Menon v Department of Natural Resources, Mines and Energy

[2004] QLC 39

LAND COURT OF QUEENSLAND

CITATION:	Menon v Department of Natural Resources, Mines and Energy  [2004] QLC 0039
PARTIES:	Beatrice L and Prem K Menon (appellants)
v.
Chief Executive, Department of Natural Resources, Mines and Energy (respondent)
FILE NO:	AV2003-0587
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 38 on RP 170651 as determined by the Chief Executive in the sum of Seventy-Five Thousand Dollars ($75,000) is affirmed.
CATCHWORDS:	Valuation – Sales evidence – Use of old sale – High sale rejected. Valuation – Valuation of Land Act 1944 - Relativity
APPEARANCES:	Mr PK Menon for the appellants Mr J O’Rourke for the respondent

Background:

1. This matter relates to land at the corner of Golspie Street and Archdale Road, Ferny Grove, and described as Lot 38 on RP 170651, Parish of Enoggera.  The subject land has an area of 623 m², and is located about 1 kilometre from the Ferny Grove Railway Station, and about 18 kilometres north-west of the Brisbane GPO.  Access to both Golspie Street and Archdale Road is good, and both are bitumen sealed with concrete kerbing and channelling.  All normal urban utility services are available, and the subject land is designated as Low Density Residential under the Brisbane City Plan of 30 October 2000, and effective at the date of valuation of 1 October 2002.  The key issues are the nature of the land, impact of traffic, relativity and comparison of sales.

2. On 24 February 2003 the Chief Executive issued a valuation of the subject land at $75,000.  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 $65,000.

3. Prem Kumar Menon appeared and gave evidence for the appellants.  Mr J O’Rourke, Principal Legal Officer appeared for the respondent, calling evidence from John Mauchline, the departmental registered valuer now accepting responsibility for the valuation, which was previously undertaken by another registered valuer no longer available to defend that valuation.

Nature of the Land –

1. The subject land is a regular shape corner parcel of 16 metres fronting Archdale Road and 27.6 metres fronting Golspie Street.  The land rises sharply from Archdale Road, and then is more level to the rear.  Because of the natural fall of the land, surface waters pass across the land towards the intersection of Archdale Road and Golspie Street, from where Archdale Road continues to fall towards the north to Conavalla Street. 

2. Mr Menon argues that the subject land is the lowest point in that immediate area, and as such is subject to local ponding of surface waters, particularly at the rear of the existing dwelling.  Because of that difficulty Mr Menon argues that allowances should be made in the valuation for the cost of earthworks to overcome that disability.  Mr Mauchline rejects that assumption, arguing that he has valued the land as it was in its natural state by comparisons with sales of comparable vacant lands.  Any allowances for earthworks for construction of a dwelling would be comparable to those parcels also.

3. A major concern of Mr Menon is the impact of traffic noise, as vehicles pass along Archdale Road towards the residential areas to the south of the subject land.  Those residential areas include a primary school, secondary school and a private school, as well as a local shopping centre which is presently being reconstructed.  Mr Menon advises that the general flow (90%) of commuter traffic from the Ferny Grove Railway Station, is along Conavalla Street, turning either left or right into Archdale Road.  Because of the nature of those alignments, he argues that the excessive engine noise and screeching of tyres is very evident at the subject land.  Mr Mauchline concedes that the traffic noise is evident at the subject land, and he has allowed for that disability in his valuation.  However he notes that there is also some traffic noise at its comparable sales evidence, particularly in Lanita Road.

4. Mr Menon also agrees that there would be more traffic noise along Bergin Road to the south of the subject land. Mr Mauchline argues that Bergin Road is busier than Archdale Road, and he has allowed for that in his relativities at that corner as discussed in para [8]. Mr Mauchline advises that Bergin Road is mainly used as a distributor for traffic from the western area south of Lanita Road. He also argues that Lanita Road also services housing estates in Berkeley Place, Hatia Grove and Outlook Terrace. However Mr Menon notes that traffic along Lanita Road to the west of those estates is more sparse, and Lanita Road finishes at a dead-end.

Relativity –

1. To support his valuation Mr Mauchline provides comparative relativities on parcels along Archdale Road, which show declining values as Archdale Road falls towards the north.  He advises that Lot 9 to the south of the subject land at the corner of Archdale Road and Bergin Road is a similar size parcel and is valued at $78,000.  The parcel (Lot 43) across Golspie Street at the corner of Archdale Road, is a larger parcel of 654 m², and is also valued similar to the subject land at $75,000.  That is in spite of its much wider frontage, and exposure to traffic noise.  The values then decline to Lot 39 at the corner of Archdale Road and Lanita Road, which is valued at $72,000.  Mr Mauchline advises that those reducing values have made allowances for any runoff of stormwater as the lands fall towards the north.  He also observes that Lots 43 to 39 would suffer greater impact from traffic noise, and glare from headlights at night, than the subject land.

