Millar v Chief Executive, Department of Natural Resources
[1999] QLC 111
•19 October 1999
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BRISBANE
19 October 1999
Re: Appeal against an annual valuation
Valuation of Land Act 1944
Valuation Roll No 008-4267
Local Government: Brisbane City - Hamilton
(AV98-791)
Yolanda and Eric Max Millar
v.
Chief Executive, Department of Natural Resources
DECISION
Background:
This matter relates to land at 638 Kingsford Smith Drive, Hamilton and described as Lot 150 on RP 903419, Parish of Toombul. The subject land has an area of 1774 square metres and is located about six kilometres north-east of Brisbane. The land is zoned as “Residential B-R4” under the Town Plan of the Brisbane City Council effective at the date of valuation of 1 October 1997. The subject land is fairly level and regular in shape, with approximate frontage of 45 metres to Kingsford Smith Drive, and an average depth of 40 metres. All normal services are available. The key issues are relativity with comparable parcels, and comparison of sales.
On 9 March 1998 the Chief Executive issued a valuation of the subject land at $355,000. Following an objection the Chief Executive confirmed the unimproved value on 8 September 1998. The appellants have now appealed that figure claiming the correct unimproved value should more properly be $260,000. A Court supervised preliminary conference on 10 February 1999 was unable to resolve differences between the parties, and the matter came before this Court for hearing on 2 September 1999.
Mr EM Millar appeared and gave evidence for the appellants. Mr R Vyse of Crown Law appeared for the respondent, calling evidence from Mr Edward Antoni, the Departmental registered valuer responsible for determining the valuation.
The evidence:
(1) The nature of the land –
Access is via Kingsford Smith Drive, which is a bitumen sealed dual carriageway with concrete kerbing and channelling. Direct access to the most easterly 12 metres of the subject land is available to both inbound and outbound traffic along Kingsford Smith Drive, which is one of the principal routes between Brisbane Airport and the City. The locality of the subject land is at the most easterly part of Hamilton, and is within two kilometres of major commercial precincts at Hamilton and Ascot, the Doomben Railway Station, the Eagle Farm and Doomben racecourses, and opposite the Eagle Farm industrial estate. The Brisbane Airport is about 8 to 9 kilometres to the north-east. The land is currently developed as the Airport Motel.
The subject land is impacted by noise from the heavy traffic movements along Kingsford Smith Drive, and also by noise from the shunting of railway trucks on the railway line on the southern side of Kingsford Smith Drive, and immediately opposite the subject land. The shunting operations occur regularly on a daily basis.
There was also some evidence given of a proposal by the Brisbane Airport Corporation to develop a second parallel runway to the north-west of the existing runway, which, if constructed in that alignment, would result in aircraft movements immediately overhead of the subject land. However the plans supplied were conceded to be still approximate, and merely planning for future operations. The plans were also not given formal sanction until 1998 (after the date of valuation), and their impact at that time could only be considered in respect of any uncertainty they placed in the minds of any prudent purchaser in that locality.(2) History of the valuations –
Mr Millar notes that there has been a considerable increase in the valuation of the subject land (approximately 100%) since he acquired it in 1996. He notes that the unimproved value in 1995 had been $156,000, and that had increased in 1996 to $330,000. Following an objection the unimproved value had been reduced to $265,000, but has since increased to $355,000 at the current valuation of 1 October 1997.
Mr Millar notes those large increases, and argues that those inconsistent changes suggest that an error has been made in the current valuation, and hence his appeal. Mr Antoni rejects such a conclusion, noting that he had not undertaken the former valuation in 1996, but advises that his current unimproved value was based upon comparisons with sales of comparable properties. Mr Antoni had no regard to the former unimproved value, and formed his own view of the current valuation on the evidence before him. He argues that the percentage change in the unimproved value has no direct relationship to the valuation process.
