Menon v Department of Natural Resources, Mines and Energy
[2004] QLC 40
•21 May 2004
LAND COURT OF QUEENSLAND
CITATION: Menon v Department of Natural Resources, Mines and Energy [2004] QLC 0040 PARTIES: Beatrice L and Prem K Menon
(applicants)v. Chief Executive, Department of Natural Resources, Mines and Energy
(respondent)FILE NO: AV2003/0588 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 21 May 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Dr NG Divett ORDER: The appeal is dismissed, and the unimproved value of Lot 144 on RP 185592 as determined by the Chief Executive in the sum of Eighty-Four Thousand Dollars ($84,000) is affirmed. CATCHWORDS: Statutory valuation – relativity – consistent with sales evidence APPEARANCES: Mr PK Menon for the appellants.
Mr J O’Rourke for the respondent
Background:
This matter relates to land at 15 Wanata Street, Sinnamon Park, and described as Lot 144 on RP 185592, Parish of Oxley. The subject land is an area of 800 m², and is situated in an established residential suburban area about 12.5 kilometres south-west of the Brisbane GPO. Access is easy to Wanata Street, which is bitumen sealed with concrete kerbing and channelling. All normal urban utility services are available, and the subject land is within easy access to schools, shops and public transport. The subject land is zoned as Low Density Residential Area LR under the Brisbane City Plan of 10 October 2000, and effective at the date of valuation of 1 October 2002. The key issues are the nature of the land – the impact of traffic noise – relativity and comparison of sales.
On 24 February 2003 the Chief Executive issued a valuation of the subject land at $84,000. Following an objection the Chief Executive confirmed that figure on 8 July 2003. The appellants have now appealed claiming the unimproved value should more properly be $70,000.
Mr Prem Kumar Menon appeared and gave evidence for the appellants. Mr J O’Rourke, Principal Legal Officer appeared for the respondent, calling evidence from Ian Robert Smith, the departmental registered valuer responsible for determining the valuation. This matter was heard consecutively with two other appeals by the appellants in AV2003/0587 and AV2003/0589.
Nature of the Land –
The subject land is a rectangular parcel rising gently from Wanata Street to its rear boundary, which adjoins Centenary Highway, which is a major traffic corridor. Because of traffic noise along the Centenary Highway a substantial barrier fence has been erected along the rear boundary in order to provide a visual barrier and a partial sound barrier. Those features have been provided for in the valuation.
Mr Menon argues that allowance should be provided in the valuation for current water logging problems which occur to the rear of the subject land. He advises that storm waters from the adjoining property to the south accumulate on the subject land, and take some time to dissipate after heavy rains. Mr Menon explains that the surface waters tend to remain on the land near the existing dwelling, in spite of his efforts to install an agricultural pipe drainage system to discharge those waters into Wanata Street. However he was unable to explain the natural surface levels of the subject land prior to the excavation for development of the existing building, or whether the current waterlogging has occurred as a result of the site excavations. Mr Menon agrees that there is a low retaining wall of height 0.4 metres along the rear of the subject land.
Mr Smith advises that he has valued the land on an unimproved basis, so that the impact of any potential water logging which might occur as a result of site excavations, is not an issue for him to consider in his method of valuation as explained later. However in seeking comparisons with sales of other comparable properties, Mr Smith advises that site excavations in excess of those evident on the subject land have been required. On that basis Mr Smith argues that any detriment to the subject land for that purposes would have been more than allowed for in the valuation process.
In respect of the impact of traffic noise on the subject land, Mr Menon explains that as the parcel backs on to the Centenary Highway near the road interchange at Dandenong Road, which leads to the Mount Ommaney district shopping centre, there is considerable noise from accelerating traffic as it seeks to enter the main highway traffic flows. Mr Smith agrees with that observation, as demonstrated by the need for the noise barrier fence. He advises that has been allowed for in the valuation as discussed in para [10].
Comparison of Sales –
Mr Menon provides no sales of his own to support his estimate of the unimproved value, but questions certain aspects of Mr Smith’s sales. Mr Smith provides the following sales of vacant lands:
· Sale 1 – (10 Buckle Street, Sinnamon Park – Lot 206 on RP 195993). This is a 837 m² parcel located about 450 metres east of the subject land. Buckle Street is an elevated cul-de-sac facing west towards the Centenary Highway, but is more removed from that highway, and therefore the traffic noise levels are reduced. However the steeper nature of the sale (falling about 5 metres), has required greater earthworks and costs than the subject land in order to obtain a level building pad. Mr Smith’s advice from the purchaser was that site development works totalling $25,000 were required, compared to an estimated $5,000 of site works on the subject land. The sale is seen as superior to the subject land overall. The sale sold in December 2001 for $125,000, was analysed at $120,000, and applied at $115,000 (92%).
