McDonald v Chief Executive, Department of Natural Resources
[2000] QLC 50
•29 March 2000
|
BRISBANE
29 MARCH 2000
Re: Appeal against Annual Valuation
Valuation of Land Act 1944
Valuation Roll No.: 23351/50000
Local Government: Caloundra City
(V98-888)
David L and Alison L McDonald
v.
Chief Executive, Department of Natural Resources
(Hearing at Maroochydore)
D E C I S I O N
Background:
This matter relates to a property at Reesville Road, Maleny, and described as Lot 10 on RP 912802, Parish of Conondale. The subject land has an area of 12.65 ha, and is located about 4.5 km west of Maleny, on the northern escarpment of the Reesville Plateau. Access to the subject land is good, via a bitumen strip roadway, and services available include electricity, telephone and garbage collection. The land is zoned "Rural" under the Town Plan of the Caloundra City Council of 2 August 1996, and effective at the date of valuation of 1 October 1997. The key issues are the nature of the land, relativity, comparison of sales, and the added value of improvements. It is agreed that the highest and best use of the subject land is for rural residential purposes, which is its current use.
On 7 September 1998 the Chief Executive issued an interim valuation of the subject land under s.28(1)(A) of the Valuation of Land Act at $180,000. Following an objection, the Chief Executive amended the unimproved value to $170,000 on 2 November 1998. The appellants then appealed that figure claiming the unimproved value should more properly be $130,000. At the hearing in Maroochydore on 13 December 1999 the appellants sought leave to amend their estimate of the unimproved value to $90,000, which was the unimproved capital value of the subject land prior to the recent increase by the Chief Executive.
David McDonald, an experienced accountant with 23 years in the building industry, represented and gave evidence for the appellants, also calling evidence from Trevor Wilson, the former owner of the land. Mr R Paterson, Principal Legal Officer, appeared for the respondent, calling evidence from Roland Keith Monteith, the departmental registered valuer responsible for determining the valuation.
The Evidence:(1) Preliminary Matters -
At the opening of the hearing, following an objection by Mr Paterson, Mr McDonald sought leave to amend his statement (Exhibit 2) to remove certain references to matters, which had inadvertently referred to outcomes from previous without prejudice communications between the parties. Other matters raised by Mr Paterson were determined by the court to be relevant to the matter, and not to extend the grounds of appeal, which were constrained by s.56(2) of the Act.
Guidance on constraints to the powers of this Court, were referred to in SAG Pratt v. The Valuer-General (1981-82) 8 QLCR 145, where the Land Appeal Court said at p.149:
" Neither this Court nor the Land Court has the power to permit the landowner to enlarge or add to his grounds of appeal as set out in his Notice of Appeal against the determination of the Valuer-General. In Molloy v. The Federal Commissioner of Land Tax 59 CLR 609 the High Court held that a provision similar to the provisions of section 21(3) were an imperative direction to the Court and not as a provision merely for the benefit of the Commissioner which he is in a position to waive."
Mr Paterson sought support in respect of any previous communications involving the objection process under s.53(2), which provides the power for the parties to confer (presumably either face to face or by telephone); and also to the less-constrained nature of an objection conference under s.53(3) compared to an appeal under s.56(2); and further that under s.53(4) any such conference shall be without prejudice.
Mr Paterson also queries the reference by the appellants to concerns about advice that the respondent had based the valuation upon a comparison of the "aesthetic qualities" of the subject land. Mr McDonald confirms that such an opinion was in fact not part of any without prejudice discussions, but was outlined in an official letter of 20 November 1998 to the appellants from the respondent (Exhibit 3). The significance of the "aesthetic qualities" of the subject land is discussed later.
In respect of whether the original grounds of appeal could be construed to refer to a previous level of relativity between the subject land and the surrounding parcels, Mr Paterson argues that there is no specific reference to the former unimproved values prior to the current valuation under s.28(1)(A) at 2 November 1998. While that may, on first reading, appear correct, the Court notes that the valuation appealed was actually an interim general valuation issued on 2 November 1998, subsequent to the former valuation determined on 1 October 1997, and effective at 1 July 1998. The reason for the current appeal lay in the sudden rise in the unimproved value from the level formerly determined at 1 October 1997. It is that rise which is endemic in the current appeal, and the level of the former valuation at 1 October 1997 was deemed by the Court to be relevant to the current matter.(2) The Nature of the Land -
The subject land is steeply sloping with a northerly aspect, falling about 100 metres from its southern boundary along a ridge, to a deep creek that crosses the land from south-east to north-west, then the land rising again to a ridgeline to the north. There are views to the north and north-west, across that timbered ridgeline, which falls along the northern boundary of the subject land, thus maintaining control for the appellants of any future clearing of timber in that location. The creek is joined by another creek running across the southern side of the parcel south of the subject land (Lot 9 on RP912802), and then passing across the south-western boundary of the subject land. Both creeks are timbered with rainforest trees, and the general timber on the ridges is mainly brush box. There has been some extensive reafforestation undertaken by the appellants and the former owner (Wilson).
