shall in no case exceed the amount that should reasonably be involved in effecting, at the time as at which the value is required to be ascertained for the purposes of this Act, improvements of a nature and efficiency equivalent to the existing improvements."
I find that the effect of these sections of the VLA is to provide a formulae or code which, in a case such as this, does not permit the unimproved value of the land, as at the relevant date, to be less than its improved value (i.e. as cleared land) less the reasonable cost of achieving an equivalent standard of clearing on the land.
I also consider that the construction of s.3(1)(b) contended for by the appellants wrongly requires the subject land to be treated as if it were never cleared and that the town planning restrictions complained of would prevent or seriously restrict clearing that had, as a matter of fact already occurred. S.3(1)(b) requires the land to be valued on the basis that, as at the date of valuation, the improvements on or to the land "did not exist", not on the basis that such improvements had "never existed" or "never been made".[7] To require cleared land to be treated as if the use of the land was limited by restrictions on clearing, would also seem to fall foul of s.3(4) of the VLA which provides:[8]
"Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that –
(a)the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and
(b)such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used;
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made."
[7] Department of Natural Resources and Mines v QNI Metals Pty Ltd & Anor 23 QLCR 261 at para [14] (LAC).
[8]See P & V Jackson v Chief Executive, Department of Natural Resources and Mines [2005] QLC 0018, per Mr R. Scott.
The Sales Evidence
Both Mr Dudek and Mr May had regard to the sale of a 6000 square metre lot located in 8 Rachow Street for $385,000. The unimproved value attributed to this land is $375,000, the same value the appellants want applied to the subject land. While this land has some obvious similarities to the subject, most notably being located in the same street and having the same zoning, there are also significant differences between them. First, the subject is located adjacent to a tidal flat area, which I understand to be a part of the Eprapah Creek system. Second, the subject is a significantly larger parcel of land. I accept Mr Dudek's evidence that these are characteristics which make the subject a more valuable parcel of land.
Mr Dudek and Mr May also had regard to the sale of a 6.108 hectare parcel of land zoned "Special Rural" located in Giles Road at Redland Bay. The sale price for this land was $410,000. Apart from size and shape there are more differences than similarities between the subject and this parcel of land as far as I can tell. The sale land has a different zoning and is located much further inland than the subject. More importantly, development of the land is limited to only a 2000 square metre site and the amenity of the land is materially affected by its close proximity to a poultry farm. I accept Mr Dudek's evidence that the subject is a superior parcel of land and therefore more valuable.
Overall I accept that Mr Dudek has had regard to relevant sales evidence and has appropriately analysed and applied them in his valuation of the land. For the reasons canvassed in paragraphs 5 to 14 above I have rejected the evidence about Lots 10 and 16 on SP 1692893 (the covenanted lots) as I do not consider it reliable evidence in the circumstances of this case.
For all of the above reasons, I have reached the conclusion and so find that the appellants have failed to prove that the valuation of the respondent is incorrect and ought be varied.
Accordingly, the appeal is dismissed.
R S JONES
MEMBER OF THE LAND COURT
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