Nimmo v Department of Natural Resources and Mines
[2005] QLC 28
•10 June 2005
LAND COURT OF QUEENSLAND
CITATION: Nimmo v Department of Natural Resources and Mines [2005] QLC 0028 PARTIES: Geoffrey K Nimmo
(applicant/appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2002/0419 and AV2003/0686 DIVISION: Land Court of Queensland PROCEEDING: Appeals against Annual Valuations under the Valuation of Land Act 1944 DELIVERED ON: 10 June 2005 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDERS: (1) Appeals AV2002/0419 and AV2003/0686 are allowed.
(2) The unimproved value of Lots 16 and 17 on Registered Plan 11691, Parish of South Brisbane, County of Stanley, as at 1 October 2001 is determined at Four Hundred and Forty-eight Thousand Dollars ($448,000).
(3) The unimproved value of Lots 16 and 17 on Registered Plan 11691, Parish of South Brisbane, County of Stanley, as at 1 October 2002 is determined at Five Hundred and Eighty-two Thousand Dollars ($582,000).
CATCHWORDS: Valuation - Sales - Use of sales - Unacceptable sales - Discount for use of "scarce" vacant land sales
Valuation - Heritage listed property - Effect on unimproved value - Restrictions on potential use - Discount for heritage listed impact a question of fact and not of precedent - 15% allowance made
APPEARANCES: Mr G Nimmo in person for the appellant
Mr P Rabaa, counsel for the respondent
Background
These appeals concern land located at 38 Dorchester Street, South Brisbane, more properly described as Lots 16 and 17 on Registered Plan 11691, Parish of South Brisbane, County of Stanley. The land comprises a total area of 1,255 m² and is located approximately 1.5 km from the Brisbane CBD. Access to the land is available from Dorchester Street which is bitumen sealed with concrete kerbing and channelling. All the usual urban services and amenities are available. As at the relevant dates of valuation the land was in the "Low-Medium Density Residential" zoning under the Brisbane City Plan 2000.
Located on the land is a substantial two-storey residential dwelling. The dwelling is identified by the respondent as being listed on the Queensland Environmental Protection Agency register as a heritage building (Heritage Place ID No: 600224) pursuant to the Queensland Heritage Act 1992. Apparently, the dwelling is also listed or registered in the register of the National Estate, the Heritage Register of the Brisbane City Council and the National Trust of Queensland. Historically the dwelling has been known as both "Coorooman" and "The Grange".
The appellant has appealed the respondent's assessment of the unimproved values of the land determined as at 1 October 2001 (effective as at 30 June 2002) in the amount of $700,000 and as at 1 October 2002 (effective as at 30 June 2003) in the amount of $900,000. As a consequence of the dwelling being located on the land, the respondent asserts that the unimproved value for each period has been struck having regard to the concessional provisions of s.17 of the Valuation of Land Act 1944 ("VLA"). More will be said about this issue below.
In his Notices of Appeal the appellant estimated the unimproved values as at 1 October 2002 and 1 October 2003 to be $160,000 and $410,000 respectively.
The appellant represented himself in both appeals. He has no legal or valuation qualifications. However, he contends that he has both qualifications and experience which allow him to speak with some authority in respect of a number of matters raised in the appeals. To use the words of the appellant, he considers himself to be "… a home owner with a background that offers some relevant expertise." The appellant has professional qualifications in the form of a Bachelor of Architecture degree, a Diploma of Social Planning and post graduate qualifications comprising a Master of Science. He also has over 25 years' experience in the building design, property management and construction industry.
On the first hearing day of this matter, 15 March 2005, in the presence of counsel for the respondent and the appellant in person, I inspected the land, the sales evidence and other properties relied on by the parties in respect of both appeals. The inspection was of considerable assistance in my understanding of the sales evidence relied on by the parties and the physical characteristics of the land and surrounding area.
The Conduct of the Appeals
As referred to above, the appellant represented himself in both appeals. He was also the only witness relied on. The respondent was legally represented and relied on the evidence of Mr Van Hees, a registered valuer employed by the respondent with some 12 years' experience.
