Mills v Chief Executive, Department of Natural Resources
[1999] QLC 59
•27 August 1999
|
LAND COURT,
BRISBANE
27 August 1999
Re: Appeals against Annual Valuations –
Valuation of Land Act 1944 –
Shire of Johnstone.
(AV98-271 to 273, AV98-299 and AV98-300).
Leslie GJ Mills and Anne E Mills
v.
Chief Executive, Department of Natural Resources
Olga Storck
v.
Chief Executive, Department of Natural Resources
Maurice Percival Benn and Benjamin Walter Benn
v.
Chief Executive, Department of Natural Resources
Tracey L Onaindia
v.
Chief Executive, Department of Natural Resources
(Hearing at Innisfail)
D E C I S I O N
These are five appeals by landowners against the unimproved values applied to their lands in the Shire of Johnstone by the Chief Executive, Department of Natural Resources, under the provisions of the Valuation of Land Act 1944 (the “Act”).
Introduction:
The five allotments the valuations of which are the subject of these appeals (“subject lands”), each has an area of 809 square metres and is situated fronting Marine Parade at Mission Beach. The details of the allotments are as follows:
Owners Description Valuation
appealed against
Mr and Mrs Mills Lot 11 RP 710564 $ 150,000
Mr and Mrs Mills Lot 13 RP 710564 $ 157,500
Ms Storck Lot 14 RP 710564 $ 155,000
Messrs Benn Lot 15 RP 710564 $ 155,000
Ms Onaindia Lot 10 RP 710564 $ 155,000
The subject lands are situated approximately 300 metres south of the Mission Beach Business District, with access by means of the bitumen sealed Donkin Lane. All allotments have frontage to both Donkin Lane and Marine Parade, while Lot 10 and Lot 11 are situated on opposite corners of Central Avenue, which is also bitumen sealed. They all have electricity, telephone and town water supply.
As at 1 October 1997, the respondent Chief Executive valued each of those lots, together with all other lots fronting the esplanade between Seaview Street and David Street, at $162,000. A number of owners (including the present appellants) objected against those valuations and succeeded in having the valuations reduced. The owners then appealed to the Land Court, advising that their estimates of unimproved value were $125,000 (Lots 10, 11 and 13) and $129,000 (Lots 14 and 15).
The grounds of their appeals were identical. Each of the appellants contended that the valuations had been increased on the basis of the sales of two allotments in the commercial area of Mission Beach, whereas the subject lands could not be used for commercial purposes. In addition, each of them raised the following:· the subject lands could not be termed “absolute beachfront”, as there is a gazetted road (Marine Parade) in front of them, which is kerbed, guttered and bitumen sealed in front of Lots 11 and 13;
· Lots 11 and 13 sold for $130,000 each in November 1993;
· Lot 14 was auctioned earlier that year and passed in for $140,000;
· Lot 3 was sold for $120,000 in February 1994 and resold in 1997 for $260,000, with a large modern brick house and other improvement, the cost of which would have been in excess of $130,000; and
· with current real estate values being 20% lower than 1994, these sales should be considered rather than the sales that can be used for commercial purposes.
With the consent of the parties, these appeals were heard together. Mrs AE Mills appeared on behalf of herself and her husband, and also on behalf of Ms Storck and Ms Onaindia. Mr HW Layt, a registered valuer, appeared on behalf of Messrs MP and BW Benn. Mrs Mills, Mr Layt and Mr MP Benn gave evidence on behalf of the appellants.
Mr K Fisher appeared for the respondent, while valuation evidence on the respondent’s behalf was given by Mr SA Cross, a registered valuer employed by the Department of Natural Resources.
The Subject Lands:
There was general agreement between the parties about the physical attributes of the subject lands. Mr Cross described each of them as regular shaped allotments with esplanade beach frontage, the land rising gently from its esplanade frontage to its western or Donkin Lane frontage.
Marine Parade separates the subject lands from the beach, but it is constructed as a bitumen street for only a short distance from Central Avenue north to Lot 13. From there north to David Street and beyond it is only a track. It seems from the evidence that the Council mows and maintains an area of parkland in front of the subject lands and has constructed toilets and showers on the beachfront opposite Seaview Street, which is one town block south of the subject lands.