A feature of the subject land is the existence of a building site located part way down the north-facing slope from the access ridge. Access to that building site is by a well-formed bitumen 400 metre access road from the legal access strip jointly shared with the adjoining lands to the south (Lot 9 on RP 912802 - Wilson), and also Lot 7 on RP 202247 - Webster). The private access road is lined with hoop pines, which add to the aesthetic value of the parcel. A key feature of the subject land is its north-facing aspect, its views to the near timbered ridges with some distant views to the Conondale Valley in the north-west; and its secluded privacy features, which are argued by the respondent to be in demand in the Maleny area.Reesville Road also provides access to Howells Knob, which is the highest point in the area, and about 400 metres south-east of the subject land. The developed house site on the adjoining land to the south of the subject land (Wilson) is perhaps the highest building location in Maleny, with panoramic views, and it is agreed that the existing dwelling is located on the best point of that parcel. Likewise, the dwelling site on the Webster's land along the ridge to the south of the subject land, also maximises the dwelling location on that parcel (Lot 7).
Mr McDonald argues that each of the four adjoining parcels in that area are similar rural sites used for comparable rural residential purposes as follows:
| Parcel | Area | Owner |
| Lot 2 on RP 895878 | 2.509 ha | Gallant (east of subject) |
| Lot 9 on RP 912802 | 5.61 ha | Wilson (south of subject) |
| Lot 9 on RP 801674 | 8.006 ha | Forgan (sough-west of the subject) |
| Subject land | 12.65 ha | McDonald |
Mr McDonald argues each of those sites has similar aspect, access and topography. In addition to those sites, the Webster property is a smaller parcel (5,033 m²), on top of the ridge to the west and slightly below the Wilson house. Because of the steepness of all of those parcels, Mr McDonald argues that physical access to the lower elevations of the lands is difficult, except on foot; and vehicular access is only achievable by permission through adjoining lands to the east and west.
(3) The History of the Land -
While the past history of the group of adjoining parcels has no direct bearing upon their current value in the marketplace, some understanding of that history assists in following the appellants' logic as to why relativity between the parcels, in the appellants' opinion, should support some consistency in the values of those lands.
The Wilsons purchased an area of 16.4 ha (36 acres) in 1998 and, over a period of nine years, by a process of clearing, acquiring some additional lands, and eventual subdivision, created the four parcels now owned by the Websters, Wilsons, Forgans and the appellants. The recapture of the initial aesthetic qualities now encumbered in the lands occurred over a gradual process of clearing of weeds and lantana, and reafforestation. During this period, use was made of some cattle to constrain weed growth, as well as the planting of trees to extend the protective canopy.
Because of the presence of the weeds and lantana, the Wilsons had an unsuccessful extended program of trying to sell Lot 10 (their current house site), and eventually sold the subject land to the appellants in January 1998. The appellants had been assessing the Maleny market for lands of the characteristics of the subject land for some 18 months, due to a need to relocate from Pullenvale for health reasons.
(4) Relativity -
Mr McDonald argues that prior to the sale of the subject land to the appellants, the unimproved values of the four adjoining parcels had been relatively consistent. However, since the sale of the subject land that relativity had changed dramatically for the subject land as follows:
| Parcel | Previous UCV | Current UCV |
| Lot 2 (Gallant) | $100,000 | $95,000 |
| Lot 9 (Wilson) | $100,000 | $100,000 |
| Lot 9 (Forgan) | $102,000 | $102,000 |
| Subject land | $90,000 | $170,000 |
Prior to the subdivision of Lots 9 and 10 on RP 912802 (Wilson and McDonald), the combined parcel of 17.94 ha (Lot 10 on RP 813496 - Wilson) had an unimproved value at 1 October 1996 of $86,000, while the corresponding unimproved values of the then adjoining two parcels had been Lot 2 on R 121187 - 3.046 ha - the former Gallant land ($108,000); and the Forgan land ($97,000). Mr McDonald argues that there had been little variation in any of the other adjoining parcels between October 1996 and September 1998, while the subject land had increased significantly. This, he argues, demonstrates that the respondent had made significant errors in his determination for the subject land.
