McCallan v Valuer-General
[2014] QLC 55
•17 December 2014
LAND COURT OF QUEENSLAND
CITATION: McCallan v Valuer-General [2014] QLC 55 PARTIES: Ian Peter & Jennifer Anne McCallan
(appellants)v Valuer-General
(respondent)FILE NO: LVA391-12 DIVISION: General Division PROCEEDING: Appeal against valuation under the Land Valuation Act 2010 DELIVERED ON: 17 December 2014 DELIVERED AT: Brisbane HEARD ON: 21 August 2013 HEARD AT: Innisfail MEMBER: WL Cochrane ORDERS: 1. The appeal is allowed.
2. The site value of Lot 8 on SP132625 is determined in the amount of three hundred and forty-five thousand dollars ($345,000) as at date of valuation 1 October 2011.
CATCHWORDS: Land Valuation Act 2010 ― Statutory Valuation – unimproved value – residential land – presence of easement – scarcity of comparable sales.
Lawson v Valuer-General [2012] QLC 27
Nimmo v Department of Natural Resources and Mines [2005] QLC 28
Rodney v Valuer-General [2014] QLC 26
Steers v Valuer-General [2012] QLC 12APPEARANCES: Appellants in person.
Mr P Prasad – Legal Officer for the respondent.
Background
This is the decision in an appeal in respect of land located at 43 Royal Palm Avenue, Cardwell, in North Queensland which land is otherwise described as Lot 8 on SP 132625, Parish of Ellerbeck, County of Cardwell.
The land has an area of 941 m² and is a marina water front allotment within a development known as the Port Hinchinbrook Estate, which is an integrated oceanfront and waterfront development.
The valuation appealed against was made as at 1 October 2011 effective from 30 June 2012.
The original valuation for the land issued at $420,000 but, upon objection by the appellants, was reduced to $415,000. As a consequence of a preliminary conference conducted in this matter the valuation was subsequently reduced further to $395,000. That is the valuation for which the respondent, Valuer-General, contends.
In their notice of appeal the appellants contend for a valuation of $250,000 and identified the following grounds of appeal:
“L8 SP132625
43 Royal Palm Avenue, CardwellAppeal on Decision of the objection to site land valuation
The decision on the objection to site land valuation has been made on Ground 2 of the objection:
1)adverse characteristics
2)unrecorded disability
We believe that under Ground 2 full consideration has not been given to:
a.Lot 8 has a stormwater drain easement 4 metres wide for the full depth of the block giving a usable area of 782 sq.m.
b.During Cyclone Yasi February 2011, the land under this objection and all surrounding blocks suffered complete inundation. The area is now in an ‘orange zone’ under the flood mapping of the local council. See attached map from the web site of the Cassowary Coast Regional Council.
c.The subject land of this objection fronts the marina basin the infrastructure of which was destroyed by Cyclone Yasi in February 2011. At the date of valuation, October 2011, the marina remained obstructed, undredged and the infrastructure (including street lighting) unrepaired. Water access is heavily silted and access can now only be made on high tide. Since being subdivided the block has, over a number of years, had its water access severely restricted and is now completely tide dependent putting severe constraints on the use of the land. The previous good views of the marina have been lost. As evidence we have enclosed two images, one showing the marina basin and the other the marina entrance. Most of the vessels in these images are aground and the water depth in the remaining areas of water has an average depth of 300mm. Accessing the marina from the ocean often involves overnight anchoring in Hinchinbrook Channel waiting for a suitable tide to enter the marina basin. The pontoon now sits on the mud at low tide as does our boat.
The reduced amenity and increased constraints on the use of the land since the 2010 valuation has not been recognised.
There appears to have been no consideration given to Ground 1 of the objection “The New Site Valuation is not supported by property sales”.
a.Property Sale Information: Most of the lots listed in the attached spreadsheet were sold inclusive of piles etc. 43 Royal Palm has piles, a 12 metre pontoon, walkway and stub jetty with a value of approximately $80,000 (see attached quote which excludes stub jetty). The area of land is 941 square metres including a 4 metre easement for the full depth of the block bringing a usable area of 782 sq. metres.
We have attached all available data for water front land sales in the area around the date of the valuation. (Price Finder print out is provided as supportive evidence)
The most relevant comparative sales (before the valuation date) are:
(1) Six much larger (average area of 1441 sq. metres) subdividable blocks on Trade Winds Drive, at an average price with included infrastructure of $246,666 and
(2) 102 Keith Williams Drive, this large block of 1491 sq. metres is 550 square metres larger than 43 Royal Palm avenue and with much better views. Sale price $395,000.