The bitumen sealed Central Avenue provides access for traffic from Donkin Lane to the esplanade and the bitumen strip part of Marine Parade in front of Lots 11, 12 and 13. Lot 10 fronts Central Avenue to the south and Lot 11 fronts Central Avenue to the north. As mentioned previously, those two allotments have frontages also to Donkin Lane and Marine Parade. (Mr Cross’s report refers to Lot 14 as a “Regular shaped corner allotment”, but this was obviously a typing error, as it was clear from his evidence that he is well aware that Lot 14 was an inside allotment.)
Each of the subject lands is zoned “Urban” under the Johnstone Shire Planning Scheme. It is situated within “Precinct MB2 – Mission Beach Village” of the Mission Beach Coastal Area Development Control Plan. The relevant parts of the statement of intent for that Precinct are:
“(A)This precinct is the main urban area of the Mission Beach village… it is intended to develop as one of two tourist accommodation nodes in the coastal area, with more intensive tourism accommodation developed around the local business centre, than elsewhere in the precinct. Tourist development in this precinct should be designed to enhance the intimate and informal village atmosphere …
(B)Commercial development, as categorised and provided for in Table 4, should be restricted to the local business centre and should complement the scale, character and intimacy of the existing village centre. … ”
Table 4 shows that development for purposes of a dwelling house in Precinct MB2 is exempt from the DCP, while development for purposes of a dwelling house/attached flat is a preferred development.
Although not contained in any of the exhibits tendered in these cases, the parties were in agreement that the construction of duplex buildings in Precinct MB2 is restricted to one allotment in every five. This effectively limited the use of the other allotments to that of single dwelling houses.
The Issues:
The issues in these cases emerged as:
· whether the subject lands can be regarded as “absolute beachfront” lands;
· the appropriateness and comparability of certain sales;
· the premium applied to duplex properties; and
· the disabilities suffered by Lot 15.
Absolute Beachfront
Mrs Mills argued that the subject lands are not “absolute beachfront” allotments because they are separated from the beach by Marine Parade, which is a bitumen street in front of Lots 11 and 13 and maintained as parkland esplanade in front of the other subject lands. She argued that the bitumen road and public area in front of Lots 11 and 13 affects the views, the privacy and quiet enjoyment of those allotments. In the case of Ms Storck’s Lot 14 (and probably the other lands), its privacy and quiet enjoyment are affected by traffic using the track in front of her land and by the public using the parkland for picnicking and for parking cars, caravans and camper vans. Ms Onaindia’s Lot 10 is affected by traffic turning in front of her property, by neighbours accessing the adjoining duplex property to the south, by the public picnicking on the grassy foreshore and accessing the beach in front of her property to launch their boats.
Mr Cross was not the valuer who was responsible for the valuation of the properties. However he had inspected the subject lands and the sales and was “satisfied” with the valuations applied. He explained that the subject lands had all been valued at $162,000 as at 1 October 1997. Following objections by landowners, the valuations of beachfront properties were reviewed and reduced depending on the extent to which they were affected by the use of the esplanade. Where it was grassed parkland, the valuations were reduced to $155,000. However, where Marine Parade had been developed as a bitumen strip in front of the Mills’ two allotments, the valuations were reduced to $150,000, no doubt to reflect the disadvantage of traffic and parked cars.
Mr Cross went on to explain that following preliminary conferences prior to the hearing of the appeals, it had been decided to increase the allotments with duplex developments by 5% over the value of adjoining residential allotments to reflect the advantage that those allotments enjoyed. This resulted in Lot 13 being increased to $157,500.
The Sales
The appellants contend that the respondent based the valuations on sales of two allotments which are situated in the commercial area of Mission Beach and are therefore not appropriate as a basis for the valuation of the subject lands, the use of which is restricted to residential purposes. Lot 1 on RP 718455, with an area of 789 square metres, sold in July 1996 for $205,000. It is situated on the corner of David Street and Marine Parade adjacent to business development to the west. Since the sale the allotment has been developed as a licensed restaurant known as the “Shrubbery Taverna”.
The other sale, Lot 26 on RP 710978, with an area of 809 square metres, was sold in November 1995 for $165,000. It is situated immediately to the north of the other sale and remains vacant. It fronts Marine Parade, but its only access is by means of an unformed earth track.