(3) Relativity -Mr Millar draws supports for his estimate of the unimproved value from relativity with the following parcels:
| Property | Address | Description | Current use | Area | Unimproved value rate |
| 1. | 558 Kingsford Smith Drive | Lots 15 and 16 on RP 133641 | Vacant | 809 square metres | $154 per square metre |
| 2. | 550 Kingsford Smith Drive | Lots 12 and 13 on RP 133641 | Shops | 809 square metres | $149 per square metre |
| 3. | 560 Kingsford Smith Drive | Lot 1 on RP 189598 | Hacienda Motel | 3761 square metres | $145 per square metre |
| 4. | 574 Kingsford Smith Drive | BUP 3323 | Strata Units | 941 square metres | $141 per square metre |
| 5. | 614 Kingsford Smith Drive | Lot 1 on RP 125503 | Strata Units | 809 square metres | $141 per square metre |
It is Mr Millar’s argument that the above properties are all very close to the subject land, or have similar impacts from noise, and all had comparable relativity with the subject land prior to the large increase in the unimproved value of the subject land in 1996, and in particular Parcel 3 (the Hacienda Motel). Mr Millar argues why then was that relativity disturbed, along with the other two motel sites in that locality? He notes for instance the following unimproved values:
| Property | Address | Description | Current use | Area | Unimproved value rate |
| 6. | Kingsford Smith Drive and Nudgee Road | Lot 50 on RP 891426 | Kingsford Smith Motel | 1932 square metres | $200 per square metre |
| 7. | Kingsford Smith Drive | Lot 11 on RP 211811 | Airport Heritage Motel | 1619 square metres | $200 per square metre |
Prior to the recent increase for the three motel sites in Kingsford Smith Drive between Nudgee Road and Oxford Street, all three had also been at rates per square metre close to the Hacienda Motel site. Mr Millar agrees that the Kingsford Smith Motel, the Airport Heritage Motel, and the subject site are all of comparable areas and locality, all subject to similar noise impacts, and all valued at approximately $200 per square metre. Mr Millar also concedes that access to both the Kingsford Smith Motel and the Airport Heritage Motel are less direct for inward bound traffic, than to the subject land. At both of the former motels inbound traffic has to detour via Allen Street to gain access.
In supporting his valuation on a relativity basis, Mr Antoni argues that the optimum size for a motel site in the Brisbane, Hamilton and Ascot area has been concluded from sales of motel sites (90%) to be between 1600 square metres and 2000 square metres. He argues that, while there is no planning restriction to prevent the use of a motel upon a smaller parcel, say of 809 square metres, the market place indicates that smaller parcels are less attractive for motel use. Reasons for that lie in the greater flexibility of the larger sites, and easier traffic movements and access to those sites. He concedes that some motels have commenced operations on 809 square metre sites but many of those have since acquired extra adjoining land to maximise operational efficiency.
However it is Mr Antoni’s opinion that over a certain size the additional premium attaching to the additional area, adds incrementally less to the overall price. On that principle, he argues that the larger area of parcel 3 at the Hacienda Motel, would represent a lower rate per square metre overall than the more standard size motel unit of the subject land. Mr Antoni also concludes that parcels 1, 2, 4 and 5 are more suited to a highest and best use of shops or strata units, than for motel sites. Mr Millar contested that conclusion noting that the use of properties 4 and 5 for strata home units tends to reflect their historical development for that purpose, and notes that those properties have a similar zoning as the subject land.
(4) Comparison of sale -Mr Millar draws direct comparison with the sale of his property 1 (558 Kingsford Smith Drive – now Hamilton House), which sold in June 1997 for $126,500 ($156 per square metre). He notes it is zoned similar, is about half the size of the subject, but only has one direction access to the sale. Mr Millar concludes that property 1 is comparable, as that sale is nearer to shops and transport in Racecourse Road, and looks over a park, rather than over the railway shunting yards.
To support his valuation Mr Antoni supplies the following sales of Residential B-R4 land:
· Sale 1 – (558 Kingsford Smith Road – Lot 16 on SP 102879)
This is the same sale as Mr Millar’s property 1, and is a regular shaped parcel of 742 square metres (following resurvey), with a 20 metre frontage. Direct access is restricted to outward bound traffic, and is adversely impacted during peak hours by traffic queuing at the traffic lights about 150 metres to the east of the sale at the Nudgee Road intersection. The sale is seen as overall inferior due to size, shape, frontage, position and access.
The sale sold in June 1997 for $126,500, which was analysed at $125,500 and applied at $114,000 ($154 per square metre).·Sale 2 – (654, 660-664 Kingsford Smith Road – Lots 26 to 29 on RP 33618, and Lot 30 on RP 33635)
This is a series of sales of total area 2,226 square metres, which have been aggregated and approved for motel development. Because of some uncertainty about the arm’s length nature of certain of the more recent sales, Mr Antoni has relied upon previous sales of those specific parcels (Lots 26 and 27 and Lot 30), and concluded an aggregated sale price of $549,000. From that figure he has allowed for clearing and removal of old timber dwellings on Lots 26 and 27, currently used as flats ($16,000); Lot 28 ($6,000) and Lot 29 ($6,000); together with clearing ($1,000) plus an additional cost of demolition of a relatively new brick dwelling upon Lot 30 (plus $10,000), giving an analysed cost of $530,000 ($238 per square metre).
Mr Antoni bases his total sale price on sales of:
| Parcel | Adopted Sale Price | Date | |
| Lots 26 and 27 | $155,000 | April 1994 | (resold $210,000 in November 1997) |
| Lot 28 | $125,000 | - | (sold for $178,000 in November 1997) |
| Lot 29 | $125,000 | November 1997 | |
| Lot 30 | $144,000 | August 1994 | (resold for $200,000 in December 1997) |
| TOTAL: $549,000 | |||
The sale is regular in shape, with a 55 metre frontage and a 40 metre depth. Overall the sale is slightly superior due to corner influence and access.