· Sale 2 – (10 Natone Street, Sinnamon Park – Lot 3 on SP 110915). This is a 750 m² parcel located about 560 metres north of the subject land. Natone Street is a small cul-de-sac off O’Riley Street, connecting to Blyde Street, and then to Annondale Road. The sale backs on to the Centenary Highway, and has a visual and sound barrier erected along its rear boundary, although that wall is not as high as on the subject land. The sale has less depth than the subject land, hence the barrier fence is closer to the building area on Sale 2. Overall the sale is seen as marginally superior to the subject land, due to its more pleasant outlook, although the sale is slightly smaller in size, with a more difficult site for constructing a dwelling. The sale falls about 2.5 metres towards Natone Street. The sale sold in October 2001 for $101,000, was analysed at $95,000, and applied at $86,000 (90%).
Mr Smith advises that he had selected his two sales as the most comparable, but advises that there was of the order of 50 to 100 parcels sold each year in recent times in that general area in the ongoing Eden Brook Estate. Both of his sales had occurred well prior to the relevant date of October 2002, and therefore provided a fairly conservative level of the market at that time. He also advises that most of the Sinnamon Park suburb lands are aware of the impact of traffic noise from the Centenary Highway, and that issue was always a consideration in the sales available for comparisons. Mr Smith advises that factor was a direct consideration in his Sale 2, due to its close proximity to the highway. He notes that the purchaser of Sale 2 had bought that parcel in spite of other comparable lands to the west of the highway at Mozart Place, which is further removed from the highway. The price of Sale 2 therefore reflects the purchaser’s recognition of the noise intrusions on that parcel.
Mr Smith further advises of comparisons of land values across Wanata Street, and notes that higher lands to the east in Eden Brook Estate had varied from between $130,000 to $250,000, and he has not used those sales which are clearly far superior parcels than the subject land. He believes that his Sale 2 is the most comparable sale as it is on the Centenary Highway.
In respect of Mr Menon’s concern that the premiums attached to cul-de-sac locations have not been allowed for when valuing the subject land, Mr Smith provides the following opinion. He agrees that the No Through traffic associated with a cul-de-sac is an advantage. However he has found that the important feature is the nature of the feeder roads leading to the area. Mr Smith notes that there can be good cul-de-sac roads, but he agrees that where there is a limited vehicle turning space, waste disposal, and lack of parking cul-de-sacs can be a problem. In drawing comparisons with Wanata Street, he finds that is a quiet “loop” road exhibiting similar privacy aspects as a cul-de-sac, with none of the above disadvantages. He believes that is different to a feeder or distributor road such as Glen Ross Road or Annondale Road.
In respect of the difference in value of land more removed from the noises of the Centenary Highway, such as Sale 1, Mr Smith notes that is reflected in the overall value of a development building site at Sale 1. At a cost of $125,000, plus development works of $25,000, or a total of $150,000, that compares with a similar development pad at the subject land at $84,000 plus site costs of $5,000, or $89,000.
Mr Menon also raises the issue of whether the sales evidence might reflect issues raised in the High Court case in Maurici v Chief Commissioner of State Revenue and Anor [2003] HCA 8, 13 February 2003, in which the matter of scarcity was addressed. The matter of scarcity of comparable sales is an issue well known to experienced valuers. The circumstances of Maurici were different to the current matter, in that in Maurici, it was agreed by the parties that a scarcity factor did exist in respect of the three sales of vacant land that had been adopted by the valuer for the Chief Commissioner. Under those circumstances there had been also a representative group of comparable improved sales which were not considered by the government valuer. The High Court directed that under those circumstances the valuer should have considered the other sales of improved land.
That issue was also recently clarified by the Land Appeal Court in Chief Executive,Department of Natural Resources and Mines v GE and JEJ Spender [2003] QLAC 0086, 19 December 2003, to be reported. That decision was the first interpretation by the Land Appeal Court in Queensland on the implementation of Maurici on that issue, and provides a comprehensive explanation of the matter of scarcity of sales. However in the current matter Maurici can be distinguished as there is no evidence that scarcity exists in the available sales for comparison purposes.