2. In explaining the historical relativities in the Ferny Grove area, Mr Mauchline advises that a conservative approach has always been applied.  He provides a record of previous unimproved values of the subject land for the period 1996 to 2003.  That record shows revaluations for $56,000 (1996 to 1997), $62,000 (1998), $65,000 (1999 - 2000), $68,000 (2001) and $75,000 (2002).  In each case the dates of valuation were at 1 October of each relevant year.  Mr Mauchline notes that while relatively conservative increases had occurred in Ferny Grove, there had been a considerable increase in market levels in the Brisbane area since 1996. 

Comparison of Sales –

1. Mr Menon provides no alternative sales to support his estimate of the unimproved value.  Mr Mauchline provides the following sales of vacant lands:

   ·    Sale 1 – (167 Lanita Road, Ferny Grove – Lot 55 on SP 123641).  This is a 724 m² parcel located about 1.4 kilometres west of the subject land, and is further removed from public transport.  The sale is steeper and has inferior access compared to the corner nature of the subject land, however the sale is larger than the subject land.  Overall the sale is seen as inferior to the subject land, although it is agreed that there is more traffic noise at the subject land.  The sale sold in January 2001 for $85,000, was analysed at $84,000 and applied at $75,000. 

2. ·    Sale 2 – (15 Golspie Street – Lot 30 on RP 170651).  This is a 719 m² parcel at the end of a cul-de-sac, and located about 100 metres west of the subject land.  The sale has similar slopes, but inferior access to the subject land due to its corner location.  The sale is larger in area.  The sale is an old sale that was not applied for some reason at that relevant period in October 1996.  Mr Mauchline speculates possibly because it was seen as a higher sale at that time.  The sale sold in May 1996 for $80,000, and was analysed at $79,000, and has now been applied at the relevant date at $78,000.  (Exhibit 4).

3. ·    Sale 3 – (3 Outlook Terrace – Lot 33 on SP 123641).  This is a 862 m² corner parcel at the corner of Outlook Terrace and Mur Street, and located about 1.2 kilometres west of the subject land.  The sale is seen as having inferior access due to traffic and surface water runoff.  However it is agreed that the traffic at Sale 3 is less than at the subject land. 

   During heavy rains the surface runoff from Hatia Road ponds at the corner of Mur Street outside the subject land.  The sale is much steeper land requiring more earthworks for a dwelling.  The surface waters run along the frontage and side of the sale property.  He notes that the slopes of Mur Street is less than the slope of Archdale Road near the subject land, so that the rate of water discharge would be less at Sale 3. 

   The analysis of the sale shows that the sale sold in January 2001 for $80,000, and was analysed at $79.000.  However Mr Mauchline’s evidence also reveals that the sale actually sold for $90,000 and was subsequently applied at 1 October 2002 at $86,000.  (Exhibit 3, p.9).  Overall the sale is seen as inferior to the subject land.

4. In respect of why he had used the old Sale 2 (15 Golspie Street), Mr Mauchline explains that he had not sought to demonstrate whether that sale was a high sale.  However he feels that as an indication of market changes since 1996, the current difference in relativity between 15 Golspie Street ($78,000) and the subject land ($75,000), if applied to the unimproved value of the subject land of $56,000 in 1996, would indicate why the sale was not used at that time.

5. In seeking comparisons with Sale 2 (15 Golspie Street) it is agreed that noise from traffic is less at Sale 2.  However Mr Menon argues that lands like Sale 2 in a cul-de-sac area are always valued higher than parcels elsewhere, due mainly to the less traffic intrusions in the no-through nature of the cul-de-sac.  Mr Menon estimates that premium at $13,000.  However while he partly agrees with that observation, Mr Mauchline advises that from his extensive experience with cul-de-sacs, the highest valued lots are either at the corner or near the corner locations.  He advises that the lesser values applied to parcels at the end of the turning of the cul-de-sacs, where turning traffic and lack of street parking spaces is a problem.  Mr Mauchline provides a premium for Sale 2 above the subject land at only $3,000.

Decision:

The Legislation –

1. I turn first to the Valuation of Land Act 1944, and note that unimproved value is defined in s.3(1) which states:

   “3.(1)  For the purposes of this Act –

   ‘unimproved value’ of land means –

   (b)     in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.”

2. In seeking further clarification of the meaning of “unimproved value” as it applies to the subject land under the Act, I note also the findings of the Privy Council in Tetzner v. Colonial Sugar Refining Company Limited (1958) AC 50 where Their Lordships said at 57:

   “What in Their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation.  The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it.’”

3. That also followed the findings of the Privy Council in Tooheys Limited v. The Valuer-General (1925) AC 439 where Their Lordships said at 443:

   “Now, what he has to consider is what the land would fetch as at the date of valuation if the improvements made had not been made.  Words could scarcely be clearer to show that the improvements were to be left entirely out of view.  They are to be taken, not only as non-existent, but as if they never had existed.”

