McLean v Chief Executive, Department of Natural Resources
[1997] QLC 37
•4 April 1997
|
BRISBANE
4 APRIL 1997
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 17205
Local Government: Brisbane City
(AV95-544).
Malcolm S and Janet A McLean
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
Background:
The key issues in this appeal relate to the impact of stormwater drainage, the location of a sewer line, and relativity with adjoining lots. The appeal related to a single residential property at 24 Pacific Street, Chermside, and described as Lot 35 on RP 95971. The land is zoned as "Residential A" under the Town Plan of the Brisbane City Council dated 13 June 1987.
The lot is used as a single residence by the appellants, with a high-set brick building, is regular in shape with a frontage of 17.8 metres and a depth of 32.9 metres. The lot has an area of 584 square metres, has easy access to Pacific Street, which has a standard width "Type A" carriageway, and is bitumen sealed with concrete kerbing and channelling. Utility services available to the land include electricity, water, sewerage and telephone.
The land is located within an eleven (11) kilometre radius of the Brisbane GPO, in an area of above-average quality homes, about 1.5 kms west of the Chermside Regional Shopping Centre, and 0.5 kms north of the Craigslea State High and Primary Schools. The land's elevation is moderate compared to surrounding areas.
A Brisbane City Council sewer main passes through the rear third of the property and there is a sewer manhole inside the subject and near to the boundary with adjoining Lot 34.
The Chief Executive, Department of Natural Resources, on 20 March 1995, issued a valuation notice of the property, with a date of valuation at 1 January 1995, to an amount of $77,000. Following an objection from the appellants, the Chief Executive on 26 September 1995, reduced the valuation to $76,000 in recognition of the impact of the sewer line that passes across the property. The appellant has appealed against this figure and proposed that an amount of $73,000 would more reasonably reflect the unimproved value of the land.
Mr McLean appeared for the appellants, and Mr R Paterson appeared for the respondent, calling evidence from Mr MW Cowley, the Departmental registered valuer who undertook the valuation.
Evidence:
The appellants argue that the Chief Executive has failed to adequately consider the impact of local stormwater flooding which occurs after heavy rains, and which is compounded by the existence of certain retaining walls that have been built upon adjoining parcels to the south and west. These walls tend to concentrate the natural flow of surface water and channel it across the subject.
The appellants also argue that the relativity in valuations between these adjoining lots and the subject, does not reflect the detriment caused to the subject from this flooding. The appellants provided photographic evidence of the flooding, taken over a period of about three years, which demonstrates the consistency and severity of the problem. The respondent's valuer, Mr Cowley, conceded that while he had made some allowance for local flooding in his determination of the subject, the extent of flooding shown in the photographs was greater than anything he had previously been shown of the subject. Mr Cowley suggested that in his opinion, on reflection of this greater impact, that he could value this greater detriment at about $1,000 for the subject.
The appellants noted that they had constructed a garden shed, following correct Local Government building approvals, which now was impacted by the extent of local flooding. There were some serious concerns by the appellants in respect of the legality of the construction of the retaining walls around the swimming pool on Lot 38 to the rear of the subject. However, it was agreed by the appellants that the matter of whether the owner of Lot 38 had legally erected the wall which now caused the flooding, was not a matter within the jurisdiction of this Court to be determined. Mr McLean conceded that the retaining walls had been erected prior to his acquiring the subject. He noted also that four parcels of land to the south of the subject, being Lots 37 to 40, all had erected swimming pools and retaining walls which impeded the natural flow of water.
The major concern of the appellants was that, in their contention, while the adjoining neighbour on Lot 38 had exacerbated the extent of local flooding on the subject, the valuation of Lot 38 was only $77,000, while the subject, which received the build-up of stormwater, was valued at $76,000. This small variation in relativity did not, in their view, account for the difference in real impact upon the two parcels. The appellants conceded that, because of the natural fall of the subject from west to east, they would have been likely to receive some build-up of surface water during heavy rain. However, the interference in natural flow by the retaining walls has increased the severity of that flooding.