However, Mr Monteith argues that the relativity of the subject land has changed, as demonstrated by the sale of the land itself. Mr McDonald argues that the "aesthetic qualities" of the subject land would not have changed, but for the added value brought to the land by the improvements, and those did not occur overnight.(5) Comparison of Sales -
(5.1) The Sale of the Subject Land -The key to Mr Monteith's analysis is the sale of the subject land in January 1998 for $230,000. Mr McDonald agrees that the appellants were prudent and well informed buyers, and had been investigating the Maleny market for some time prior to that sale. However, while Mr McDonald has no problem with the adoption of that sale for comparison purposes, he believes Mr Monteith has failed to correctly analyse the added value of improvements attributed to the sale.
Mr McDonald argues that if the "aesthetic qualities" are to be afforded the special value attributed by Mr Monteith, then such features of privacy and outlook have only been achieved through the development of certain improvements upon the land. Both parties accept that philosophy, but differ greatly in their assessment of the added value that those improvements bring to the land.
It is argued by Mr Monteith that comparable parcels of land in the Maleny locality are purchased at higher prices than that paid for the subject land. The features which appear to be in demand in Maleny include views across the valley, privacy and other unique features which tend to set selected parcels apart from other lands. Mr Monteith notes that similar lands exist in areas like North Maleny, where unimproved values greater than $170,000 occur. Mr Monteith argues from his extensive experience in the Maleny area, that the subject land would tend to fall within the lower end of the scale for such outstanding parcels. He believes that the subject land is slightly inferior to inferior compared to those other parcels in other sub-market areas, which tend to be located on the easterly and north-easterly side of the Maleny plateau.
The location of those Maleny superior properties would support Mr Monteith's opinion that a northerly aspect can have the effect of doubling or trebling the value of lands on the south or south-west of a slope, because of exposure to weather, etc. Mr Monteith draws support for such a variation in values also from properties at Buderim Mountain, and seeks the application of that principle for the western sloping lands of Wilson and Forgan, compared to the north sloping subject land and the Gallant land. However, it is noted that as rural residential parcels, all of those lands are steeply sloping, and it is the site of the residence, and its exposure to views and cooling breezes, which tend to dictate their value. Both Wilson and Forgan have house sites higher, and with a northerly aspect, than the subject land. Perhaps the subject land's house site may have been located nearer the joint access easement, at a reduced cost for the roadway, but it would then have lost some of its "aesthetic quality" of privacy.
In their respective analyses of the improvements that bring added value to the subject land, the parties estimate as follows:
| Improvements | Mr McDonald (Costs allowing inflation 25.7%) | Mr Monteith (Added Value) |
| Existing dwelling | $74,792 | $20,000 |
| Access road | $5,656 | $4,000 |
| Retaining wall | $25,140 | $10,000 |
| House pad | $22,626 | (Included in wall) |
| Fencing | $3,142 | $3,000 |
| Clearing | $48,395 | $5,000 |
| Dams (three) | $3,771 | $5,000 |
| Cattle yards and loading ramps | $7,542 | - |
| Electricity and telephone | $4,777 | - |
| Farm contour roads | $1,886 | - |
| Cost of trees and fertiliser | $3771 | - |
| Value of standing timber | $10,000 | Nominal |
| Total | $211,498 | $47,000 |
| Less Value of Dwelling | Donated to Naval Reserve Cadets (allow $140,000) | (allow $50,000) |
In arriving at his indexed estimate of the cost of the improvements, Mr McDonald argues that the Consumer Price Index (CPI) is a broad general factor for measuring inflation in the economy. From his knowledge of building costs he contends that, subject to the level of demand, then building costs may even exceed CPI. He agrees that the cost of land is not included in the CPI figure, which is directed mainly at labour and cost of products in the community. However, Mr McDonald sees the CPI as a useful indicator of how the cost of the known improvements upon the subject land may have increased since they were undertaken some eight years previously.
In arriving at his estimate of the cost of improvements, Mr McDonald has relied upon the memory of the former owner of the subject land (Mr Wilson), in his estimate of the time and costs spent on the land. Mr Wilson gave evidence that when he purchased the total areas of 16.4 ha (including the subject land), the entire area was heavily infested with lantana and weeds. Mr Wilson recalled that the bulldozing of the house site, contour roads, and the access road occurred periodically over some four or five years. The estimates Mr Wilson provided were to the best of his memory, but in his opinion the times were conservative of the actual effort expended. Mr Wilson further advises that because of the overgrown nature of the land, there was little interest in purchasing any of it by either potential owners or land agents, until the appellants entered the market. In fact, he notes that the previous owner before himself was not aware of the existence of the creek in the gully across the subject land.