   In simple terms the land is to be treated as if all the improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant.

4. In seeking further to understand the nature of a bona fide sale between a seller and a purchaser, I note that the High Court of Australia has provided directions in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 where Griffith CJ said at 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 for it 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 such 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.”

   That definition of what constitutes a bona fide sale has long been adopted by courts, and is a matter which must weigh heavily in the minds of a valuer when he seeks to analyse sales for comparison purposes.

Comparison of Sales –

1. In seeking comparisons with sales of vacant or lightly improved lands, Mr Mauchline has followed a principle long favoured by the courts at all levels.  That was clearly espoused in PH Clough v Valuer-General (1981-82) 8 QLCR 70, where the Land Appeal Court said at 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.

   Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement.” 

2. That principle has also been followed in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, at 46; R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17; and Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 328.

3. If I look then at Mr Mauchline’s sales evidence I find that he has sought comparisons with three sales, one of which is an old sale in 1996.  The evidence given is that the market has moved upwards since 1996, and it needs to be considered how relevant is that old sale in terms of a valuation in 2002.  I note for instance that in the New South Wales Land and Environment Court in Collins & Ors v The Minister (1922-24) 6 LGR 84, where Pike J noted that in analysing sales evidence:

   “You have either got to take the sale as representing the fair market value, or reject it.”

4. In note also that there is some uncertainty about why Sale 2 was a high sale in 1996, as the comparison with its applied unimproved value of about $59,000 in 1996 would suggest.  For whatever reason the Department did not apply that sale in the 1996 revaluation, and the question that might be asked is what relevance that old sale has now for a 2002 valuation, when the market has been shown to have increased.  It may well have been a less than prudent sale in 1996, and therefore less than useful at that time.  Certainly any sale that fails to meet the Spencer test is one of little value for reliability purposes.  On that basis I believe that 15 Golspie Street might only be useful from a relativity perspective.

5. I turn them to Mr Mauchline’s Sale 3, and note the confusion in respect of the sale price and its analysed value.  If I was to adopt the computer figures for the sale price at $90,000, and its application at $86,000, that would be inconsistent with Mr Mauchline’s opinion that Sale 3 is overall inferior to the subject land at $75,000.  At best it could support is that Mr Mauchline has made a conservative application of the subject land at $75,000.

6. If I turn then to Sale 1 (167 Lanita Road) I find that it is applied at $75,000, and is seen as overall inferior to the subject land.  However, while Mr Mauchline has allowed for traffic noise at both properties, he has now agreed that the noise would be greater at the subject land.  On balance that would tend to support the value of $75,000 for the subject land, which is both a corner parcel and closer to Ferny Grove facilities.

Relativity –

1. I turn then to the relativity comparisons, and find that relativity is seen by the courts to also be an important feature, particularly in respect of rating valuations.  That was noted in WM and TJ Fischer v Valuer-General (supra), 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.”

2. The matter of relativity was also noted in TF and SA Shepherdson v Valuer-General (1992-93) 14 QLCR 83, where the learned Member said at 87:

   “Applying to this case the principles of law summarised above, it is desirable that valuations of comparable lands should bear proper relativity.  The appellants are entitled to rely on the valuations of properties in the vicinity of the subject land as being correct. …  Although the comparable sales support a valuation in the order of that assigned to that of the subject land, it is appropriate that attention be given to obtaining some relativity to blocks in the same category of land.”

3. If I look then at Mr Mauchline’s comparisons, I find that the subject land falls in value between the higher Lot 9 at the corner of Archdale Road and Bergin Road at $78,000, and the lower elevation of Lot 39 ($72,000) at the corner of Archdale Road and Lanita Road.  Both of those parcels are also impacted by traffic noise, as is also Lot 43 across Golspie Street which is also valued at $75,000.  On those comparisons the value of $75,000 for the subject land is not inconsistent.

4. If I then compare the unimproved value of 15 Golspie Street (Lot 30) at $78,000, that has apparently maintained the old relativity existing in 1996.  There is nothing in those comparisons to discredit Mr Mauchline’s conclusion of $75,000. 

Summary –

1. In concluding this matter I am reminded that s.33 of the Act directs:

   “33.  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.”

2. I am also aware that unless the Chief Executive has been shown to have made a serious error of fact, or has acted on a wrong principle, then the valuation is not disturbed.  (Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41, at 57. That has not occurred in this matter.

3. As the only evidence by a valuer was provided by the Chief Executive, then this Court has the power to consider the appeal in the light of the actual evidence before it, bearing also in mind the presumptive nature of s.33.  (CH and BD Henricks v The Valuer-General (V89-220) Full Court of Queensland (1983) 9 QLCR 59, at 68.

Conclusion –

1. 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 38 on RP 170651 as determined by the Chief Executive in the sum of Seventy-Five Thousand Dollars ($75,000) is affirmed.

NG DIVETT

MEMBER OF LAND COURT