While the sale of 47 Royal Palm Avenue may seem relevant this land was subject of a private swap by the owner to redeem a debt. The purchaser never saw the land, no agents were involved, no money changed hands and thus this sale fails to meet the established criteria that sales must “Be between prudent and willing, but not over-anxious parties”. This sale which was far in excess of its value at the time of the swap and should therefore be ignored.
b.Further evidence of inconsistent valuations in Port Hinchinbrook:
Keith Williams Drive
Street number area Valuation75 1360sqm $255k
99 1320sqm $255k
101 1321sqm $247,500
103 1360sqm $247,500
107 1360sqm $237,500
All these blocks on Keith Williams Drive are virtually identical. All have the same outlook all have the same road frontage and all are about the same size. The local real estate agent states they all have identical resale values. The valuations differ for no apparent reason and range form 75 Keith Williams Drive @ $255,000 to 107 Williams Drive @ $237,500. All these properties have substantially greater area, and ocean front better views and aspect but all have greatly reduced SVs to the subject land.
Due to the cyclone damage there were limited sales in 2011 up to the date of valuation. There appears to be no consideration given in the valuation to the effects of the cyclone, the flood mapping or the deteriorating condition of the development infrastructure.
At the hearing the appellants’ case was set out as follows[1]:
[1] Exhibit 1.
Statement for Hearing of Appeal on Decision of the objection to site land valuation
A.The decision on the objection to site land valuation has been made on Ground 2 of the objection:
1)adverse characteristics
2)unrecorded disability
We believe that under Ground 2 full consideration has not been given to:
a.The subject land of this objection fronts the marina basin the infrastructure of which was destroyed by Cyclone Yasi in February 2011. At the date of valuation, October 2011, the marina remained obstructed, undredged and the infrastructure (including street lighting) unrepaired.
b.Water access is heavily silted and access can now only be made on high tide. Since being subdivided the block has, over a number of years, had its water access severely restricted and is now completely tide dependent putting severe constraints on the use of the land. As evidence we have enclosed images showing the marina basin and entrance. Most of the vessels in these images are aground and the water depth in the remaining areas of water has an average depth of 300mm. Accessing the marina from the ocean often involves overnight anchoring in Hinchinbrook Channel waiting for a suitable tide to enter the marina. The pontoon now sits on the mud at low tide as does our boat.
c.The previous good views of the marina have been lost.
A.There appears to have been no consideration given to Ground 1 of the objection “The New Site Valuation is not supported by property sales”.
Property Sale Information: See attached spreadsheet which shows land sales up to the date of the valuation. Specifically attention is drawn to the pro rata valuation based on the area of 43 Royal Palm to the evidenced sales. Note that no allowance has been made in this figure for the inclusions. Most of the lots listed in the attached spreadsheet were sold inclusive of piles and other infrastructure.
Where installed lots are sold with piles, pontoons, walkways and additional infrastructure this also means that such lots come with the benefit of a DA and permit for such erection. A copy of such documentation is attached for 43 Royal Palm. An indication of the cost of such infrastructure is shown by the attached quote which excludes engineer’s drawings, DA application, permit, stub jetty or decks. Both the inclusion of a permit to build and the infrastructure itself is of great benefit to the land but should not be included in any site value. The property selling amounts evidenced should therefore be adjusted if they are to be used to support site valuations.
Any calculation of land value based on property sales with regard to land area and inclusions show values significantly below the present value given to the subject property.
We suggest at the site inspection all the properties listed in the spreadsheet are inspected.”
Legislative provisions
This appeal is brought pursuant to the provisions of the Land Valuation Act 2010 (LVA).
The LVA made a number of significant changes to the valuation process which had previously been carried out pursuant to the provisions of the Valuation of Land Act 1944 (VLA).
The LVA retains an obligation upon the Valuer-General to carry out a valuation of all properties throughout Queensland for the purpose of rating, land tax and other associated purposes.
The respondent is required to comply in its conduct with the requirements of the Land Valuation Act when undertaking various valuations required.
The LVA has brought about a change to the valuation approach insofar as under the previous Act, the Valuation of Land Act, all valuations were of unimproved value but now under the LVA valuations are broken into two categories: non-rural land which embraces residential, commercial and industrial land on the one hand and rural land on the other.
Pursuant to the provisions of the LVA, the value of land to be valued by the respondent is, in the case of non-rural land, its site value which term is defined in the Act and for rural land, its unimproved value.[2]
[2]See the discussion of the valuation process by His Honour Mr Smith in Lawson v Valuer-General [2012] QLC 27 [13].
The Land Valuation Act also draws a distinction between the unimproved value of improved land (Chapter 2, Part 2, Subdivision 4) and the value of unimproved land (Chapter 2, Part 2, Subdivision 5).
