Monaghan v Department of Natural Resources and Mines
[2003] QLC 70
•30 October 2003
LAND COURT OF QUEENSLAND
CITATION: Monaghan v Department of Natural Resources and Mines [2003] QLC 0070 PARTIES: William John Monaghan
(applicant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO:
AV2002/0254
DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 30 October 2003 DELIVERED AT: Brisbane HEARD AT: Stradbroke Island MEMBER Dr NG Divett ORDER: The appeal is dismissed, and the unimproved value of Lot 18 on PL 85443 as determined by the Chief Executive in the sum of Two Hundred and Seventeen Thousand, Five Hundred Dollars ($217,500) is affirmed. CATCHWORDS: Statutory valuation – Valuation of Land Act 1944 – Section 17 – Residential use – Potential for subdivision to be ignored – Meaning of subdivision – Impact of development under Integrated Planning Act 1997 – Whether lot reconfigured by planning approval for multiple dwellings
Statutory valuation – Valuation of Land Act 1944 – Section 17 – Residential use - Potential for subdivision to be ignored – Meaning of subdivision – Whether partition has occurred with multiple dwellings.APPEARANCES: Mr WJ Monaghan appeared for the appellant
Mr G Smith, Senior Legal Office appeared for the respondent
Background:
This matter relates to land at 34 George Nothling Drive, Point Lookout, Stradbroke Island, and described as Lot 18 on PL 85443, Parish of Stradbroke. The subject land has an area of 922 m² and is zoned “Special Development” under the Redland Shire Council Town Plan of 20 February 1988. The land is also identified as “Urban Residential” in the Redland Shire Strategic Plan; and is included in the existing Island Residential Precinct of the Point Lookout Development Control Plan No. 3 of 9 February 1996. The valuation appealed is at 1 October 2001. The key issues are the nature of the land, the method of valuation, the use of the land, relativity, changes in the valuation and comparison of sales.
The subject land is situated at Point Lookout which is a relatively small community on the ocean side of Stradbroke Island, and about 20 kilometres from Dunwich. Water taxi and vehicular ferries are available to the mainland at Cleveland from Dunwich, with travelling times of about 40 minutes and 1 hour respectively. Access to the subject land is good from George Nothling Drive which is bitumen sealed with concrete kerbing and channelling. There is a local bus service from Dunwich to Point Lookout. All normal urban utility services are available.
On 25 February 2002 the Chief Executive issued a valuation for the subject land at $217,500. Following an objection the Chief Executive confirmed that figure on 16 July 2002. The appellant has now appealed claiming the unimproved value should more properly be $162,500. While the appellant did not request a court supervised preliminary conference, an unsuccessful preliminary conference before the Judicial Registrar was held in conjunction with other matters on 11 March 2003. A formal hearing of the appeal was held on 22 July 2003.
William John Monaghan appeared and gave evidence on his own behalf. Mr G Smith, Senior Legal Officer appeared for the respondent, calling evidence from George Dudek, the departmental registered valuer responsible for determining the valuation.
The Appeal –
The appellant relies upon the following grounds in his Notice of Appeal:
· That the Chief Executive has ignored the previously negotiated valuation, agreed after a reduction by the Chief Executive following an appeal to this Court. (AV00-98), and formally withdrawn on that basis from the court on 21 September 2000.
· That the Chief Executive has contravened section 17 of the Valuation of Land Act 1944.
A statement generally elaborating those grounds was provided. (Exhibit 3). Mr Monaghan is a retired naval officer with experience and training in economics, statistics and accounting. He has no formal training in valuation and property matters. He confirms that previous objections against annual valuations in 1998 and 2000 had resulted in some reductions being applied by the Chief Executive. The most recent appeal in 2000 had been reduced from $162,500 to $155,000 after a s.68(2) offer by the Chief Executive on 13 September 2000. That valuation related to 1 October 1999, some two years before the current relevant date of 1 October 2001.
The Nature of the Land -
The subject land is an almost rectangular parcel of medium elevation, located about 600 metres inland from the shore line. The land falls slightly from the street, and its frontage is below street level. The subject land is currently occupied with a single residence, and has been valued on the basis of there being no direct views of the ocean from the existing dwelling. However Mr Dudek observes that distant ocean views are available from the street in front of the subject land. He further speculates that some ocean views may be possible from a possible two-storey dwelling on the subject land. On that basis he argues that the current valuation may be conservative, and he speculates that a figure of $240,000 might be relevant if ocean views did exist.
Changes in the Valuation –
To support his concerns Mr Monaghan provides records obtained from a local real estate agent, which purport to demonstrate changes in the market levels over recent years. Mr Monaghan provides a selected schedule showing medium growth patterns of vacant urban land at Point Lookout over the period 1991 to 2002. (Exhibit 3, enclosure C). He argues that those statistical figures covering all land use types at Point Lookout were prepared by a private company Australian Business Research. Mr Monaghan understands that those statistics were based upon raw sales information obtained from records maintained by the respondent. However he was unable to confirm either the professional competence of the source of the analysis, or the exact dates used in the analyses.