It became apparent very early in the hearing of the appeals that there was a significant degree of commonality between the grounds of appeal, the evidence and the legal issues relevant to both appeals. Accordingly, the appeals were conducted in the following way. The 2002 valuation appeal was conducted in the usual way, that is, the appellant put forward his evidence-in-chief and was cross-examined and, following that, the respondent called its only witness who was then cross-examined by the appellant. In respect of the 2003 valuation appeal, it was agreed that the evidence led in the 2002 appeal also relevant to the 2003 appeal would be evidence in that appeal and vice versa. At the conclusion of all the evidence the parties addressed me on both appeals. Inevitably there was some overlapping and repetition of evidence in the appeals.
The Issues in the Appeals
The appellant raised fifteen grounds of appeal concerning the 2002 valuation and nine grounds of appeal concerning the 2003 valuation. As mentioned above, there was a significant degree of overlap (if not repetition) in a number of the grounds of appeal.
Essentially the substantive issues raised by the appellant in each of the appeals were:
(i)the impact on the unimproved value of the land resulting from local influences including:
(a)noise
(b)traffic
(c)parking
(ii)the lack of relativity between the unimproved value placed on the land when compared to the unimproved value placed on other land in Dorchester Street and elsewhere in the general location;
(iii)the change in relativity in the unimproved value of the land when compared to the unimproved value attributed to other heritage-listed properties in the area;
(iv)the impact of activities off the land including interference to views and loss of amenity;
(v)the reliance on scarce vacant sales by the respondent and/or its failure to analyse sales of heritage-listed properties when assessing the unimproved value of the land;
(vi)the lack of reliability and/or comparability inherent in some of the sales evidence relied on by the respondent;
(vii)the impact of the heritage listing of the dwelling on the unimproved value of the land;
(viii)failure by the respondent to make sufficient allowance for the benefits provided under s.17 of the VLA.
The Valuation of Land Act 1944
Section 13 of the VLA requires the Chief Executive to decide the unimproved value of the land to be valued. Section 3 of the Act provides, so far as is relevant -
"3.(1) For the purposes of this Act -
unimproved value of land means -
(a)in relation to unimproved 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; and
(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.
…
…"
The subject land is improved land and therefore the valuation is to be made under s.3(1)(b).
The respondent accepts that because the land is used solely for a single dwelling house, s.17 of the VLA applies. Section 17 effectively provides that, in making a valuation of the unimproved value of land which is used solely for a single dwelling house, any enhancement in the value of the land because of it being subdivided by survey or having a potential use higher than that for a single dwelling use, is to be disregarded. It is the appellant's case that the respondent has given only lip service to the operation of s.17.
Pursuant to s.33 of the VLA, the appellant has the burden of proving that the valuations appealed against are wrong. Further, pursuant to s.45(4) the burden of proving every ground of the appeal lies with the appellant. The presumption in favour of the correctness of the valuation may, however, be rebutted where it can be shown that the valuations were based on a wrong principle and/or involved a serious error of fact and/or were made by a fundamentally erroneous method: Brisbane City Council v Valuer-General (1977-78) 140 CLR 41 at 56-57[1]; G Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331-332 (LAC). In this context, as has been often observed[2] that the valuation of land is not an exact science. The valuer is usually required to apply his or her experience and subjective judgment to matters. In such circumstances it is not surprising that the valuation eventually produced and relied upon by the respondent and the bases underlying the valuation leaves room for differences of opinion.
[1] Also reported in (1978) 5 QLCR 283 at 303.
[2] eg Hornsby Shire Council v Roads and Traffic Authority (NSW) (1998) 100 LGERA 105 at 108-109; AMP Henderson Global Investors v Valuer-General (2004) 134 LGERA 426 at 437.
Before moving on to deal with each of the issues raised in the appeal, I consider it appropriate to deal briefly with the case where the appellant is confronted with the situation that the only "expert" evidence before me is that led on behalf of the respondent. Some comment on this topic is necessary as it seemed to be suggested by counsel for the respondent that I should reject most (if not all) of the appellant's case wherever it conflicted with the opinions of Mr Van Hees, a qualified and experienced valuer.
Assessment of the unimproved value of land is an enterprise considered to be within the province of a recognised area of expertise. Accordingly, in appeals such as these, a valuer's evidence on matters of opinion relating to his field of expertise would ordinarily be preferred to differing opinions of a lay person. However, it is quite another thing to say that, because the valuation of land is the issue, the valuer's evidence should automatically be preferred to that of a lay person.