Section 26 of the LVA provides a meaning for the “unimproved value of improved land” in the following terms:
“26 What is the unimproved value of improved land
(1) If land is improved, its unimproved value is its expected realisation under a bona fide sale assuming all site improvements and non-site improvements on the land had not been made.
(2)However, the land’s unimproved value is affected by any other relevant provisions of this chapter.”
Similarly, s 29 provides a meaning for the value of unimproved value in the following terms:
“29 What is the site value and unimproved value of unimproved land
If land is unimproved, both its site value and its unimproved value are its expected realisation under a bona fide sale.”
The Dictionary in Schedule 2 to the LVA defines “unimproved” as:
“means land in its natural state.”
In the present case the valuation exercise which must necessarily be conducted is one which calls for the determination of the unimproved value of improved land, that is assuming that all site and non-site improvements do not exist.
In the Lawson decision, footnoted above, His Honour Mr Smith referred to a decision of His Honour Mr Isdale in Steers v Valuer-General[3] where His Honour was obliged to consider the valuation of land pursuant to the LVA.
[3] [2012] QLC 12 [8]-[9].
His Honour Mr Isdale said:
[8]The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said at page 381:
“Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.”
[9]This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular multiplier and not some other one should be applied.”
His Honour Mr Smith in Lawson then said[4]:
[4] Lawson v Valuer-General [2012] QLC 27 [14]-[15] (citations omitted).
“[14]I consider it remains a relevant feature under the LVA, to consider market value. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines.
[11]The principles for determination of the ‘market value’ of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property. (See Griffith CJ at 432 and Isaacs J at 441).
[12]It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:
‘Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but-as with other commodities-the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date-and that is evidenced by sales.”
[15]Despite the legislative change, it is refreshing that the views expressed by the High Court in Spencer, now well over a century ago, remain just as current and relevant today as they did when they were first uttered. It is certainly my view, at least at this stage until other authorities may prove me wrong, to continue to apply the Spencer test under the LVA.”
In addition to the changes with respect to the valuation process, the regime established by the Land Valuation Act also brings a change in the evidentiary onus.
Under s 3 of the Valuation of Land Act the valuation made by the Valuer-General was deemed to be correct unless proved otherwise either upon objection or appeal. That is to say there was a presumption of correctness in favour of the valuation contended for by the Valuer-General.
The Land Valuation Act does not retain that evidentiary provision but rather provides at s 169(3):
“(3) However, the appellant has the onus of proof for each of the grounds of appeal.”
The only grounds of appeal which are able to be contemplated at a hearing are those grounds stated in the valuation appeal notice.[5]
[5] Land Valuation Act s 169(1).
Accordingly, the McCallans are limited to those matters which are recited in the notice of appeal. Those matters are set out above.
The witnesses
Mr and Mrs McCallan did not engage a valuer to provide a valuation report. Nor did they file a statement of their evidence in a conventional form but rather did file and tendered at the hearing a number of documents which would have been exhibited to any statement they had provided to the Court.
I have commented previously on the difficulties confronted by self-represented parties to an appeal against a valuation of the Valuer-General, in circumstances where they elect not to engage the services of an appropriately qualified and experienced valuer and have to confront the evidence which, inevitably, is adduced by the Valuer-General utilising the services of a qualified and experienced valuer (generally one in the employ of the Valuer-General).[6]
[6] See my observations in Rodney v Valuer-General [2014] QLC 26 [54].
As I observed in other cases, comments by other Members of this Court in a similar vein have been made over a long period of time.[7]
[7] See, for example, Nimmo v Department of Natural Resources and Mines [2005] QLC 28.
In the Nimmo case His Honour Mr Jones commented as follows[8]:
“[16]Assessment of the unimproved value of land is an enterprise considered to be within the province of a recognised area of expertise. Accordingly, in appeals such as these, a valuer's evidence on matters of opinion relating to his field of expertise would ordinarily be preferred to differing opinions of a lay person. However, it is quite another thing to say that, because the valuation of land is the issue, the valuer's evidence should automatically be preferred to that of a lay person.
[17]It may be that the valuer's opinion is expressed in a manner or upon bases which are unable to be scrutinised, or otherwise lacks rational explanation. It may also be shown that in reaching his opinion the valuer has relied on information shown to be wrong or has failed to take into account relevant and material facts.
[18]Accordingly, it is clear, in my view, that the opinions of value expressed by Mr Van Hees are not immune from challenge by the appellant. That said, in the absence of any demonstrated error of approach or reasoning on the part of Mr Van Hees, his opinions on matters within his field of expertise ought to be preferred to the opinions of the appellant on the same matters.”