Mr Dudek rejects such analyses as he notes that the use of moving median prices, as well as the use of any averaging of sales information, are both unreliable methods of comparing actual changes in the value of land. He notes for example that such processes tend to use sales of significantly different properties in character or quantum. As such he therefore notes that trend patterns can be very unreliable. Mr Monaghan concedes that averaging of sales information is probably an inaccurate approach, but he uses the statistical chart to merely demonstrate that there had been a sudden change in the trend of values, coincident with the introduction of the new Development Control Plan (DCP) for the area in 1996.
In explaining his understanding of the changes in the values at Point Lookout, Mr Monaghan provides the following patterns:
YearMoving Median Value Percentage Growth
1991$88,557 -
1992$139,672 Plus 57.7%
1993$131,429 Minus 5.9%
1994$173,500 Plus 32%
1995 $181,850 Plus 4.8%
1996$106,610 Minus 41.4%
1997$163,610 Plus 53.5%
1998$142,556 Minus 12.9%
1999$233,250 Plus 63.6%
2000$361,321 Plus 54.9%
2001$285,000 Minus 21.1%
2002$313,167 Plus 9.9%
Mr Monaghan explains that just prior to the introduction of the DCP, the Redland Shire Council (the Council) had undertaken a major planning environmental and public relations exercise in seeking to make available a further 400 lots of residential land at Point Lookout. That was intended to extend the current 850 lots available in that area, and was planned for an extension of the George Nothling Drive area. The potential of the availability of those extra lots tended to influence a decline in the price of lands in 1996.
Mr Monaghan explains that for a period, values for land declined until the public realised that the Council proposal had to be cancelled, because of current native title restrictions by the local Quandamooka People land claim. That was subsequently confirmed in a letter by the Minister for Natural Resources and Mines on 4 April 2003. (Exhibit 3, enclosure G). The result of that current land claim is that no further lands for residential development are currently available at Point Lookout. That was then seen to cap the availability of land, and land prices then started to escalate. Mr Monaghan explains that those trends were evident in the moving median values for 1995 to 1997. He notes also that a decline in 1998 (Minus 12.9%) had been then recovered by a major increase in 1999 (plus 63.6%). Those increases were subsequently continuing.
Mr Monaghan argues that following the introduction of the DCP, developers quickly realised that it was then possible to develop multi-units upon a single parcel. Mr Monaghan identifies such multiple use of a single parcel as a form of “subdivision”, allowing greater use of each site. He argues that altered planning regime has now led to two different markets at Point Lookout, one for single residence sites, and the second for multiple use residential sites.
In considering the difference between Mr Dudek’s valuation and the statistics provided by Australian Business Research, it is Mr Monaghan’s understanding that Mr Dudek has only adopted sales evidence from a small sample of all sales in the area. The Australian Business Research statistics by comparisons provides a moving median price for all sales in the area. On that basis he concludes that there are inherent errors in the representation of Mr Dudek’s selection of his sales evidence. Mr Monaghan argues that was likely to have led to the differences between Mr Dudek’s projected increase of 40% during 2001, while the Australia Business Research statistics revealed a decline of 21% in the same period. Mr Dudek rejects that assumption as he argues that he has considered all of the 25 available sales in the relevant period, and chose for the preparation of his report, to rely mainly upon the five most comparable sales.
Mr Dudek does not agree that the more recent large increases in land values at Point Lookout are the direct result of the DCP, as he notes that similar increases in value have occurred elsewhere in South-East Queensland. He advises that is particular so where lands have close proximity to the waterfront, or have good water views. He advises that in such locations there have been annual increases in value of up to 70% in other areas.
Method of Valuation –
In explaining his approach to the valuation of the subject land, Mr Monaghan argues that it is his opinion that Mr Dudek has failed to properly implement directions found in s.17 of the Valuation of Land Act 1944 (the Act). Mr Monaghan notes that s.17 specifically directs that any valuation of the subject land, in accordance with its use as “a single residence” site, must exclude considerations of any other potential of the land. Mr Monaghan argues that as development of single lot parcels at Point Lookout under the DCP is now conceding virtual “subdivision” of the land into several separate parcels, then that higher potential of the land must be ignored in the valuation.
To explain his understanding, Mr Monaghan seeks clarification of the meaning of “subdivide” from s.8(1) of the Act. He notes that it may be taken to mean that the land may be divided into parts, among others, by “partition”. He argues that action to develop several dwellings upon a single lot under the DCP, is virtually the partitioning of that parcel, and therefore is subdividing the parcel into partitions. He argues such potential must be excluded under s.17 of the Act. Mr Monaghan further speculates that while s.17 directs that any enhancement in the value for “any other purpose” is not specifically defined in the Act, he concludes that was likely to reflect the age of the Act (1944), and a more updated understanding of what might be involved in “subdivision” under more recent legislation such as the DCP should now be contemplated.