It may be that the valuer's opinion is expressed in a manner or upon bases which are unable to be scrutinised, or otherwise lacks rational explanation. It may also be shown that in reaching his opinion the valuer has relied on information shown to be wrong or has failed to take into account relevant and material facts. [3]
[3] Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 per IPP J; Steffan v Ruban (1966) NSWR 622; Automasters Australia Pty Ltd v Bruness Pty Ltd & Anor [2004] WASCA 229 per Steytler J, para [28].
Accordingly, it is clear, in my view, that the opinions of value expressed by Mr Van Hees are not immune from challenge by the appellant. That said, in the absence of any demonstrated error of approach or reasoning on the part of Mr Van Hees, his opinions on matters within his field of expertise ought to be preferred to the opinions of the appellant on the same matters.
I now turn to the issues raised in each of the appeals. In dealing with each issue I have had regard to the totality of the evidence, however, where I have considered some evidence to be of particular importance, I have endeavoured to reference it.
The 2002 Appeal
Local Influences
I have little doubt that Dorchester Street, particularly during daylight hours, is a busy one involving significant traffic movements and on-street parking difficulties.
I also accept that from time to time the appellant would be affected by noise emanating from various institutions in the area including the Serbian Orthodox Hall, the building which was the former Blind Institute Hall and even the school, "Somerville House".
I also accept that, to use the appellant's words, "unsavoury and criminal activity" occurs in the immediate area from time to time.
Importantly however, the appellant has failed to show that these matters have not been taken into account by the respondent in arriving at the unimproved value. I am also of the view that even if it had been established that these matters were not adequately taken into account by the respondent, it has not been demonstrated that they, if taken into account, would have resulted in a materially lower valuation.
The appellant also raised the impact on amenity which would be caused by the residential construction to occur on the three lots immediately to the west of his.
I had the opportunity of seeing the extent of these works when I attended the view on 15 March 2005 and accept that, when work was occurring, it would have been disruptive to the appellant. However, no probative evidence was given showing that such temporary works, even if occurring at the date of valuation, would have affected values and, even if it did, to what extent.
For the reasons canvassed above, I do not accept that the unimproved value of the land should be reduced to take account of local influences or disabilities of the character discussed. Mr Van Hees gave evidence that these matters were taken into account in his evidence-in-chief and that evidence was not really challenged by the appellant.
Relativity
A significant amount of hearing time was taken up with this issue. In essence, the appellant contended that the respondent's valuation had to be wrong when regard was had to what was said to be a significant lack of relativity in the rate of change in value to his land when compared to that of other lots in Dorchester Street and the surrounding area and the change in relativity in the unimproved value of the land when compared to the unimproved value attributed to other heritage-listed properties ("Wairuna" and "Kinauld").
Before dealing with each of those issues in more detail, it is appropriate to make some comment about the relevance of "relativity" and the valuation process under the VLA.
As identified by the Land Appeal Court in Gibson Investments Pty Ltd v Valuer-General (1978) 5 QLCR 223, as a matter of policy reasonable property-to-property relativity within a valuation area is highly desirable to ensure an equitable distribution of the incidence of rating.[4] However, it is equally well established that the relativity of unimproved values between properties is not fixed but fluid.[5] There can be "… any number of reasons why blocks in the same valuation area should increase at different rates …".[6]
[4] Also T & S Shepherdson v Valuer-General (1992-93) 14 QLCR 83 at 87.
[5] JD Lindenmayer v Valuer-General (1974) 1 QLCR 273 at 276; R & M Barnwell v Valuer-General (1990-91) 13 QLCR 13 at 17 (LAC).
[6] C & B Henricks v Valuer-General (1983) 9 QLCR 59 at 63.
To my mind there can be little room for doubt that in cases such as this the primary method for assessing the unimproved value of land ought to be, as far as reasonably practicable, by comparison of the subject land to the sales of comparable lands. In NR & PG Tow v Valuer-General (1978) 5 QLCR 378 the Land Appeal Court at 381 said:
"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."
In my opinion the same principle applies in respect of relativity. That is, variations in the relativity of values are not in themselves relevant provided bona fide comparable sales support the valuation assigned to the land in question.