[8] Nimmo v Department of Natural Resources and Mines [2005] QLC 28 [16]-[18].
That is not to say that the self-represented person’s prospects are entirely forlorn. There are instances where self-represented parties enjoy considerable success before this Court but it most be noted that the task they set themselves is a difficult one when they are confronted by the dual difficulties of considered expert evidence and the forensic skill of lawyers representing the Valuer-General.
Mrs McCallan gave evidence on behalf of the appellants and was cross-examined.
The evidence of the respondent Valuer-General was given through a report of Michael Lawrence Donnelly, an experienced and registered valuer in the employ of the Department of Natural Resources and Mines, who produced a report which was tendered before the Court.[9]
[9] See Exhibit 15.
Mr Donnelly, although not the valuer responsible for the original site valuation assessment, had inspected the property and in his evidence supported a valuation of $395,000.
The Court was greatly assisted by an inspection of the subject property and other properties in the immediate area.
It is noteworthy the subject residential land is located in a Marina Group Title Development. It is apparent that there are some difficulties with the functioning of the Body Corporate as access to the subject land is marred by very poor quality roadworks extensively broken up and pot-holed so that access to the subject land by car is somewhat difficult and requires great caution.
The land
The subject property is approximately 3.5 km by road from the Cardwell Post Office. Cardwell itself is about 50 km north of Ingham and 165 km north-west of Townsville.
The totality of the community in which the subject land is located is a small coastal community offering basic commercial, industrial and educational services. The economy of the area relies, to some extent, upon tourism.
Pursuant to the Cardwell Shire Planning Scheme, which was adopted on 28 June 2007,[10] the subject land is located in the Port Hinchinbrook zone and is identified in the Port Hinchinbrook Master Plan as residential marina frontage.
[10] Exhibit 15, p 6.
The location of the subject property on the area of the marina known as “The East Marina” gives its views to the north and west across water. All adjoining properties also have a frontage to the water on either the Grande Canal or the East Marina. There are other properties located north and west of the subject along what is described as North Marina and West Marina.
The subject land is serviced by electricity, town water, telephone and sewerage.
The Royal Palm Avenue is a bitumen-sealed road with concrete kerbing and channelling although, as I observe above, the road access along Foxtail Avenue to the subject land is poorly maintained.
It is noteworthy that the subject property has a 4-metre-wide easement for drainage purposes located along its eastern boundary.
That easement has an area of 159 m² which reduces the usable area of the subject land to 782 m².
Notwithstanding the presence of that easement, the site inspection revealed that a large residence has been able to be constructed on the site, albeit by encroaching partly over the easement.
Land in the general area of the subject was subjected to the ravages of Cyclone Yasi. While the subject land is a waterfront block it was generally agreed between the parties that the waterfront was subject to siltation issues because of the failure of the development company to undertake maintenance requirements and in particular a failure to carry out regular dredging.
The subject land is located within the Cardwell Shire Planning Area which, following amalgamation is part of the Cassowary Coast Regional Council.
Because the land is located within an integrated oceanfront and waterfront development it is identified as Residential Marina Frontage in the Port Hinchinbrook Master Plan.
A large number of exhibits were tendered through Mrs McCallan including photographs, town planning maps, sales reports and brochures relating to the promotion of the Port Hinchinbrook Development within which the subject land is located.
There was a deal of documentation relating to a permit to construct a pontoon (which has been constructed) in front of the subject land.
Notwithstanding some doubt about its relevance I did permit its tender.
The appellants’ evidence
In her oral evidence Mrs McCallan covered a number of topics. In particular she sought to emphasise the impact of Cyclone Yasi which occurred in February 2011 on the subject site.
Mrs McCallan told the Court that the infrastructure of the marina basin had been destroyed by that cyclone and at the date of valuation 1 October 2011 the whole marina remained obstructed and undredged and infrastructure including street lighting was unrepaired.[11]
[11] See Exhibit 1 section A.
When invited to inform the Court how she came to reach a valuation of $250,000 for the subject land, Mrs McCallan said as follows[12]:
“… It was based on a knowledge of what was going on around us, of what the – what sales were happening. The property next door to us, which wasn’t sold at that time but has since been sold, we were very aware of because we were looking – we look after that – we were looking after that property for the owner for a while and we knew that they, from – historically, they had been trying to sell for a long while because their personal situation, which, obviously, is not relevant here. So we were very well aware of what the market was doing, from their point of view of them trying to sell it, etcetera. That’s just one example. So it was just our local knowledge.”
[12] ` T 1-25 L 29-37.
She later informed the Court that sale occurred in the middle of 2012.[13]
[13] T 1-25 L 46.