Mr Wilson also confirmed that, because of the very steep nature of the subject land, and the impossibility of being able to slash the regrowth, the constant eradication of noxious weeds became an ongoing problem in order to retain the aesthetic nature of the land as a rural house site. To help to overcome that problem, Mr Wilson had installed several cattle, and the stockyards and loading ramp to manage the cattle. He believes the ongoing use of some cattle on the land is an important part of the regular maintenance of the land, although he agrees that the cattle were also a hobby for himself. Mr McDonald confirms that the Wilsons and the appellants continue to rotate some cattle on their respective properties, so that the stockyards and ramp have an ongoing function. Mr Wilson also confirms that regular spraying of weeds has had to be continued to control their regrowth. Mr Wilson confirms that the stockyards and ramp are an essential part of maintaining the health of the cattle, although Mr Paterson queries whether the $7,542 cost of the stockyard facilities might not represent the added value that they bring to a rural residential property, compared, say, to a rural property used for commercial grazing purposes.
In the matter of the planting of additional trees upon the subject land, Mr Wilson confirms that some 2,950 cabinet wood trees were planted there over a period of about three years. There are plans in hand to extend that reafforestation program by a further 1,000 trees in January 2000. The trees previously were purchased on an opportunity basis, averaging about $1 each, although some selected species were dearer. Mr Monteith saw the replanting as seeking to return the land to its natural state, and therefore not an improvement beyond the highest and best use as an attractive rural homesite.
In respect of his estimated value of the current millable value of the standing timber at $10,000, Mr Wilson has based that entirely upon his experience with another client of his, and Mr Wilson confirms that the stumpage value of such trees would always be subject to an element of risk for the vagaries of the weather or other natural disasters. Mr Wilson confirms that the tree canopy, and the need to maintain control of regrowth of weeds, are inextricably related to the amenity of the subject land as a rural residential house site.
In his analysis of the added value of the old dwelling upon the subject land, Mr Monteith argues that the cost of that dwelling would not reflect its added value to the appellants, who subsequently gave it away to a community group. However, because the dwelling may have had some latent use for rental purposes, Mr Monteith has allowed an added value of $20,000, which he argues is supported by analyses of sales of vacant lands in the locality. Mr Monteith merely sees the subsequent donation of the building to the Naval Reserve Cadets as confirming his added value of the building. Mr McDonald agrees that the residual value of any parts of the old dwelling which were retained by the appellants would represent $20,000. (Transcript p.20).
In the matter of the value of the fencing, access road and dams, there is little between the parties. However, there is considerable variation between them in respect of the extent of clearing, the development of the house pad, and the value of retaining wall. Mr McDonald's estimate for the clearing relies upon Mr Wilson's memory of events, and an estimate of times and costs ($48,395). Mr Monteith has applied a notional figure of $5,000 based upon the current clearing.
In the matter of the retaining wall Mr McDonald advises that the wall had been designed and supervised by a structural engineer. The wall has heavy steel reinforcing, and remains in its original condition, with little sign of deterioration. As the prudent buyer of that wall in 1998, Mr McDonald argues that he believes the wall brought in excess of $20,000 value to the land at that time, noting that it cost $20,000 about 10 years previously. Mr Monteith does not argue with the original cost of development, but sees the life of the retaining wall at about 15 to 20 years, and allowed 50% depreciation, based upon the life of the wall.
While Mr McDonald does not provide a report on evidence from the engineer, in respect of the condition of the wall, from his experience in the building industry, Mr McDonald believes that the level of depreciation does not reflect the condition of the specific wall. Mr Monteith disputes the current cost of the wall, arguing that, in his opinion, a new retaining wall and house pad could cost a total of $20,000. There was discussion about the need for full benching of the house pad in what is recognised as slip country. Mr Monteith discounts any need to export soil from the site, although those sales of soils were offset against the cost of excavation on the house pad.
Mr Monteith bases his conclusion upon the quantities of material supplied by Mr Wilson for the wall, which, using industry costs, he would estimate at $12,000 for the wall, and $8,000 for the house pad. However, Mr McDonald points out that such costs make no provision for labour, the engineer's design costs, and heavy equipment cost to prepare the foundations. In his final address Mr Paterson concedes that there may have been some underestimation of the value of the house pad and retaining wall, and he leaves any adjustment to the Court.(5.2) Other Sales -
To support his estimate of the unimproved value, Mr McDonald supplies the following additional sales:
·Sale A - Reesville Road - (Payne to Gallant - Lot 2 on RP 895878). This sale adjoins the subject land to the east, has an area of 2.509 ha, and sold as an improved parcel in January 1998 for $195,000. The sale was analysed by the appellants to have improvements of between $50,000 to $70,000, giving an unimproved value of between $145,000 to $125,000.