Both those sale properties are zoned “Urban” and are situated in Precinct MB2. However, while Lot 1 is shown on Plan MBCA 4 to be in the local business area, Lot 26 is not and it would seem that its development potential is similar to that of the subject lands.
Despite the appellants’ contention, the respondent did not rely upon the sale of Lot 1 to support the valuations. However, Mr Layt included it in his comparisons, making the following comments:
“The land borders onto Beachtown Shopping complex to the east. Improvements consisted of a substantial residence now converted and operated as a restaurant/tavern. It is more a commercial block and is on the edge of the main Mission Beach shopping area. Considered to be much more valuable block than subject as it is designated “business” under the Council DCP. Approximate break-up of sale could be –
Residence $ 30,000
Land $ 175,000 $205,000”
On the other hand, Mr Cross relied on the sale of Lot 26 to support the respondent’s valuations (Sale 1). He considered it to be “fairly comparable” to the subject lands, although superior despite its lack of access, because of its adjacency to the Mission Beach business district. He said that he had ascertained that it had been purchased for residential purposes, although it had remained vacant since November 1995. He had included it as market evidence because of its proximity to the subject lands, notwithstanding that it was “a very early sale”. The respondent had valued that land at $156,000 as at 1 October 1997.
When asked why he did not refer to that sale, Mr Layt replied that he had rejected it because his enquiries had revealed that it was an inter-company transfer. However, Mr Cross said that his investigations had not revealed any relationship between the parties and in any case, he thought that the later evidence demonstrated that it was “seemingly an arms-length transaction”.
The appellants also referred to the purchase prices of Lots 11 and 13 in 1993 and the unsuccessful auction of Lot 14 in 1993. However, those events occurred so long prior to the date of valuation they were of no assistance in these cases.
They also referred to the sales of two allotments, each for $150,000 in June 1999. Those allotments are situated at Reid Road, Wongaling Beach, which is situated over 2½ kms south of the subject land. Mrs Mills contended that they were “absolute beachfront” allotments and that “… Reid Road is considered very prestigious land”, but she could provide no other details. Mr Cross denied that they were absolute beachfront allotments. He knew the sales had taken place but had not investigated them. In the circumstances, in the absence of a detailed comparison between the sales and the subject lands, I can place no reliance on those sales.
Mrs Mills and Mr Layt also referred to the sale of Lot 3 on RP 710564, with an area of 809 square metres, in February 1997 for $260,000. That sale was improved with what Mr Layt described as a fairly new brick residence and garage. His estimated apportionment was:
Improvements $ 130,000
Land $ 130,000 $260,000
According to Mrs Mills, that allotment had sold as vacant land for $120,000 in February 1994.
Mr Cross did not have regard to that sale because of the extent and nature of improvements and the difficulty of accurately arriving at the added value of those improvements in order to analyse the sale to unimproved value. It is well settled that such sales should be avoided and that the best evidence of unimproved value is derived from sales of unimproved or lightly improved land. (See Grahn v. The Valuer-General (1992-93) 14 QLCR 327.)
Mr Layt also referred to the recent sale of Lot 18 on RP 710564 (three allotments to the north of the Benns’ Lot 15), with an area of 809 square metres, for $175,000 in May 1999. That land was improved with what Mr Layt described as a modest timber dwelling, currently let for $140 per week. His estimated apportionment of the sale was:
Improvements $ 20,000
Land $155,000 $175,000
Mr Cross had no regard to that sale, probably because it occurred so long after the date of valuation and because it was improved. He did not disagree with the apportionment by Mr Layt, as the respondent had applied $155,000 to that land at the date of valuation. When Mr Layt was questioned as to the market movement at Mission Beach since the date of valuation, he ventured the opinion that it had fallen. Mr Cross made the point that if that was so, then Mr Layt’s apportionment of land value from that sale would tend to support the respondent’s level of value for the beachfront land as at October 1997.