There are obvious difficulties in relying on a sale which occurred in mid 2012 as confirming or contradicting a valuation which was made in October 2011 although I think some weight can be given to it as evidence of the state of the market as at the valuation date, namely ‘depressed’.
Mrs McCallan also demonstrated a general familiarity, on her part, with attempts by landowners to sell property in Royal Palm Avenue without success.
Mrs McCallan’s evidence also focused on a Schedule of Land Sales prepared by her and her husband of 7 sales of land[14], all of which were either in Trade Winds Drive or Keith Williams Drive.
[14] Exhibit 10.
All of those Lots were in excess of 1,200 m² and one of them, 119 Keith Williams Drive, had an area of 3,442 m².
Mrs McCallan’s proposition with respect to those sales was that 5 of them (all along Trade Winds Drive) had sold prior to Cyclone Yasi and, applying the m² value which each of those 5 sales achieved, she was able to calculate on a pro-rata basis a value for the subject land of something between $145,000 and $199,000.[15]
[15] Exhibit 10.
Those sales being approximately one year prior to the date relevant for this valuation exercise are of limited relevance.
Mrs McCallan acknowledged that, of all the sales referred to by her in either exhibit 10 or exhibit 6a, it was really only the property located at 102 Keith Williams Drive (Lot 13 on SP 116825) which was directly comparable to the subject land.
Mrs McCallan however wished to make clear that there were other factors than merely water access that were relevant in her valuation exercise. She placed significant weight upon the fact that, consequent upon the effects of Cyclone Yasi, the marina remains silted up and largely inaccessible by boats with any significant draft. It is also generally unsightly.
Given that the relevant valuation date was as 1 October 2011 Mrs McCallan contended that the market after the incident of Cyclone Yasi in February 2011 had deteriorated and had not begun to recover until well into 2012.[16]
[16] T 1-19 to 1-21.
The Trade Winds Drive properties front onto what is described in the plans as the boat maintenance basin (and also referred to as the boat haven).
In response to a question Mrs McCallan acknowledged[17] that the subject land was in a different location fronting the marina proper and also that her land is “marina front with pontoon permitted” whereas the Trade Winds Drive properties are “pontoon permitted with deck and a boat basin frontage”.
[17] T 1-27 L 10.
Mrs McCallan was also keen to tell the Court about the marketing program for the whole of the development from about the Year 2000 up until 2011.
I am bound to find that that information was generally irrelevant as the focus of the determination required to be made by me ought be squarely upon the value of the land as at October 2011.
Mrs McCallan wished to place before the Court, and did so, material contained in a quote from a business identified as the Jetty Specialist[18] which dealt with the costs of reinstatement of the jetty on the subject land which had been largely destroyed courtesy of Cyclone Yasi. The cost for reinstatement was in the order of $70,000. (Two quotes dated 18 and 21 March 2011 from the same contractor range from $70,380 to $65,177. The reason for that difference was never properly explained.)
[18] Exhibit 3.
The objective of this hearing is to determine the unimproved value of the land and the pontoon/jetty clearly constitutes an improvement.
It might be assumed that the details with respect to the cost of a replacement pontoon was to assist in calculating the unimproved value of the land having regard to the price that might be achieved for the sale of the existing house and land but no evidence in that regard was placed before the Court.
Moreover the particular jetty/pontoon is peculiar to that lot of land.
Under cross-examination Mrs McCallan acknowledged, being confronted by the respondent with the appropriate valuation figures that what she had thought, to compile what became her exhibit 10, were 2011 figures, were in fact figures which reflected a valuation which had occurred on 1 October 2009 to be effective 30 June 2010. That is to say she is referring to the previous valuation figures.
Further, under cross-examination, Mrs McCallan acknowledged[19] that with respect to Lot 55 on SP 100813 located at 119 Keith Williams Drive, upon which valuation she had relied to generate back at on a pro-rata basis (a valuation of $129,859) for her land, it was a superior lot and certainly, on the evidence, a vastly larger lot so that it was unsurprising a lower price per m² should be realised.
[19] T 1-31.
Further, with respect to attacking Mrs McCallan’s reliance upon the figures in schedule 10, Mr Prasad for the Valuer-General extracted a concession that none of the properties in her schedule 10[20] had a similar marina frontage with pontoon to the situation which applied to the subject land.
[20] T 1-31 L 44-47.
Mrs McCallan also agreed when regard was had to the schedule of figures contained in what had become exhibit 6(a) that the only property in the exhibit 6(a) schedule of a similar type to the subject property was that located at 102 Keith Williams Drive.[21]
[21] T 1-32 L 34.
It became clear in the course of Mrs McCallan’s evidence that she placed significant weight on the fact that, following Cyclone Yasi, the marina complex became heavily silted up.