Mr Monaghan argues that while Mr Dudek might claim that he has not taken any subdivisional potential into consideration in his valuation, the adoption of sales of lands subsequently used for several dwellings contradicts that assumption. Mr Monaghan advises that in George Nothling Drive near his property there are already two parcels containing three dwellings, five parcels containing two dwellings each, and both parcels either side of the subject land (Lots 17 and 19), each have current approval for four dwellings on each of those two parcels. He also notes that three of five sales recently indicated in a letter from the respondent of 26 March 2003 (enclosure D), as comparable sales, have been granted approval for multiple dwellings at 35 Cumming Parade, 7 Midjimberry Road and 20 Bigoon Street.
To further support his estimate of the valuation of the subject land at $162,500, Mr Monaghan seeks to analyse a recent sale of Lot 12 in June 2001 of an improved property at 30 George Nothling Drive, one lot removed from the subject land. He argues that if the improvements of $95,000 are deducted from that sale price of $375,000, the resulting $280,000 reflects the value of the land suitable for two dwellings. He notes that the existing dwelling is conveniently located such that a second dwelling may later be built at the rear of that parcel, in accordance with the current building trends in that area. On that basis he concludes that land for one dwelling would be worth $140,000. Allowing for the larger area of the subject land as a single dwelling site, he concludes a value of $162,500.
As a method of seeking to isolate any premium that might attach to the recent sales, which have the inbuilt potential for subdivision included in their market value, Mr Monaghan seeks to identify any increases as a result of normal market trends. He takes support from trends shown in the statistics provided by the Australian Business Research in para [10]. He notes that between 1991 and 1996 there had been a suggested 20% increase over those five years in the median figures. He then compares that trend with the increase between 1996 and 2000 at 139%, which he argues then included the extra subdivisional potential.
Mr Monaghan also considers normal supply and demand cycles where market forces direct the establishment of market value in a reasonably elastic market situation. He argues that the restrictions on supply of vacant lands by the current Indigenous land claims on the Island, has imposed a greater level of inelasticity into the Point Lookout market, escalating land prices. To that economic situation he argues that the Council has now further increased the pressures on land prices by allowing multiple dwellings under the DCP.
Because of that very constrained market situation, Mr Monaghan seeks support in respect of comparable sales evidences in a recent decision of the High Court of Australia in Maurici v Chief Commissioner of State Revenue and Anor [2003] HCA 8. The key issue he seeks to identify from Maurici is the need for any sales evidence adopted to be truly comparable, where scarcity of suitable residential lands in Point Lookout is apparent. He argues that the level of scarcity of land at Point Lookout is virtually conceded by the ministerial advice of 4 April 2003 (enclosure G). He further argues that such scarcity of comparable residential land for single dwelling purposes should be restricted to pre-existing dwellings at the creation of the DCP in 1996.
Mr Dudek rejects that approach, arguing that under s.3(1)(b) of the Act the subject land itself must be valued as if it were unimproved, and comparisons on that basis would allow any potential for development of the subject land to be in accordance with the current DCP. Mr Dudek also pointed out that “Duplex” dwellings are also included in the definition of a “single dwelling house” under s.17 of the Act. Mr Smith notes that Mr Monaghan’s estimate of the analysis of the nearby 30 George Nothling Drive (Lot 12) provides a land value of $280,000 for that parcel, which is more supportive in relativity with the $217,500 for the subject land as determined by the Chief Executive.
Comparison of Sales –
The only sales evidence supplied by Mr Monaghan is the sale of 30 George Nothling Drive, discussed in para [19], and which Mr Monaghan estimates has an unimproved value of $280,000. To support his valuation Mr Dudek supplies the following sales:
· Sale 1 – (35 Cumming Parade – Lot 24 on PL 85444). This is a 1,250 m² vacant hatchet shaped parcel with reasonable ocean views from ground level, and better ocean views from the upper floor level. The sale is about the same distance from the waterfront as the subject land, and has subsequently been developed for two residences. The sale sold in October 2000 for $412,000, was analysed at $410,000, and applied at $410,000. The sale is vastly superior to the subject land.
· Sale 2 – (7 Cumming Parade – Lot 42 on PL 85446). This is a 985 m² parcel developed with a small cottage, which was partially demolished, and the balance included into a new dwelling. The added value of that old cottage is estimated at $10,000. The sale has some of the best ocean views on the Island. The sale sold in March 2001 for $556,000, was analysed at $546,000, and applied at $540,000. The sale is vastly superior to the subject land.
· Sale 3 – (George Nothling Drive – Lot 12 on PL 85443). This is the same as Mr Monaghan’s sale, and it has an area of 802 m², and was analysed at $275,000, and applied at $245,000. The old brick two storey single dwelling is agreed to provide $100,000 of added value, and there is likely to be some ocean glimpses from the upper level of that dwelling. The sale is seen as slightly superior to the subject land, and sold in June 2001 for $375,000.
· Sale 4 – (106 Mooloomba Road – Lot 4 on PL 85430). This is a 574 m² vacant parcel on the main thoroughfare through Point Lookout. The land is level, below street level, falling slightly to the rear. The sale is about 200 metres from the waterfront, but there are unlikely to have any ocean views due to surrounding topography. The sale is seen as similar to the subject land. The sale sold in August 2001 for $285,000, was analysed at $283,000, and applied at $237,500).