Both Mr Layt and Mr Cross referred to the sale of Lot 8 on RP 716129, with an area of 630 square metres, which sold in December 1997 for $220,000 (Sale 4). Mr Layt described the improvements on that land as including an old 2-bedroom fibro residence and apportioned them at $20,000, leaving $200,000 as land value. On the other hand, Mr Cross described the structure as a poor low-set dwelling which had been removed since sale. He considered that it added no value to the land, attributing only $2,500 to clearing, to show an unimproved value of $217,500. As at 1 October 1997, the respondent had applied an unimproved value to that land of $162,000.
That land (Lot 8) is situated some 400 metres south of the southern-most of the subject lands (Lot 10). Its access is by the formed gravel Pacific Parade. It also fronts Marine Parade, which at that point has not been developed, described by Mr Cross as “unformed esplanade frontage” and by Mr Layt as “absolute beach frontage”. Both agree that it is that feature which makes it superior to the subject lands.
In addition, Mr Cross referred to the sales of two allotments in Conch Street, almost 1km south of the subject lands. Lot 13 on RP 898592, with an area of 817 square metres, sold in September 1996 for $190,000 (Sale 2). The sale was analysed to show $187,000, the only improvement being clearing, to which $3,000 had been attributed. As at 1 October 1997, the respondent had applied $162,000 to that property.
Similarly, Lot 2 on RP 898593, with an area of 795 square metres, situated just two allotments south of Lot 13, also sold in September 1996 for $180,000. That sale was analysed to show an unimproved value of $178,000 (improvements clearing $2,000) and as at 1 October 1997, the respondent applied an unimproved value to that land of $162,000.
Both those allotments have what Mr Cross describes as “unformed esplanade beach frontage”, but which Mrs Mills describes as “absolute beachfront”. Mr Cross considered each sale allotment to be superior to the subject lands because of the “more private residential locality and unformed esplanade frontage”. Because their views were restricted by trees on the esplanade, he thought that they had been purchased for their proximity to water, rather than their views. While not disagreeing that they are superior to the subject lands, Mr Layt thought that they were irrelevant as they were in an area of new development compared with the older development in much of the subject area.
The Duplex Properties:
Because of the Council’s policy of allowing only one duplex development in five residential allotments, Mr Cross was of the opinion that those properties which had been developed with duplexes enjoyed an advantage over the other lots. He said that while it was difficult to obtain market evidence that a premium was paid for that advantage, the same policy had been applied in other areas of Johnstone Shire. He felt that 5% was the “most conservative premium to apply over and above a residential sort of level of value” to reflect that advantage.
Mrs Mills did not really challenge that reasoning, merely making the point that the valuation of Lot 13 had been increased from $150,000 to $157,500 following the preliminary conference and seeking an explanation for the increase. She also thought the respondent’s policy had not been applied uniformly as she said that her investigations had shown that Lot 9 upon which a duplex had been constructed, was valued the same as the residential Lot 8. However, Mr Cross advised that the valuation of Lot 9 had been increased by 5% in a similar manner to Lot 13.
Lot 15:
The remaining issue concerned the alleged disabilities suffered by Lot 15. Mr Layt gave evidence that after heavy rain, water runs towards the beach from the hill to the west of that part of Mission Beach. Lot 15 is particularly affected, he contends, as it is slightly lower-lying than the other lots. He said that in the wet season water runs across the lot making it wet and boggy. He estimates that as much as 300mm of fill is required to raise it to a level that will prevent runoff from the present drainage of Donkin Lane. He went on to say that there was not sufficient gradient to effect a good drainage system and this was exacerbated by high tides which usually occur during the wet season.
Mr MP Benn explained that his father had purchased Lot 15 cheaply in 1952 for £25 because it was so low-lying. It was what he described as a wet season runoff drain. Then in 1960 his father pushed up “a few hundred metres” of sand from the beach to fill the drain and level the allotment. He said that the neighbouring properties were filled, not by beach sand, but by “truckloads of soil”. Lot 15 was the last allotment to be built on “because it was a drain” and was the worst affected before it was filled. He said that even now after heavy rain “… you can’t even drive in on the block … you’d get bogged”.
When Mr Benn was being cross-examined by Mr Fisher, there was the following exchange:
“And do you agree with Mr Layt who says that your property is the worst affected by water along the front Mission Beach Parade? -- Yes I do, for the simple reason it was the lowest-lying block of the whole area.