It appears that at the date of hearing the marina access described as “the grand canal” had been dredged by the State government but the marina and entrance to the marina had not been dredged so that, according to Mrs McCallan’s evidence, access for boat owners to the various marinas was severely curtailed.
Exhibit 18 tendered by Mr Prasad for the respondent further confirmed that the valuations relied upon by Mrs McCallan to compose what became exhibit 10 are based upon valuations carried out as at 1 October 2009 with effect from 30 June 2010, whereas the valuation exercise which the Court is currently considering is a valuation as at 1 October 2011 effective from 30 June 2012.
Under cross-examination[22] Mrs McCallan conceded that she was in error in relying upon the valuations as being 2011 valuations when in fact they were from 2009.
[22] T 1-30 L 29-33.
That concession has significant implications for the approach taken by the applicants in formulating the valuation for which they contend.
The evidence of Mr Donnelly – valuer
Mr Donnelly’s evidence-in-chief was constituted by his written report.[23]
[23] Exhibit 15.
Mr Donnelly described the nature of the land in the following terms:[24]
“The subject property is an inside waterfront allotment with a northerly aspect, which overlooks the Port Hinchinbrook Marina and has distant mountain views. The land is generally level along its road frontage with an easy fall to its northern marina front boundary.
The subject property has a 4.0 metre wide easement along its eastern boundary with an area of 159m², which reduces the useable area to 782m². This easement is for drainage purposes.
The subject is impacted by this easement as it restricts the developed area of the allotment, however a large residence has been able to be constructed on the site and the owner has advised the residence was built partly over the easement.
The land’s water frontage is subject to siltation issues given the development companies failure to undertake maintenance requirements in particular dredging. The owner has advised that the siltation issues have worsened since Cyclone Yasi.”
[24] Exhibit 15, p 3-4.
Mr Donnelly’s report was based upon a direct comparison approach using what he described as the most comparable sales available around the relevant date.
In his report he identified those four sales as being:
a. Sale 1 was Lot 13 on SP 116825 located at 102 Keith Williams Drive with an area of 1,491 m² which had sold on 14 October 2011 for $395,000 and which analysed to an applied site value of $410,000 or 103% of the sale price.
b. Sale 2 was Lot 55 on SP 100813 located at 119 Keith Williams Drive with an area of 3,442 m² which had sold on 2 September 2011 for $475,000 and which analysed to an applied site value of $430,000 or 90% of the sale price.
c. Sale 3 was Lot 163 on SP 239002 located at Trade Winds Drive with an area of 952 m² which had sold on 7 October 2011 for $240,000 and which analysed to an applied site value of $170,000 or 77% of the sale price.
d. Sale 4 was Lot 2 on SP 100813 located at 13 Keith Williams Drive with an area of 1,422 m² which had sold on 1 March 2011 for $280,000 and which analysed to an applied site value of $200,000 or 71% of the sale price.
With respect to comparability between the subject land and the sales upon which Mr Donnelly has relied he asserted as follows:
a. With respect to sale 1 at 102 Keith Williams Drive, in comparison to the subject land, it is slightly inferior overall.
b. Sale 2 at 119 Keith Williams Drive was superior to the subject property with a vastly larger area (3,442 m²) which it had been believed was subject to an easement which was subsequently revealed to no longer exist so that the particular valuation increased from $395,000 to $450,000.
c. Sale 3 at Trade Winds Drive had a similar zoning to the subject but because of an easement for Right of Way purposes the useable area was reduced to 874 m² but was described by Mr Donnelly as being “a comparable sized allotment with deep water anchorage however is located within the least desirable location of Port Hinchinbrook Estate.”[25]
[25] Exhibit 15, p 8.
Giving evidence in respect of his analysis of sale 2 located at 119 Keith Williams Drive, Mr Donnelly, said, in evidence, as follows:[26]
“This particular sale was initially – in the information that the appellant had was previously $395,000 as at October 2010. Upon discovering the easement on this particular property was no longer in existence that particular valuation was increased from $395,000 to $450,000. The $450,000 was at October 2010 and this has subsequently been reduced from $450,000 to $430,000.”
[26] T 1-38 L 5-10.
That evidence suggests to me that Mr Donnelly values the impact of an easement on an otherwise unencumbered but apparently comparable block to the subject as being $55,000.
His sale 2 was a much larger block having an area of 3,442 m² as compared with the subject lot with an area of 941 m², so that one might surmise a much reduced impact on the capacity to utilise the whole area of the block which constituted sale 2.
I note that in his report[27] Mr Donnelly makes no mention of the impact of the easement on the value of sale 2 in his analysis.
[27] Exhibit 15 p.8.