The appellants sought some possible impact from a supposedly unfinished stormwater drain across the rear of the property. However, the evidence given was merely hearsay, and it was agreed by the appellants that there was no known official record of such a drain in the area.
The appellants also argued that while the Chief Executive may claim that relativity between the subject, and the adjoining parcels of Lots 38 and Lot 36, may be in line with current valuations, the appellants are more concerned with recognition of the actual impacts of stormwater upon the value of the subject.
The respondent supplied four sales of vacant land within the general area as follows:
•Sale 1 -(54 Cremorne Road, Kedron - Lot 1 on RP 858750). This is a "hatchet shaped" rear allotment, located approximately 3 kms south-east of the subject, close to Gympie Road which is a major arterial road. The supply of utility services are similar to the subject, the zoning is "Residential A", and the area is 700 square metres. It has a moderate slope, falling from north to south, with moderate elevation, and little outlook. It is considered to be superior to the subject, and sold in July 1994, for $86,000, which after allowing $3,500 for improvements, provided an applied value of $80,000.
•Sale 2 -(5 Awaba Street, Wavell Heights - Lot 83 on RP 808959).
This is a regular-shaped lot with gentle cross-slope and moderate to good elevation, and is zoned as "Residential A". It is surrounded by well-established older-style homes of above average quality. All four utility services are available, and it has easy access to Awaba Street. The land is located approximately 4 kms south-east of the subject and has an area of 400 square metres and, because of its smaller size, is seen as inferior to the subject. It sold in March 1994, for $75,000 which, after allowing $1,000 for improvements, provided an applied value of $72,000.
•Sale 3 -(Nellings Place, Chermside West - Lot 218 on RP 848173).
This is an irregular shaped lot with a moderate to steep slope falling north-east to south-west, requiring some earthworks to position a dwelling. It has a relatively low elevation, and is surrounded by reasonably high standard developments and is zoned as "Residential A". Access to Nellings Place requires some development because of the slope. All four utility services are available. The land is part of more recent developments, and represents a different market to the subject, which is seen as inferior to the sale. The sale has an area of 849 square metres, and sold in April 1994, for $96,000 which, after allowing for improvements of $1,000, provided an applied value of $90,000.
•Sale 4 -(3 Rogers Parade West, Everton Park - Lot 10 on RP 204325).
The land is regular in shape, with a moderate to steep slope falling from west to east from the road. It has some elevation and outlook to the east, but suffers from traffic noise from nearby South Pine Road, and is zoned as "Residential A". Access from Rogers Parade is partially hindered due to the slope of the land. All four utility services are available, and the land has an area of 624 square metres. Because of its gentler slope, and better access to the street, and because Pacific Street is seen as a superior area, the subject is seen as superior to this sale, which in May 1994 sold for $67,000 and, after allowing $1,000 for improvements, had an applied value of $63,000.
It was noted that Sales 1, 3 and 4, because of their slope, would be subject to some surface water runoff after heavy rains.
The appellants conceded that they had no knowledge of any of the above sales, and noted that they were surprised the Chief Executive had gone so far away from the subject for sales evidence.The appellants had not considered the significance of only using sales of vacant sites, but agreed that only market forces of comparable properties should determine the value of the subject.
The appellants rested their case more on the relativity between the subject and adjoining parcels, particularly Lot 38 to the rear of the subject. The respondent considered the difference of $2,000 in value between Lot 35 and Lot 36 as appropriate.
In respect of the position of the sewer line and manhole upon the subject, the respondent conceded that the current position of the home and the sewer line made the erection of a swimming pool quite difficult, if not impossible. However, the respondent argued that in valuing the subject as unimproved land, it would have been possible for a prudent purchaser, by judicious location, to build both a home and a swimming pool on Lot 35, prior to erecting the current dwelling. The location of the existing improvements therefore impacted the possible erection of a swimming pool.