·Sale C - (Maleny/Kenilworth Road - Lot 8 on RP 810881). This is a 11.37 ha vacant land sale with access to a shared use of a driveway that is estimated to have an added value of $10,000. The sale sold for $205,000, and has an applied unimproved value of $104,000 (reflecting a 53% application).
·Sale D - (Maleny/Kenilworth Road - Lot 9 on RP 902240). This is a 16 ha vacant site which sold for $192,000 and has been applied at $137,000 (71%).
In support of his valuation Mr Monteith also relies upon his Sale 2, which is the same as the appellants' Sale A. In his analysis of his Sale 2 Mr Monteith analyses that sale to have $80,000 of added value of improvements, including $60,000 for an old dwelling, $5,000 for outbuildings, $10,000 for a pool, and $5,000 for clearing and fencing. Mr Monteith argues that the old dwelling on Sale 2 was superior to the old dwelling on the subject land, a matter refuted by Mr McDonald.
From advice given to him, Mr McDonald argues that the old Gallant dwelling was larger than the old dwelling on the subject land, but in poorer condition and design, the renovation of which took nine months to complete at a considerable cost. However, Mr McDonald was unable to offer comment on the added value that the vendors (Gallants) may have seen in the old dwelling at the date of that sale.
Mr McDonald does not disagree greatly with Mr Monteith's conclusion, although he believes that they have not been applied consistently with the approach to improvements upon the subject land. Mr Monteith advises that, in his opinion, the added value of $60,000 represents what it would cost to relocate an old Queenslander-type dwelling upon the site at Maleny, prior to refurbishing. He also agrees that the value of the additional outbuildings upon the Gallant sale at $5,000, and the clearing and fencing, may have been a bit high, but he allowed that giving any doubt in the owner's favour. Mr Monteith also sees the value of the pool as a depreciated value of $10,000.
Mr Monteith sees Mr McDonald's Sale C as not comparable to the subject land, as it is a poorer lot, facing west, but with a substantial fully bitumised access road improvement along a shared easement. Mr Monteith also discounts Sale D as it is a late sale in March 1999, which is more relevant to the subsequent future valuation, and the market has not been assessed for 1999. In considering his comparisons, Mr Monteith has considered a wide range of sales in the Maleny area, but has only supplied the most relevant two sales to support his valuation, although he relies upon his wide experience of the area to support his conclusion.
Mr Monteith also argues that, in his opinion, Sale C represents a high sale for which the purchasers may have paid too much. However, he provides no direct evidence to support his conclusion, relying apparently merely upon hearsay comments from several estate agents.
Decision:
(i) The Nature of the Land -
I turn first to the nature of the land and note that the subject land is now an attractive, secluded, north-facing parcel with pleasant near and some distant views. The land would seem to represent the features well sought after in the Maleny district. However, the land is steep and maintenance of the areas beyond the house site would be very difficult, and costly to sustain. From the evidence a large part of the "aesthetic qualities" of the subject land is conditional upon the regular maintenance of the cleared and timbered ridges. Certainly the value of the land as a quality rural homesite, is dependent upon maintaining the character of the timber and cleared open spaces.
The program of reafforestation has clearly added value to the subject land and its amenity, although the planting of some 2,950 cabinet wood trees would indicate a future use of the land beyond merely as a rural homesite. However, in their current state of immaturity, those trees probably merely represent a replacement of the initial timber cover.
While it may have been possible to develop an alternative house pad nearer to the top of the ridgeline, such a location would, in my opinion, detract from the privacy attributes that are demonstrated at the existing house site, which is seen as the highest and best use of the land. For that reason, the house site, and its accompanying access and retaining structures, are seen as essential improvements in order to capitalise on the highest and best use of the site.
Because of the very steep nature of the land, and the previous owner's experience, I accept that it would be reasonable for the appellants to continue to graze some limited numbers of cattle to constrain regrowth of weeds. On that basis the added value of the cattle yards and ramp are reasonable allowances to be made, although not to the full cost of development of the facilities, which are now shared anyhow. Allowing for some depreciation of the cattle yards (50%), and their shared benefits to the Wilsons and the appellants, I will allow $2,000 for that purpose.(ii) The Value of Improvements -
In seeking to ascertain the value of improvements, I note that s.5(1) of the Valuation of Land Act 1944 directs:" 5.(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."
The matter of the added value of improvements was addressed in O'Brien Nominee Pty Ltd v. The Valuer-General (1979) 6 QLCR 280, where the Land Appeal Court said at p.285:
" It is clear that the value which the improvements give to the land, subject to the above proviso, is to be ascertained irrespective of the cost, as at the relevant date, of making them."