In response to the question as to research into historical sales that had taken place since the beginning of the development in which the subject land is located, Mr Donnelly set out what he described as the highlights of the actual historical evidence with respect to sales in the following terms:[28]
“Well, tell me what you highlight out of it though? I highlight out of it is that initially when the development was done the ocean front properties were marketed at a higher level than the marina front properties and subsequently because of the interest in the marina front properties, this – the asking prices were reversed. And I’ve referred to the highest marine front property and the highest ocean front property which has taken place in the development. So that’s firstly to show the superiority of the marina front properties as opposed to the ocean front properties through historical sales evidence. It’s acknowledged – in these – and in the second part of the historical sales evidence. It’s acknowledged – in these – and in the second part of the historical evidence is my researches of vacant sales. There’s – with – I understand would have had pylons and pontoons in place too but we – I’m looking at like with like in the sales that take place in that marina basin, and establishing from this historical evidence where the particular locations within the development side from the ocean front to the – well, the price point and the hierarchy in terms of desirability within the marina. And in that explanation too, I’ve mentioned the sales which have taken place in the location of the subject property at Royal Palm Avenue and looking at historical relationships with sales between Royal Palm Avenue and within the marina and elsewhere which establishes that if you look at, for example, well September/October 2003 is the date that I used for comparison’s sake, given there were the sales with the latest sales – bona fide sales that ‘s taken place in the Royal Palm locality aside from any subsequent to October 2011. So broadly based on this the oceanfront in relation to historical sale 4 where if you refer to historical sale 4 is on 3 Allamanda Lane, which is in proximity to the subject property, is Allamanda Lane and the changes as you head out towards the cul-de-sac into Royal Palm Avenue. So I’ve used that sale in relation to other sales in the locations that have taken place. As I said before, sale 6 is the oceanfront one for $265,000. Broadly on comparison there with the sale that took place around the similar date at 3 Allamanda Lane at $425,000. There’s a premium there of 60 percent. If you look at sale 7 at, 1 like to call is West Marina, so that I have an understanding of the actual marina itself. There was a sale there for 23 Poinciana Boulevard for $415,000. And there’s – albeit it reflects a two per cent premium which purely on a sale price comparison. And sale 8, North Marina, 100 Keith Williams Drive, there was a sale there September 2003 for $405,000.”
[28] T 1-44 L 10-41.
In further evidence, the full extent of which I need not cite here in its entirety, Mr Donnelly informed the Court:
“In my mind it is clear the historical sale evidence prices obtained from marina front allotments are superior to those achieved for ocean and canal front locations. Also (it is) evident that the lots at the (lots on) the bracket which I like to call there which is on the Royal Palm location traditionally preferred and the area of the allotment is a secondary consideration. Then I further explained the Tradewinds Drive locality. How it is the least desirable location and sort of didn’t feature in the market until 2004-2005. And I have referenced sales there that took place over 10 and 11 which took place in 2004, 2005 which the same purchasers subsequently subdivided into four allotments and on a gross sale price per allotment basis that shows $235,000.”[29]
[29] T 1-45 L 7-16.
To my mind the most compelling part of Mr Donnelly’s evidence, which assisted the appellants, was in response to my suggestion to him the proposition that:
“Aspect and setting are important parts of a valuation exercise?”
He responded:
“They are, your Honour.”[30]
[30] T 1-45 L 33-34.
Mr Donnelly also agreed with the proposition raised by me that:
”The valuations that are done are effectively short-term valuations in the sense they reflect market conditions at the time the valuations done. And if there is a dramatic change, that is picked up the next year or two years later when the next rolling series of valuations are done?”[31]
[31] T 1-45 L 36-39.
Mr Donnelly confirmed that was the case:
“Provided that the market is showing a change in the market.”[32]
[32] T 1-45 L 39-40.
I then asked him this question:
“Did you, or have you made in your … approach to the valuation exercise, any allowance of the setting and aspect of the setting having regard to the fact that we are looking across a completely destroyed marina with bent pylons, no decking, no boats and a silted marina basin?”[33]
[33] T 1-45 L 44-47.
Then in response to this proposition:
“It just seems to me that at the time the valuation was done, it is only 8 months after Cyclone Yasi. If we had a look at the definition in the Land Valuation Act, the new definition as it were, site value is it expected realisation under a bona fide sale. At the time this valuation was done, a bona fide purchaser would be looking at land, the fittings of which and the setting of which has been substantially ravaged by Cyclone, wouldn’t it? That hypothetical creature, the bona fide purchaser?”[34]
[34] T 1-46 L 1-6.
Mr Donnelly agreed with that proposition and then also conceded that in his report we see no allowance for those matters.[35]
[35] T 1-46 L 9-10.