[28]
· Sale 5 – (8 Moongalba Road – Lot 15 on PL 8541). This is a 759 m² improved parcel with a small cottage in poor condition providing no added value. The sale is level, and above street level, and has possible ocean views from a second level of a new dwelling. The sale is seen as superior to the subject land. The sale sold in December 2001 for $432,500, was analysed at $430,500, and applied at $385,000.
Mr Dudek advises that the previous unimproved value of 30 George Nothling Drive had been $175,000, and the new applied value of $245,000 reflected an increase over the two years since 1999 of 40%, which was consistent with the increase applied to the subject land of 40% over the same period. Mr Smith argues that many of the new dwellings constructed are duplex dwellings by nature. Mr Monaghan was unable to comment on areas well removed from George Nothling Drive, but argues that dwellings in that street tend to be separate dwellings, except for the adjoining parcel at 36 George Nothling Drive, which has been developed as a duplex. There is also a third dwelling on the rear of 36 George Nothling Drive. Many of the houses on that street are also tourist accommodation, however he agrees that there could be some duplexes in Tramican Street.
In respect of the availability of the existence of vacant residential sites in Point Lookout generally, Mr Monaghan was unable to advise, but he concedes that there are about three or four vacant lots still available in George Nothling Drive. However he believes those owners were presently just waiting to sell as the market continued to rise, and he argues that speculators are driving up the value of land generally. He argues it is therefore unreasonable to compare those inflated prices with lands where existing developments have already utilised the then potential of those parcels as a single residence site, such as the subject land. In such a constrained and restricted, or scarce market environment, he argues that it is clearly the sellers who dictate the selling prices, where the inflated potential to “subdivide” into two separate dwelling areas has been built into the price. He argues that is the very scarcity that was addressed in Maurici. Speculators in the area are now conscious of the restrictions upon supply at Point Lookout. He was unable to comment on Mr Smith’s suggestion that data bases currently show 203 vacant parcels at Point Lookout.
Mr Monaghan accepts that there are currently some selected purchasers who buy the parcels at the existing high prices, and continue to develop those fewer parcels for a single dwelling. But he argues that such buyers reflect a smaller portion of the overall market, as the majority of buyers plan to develop multiple dwellings. He argues that those buyers exercised their personal choice, but they pay the prices which are already inflated by the higher potential for subdivision, which must be rejected under s.17 of the valuation process.
Mr Monaghan argues that if his current dwelling could be demolished, or removed from the subject land, as required under s.3(1)(b) of the Act, then he would agree that it then had the potential to be used for the development of two separate dwellings. He notes that has occurred where some of the sales have already been lightly developed, and therefore it may be economic to allow for its demolition. But with the substantial improvements of the subject land, that opportunity does not present itself at the current level of the market. He notes that if the existing dwelling on 30 George Nothling Drive had to be removed to allow for two dwellings on that site, then that owner would virtually have to throw away $100,000, plus the cost of demolition. Mr Monaghan argues that is not reasonable at current market levels.
In explaining his method of comparing sales evidence under s.17, Mr Dudek advises that such parcels are always compared upon a site basis, and not upon a pro rata basis or a per unit basis. He argues that the market place reflects such an approach. He also confirms that in his professional opinion there remains a significant number of vacant parcels at Point Lookout at the relevant date, and issues addressed by Maurici are therefore not relevant in respect of scarcity. He argues that at Point Lookout the market does not differentiate between a higher use which is mostly two dwellings, or a duplex, or a single residential use. He advises that provided there are only two dwellings on a site it will continue to attract a s.17 concessional valuation.
Mr Dudek argues that four of his five sales are vacant or lightly improved sales. He also included his Sale 3 at 30 George Nothling Drive, which was an improved sale, because of its proximity to the subject land. He argues that even Mr Monaghan’s estimate of the land value at $280,000, more than supports his applied value of $245,000 for that sale. In respect of why he provides some further sales beyond those referred to in the Chief Executive’s letter of 26 March 2003, [para 18], Mr Dudek notes that he is not bound to the previous sales evidence, as he had considered all of the sales in the relevant period. In his opinion the five sales now included in his report provide a good picture of the market levels at Point Lookout.
Mr Smith seeks support for Mr Dudek’s conclusion that there is no difference in value between a single unit dwelling and a multi-unit site, given the prestige and quality of the Point Lookout location, in a decision of this Court in Shara Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 340, which is discussed later.
Decision:
The Method of Valuation -
I turn first to the legislation and note that the meaning of unimproved value of land is defined in s.3(1)(b) of the Act 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.”
I note also s.17 of the Act which relevantly states:
“17.(1) In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.
(2) In subsection (1) –
‘single dwelling house’ means –
(a) a dwelling used solely for habitation by a single household; or
(b) a dwelling used solely for habitation by a single household –
(i) part of which is used or for use as a furnished room or furnished rooms; or
(ii) with a single self-contained flat or
(c) a building consisting of two flats used solely for habitation; or
(d)a building consisting of two self-contained units, known as a ‘duplex’, and used solely for habitation.”