The Land Appeal Court in that matter had followed guidance in the decision of the High Court of Australia in The Australian Estates and Mortgage Company Limited v. The Commissioner of Land Tax (1931) 1 The Valuer, 1 July 1931, at p.247, per Rich J. The Land Appeal Court went on further note in O'Brien at p.287:
" The test of 'added value' of improvements is, as the term implies the value added or given to the land by the actual and existing improvements."
The common thread in all of those references is that it is the actual improvements, which must be assessed, and not any other hypothetical, or potential improvements. However, those precedents remain silent in respect of the method to be adopted in ensuring that the improvements to the land are put in place.
Some guidance in respect of the method of assessing the added value may be found in the decision of the High Court of Australia in Morrison & Ors v. The Federal Commissioner of Land Tax (1914) 17 CLR 498, where Griffith CJ said at p.503:"…the term 'value of improvements' is defined to mean 'the added value which the improvements give to the land at the date of valuation irrespective of the cost of the improvements. … Any operation of man on land which has the effect of enhancing its value comes within the definition of 'improvement'."
The added value principle was also addressed by the Land Appeal Court in Mayne Property Development Pty Ltd v. Chief Executive, Department of Natural Resources (1996-97) 16 QLCR 709, at p.722.
If I turn then to the current matter, it is agreed that the old dwelling, the access road, house pad and retaining wall all enhance the value of the subject land and all are improvements within the meaning of the Act. Likewise, I believe it is appropriate to consider the fencing, clearing, electricity and telephone, the dams and farm contouring as improvements. However, it is their added value that they bring to the land, and not their cost, which must be assessed.
In seeking some understanding of those added values, I note some general agreement between the parties, and I will allow as follows:
Access Road $4,000
Fencing $3,000
Dams $5,000
Dwelling $20,000
Without evidence from the respondent I will allow further electricity and telephone ($4,000), farm contouring ($1,000), and cattle yards and ramp ($2,000).
In respect of the remaining improvements I look to their method of assessment by the parties. I note first that Mr Monteith has depreciated the retaining wall by 50%, although it is claimed by Mr McDonald that the concrete block structure shows no sign of depreciation. The photographs of the house and environs would appear to support Mr McDonald's view that the wall continues to serve its purpose. However, in his assessment of the likely current cost of development, Mr McDonald has made no allowance at all for any depreciation. On balance I have an estimated original cost of $20,000, an updated undepreciated cost of $25,140, and a heavily depreciated value of $10,000. I will allow $15,000 bearing in mind the location of the wall on the inside of the house pad, removed generally from any possible impacts from movements as a consequence of slippage.
In the matter of the added value of the house pad, I note that the cut is extensive, and in a difficult location. I make no allowance for any offsetting by the export of soil to the Maleny Riverside Centre, as I believe surplus soil could otherwise have been distributed elsewhere on the site, even allowing for full benching in the potential slip country. However, I believe a fully benched site to accommodate both the old dwelling and the new dwelling, plus carports, was likely to have cost well in excess of the total cost of $10,000 allowed by Mr Monteith for both the retaining wall and the house pad. While I have no specific evidence as to the length of time taken by the heavy equipment to complete the house pad, it would not be unreasonable for a dozer at $100 per hour to have spent up to 10 days on the house pad project.
I get little comfort from the manner in which the earthworks were undertaken over a period of four to five years. The effective method of executing works was addressed in the matter of Appeals against determinations (21) - Shire of Millmerran v. The Valuer-General (V83-916), 18 October 1994, unreported, to which I was directed by Mr Paterson. In that matter the learned Member considered the method to be adopted when considering the added value of clearing land for its use as improved irrigable land for cultivation.
The Member was more concerned with the development period, than with how the work was to be done at that time, however, his words have application to the current issue in two respects. Firstly, they direct how a prudent developer should undertake the task of preparing the land, and secondly, that any time involved should be based upon the most cost-effective method, rather than to be based merely on how the task was originally undertaken. I believe the words speak for themselves, where the learned Member said at p.12:"The next matter for consideration is that of the development period applicable to the sales. In considering this question one must envisage the respective blocks as being unimproved and having come to a conclusion of their physical state in that condition, assess the time it would take for a prudent farmer with the money available to bring the property to a state where it is fully productive. The hypothesis must exclude personal managerial idiosyncrasies, slovenly or faulty development and the step-by-step development for one or other uses which has occurred over the years since these lands were alienated. That is to say the test envisages the development of the block to its developed state at sale from an unimproved state by the use of such technology, machinery and expertise as is available at cost to the farmer at the relevant date. It follows that evidence of what has in fact occurred over a period of many years in the development of a block can be misleading."