With respect to the issues or disabilities of the subject land which were highlighted by the appellants both in their written statements in respect of the grounds of objection and in the evidence given by Mrs McCallan, Mr Donnelly, when invited to do so by the solicitor for the respondent, said:
“When the objection was processed I think the letter, although it is not totally comprehensive goes out to the appellant and on objection the valuation was reduced from $420,000 to $415,000 on the basis of the easement across the eastern boundary of the subject property which, as is in my report, I have referenced that it has been built across so there is a slight allowance in there which was made on objection.”[36]
[36] T 1-46 L 24-29.
That evidence is not congruent with the evidence given by Mr Donnelly to which I referred earlier in which an allowance was made in respect of Lot 2 in a sum of $55,000 in circumstances where it became known that an easement previously thought to exist had been extinguished.
Lot 2, it might be remembered from Mr Donnelly’s report, had an area of 3,442 m² so that it might be thought the impact of an easement on a lot that size would be somewhat less than an impact on a block with an area (as in the subject case) of 941 m² of which 159 m² was given over to an easement.
It seemed to me from Mr Donnelly’s evidence that the fact that the easement had been encroached upon by the McCallan home caused him to reduce the allowance made for the presence of the easement.
Such an approach seems to me to be entirely contrary to the intent of the Land Valuation Act which requires the valuation to be carried out as though the land was vacant.
In the section of his report dealing with historical sales evidence Mr Donnelly identified an apparent reversal in sentiment reflected in the market as between ocean front allotments and marina front allotments.
He said:[37]
“The original pricing of allotments within Port Hinchinbrook rated the ocean front allotments as most valuable over the marina front allotments, then Grande Canal allotments and finally boat maintenance allotments being considered least valuable by the developers.
However, given the high demand for marina front allotments the price point hierarchy between the two most desirable localities was reversed with prices paid for marina front allotments surpassing that of ocean front allotments, whilst the price order for the two lesser desirable localities remained unchanged.”
[37] Exhibit 15 p 10.
Mr Donnelly produced a sales historical map in which he identifies a sale (sale 4 in that list) of a property in Allamanda Lane. He said:[38]
“The highest price paid for a marina front allotment (with a pontoon permitted) in the immediate subject locality occurred in September 2003 with 3 Allamanda Lane (sale 4) selling privately for $424,000 having an area of 905m². This property has been re-surveyed since sale into lots 1 and 2 SP 177416, which has a single residential 2011 site value of $420,000.”
[38] Exhibit 15 p. 11.
Applying simple mathematics to those details suggests that if the site was resurveyed into two lots each lot has an area of approximately 450 m² and the valuation which might be applied to each of those lots appears to be $205,000.
The subject site is slightly larger but is on one title with the burden of an easement along its boundary.
There was no evidence of an easement burdening the land at 3 Allamanda Lane.
A comparison of two lots of land, each of which can be sold separately, having an average value of $210,000 each compared to the subject site which carries with it no apparent opportunity for configuration at $395,000 suggests some inconsistency.
Allamanda Lane is oblique to and intersects with Royal Palm Avenue on which the subject lot is located.
In all the circumstances I am satisfied that, while the McCallans’ calculations were apparently based upon some misconceptions as to the relevant dates of valuations to which they referred, evidence has emerged in the course of this appeal which satisfies me that Mr Donnelly has not made a sufficient allowance for the impact of the existing easement on the value of the subject land and accordingly the evidentiary onus on the appellants has been satisfied.
The evidence as to the precise impact of that easement on value is not entirely clear and I am forced to do the best I can with the evidence which was placed before me.
The Court was not informed of the nature of the easement which was thought to exist at 119 Keith Williams Drive, that is to say was it for access or for drainage or for some other purpose.
I am also satisfied that Mr Donnelly did not make a sufficient allowance for the setting of the subject land at the time the valuation was notionally carried out.
The whole of the development had been ravaged by Cyclone Yasi and its setting was that of a relatively new marina development with much of the infrastructure destroyed, damaged and unsightly.
I have come to the view that the valuation contended for by the respondent should be reduced by a figure of $50,000 so that the appellants succeed to the extent that the valuation of the subject land is amended from $395,000 to $345,000.
It may be that as and when the marina is rehabilitated that rehabilitation will so significantly affect the setting of the subject land that in the future the valuations may rise again but for the moment I am content that the appellants ought have the benefit of a reduction of $50,000 in the valuation.
Accordingly, I order:
1.The appeal is allowed.
2.The site value of Lot 8 on SP132625 is determined in the amount of three hundred and forty-five thousand dollars ($345,000) as at date of valuation 1 October 2011.
WL COCHRANE
MEMBER OF THE LAND COURT
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