I note also that s.8 of the Act at the relevant date stated:
“8.(1) ‘Subdivide’ land means divide land into parts.
(2) Land may be divided into parts by –
(a) sale, conveyance, transfer or partition; or
(b)an agreement, conveyance or instrument between living persons under which a part of the land becomes immediately available for separate disposition or occupation; or
(c)the issue of a certificate of title under the Land Title Act 1994 for a part of the land.”
That has subsequently been amended in 2003 by alterations of s.8(2)(c) to read:
“8.(2)
(c)the registration of a plan of subdivision, for the land, in the Land Registry kept under the Land Titling Act 1944.”
The 2003 amendment to s.8(2)(c) followed a decision of this Court in Zadtech Pty Ltd v Chief Executive, Department of Natural Resources and Mines (V2001-0016 to 0038), 21 September 2001, unreported. In that matter the Learned Member considered the implications of changes to the Land Title Act 1994 which removed the automatic issuing of a certificate of title. [para 15].
If I turn then to the Land Title Act 1994 I find that the issuing of a certificate of title occurred under s.42(1) of that Act at the relevant date. A Certificate of Title relates to an indefeasible title to “a lot”, which in turn is defined as a separate, distinct parcel of land created on the registration of a “plan of subdivision”. (S.49). Guidance on interpreting that meaning of “subdivide” within the context of the Land Titles Act 1994 was clarified in Zadtech Pty Ltd where the learned Member said at [para 15]:
“(15) It is noted that a certificate of title is no longer issued automatically under the Land Title Act 1994. The indefeasible title for a lot is the correct particulars in the freehold land register about the lot. (s 38, Land Title Act). A certificate of title issues only on the request in writing of the registered owner (s 42(1), Land Title Act). The reference in s.8(2)(c) of the Valuation of Land Act to the issue of a certificate of title was inserted prior to the introduction of the Land Title Act and at a time when certificates of title issued automatically on the registration of the relevant dealing under the predecessor legislation, the Real Property Acts 1861 – 1993. It is considered that, in the light of the changes introduced by the Land Title Act, s.8(2)(c) should be read as a reference to the point of time when a certificate of title could issue under the Land Title Act, that is, when the relevant dealing is registered.”
In the current matter there are no specific subdivisional surveys involved where the Council was approving multiple dwellings upon a single parcel of land, and s.8(2)(c) is not relevant in those matters. There is also no evidence that such multiple dwellings upon a single parcel were subject to separate leases, or disposition, or occupation by a lease for a period exceeding five years as required under s.8(3)(a).
In seeking to understanding the meaning of “partition” as it is expressed in s.8(2)(a), I note that Mr Monaghan argues that its ordinary meaning should be taken to mean the action of parting or “division into parts”. (Concise Oxford Dictionary). However I note also that the Oxford Dictionary also identifies a legal meaning of “partition” which is used to define the “division of real property between joint tenants”. In explaining that legal meaning in Zadtech Pty Ltd, the learned Member said at (para 36):
“(36) The word ‘partition’ has acquired a legal meaning, which is the ‘division of land belonging to co-owners and the allotment among them of the parts so as to put an end to community of ownership between some or all of them’. (Butterworths Words and Phrases Legally Defined.) In considering whether that meaning should be attributed to the word ‘partition’ in s.8(2)(a) of the Act, I have applied the decision of Priestly JA in Gamer’s Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Pty Ltd. His Honour said (at 483, 484):
“… but if, as is the case here the words have a range of meanings, then the construction to be given to the words used must take into account the legal as well as the ‘ordinary’ uses to which they have been put. … The object of the approach is not to find the legal as opposed to the ‘ordinary’ meaning, but to find from the range of legal or ordinary meanings, which in any event will seldom be in watertight compartments, the meanings best suited to the statutory document as a whole.””
In Zadtech Pty Ltd that matter dealt with the date of effect of a plan of subdivision, and the resulting separate valuation of the separate parcels of land under s.28(1) of the Valuation of Land Act 1944. There was no dispute that the land had actually been divided into separate parcels by that survey, but only dispute as to the actual date of effect of the separate valuations. In seeking to understand the meaning best suited to the statutory meaning of “partition” in s.8(2)(a), the learned Member said at (paragraph 37):
“(37) The word ‘partition’ is used in s.8(2)(a) of the Act which begins with the words ‘Land may be divided into parts by,’ among other ways, partition. If the respondent’s submission as to the meaning of ‘partition’ were adopted the section would read, ‘Land may be divided into parts by parting or dividing into parts (or similar words)’. This interpretation, in effect, gives no meaning to the word ‘partition’. In my opinion, therefore, the word partition as used in s.8(2)(a) should be given a more specific meaning, namely its legal meaning as set out above.”