In the current matter I believe that the house pad, if undertaken in conjunction with the development of the access road, could have been completed in a total of 14 days by the heavy earthmoving equipment. I note that the parties agree on an added value of $4,000 for 400 metres of roadway. I would expect the building site to have been undertaken for about $10,000.
That then leaves the matter of the clearing of the land. I believe the cumulative time spent on the clearing and spraying by Mr Wilson etc, was likely to have not represented the most effective manner of undertaking the clearing. While the steepness of the land rules out less costly methods such as slashing, the amount of $5,000 by Mr Monteith makes some reasonable allowance considering the areas involved. As I have in addition, already allowed extra for the use of cattle and the facilities to work them, I will allow Mr Monteith's figure of $5,000 for that purpose.
In summary, the added value of improvements I conclude:
Dwelling $20,000
Access Road $4,000
Retaining Wall $15,000
House Pad $10,000
Fencing $3,000
Clearing $5,000
Dams $5,000
Cattle Yards etc. $2,000
Electricity and Telephone $4,000
Contouring $1,000
Total $69,000
(Say) $70,000(iii) Comparison of Sales
In seeking guidance on the preferred method of assessing unimproved value, I note the findings of PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, where the Land Appeal Court said at p.76 that sales of vacant or lightly improved lands are preferred, because of the lack of any error in assessing the value of the improvements. However, where improved lands are all that is available, such as in the current matter, then guidance may be found in the following precedents.
In the use of comparable sales I note that in AC & AA Ussher v. The Valuer-General (1986-87) 11 QLCR 169, the learned Member found at p.176:" I am unable to accept this submission. Courts of the highest authority in many cases have approved the method of valuation whereby analysed sales of comparable lands are used as a basis for comparison with the subject land, in order to determine an unimproved value. Valuation text books support this approach."
In considering then the sale of a subject land itself, I note that was considered by the High Court in Jowett v. The Federal Commissioner of Land Tax (1926-27) 38 CLR 325, where Rich J said at p.329:
" A sale of the subject land, or of comparable land, affords the best means of arriving at the fee simple value of any land, …"
Further, also, I note the findings of The Chief Executive, Department of Lands v. J & L Lorenzen (AV93-22), 1 June 1994, unreported, where the Land Appeal Court said at p.4:
"Whilst we agree that a sale of the subject land should always be considered in assessing its value we hasten to stress that such a sale is only prima facie evidence of its value. The weight which will be given to the sale is dependent upon a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable land."
In considering the weight to be applied in that matter the Land Appeal Court went on to say at p.5:
"In this context we agree with the statement of the former President of the Land Court (Mr Smith) in re Determination of rents and unimproved values for Conversion Purposes - Perpetual Lease Selections and Grazing Selections - Goondiwindi District - (1974) 1 QLCR 45 p.48 where it was said -
'Whilst a sale of a subject property around about the relevant date in normal circumstances is cogent evidence of its value, it is always necessary to check the analysed value against the standard reflected by other sales of comparable properties to ensure that it conforms to the "norm" of the market. If the sale does not conform caution must be used in its application and it may be even proper to reject it if it is shown to be a sale out of line with the market "norm". This check becomes vital, in my opinion, in times of varying market be it rising or falling or in times of an erratic market. One cannot assume, ipso facto, that the analysed sale figure equated fair market value for the subject purposes.'"
In the current matter Mr Monteith has given evidence that the sale of the subject land was in line (at the lower end) with other sales of comparable high quality land in Maleny. The appellants agree that they were prudent purchasers in the context of the recognised test of a sale in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418, where the High Court established the principle of the meeting of minds of a prudent vendor and purchaser at p.432. Mr Monteith relies on his experience as a valuer as outlined in King Ranch Company Pty Ltd v. The Valuer-General (1968) 35 CLLR 255, at p.259 where the Court found:
"In not attempting to do this, Mr Walker adopted a method of valuing based on knowledge and experience rather than one lacking precedent and authority."
That was further clarified in the wording of the minority decision of that case where the learned Member noted at p.262:
"In Bingham v. Cumberland County Council (1954) 20 LGR 1 at pages 18 and 19, Sugerman J says, 'In the absence of sufficient guidance to be had from sales, the valuer may find himself in a position resembling that to which Lord Romer referred in the Raja case (1939) AC at pages 312 and 313, in which he will have no market value to guide him, and he will have to ascertain as best he may from the material before him what a willing vendor might reasonably expect to obtain from a willing purchaser for the land.' The valuer in arriving at his opinion in these difficult matters may have to draw upon his general knowledge and experience, including perhaps experience in other situations which, although lacking in complete comparability, may yet provide an experienced valuer with guidance and suggestions as to the general approach which may be made and as to considerations which may become relevant."