·Sale 3 - (285-289 Lancaster Road, Ascot – Lots 1 and 2 on RP 110772 and Lot 2 on RP 58910)
This is a 1811 square metre parcel which was aggregated from three smaller parcels for development as serviced apartments. Located in the poorer end of Ascot, the sale has a frontage of 46 metres to Lancaster Road, and 40 metre frontage to Duke Street. It is located 70 metres south of the Doomben Railway line, about 500 metres from Doomben and Ascot Railway Stations. There is a major Telstra structure immediately in front of the sale. Overall the sale is slightly superior to the subject land.
The sale sold in November 1997 for $510,000, which after allowing for improvements was analysed at $507,700, and applied at $460,000 ($254 per square metre).· Sale 4 – (58 Nudgee Road, Hamilton – Lots 251 – 253 on RP 33643)
This is a 1,225 square metre property amalgamated and developed as 20 units. The sale has a 30 metre frontage to Nudgee Road and a 40 metre frontage to Beatrice Street. Overall the sale is superior to the subject land.
The sale sold in December 1996 for $355,000, which was analysed after allowing $20,000 to demolish the existing dwelling, at $373,900, and applied at $360,000 ($294 per square metre).
·Sale 5 – (57-65 Nudgee Road, Hamilton – Lot 111 and 113 on RP 33637, and Lot 114 on RP 33618)
This is an amalgamated parcel of 3 lots of total area 1,619 square metres, which has subsequently been resurveyed as Lots 1 to 20 on BUP 104815, and developed as serviced apartments. The apartments are used together with the adjoining Pegasus Motel under a lease back arrangement. Two of the existing dwellings were sold for removal, and $10,000 has been allowed for the added value of those dwellings. The third dwelling could not be sold, and was demolished. Overall the sale is seen as slightly superior to the subject land.
The sale sold in April and March 1996 for a combined price of $347,000, which after allowing for the two dwellings and clearing was analysed at $334,000 and applied at $300,000 ($185 per square metre) at 1 October 1996 and revised at $360,000 ($222 per square metre) at 1 October 1997. The reason for the adjustment of the applied value of the sale was to retain relativity with sale 4 at $294 per square metre.
Mr Antoni provides verbal evidence that the unimproved value of the Pegasus Motel site (1,611 square metres) is $223 per square metres, and is superior to the subject land because of its corner influence, and lesser traffic impacts.
In respect of his use of his sale 2 at November 1997, which occurred after the date of valuation at 1 October 1997, Mr Antoni argues that it is appropriate to consider all sales up to the date of issue of the valuation on 9 March 1998. However he also argues that in comparing the Hacienda Motel property, the much larger area of that parcel, and the better access of the subject land, supports the current relativity of $200 per square metre versus $145 per square metre.
Mr Antoni concedes the difficulty of directly relating only size of motel sites on a rate per square metre basis, noting that his sale 2 (2226 square metres at $238 per square metre) also allows for other features of that land. Mr Millar argues that the property market had declined during 1994 to 1997, although he has no evidence to support that conclusion. Mr Antoni argues that departmental sales evidence supports that the market had not declined over that period.
Decision:
I note that it is agreed that the subject land is located near three other motels in Kingsford Smith Drive, all of which would be competing for share of the combined customer market both to and from the airport, and also elsewhere in the city. Both parties agree that the subject land has some advantage over the other three motels in respect of its better availability of direct access both for inbound and outbound traffic.
The key difference between the parties lies in the relative comparisons undertaken adopting different size properties. Mr Millar seeks comparison on a relativity basis with sites of areas of 809 to 941 square metres, for uses for shops or strata units, and also with the Hacienda Motel site at 3,761 square metres. His main argument is that all of those five properties had been valued in a tight range of $141 per square metre to $156 per square metre.
Mr Antoni adopts some relativity comparisons, adopting the Kingsford Smith Motel and the Airport Heritage Motel, but argues that the highest and best use for a motel site in that area would reflect in the range 1600 square metres to 2000 square metres. He argues the additional area of the Hacienda Motel of 3,761 square metres is larger than the optimum size, and reflects the principle that beyond the optimum size, any extra area merely has the impact of lowering the rate per square metre basis for the land. In comparing the lands on a relativity basis all parcels would be impacted by comparable noise levels. Mr Antoni argues the range of those three motel sites in that locality should be $200 per square metre.