Decision:
In analysing the sales evidence supplied, the respondent has used the preferred approach for determining unimproved value by using sales of vacant sites of comparable lands. There is considerable precedent in this matter, in particular the findings of the Land Appeal Court in PH Clough v. The Valuer-General - Caboolture Shire (1981-82) 8 QLCR 70 (LAC) at p.76:
"It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements. "
The principle of comparing comparable sales of vacant sites was also established in WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44 at p.46:
"The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land. "
The principle was also established Hans and Else Grahn v. The Valuer-General (City of Redcliffe)(AV90-472/473)(1992-93) 14 QLCR at p.330:
"The appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. "
This was also found in NR and PG Tow v. The Valuer-General - Redland Shire (LAC)(1978) 5 QLCR at p.378.
In respect of whether the sales selected represented a fair range of comparable sales to the subject, I am persuaded by the evidence of the respondent that the sales offered within the time frame established by the Valuation of Land Act 1944, that is generally within the time period of 1 January 1994, to 1 January 1995, are appropriate. The respondent has supplied two sales of superior land (Sales 1 and 3), and two sales of inferior land (Sales 2 and 4). The appellants have not challenged the valuer's process in arriving at the unimproved values, but rested their case entirely upon the relativity between the subject and surrounding parcels.
In respect of the general level of relativity, the respondent has allowed for the impacts of topography, and general surface drainage, and aspect. As you move from parcels on higher land to the west towards the lower land to the east, the values decline. Also as Lot 37, fronting Gilmore Street, is lower than the subject, the respondent feels that the relativities are sound in that area.
Precedent in respect of the importance of maintaining relativities is to be found in R and MM Barnwell v. The Valuer-General (1989) 13 QLCR at p.16:"It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, if the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis. "
Thus, while it is important to establish true relativity between parcels, it is also important to ensure that the actual valuation of a property is soundly based. This, then, leads to the impact upon the valuation of local flooding upon the subject. The respondent has already acknowledged that the impact of local flooding was more severe than his evidence indicated in determining the valuation at $76,000. I am persuaded by Mr Cowley's expert opinion that an additional allowance of $1,000 would seem appropriate and, as conceded by the respondent, an unimproved value of seventy-five thousand dollars ($75,000) should be applied to the subject.
In respect of the impact of the sewer line across the subject, that has already been allowed for in reducing the previous valuation in September 1995, from $77,000 to $76,000.
In considering the value that a prudent purchaser of land may offer for the subject in its unimproved condition, I am reminded by the respondent of the well-established principle set out by Griffith C.J. in the High Court of Australia in Spencer v. The Commwonwealth of Australia (1907) 5 CLR 418 at p.432:"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained on a given day, i.e. whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell'? It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together. "
This is a well-established benchmark in valuation matters, which leads to the question in the current case of what impact would the local flooding have had upon a prudent purchaser of the subject. I believe, bearing in mind the surrounding properties, a valuable of $75,000 would be appropriate.
Summary:
In determining amendments or alterations to the valuations, the onus of proof rests with the appellants under section 33 of the Valuation of Land Act 1944:
"Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered. "
This has been further clarified in Brisbane City Council v. The Valuer-General - Shire of Esk (1977-78) 140 CLR 41 where the Court found that unless it can be demonstrated that the Chief Executive, in making a valuation, has acted upon a wrong principle or made a serious error of fact, the valuation of the Chief Executive is presumed to be correct. In the current case, the Chief Executive has acknowledged that there had been an error of fact in the quantum of impact by the local flooding upon the subject. I would accept the professional opinion of Mr Cowley that this would amount to a further reduction of $1,000 from $76,000 to $75,000, to which the respondent has agreed.
Conclusion:
After having considered the whole of the evidence, I am persuaded that the appellants have proved their case. The appeal is allowed, the Chief Executive's valuation is set aside, by agreement with the respondent, and the unimproved value of Lot 35 on RP 95971 is determined at Seventy-five thousand dollars ($75,000).
NG Divett
Member of the Land Court
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