The meaning of “subdivide” was also explored in Chief Executive, Department of Natural Resources and Mines v Atzeni (AV2000-301) 10 October, 2001, unreported. In that matter the Land Appeal Court considered whether three parcels of land which were found not to be eligible for “farming” concession under s.17 of the Act, should in fact be considered as three separate parcels for valuation purposes under ss.25 and 34 of the Act. The learned Member below had found that a survey of two of the existing lots had been “reconfigured” to provide access, and those parcels as such had not been “subdivided”. However he also found that a single valuation of those three parcels was not appropriate. The major ground of appeal related to whether any discount for multiple holding should apply to each of those separate valuations.
In rejecting the matter of discount for multiple ownership, the Land Appeal Court also considered whether the alteration of the original common boundary of two of the lots constituted a “reconfiguration” of those parcels; or if such a survey constituted “to subdivide” under s.8(2) of the Act. The Land Appeal Court found at p.8:
“When the definition of ‘subdivide’ inserted in the Act in 1993 is compared with the original definition of the Act, the new definition appears to have modernised the drafting of the original definition, rather than change the underlying concept of subdivision. That is consistent with the explanatory notes for the Lands Legislation Amendment Act 1993 which refer to the relevant amendment providing for ‘updated meanings’ of definitions including ‘subdivide’.
Possible approaches to the construction of the virtually identically worded part of the definition of ‘subdivide’ in section 4 of the Local Government Act 1919 (NSW) were considered by Mahoney JA in Registrar General v Lee (1990) 19 NSWLR 240, 248; 70 LGRA 114, 122:-
‘It is not clear whether the words “whether the dividing is” which introduce matters intended to be within the definition are intended to include within the words “dividing land into parts” the matters in pars (a), (b) and (c) upon the basis that they clarify what would otherwise fall within “dividing land into parts” or whether the words “whether the dividing is” are intended to include those matters within the general expression upon the basis that they would not otherwise be included in it. This is of relevance because if the registration of the present plan by the Registrar-General would not, as I think, constitute a “dividing land into parts”, then pars (a), (b) and (c) would, on the first basis require no further consideration: on the second basis, they would. I shall at this point assume without deciding that the words “whether the dividing is” are intended to add to “dividing land into parts” things which otherwise would not be within them and are therefore equivalent to “include”.’
Other members of the court in Registrar-General v Lee did not consider this aspect of the definition of ‘subdivide’.
As a matter of analysis, we consider that the operative part of the original definition of ‘subdivide’ is that of ‘dividing land into parts’ and that the purpose of pars (a), (b) and (c) is to set out examples of the means by which land can be divided into parts by a way that is illustrative, but not exhaustive of how subdivision can occur. We therefore prefer the first interpretation offered by Mahoney JA that the matters in pars (a), (b) and (c) clarify would otherwise fall within ‘dividing land into parts’, but we would add that the inclusion of those specific matters does not exclude other means of dividing land into parts not expressly covered by pars (a), (b) and (c).”
The Land Appeal Court further explained at p.9:
“That approach to the old definition is reinforced by the modern drafting of the same definition now found in section 8 of the Act. Section 8(1) contains the operative definition. Section 8(2) then lists means by which land may be divided into parts and expressly relates back to the operative definition in section 8(1) of the Act. The means of dividing land into parts that are set out in section 8(2) of the Act illustrate possible means of how dividing land into parts can occur. The use of the word ‘may’ in section 8(2) of the Act is consistent with the methods of dividing land into parts which are set out in pars (a), (b) and (c) being specified as means of effecting a subdivision for the purpose of the Act, but that are not necessarily all possible methods. The use of the word ‘may’ does not connote that if one of the matters set out in pars (a), (b) or (c) of section 8(2) of the Act has occurred, further enquiries should be made as to whether there has been a subdivision for the purpose of the Act. If one of the matters in pars (a), (b) or (c) of section 8(2) of the Act occurs, the result is that the land has been subdivided into parts for the purposes of section 8(1) of the Act.”
That explanation therefore accepts that there may be other methods by which land may be subdivided, further to those expressly identified in s.8(2)(a), (b) or (c). It may be possible, for example, for such a method to include the designation of separate individual buildings upon a single parcel as a form of subdivision, if those buildings are to be used for “separate disposition or occupation”. But the existence of such separate “disposition or use” is already conditioned by s.8(3) of the Act, and there is no evidence of such intended uses.
The matter of whether a lot may be perceived to be reconfigured as the result of a planning approval for multiple dwelling use, could be seen in the perspective of the meaning of “development” under the Integrated Planning Act 1997. Under the definition for terms used in “development”, as specified in s.1.3.2 of that Act, s.1.3.5 of that Act directs that a “lot” includes a lot under the Land Title Act 1994, which covers all existing freehold parcels at Point Lookout. That section also defines “reconfiguring a lot” to mean:
“Reconfiguring a lot means –
(a) creating lots by subdividing another lot; or
(b) amalgamating two or more lots; or
(c)rearranging the boundaries of a lot by registering a plan of subdivision; or
(d)dividing land into parts by agreement (other than a lease for a term, including renewal options, not exceeding 10 years) rendering different parts of a lot immediately available for separate disposition or separate occupation; or
(e) creating an easement giving access to a lot from a constructed road.”