In seeking what reliance to place upon relativity, I note that was found to be important in the decision of R and MM Barnwell v Valuer General (1990-91) 13 QLCR 13, where the Land Appeal Court said at page 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 principle was also followed in WM and TJ Fischer v The Valuer General (1983) 9 QLCR 44, although the Land Appeal Court went on to link the matter of relativity with the comparison of sales of comparable lands, where it said at page 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.”
That was also supported by the Land Appeal Court in Hans and Else Grahn v Valuer General [1992-1993] 14 QLCR 327, where it said at page 329:
“Bearing those propositions in mind, it is best to approach this case by considering first the position regarding sales evidence then considering the relativity of the valuations of the subject blocks with the valuation of comparable blocks of land.”
If I then examine Mr Millar’s concerns with the large percentage increase in the valuation between 1995, 1996 and the current valuation, I note that changes in the valuation have found to be not indicative that an error has been made. That was held in the decision of NR and PG Tow v The Valuer General (1978) 5 QLCR 378, where the Land Appeal Court said at page 381:
“It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.”
The real test is not the percentage increase in the unimproved values, but a comparison of the subject land with sales of comparable sites in the locality, if they exist, at the time of the valuation.
In respect of the use of a sale that occurred after the date of valuation at 1 October 1997, I note that it is generally held that it is appropriate to compare sales up to the date of issue of the valuation. That was directed in KP and RD Weisenberger v The Valuer General (1978) 5 QLCR 125; and also in RG McMurray v The Valuer General (1983) 9 QLCR 35, at 36.
I note also however that the use of subsequent sales was examined in Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299. In that matter Williams J in the High Court of Australia said at page 304:“Values must be calculated in the light of circumstances which existed on the material date, in this case 30th June, 1939, but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless.”
Support for the use of subsequent sales is also to be found in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 at page 16; and also in Federal Commissioner of Taxation v Harris (1980) 30 ALR 10 at 18. However in Harris, Fisher J noted at page 25 that the subsequent event cannot create an expectation which was not in existence at the relevant date.
In the context of sales 2 and 3 in the current matter both of those occurred in November 1997 well before the date of issue of the valuation in March 1998. On that basis it is appropriate to consider those later sales.
In seeking his comparison with the sales of comparable parcels in the locality, I note that Mr Millar argues that Kingsford Smith Drive is a different locality to Lancaster Road, Ascot and Nudgee Road, Hamilton. Mr Antoni concedes the traffic movements are much higher at Kingsford Smith Drive, but argues that his sales 3, 4 and 5 are all for comparable uses such as serviced apartments or units, and each has a comparable area of 1,225 square metres to 1,811 square metres; which is the range of the optimum size for motels in that area. Mr Antoni draws comparisons, relying upon his experience as a valuer, as follows:
| Sale | Area | Rate | Comparison |
| 1. | 742 square metres | $154 per square metre | Inferior |
| 2. | 2226 square metres | $238 per square metre | Slightly superior |
| 3. | 1811 square metres | $254 per square metre | Slightly superior |
| 4. | 1225 square metres | $294 per square metre | Superior |
| 5. | 1619 square metres | $222 per square metre | Slightly superior |
If I accept Mr Millar’s concerns that the impact of traffic noise, and the shunting of railway trucks, is more severe at Kingsford Smith Drive, then I find that sale 2 at $238 per square metre provides the key comparison. I note that sale has been analysed using two sales in 1994, and ignores two sales of Lots 28 and 30, both of which showed a considerable increase in the sale price in 1997. On that basis, I can conclude that Mr Antoni has sought to provide a conservative estimate of the unimproved value of sale 2, in accordance with the principle established in the decision of the High Court of Australia in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Company of South Australia Limited and Others (1946-47) 74 CLR 358 where Dixon J said at page 373:
“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.”
In relying upon his knowledge and experience in comparing those sales, Mr Antoni has followed precedents noted in Bingham v Cumberland County Council (1954) 20 LGRA 1, where in a minority decision Sugerman J said at page 18:
“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.”
I believe Mr Antoni has exercised a reasonable level of care in drawing upon his comparisons, and Mr Millar has not discredited his opinions. I believe the rate per square metre for a parcel of area 1600 square metres to 2000 square metres, would be in the range of $200 per square metre. Relativity with the nearby Kingsford Smith Motel and Airport Heritage Motel support that conclusion.
In concluding my findings in this matter I am reminded that the valuation is deemed to be correct under section 33 of the Act, unless it has been proved that the respondent has made an error of fact or used a wrong principle. (Brisbane City Council v Valuer General (1977-78) 140 CLR 41 at 56). The onus of proof in this matter also lies with the appellant under section 45(4) of the Act. On the evidence before me that onus of proof has not been discharged.
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 the subject land as determined by the Chief Executive in the sum of $355,000 is affirmed.
N G DIVETT
MEMBER
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