In applying his conservative use of his sales evidence, Mr Smith notes that the area of Sinnamon Park had been increased by an average of 25% for the immediate locality of the subject land. I note that the subject land had increased from $67,000 at 1 October 2001 to $84,000 on 1 October 2002, or 25.4%. That is to be compared with increases at other western suburban areas at Sherwood, Corinda and Chelmer, which increased by 70%. Mr Smith notes that the large increases in the market occurred at about April to May in 2001, and have continued subsequently.
Relativity -
Another matter raised by Mr Menon was his concern that even as parcels along Wanata Street had apparently risen in height, the values of Lots 139 to 145 had all been the same at $84,000. He argues that it is generally held that as lots increased in height, then their values also increased. Mr Smith agrees that as a general principle that applies, but argues that there was no appreciable improvement in urban outlook or terrain of those parcels, and the unimproved values had been maintained consistent for that reason.
Mr Smith agrees that as you move towards Jagarra Place and Bellwood Street to the south, the privacy and outlook would vary, and land values would decline to reflect those differences. Mr Smith also agrees that if the lands rose more steeply, and views improved significantly near the subject land, then the values would have been increased. But he argues that has not occurred. To demonstrate that matter he supplies contour mapping of the subject lands and sales localities. (Exhibit 3- annexure 3).
To demonstrate how land values have been reduced to reflect impacts of noise from Centenary Highway, Mr Smith highlights how comparable lots on the east of Wanata Street are valued at $90,000, while similar lots backing on to those parcels, but further east and fronting Glen Ross Road are valued at $94,000, in spite of Glen Ross Road being a distributor road. He argues that the main general dominating feature in the area is the proximity to the highway corridor.
Decision:
The legislative and legal precedents in this type of matters were outlined in the previous decision of Menon v Department of Natural Resources, Mines and Energy (AV2003/0587) at paras [15] to [20], and I will not repeat those findings. Suffice to say is that the principle of comparing like with like sales of vacant lands as the method of analysis is correct in principle, and the law.
Comparison of Sales –
In drawing comparisons I find the following:
SaleArea Applied Value Comparison
1837 m² $115,000 Superior
2750 m² $86,000 Marginally superior
Subject land 800 m² $84,000 -
On those comparisons there is nothing to suggest that Mr Smith has made an error or followed a wrong principle.
Relativity –
I turn then to the matter of relativity along Wanata Street, and note that while relativity is important, particularly for rating matters, the importance of comparability with sales evidence, if it is available, should not be overlooked. That was clarified in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at 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.”
A similar approach was taken in the matter of Appeals against Determination of Valuer General – Shire of Cloncurry (1971) 38 CLLR 1, where the learned Member said at 4:
“I agree wholeheartedly that relativity is important, but there is danger that it can be allowed to assume such an appearance of importance that the first and most vital principle is overlooked, that is that each parcel or property valued should be independently and correctly assessed so that its correct valuation according to the statute is obtained. If this is precisely done in each case, then correct relativity follows as the night the day. In other words it is not relatively that confers correctness on the value, but correct value should produce correct relatively.”
That principle was also followed in Scougall v Chief Executive, Department of Lands (AV93-119), 10 July 1995, unreported at 5. The importance of a sound basis of value was also emphasised in R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, where the Land Appeal Court said at p.16:
“We are conscious that it is desirable that valuations made for the purposes of the Valuation of Land Act of comparable lands should bear proper relativity, one to the other, if the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis.”
That decision also relied upon the findings of Ladies Hosiery and Underwear Limited v West Middlesex Assessment Committee (1932) 2 KB 679, All ER 427, CA where Scrutton LJ said at 688:
“That the assessing authority should not sacrifice correctness to ensure uniformity, but, if possible, obtain uniformity by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error.”
The directions of those precedents is that what is important is a correct determination of the separate valuations for each parcel along Wanata Street from Lots 139 to 145. It is Mr Smith’s evidence that each of those parcels have similar urban outlooks and general attributes. The fact that there may be a relatively slight elevation difference, in his opinion, would not result in prudent purchasers paying more for any of those similar parcels. I see no evidence to suggest that the relativity along that part of Wanata Street is incorrect. The relativities across Wanata Street to Glen Ross Road would also support Mr Smith’s application related to noise from the highway. I see no errors in that conclusion.
Summary –
In summarising this matter I accept that in respect of an appellant’s notice of appeal, s.45(4) of the Valuation of Land Act 1944 directs in respect of an annual valuation:
“45.(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.”
As noted previously unless the Chief Executive has made an error of fact or has followed a wrong principle in law, that onus is not expunged. (Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41, per Gibbs J at 53). In the current matter that has not occurred.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 144 on RP 185592 as determined by the Chief Executive in the sum of Eighty-Four Thousand Dollars ($84,000) is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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