The use of the term in (d) for a period not exceeding ten years for a lease which may be seen to constitute “reconfiguring”, rather than “subdivide”, was included into the Integrated Planning Act 1997 (IPA) by Amendment Act 31 of 1998, which specifically changed the definition of “plan” in s.3.7.1A of IPA to mean:
“’plan’ includes an agreement that reconfigures a lot by dividing land into parts rendering different parts of a lot immediately available for separate disposition or separate occupation, but does not include a lease for –
(a) a term, including renewal options, not exceeding 10 years; or
(b) all or part of a building.”
Prior to that amendment the meaning of “reconfiguration of a lot” was included in s.3.7.1 (plans of subdivision) and referred only to a plan which, under another Act, required the approval of a local government before it could be registered.
The purpose of the amendment under Amendment Act 31 of 1998 was to enable the practice of approving leases and lease plan which constitute reconfiguration to be continued. However it is noted that such leases, which may or may not involve a lease plan, needed approval before lodgement can proceed. (Integrated Planning Act and The Local Government Association of Queensland Commentary Service, pp 11 and 145).
The intention of s.3.7.1 of the IPA continues the previous provisions of the Local Government Planning and Environment Act 1990 (LGP & EA), which was repealed on the ascension of IPA. Under s.1.4 of that Act, the definition of “subdivision” was stated as:
“’Subdivision’ means the division of land into parts by means of –
(a) sale, transfer or partition; or
(b)any agreement, dealing or instrument inter vivos (other than a lease for any term not exceeding 5 years without the right of renewal) rendering different parts thereof immediately available for separate disposition or separate occupation; or
(c)the creation of an indefeasible title under the Land Title Act 1994 for a part of the land; or
(d) the excision of land from an allotment for dedication to the Crown.”
That definition in respect of the potential for “separate disposition or separate occupation” was clearly linked to the current description in s.8(2)(b) of the Valuation of Land Act 1944. While the continued use of the period “longer than five years” in s.8(3)(a) of the Valuation of Land Act 1944, may be concluded to differentiate any meaning for the terms “subdivide” or “reconfigure”; the purpose of those two actions would tend to disregard such a scenario, as the meaning of “subdivision” under the LGP & EA included the word “partition”. On preliminary observation s.8(3) would appear to be not fully aligned with the intentions of s.1.3.5 of IPA, and the reference in s.8(3) to a term exceeding five years may be outdated, but that is a matter for consideration by the Chief Executive.
It is noted that in the Development Control Plan 3 (Point Lookout) the permitted developments for the Island Residential Precinct are included in schedule 4.2. Those requirements stipulate that single dwelling houses are permitted developments subject to conditions as espoused in the Town Planning Scheme; while multiple dwellings can be erected only with the consent of Council. However both uses are specified as primary uses in such Island Residential Precinct, and the relevant site coverage is specified in s.4.4.4 of the DCP. Clearly the use of a single parcel for a multiple dwelling use as a separate, or a detached dwelling, is an approved used of the parcel, subject to the consent of the Council. However as to whether the Council has legally approved the use subject to special conditions, must be determined by reference to the broad planning regime effective in the area.
However if that broader meaning of “subdivide” under the Act was to be extended to include the approved intended use for multiple dwellings upon a single parcel, then the Chief Executive would have a legal obligation to implement s.35(1)(a) which states:
“35.(1) Unless the Chief Executive otherwise directs –
(a)Several parcels of land which are owned by the same person, but which are separately let to different persons, shall be separately valued;”
That would also be in accordance with s.34(2) which states:
“34(2). However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships.”
But the evidence is that the Chief Executive has not sought to value each parcel where multiple separate detached dwellings have been built, as other than a “single dwelling” site under s.17 of the Act. And that is the claim of the appellant, that by so exercising his discretion not to provide separate valuations where separate dwellings have been subsequently erected upon a single parcel, that the Chief Executive has incorrectly used such sales where “subdivision” has to be ignored under s.17.
On that basis I could accept Mr Monaghan’s claim that sales should be excluded, where such sales are subsequently developed for multiple use purposes, and where the subject land itself is used for a single residence only. That is at the heart of the truly comparable sales evidence as espoused in Maurici v Chief Commissioner of State Revenue [2003] 195 ALR 236. However I am also reminded that under s.3(1)(b) the subject land itself must be seen as an unimproved parcel.
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 p.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.”
In simple terms the land is to be treated as if all improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant.