Do you know if its lowest-lying in its natural state or simply because you used sand when other people used more substantive fill material?--Yes, well of course our block was actually a drain as was stated before, the others weren’t, but you get seepage from the back of the hill and everyone cops water except ours was a drain which had top runoff and every block before they had a fill was always saturated with water in wet conditions, in rainy flood conditions.”
He concluded by saying that in its unimproved state he thought that it would be “slightly less in value” than the neighbouring allotments.
Mr Cross did not know the extent of fill on the subject lands as they were all improved. He thought that in their natural state they would all have been waterlogged or experienced flooding, which the owners had tried to remedy with fill. However, he said that these allotments had been valued many times previously and he assumed that any such matters would have been reflected in previous relativity of valuations.
Mr Cross was not aware of any drainage problem that Lot 15 suffered in comparison to the adjoining lands. It had not been apparent to him when he inspected the land.
Consideration of the Evidence:
It is clear from the evidence that none of the subject lands has absolute beach frontage. They are all separated from the beach by Marine Parade, which in that area of Mission Beach has been developed by the Council as esplanade parkland. In front of Lots 11 and 13, Marine Parade has been developed into a kerbed and channelled bitumen strip, affording access to traffic and carparking. It seems that there is also some traffic and public use of the grassed parkland area in front of the other appeal allotments. In reviewing the valuations following objections, the respondent recognised that the allotments were affected by the public use of the esplanade and road and made adjustments by reducing a number of valuations, including those of the subject lands. The respondent reasoned that the lands fronting the bitumen strip were worst affected and the valuations of Lots 11 and 13 were reduced to levels lower than those of the other appeal lands.
However, the appellants argued that their lands have been valued on the basis of sales with absolute beach frontage, namely Sales 2 and 3 (the Conch Street sales). It has emerged in evidence that those lands do not have absolute beach frontage, but actually front an undeveloped esplanade and that their views of the ocean are to some extent restricted by trees on that esplanade. Nevertheless, Mr Cross agrees that they do enjoy an advantage over the subject lands and he said that this is reflected in their higher values, each $162,000, compared with a maximum of $155,000 on the subject lands (excluding the duplex allotment).
I am of the opinion that the respondent has adopted the correct principles of valuation by making adjustments for the differences between the valuations of the sales and the subject lands. However, the question remains as to whether those differences have been sufficiently recognised. This can only be established by examining the market evidence.
The other sales relied on by Mr Cross are Sale 1 to the north and Sale 4 to the south of the subject lands, but both of which are closer than Sales 2 and 3. Sale 1 was rejected by the appellants as being in the business area, but it has been established that its present highest and best use is as a residential site. That sale analysed to show an unimproved value of $163,000 and $156,000 was applied by the respondent at the relevant date of valuation.
However, Sale 1 is less than ideal. First, it took place almost two years prior to the date of valuation. Second, while being physically similar to the subject allotments, it is situated adjacent to the business area and next door to a restaurant/tavern, which may or may not enhance its value. Third, it has no developed access, present access being by the means of an unformed earth track.
The other sale relied on by Mr Cross is Sale 4, which sold with some improvements and which was analysed by Mr Layt to show an unimproved value of $200,000 and by Mr Cross to show $217,500. That allotment differed from the subject lands by fronting an undeveloped esplanade and the respondent applied $162,000 to that allotment at the date of valuation.
Sales 1 and 4 therefore do not assist in indicating what difference in value should be made between the subject lands and those without an esplanade park or bitumen road between their frontage and the beach. Nor do Mr Layt’s sales. In the absence of such evidence, it becomes a matter of skill and judgment for a valuer to determine what adjustments should be made. In these cases, the differences have been recognised by the respondent and adjustments made. There is no cogent evidence from the appellants to indicate that those levels of value should be interfered with. From the evidence that they did advance, all that could be said is that the lands the subject of Sales 2, 3 and 4 could have been valued higher. However, they certainly do not indicate that the subject lands should have been valued lower.
The one departure from those levels of value was in respect of the duplex Lot 13. While there was no direct evidence of what increment in value such use gives to the allotment, the evidence does establish that there is an advantage over neighbouring allotments. In my view, the respondent was correct to recognise that. If authority for the increase in valuation is needed, it is derived from section 3(4) of the Act. I agree that the 5% increase was the least that could be reasonably applied.