While there is nothing to discredit the sale of the subject land in this matter, I would agree with Mr McDonald that it would have been much more assuring for the appellants had Mr Monteith also supplied some further sales of the higher quality lands to which he seeks some relativity with the subject land.
That then leaves the appellants' comparisons with the Gallant sale, and also his Sales C and D. If I consider Sale D, I note that was a late sale some 17 months after the relevant date of 1 October 1997. Use of such late evidence of the market was addressed in RJ Scougall v. Chief Executive, Department of Natural Resources (1996-97) 16 QLCR 536, where the Land Appeal Court said at p.552:"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).
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."
As I have no indication whether the market at Maleny has moved between October 1997 and March 1999, I believe any reliance upon Sale D must be treated with some caution.
If I consider Sale C, I find that parcel to have a different physical characteristic to the subject land. As I have no detailed understanding of the nature of the land, or the added value of the bituminised access road, then I am unable to draw any reasonable conclusions. Sale D does not assist me much, other than to say that it would appear to represent a parcel of 16 ha in the Maleny District, which has been applied at $137,000, and which Mr Monteith sees it to be inferior to the subject land.
Finally I compare the Gallant sale, and I note that Mr McDonald is unable to discredit Mr Monteith's analysis, although he believes generous allowances for improvements have been allowed for that sale, and contrary to the approach taken for the subject land. Mr Monteith analysed the Gallant sale at $115,000, and applied it at $95,000, noting it as inferior to the subject land, due to privacy and smaller size.
On the basis of the analyses of the sales evidence I believe the subject land would have an unimproved value between its analysed value of $230,000, less $70,000 improvements or $160,000, and $95,000 (the Gallant sale). The tentative comparisons with Sale C would suggest the value would be in the higher end of that range, although as Mr Monteith notes, Sale C may have been a high sale and out of line with the market, thus reducing its potential impact upon the unimproved value of the subject land slightly.(iv) Relativity -
In seeking reliance upon relativity with surrounding parcels, I note that relativity can, and does change with market forces. While relativity is an important issue in establishing fairness in the rating process, its use should not be given precedence above sales of comparable properties where they exist, even where those sales are not ideal. That was found in Chief Executive, Department of Natural Resources v. Radlett Enterprises Pty Ltd (1997-98) 18 QLCR 397. In that matter the Land Appeal Court followed its own findings at p.403, as espoused in Fischer v. The Valuer-General (1983) 9 QLCR 44 at p.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. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence."
Guidance in respect of changes in relativity were addressed by the Land Appeal Court in R & MM Barnwell v. The Valuer-General (1990-91) 13 QLCR13, where the Land Appeal Court said at p.17:
" It has been well recognised over the years that previously established relativity in unimproved values can and does change from valuation to valuation. If there was no justification for a change in relativity, the valuer's task would be very simple in that all that would be required to establish value would be accomplished by the use of an adjusting formula. This, of course, is undesirable."
Summary:
In concluding an analysis of the evidence before me, I find that the former relativities with surrounding parcels have now been varied, mainly by the sale of the subject land itself. In that regard, however, I find that this Court has found that some doubt exists about the statistical reliability of a trend in the market, where there are only a small number of sales available. (See RT & FH North v. Commissioner of Irrigation and Water Supply (1977) 4 QLCR 98, at 110). It would have been useful to have further sales of the higher quality lands in Maleny to assess against the subject land. Certainly that may have assisted the appellants. However, Mr Monteith has relied upon his wider experience of the locality, a principle upheld by the Courts.
Bearing in mind that Sale C has been applied by the respondent at $104,000, I believe the unimproved value of the subject land would fall between $160,000 and $104,000. On that basis I cannot support the appellants' amended estimate of $90,000. However, I can be comfortable with their earlier amount claimed at $130,000, if I allow any further uncertainties in the appellants' favour in accordance with the principle established in the High Court in Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Co of South Australia Limited & Ors (1946-47) 74 CLR 358, where Dixon J, at p.373 said:
" I have had the advantage of reading the judgment prepared by Williams J and agree in it. I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate."
For those reasons I believe a reasonable unimproved value of the subject land would be $130,000.
Conclusion:
Having considered the whole of the evidence I am persuaded that the appellants have partly proved their case. The determination of the Chief Executive is set aside, and the unimproved value of Lot 10 on RP 912802 is determined at One Hundred and Thirty Thousand Dollars ($130,000).
NG DIVETT
MEMBER OF THE LAND COURT
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