I also reject direct application of Maurici in the current matter as the evidence is that there is no agreed scarcity of sales of vacant lands at Point Lookout, where the intended purpose of the sale was to develop a single residence site. That was expressed in paras [30] to [34]. In respect of whether Mr Dudek’s valuation should be restricted to the five sales provided in the letter from the Chief Executive of 26 March 2003, I refer to the decision of this Court in Kalinicos and Others v Chief Executive, Department of Natural Resources and Mines (AV2001/0231), 22 August 2002, where the Member said at paragraph [47]:
“I then consider Mr Paterson’s concern that the respondent should not be restricted in his evidence to only those sales contained in the Freedom of Information response obtained under judicial review. In that regard I turn to the decision in Mayne Property Development Pty Ltd v Chief Executive, Department of Lands (AV94-64) 16 February 1996, where the President said at 7:
‘In my opinion there is no merit in the appellant's argument. Whatever the respondent's obligations to provide information under the Freedom of Information Act, this does not prevent him from relying on additional information before this Court. He is not required to advise the appellant of his case in advance. Here there are no pleadings by which a party is bound. On most occasions, neither party will know with any certainty what sales the other will be relying upon until they are produced at the hearing.
The unimproved value of a parcel of land is a matter of fact. A valuer forms an opinion of that value based on the evidence he has available at the time of making the valuation. Other evidence may subsequently come to his attention. If, upon closer investigation, he finds that other sales support his opinion then he is entitled to include them in his evidence or substitute them for his initial evidence.’”
Now since that date there have been amendments to the Land Court Rules 2000, which now require, under Rule 23, that expert evidence be exchanged prior to the actual hearing. However that does not preclude the expert from forming his opinions based upon the evidence as it appears relevant to him at that time. There is also scope with the leave of the Court, for variations under Rule 23(3). I see no reason why Mr Dudek should be restricted in his sales evidence applied in this matter.
Changes in the Valuation –
In respect of Mr Monaghan’s reliance upon the moving average approach to isolate a perceived change in the market related to 1996, I note that any averaging of sales approach has been found to be flawed by the Courts. The matter of averaging of sales was addressed in Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299 at 305, where Williams J said in the High Court of Australia on 26 August 1943:
“This method of averaging to my mind is unsound. The prices obtained at comparable sales should not be aggregated and averaged, especially when the prices obtained on sales of small areas are dealt with in this way in order to obtain the value per acre of a large area. The only safe course is to compare each sale with the subject land separately.”
That principle has been upheld by lesser courts on many occasions subsequently.
On that basis I get little assistance from the statistical analysis by Mr Monaghan. I also accept that Mr Dudek has not merely chosen a very restricted and non-representative sample of sales, but that he has considered all of the relevant sales, and provided the five sales to demonstrate the broad general trend in that market. I also accept that the quite significant increase of 40% at Point Lookout is not inconsistent with other waterfront lands in South East Queensland for the corresponding period.
Comparison of Sales –
In seeking to define what constitutes a fair market value, I note that it is not merely the seller who determines the price of land. That was established in the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418, where Griffith CJ said at p.432:
“In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie 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.”
In selecting his four sales of vacant or lightly improved lands, and the improved Sale 3, Mr Dudek has demonstrated that lands are being purchased at comparable prices for either a single dwelling site, or where multiple dwellings can be built. While the single dwelling sites now tend to reflect the minor part of the overall market at Point Lookout, their existence indicates a defined segment of the market for that purpose.
In respect of the highest and best use of sites at Point Lookout as being either as a single residence site or for a multiple residence purpose, I am reminded that the highest and best use must be determined specifically as it relates to individual sites. I am also reminded that in the close by suburb of Cleveland, which is also a waterfront area similar to Stradbroke Island, evidence was found in the matter of Shara Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 340, at p.350:
“It should be noted that both Mr Dewar and Mr Frew agreed that well-positioned land would have the same value in the marketplace for either single-unit or multi-unit residential purposes in the area of the subject land.”
On the evidence I have nothing to demonstrate that the constrained availability of vacant lands at Point Lookout, would not be comparable for either multiple or single residence purposes.
However it is noted that Mr Dudek advises that s.17 is applied to a single parcel, even when there are two separate dwellings upon the site. Now while that may be the current decision of the Chief Executive not to exercise his discretion under s.34(2) of the Act, that is seen to be a conservative approach in view of the wording of s.17(2)(d) which refers specifically to “a building consisting of two self-contained units”. In respect of the nature of any buildings that would appear to indicate a singular approach to the exercising of s.17 in that regard. But that is again a matter for the discretion of the Chief Executive.
If I look then at Mr Dudek’s sales evidence I find the following comparisons on a site value basis:
SaleArea Unimproved Value Comparison
2985 m² $540,000 Vastly superior
3802 m² $245,000 Slightly superior
4574 m² $237,500 Similar
5759 m² $385,000 Superior
Subject land 922 m² $217,500 -
On that basis there is nothing to indicate that Mr Dudek has made an error of fact, or has followed a wrong principle. (Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41, at 56). While Mr Dudek might speculate that some ocean views might be possible from a second storey dwelling on the subject land, on the evidence I believe that $217,500 reflects a fair valuation.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellant has proved his case. The appeal is dismissed, and the unimproved value of Lot 18 on PL 85443 as determined by the Chief Executive in the sum of Two Hundred and Seventeen Thousand, Five Hundred Dollars ($217,500) is affirmed.
MEMBER OF THE LAND COURT
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