Finally, there is the question of whether the unimproved value of Lot 15 should reflect its peculiar disabilities. Mr Layt says that it is more affected by runoff water from the rear because it is lower-lying than neighbouring allotments and would require up to 300mm of fill to raise it to an appropriate level. However, the evidence of Mr Benn raises a number of difficulties. He says that the allotment was a drain and that to fill the drain and level the allotment his father pushed “a few hundred metres” of sand from the beach.
That work was done nearly 40 years ago and its effectiveness would be difficult, if not impossible, to judge. It is highly unlikely that the authorities would allow it to be undertaken at the date of valuation. The neighbouring lands appear to have been improved with more substantial fill. However there is no evidence of the extent or cost of that fill. It seems that in previous valuations of these allotments, the valuation authority has not allowed for fill on any of these lands, as Mr Cross was unaware of it. One inference that could be drawn is that in the natural state all these lands were affected by seepage and runoff water in the wet season and required raising before building could commence. For some reason, perhaps because of the use of sand instead of more solid fill, Lot 15 was not raised to the same level as the neighbouring lands. If this was so, it would become the natural drainage point.
However, this is speculation. Whether or not Lot 15 in its natural state was lower than the surrounding lands would probably now be impossible to prove. In any case, there was no evidence of the extent of fill on the land, or its cost. The only evidence was Mr Layt’s estimate that 300mm of fill would be required to raise its present level to that of its neighbours.
In any case, as I said during the hearing, neither the effects of runoff water on Lot 15 or the fact of filling on that land had been included in the appellants’ grounds of appeal. Under the provisions of section 45(4) of the Act, the appellants are limited to their grounds of appeal and it is well established that they cannot rely on additional grounds at the hearing.
Therefore, I cannot have regard to those matters in deciding these appeals. If there were significant amounts of filling on the subject lands, it would be remarkable that the valuation authority had no record of them. If the Court was to make allowance for filling as an improvement then, apart from the threshold requirement that the matter be included in the grounds of appeal, the appellants would have to produce cogent evidence of the following:· the nature of the subject lands in their natural state;
· the amount of fill that had been placed on each allotment;
· the effectiveness of the fill (whether it remained in situ or had consolidated or been washed away; and
· the added value of the fill, which would involve calculating the volume of fill and the present cost of equally effective fill.
Conclusion:
Section 45(4) of the Act places the burden of proof on the appellants. If they fail to discharge that burden then the valuations made by the respondent are deemed to be correct. Section 33 of the Act reads as follows:
“Any and every valuation, or alteration to 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. ”
In Brisbane City Council v. The Valuer-General for the State of Queensland (1978) 140 CLR 41 at pp56-57, the High Court considered the provisions of the predecessor to section 33 (section 13(7)) of the Act. Gibbs J (as he then was), with whom the other members of the Court agreed, said:
“In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by section 13(7) is rebutted … In my opinion once it is shown that a valuation was made by a method fundamentally erroneous the presumption is rebutted. ”
In these cases, there is no evidence that the respondent acted upon a wrong principle. On the contrary, in my view, Mr Cross has adopted the correct principles of valuation in accordance with the provisions of the Act. Nor can it be said that the respondent made a serious error of fact. There was general agreement between the parties on the facts of these cases, the issues between them arose from the interpretation of those facts. I have already dealt with the matter of fill on the subject lands and there is simply not sufficient evidence in these cases to find that the respondent was in error in not allowing for that fill.
Finally, it cannot be said that the respondent made the valuation by a fundamentally erroneous method. Mr Cross, in supporting the respondent’s valuations, has adopted the method of direct comparison of the subject lands with sales of comparable lands. While issue was joined about the comparability of those sales, there can be no question that the method of valuation was erroneous.
In the circumstances, therefore, I find that the appellants have not discharged the burden of proving their grounds of appeal, nor have they rebutted the statutory presumption that the valuations are correct. In my view, the appeals should be dismissed.
Order:
The appeals are dismissed and the valuations of the Chief Executive are affirmed.
(JJ Trickett)
President of the Land Court
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