The best guide to assessing what land in fee simple might be expected to realise if offered for sale on reasonable terms and conditions[7] must be by reference to comparable sales evidence rather than a comparison with the values allocated to other lands in the vicinity by the respondent.
[7] Refer to definition in s.3 of the VLA of "unimproved value" for the purposes of the Act.
Of course the sales evidence relied on by the respondent in striking that unimproved value must be reliable probative evidence. That is, such sales must be the result of genuine market negotiations. To adopt the often used phrase the sales must be "bona fide sales for value".
While the plan showing the changes in the unimproved valuations between 1 October 2000 and 1 October 2001, on its face may suggest some anomalies,[8] it, in my view, does not assist the case for the appellant.
[8] Ex 2 at p.3.
The plan shows lots of various sizes fronting no less than five streets. As the appellant himself acknowledged, the plan showed lots with a range of different uses and quality of views. It is difficult to derive much from a comparison of values attributed to lots having such different physical characteristics that is of any probative value.
Also, I accept the evidence of Mr Van Hees that relativity of unimproved values between lots in the South Brisbane/Highgate Hill areas has been particularly dynamic from the late 1990s through to the date of valuation. As I understood the evidence of Mr Van Hees, lots previously considered unattractive due to topography, size, proximity of railway lines and the like, experienced quite sudden and dramatic increases in value. In fact, it would appear that the respondent to some extent is engaged in an exercise of trying to catch up with what is occurring in the marketplace.
The evidence about the alleged lack of relativity in the unimproved values attributed to the land when compared to the values attributed to other lots in the general areas involves, in my view, too many unresolved differences and variables to provide any real assistance in determining the unimproved value of the land.
The appellant also sought to attack the accuracy of the respondent's unimproved value on the basis of the change in values attributed to other heritage-listed properties being "Wairuna" and "Kinauld". On its face the graph at p.4 of Exhibit 2 is as consistent with the land being overvalued relative to the other two properties in 2001 as it is with the land being undervalued from 1997 to 2000. Apart from the fact that the three properties compared in this exercise are all heritage listed, there is not much more which could be said to be relevantly common between them with any degree of certainty.
They are located in different streets and at different elevations with, presumably, different views. The overall site areas vary significantly with the "Kinauld" site being some 40% larger than the subject. "Wairuna" also has two-street frontage, which "Kinauld" and the subject do not. The evidence about the topographical features of each, when compared to the other, is also far from certain.
In the circumstances I consider that the comparison of the unimproved values attributed to these three heritage-listed properties is of no assistance in trying to determine the correct unimproved value of the land. I also consider the evidence concerning the values attributed to Newstead House between 1997 and 2001 to be of no relevance. Newstead House is no longer used for residential purposes, it is a building of a public character. Valuations (not even sales) of such buildings, in my opinion, can be of no assistance in determining this appeal.
In the circumstances, I reject the appellant's "relativity" attack on the unimproved value attributed to the land.
Activities off the land
Under this heading there were two particular matters raised by the appellant. First, the impact on value resulting from development proposed on the land immediately west of the subject. Second, and more importantly, the impact on views to the north towards the Brisbane CBD caused by future development on and near the precinct known as South Bank. Vegetation on and off the land was also an issue in respect of the CBD views to the north.
As to the first of these matters, the appellant contends that as at the date of valuation (1 October 2001) any prudent purchaser would have been aware of the likelihood of what was to be constructed on the land immediately to the west. Further, given the extent of the proposed development, which was described at p.79, lines 1-10 of the transcript in the following terms:[9]
"What I'm contending is that the development approval for the house being constructed on the lot adjoining my property, which is for a three-storey house that will be built within a metre of the boundary and go up something like 12 metres into the air, is quite different in its impact to my laundry which - the impact of a development of that nature which extends across the entire length of the common boundary with, I think, about a 3-metre setback at the front and maybe a 6-metre setback at the rear, so, apart from that, that boundary length is 40-something metres, so for more than 30 metres of that common boundary length --- "
A prudent purchaser would pay less to take account of the loss of amenity which would be caused to the land when the adjoining development was completed.
[9] Refer also to Ex 26.
It was also contended by the appellant that, when constructed, the development next door would block some views to the west.
As at the date of valuation actual development next door had not commenced. However, at or about August 2001, a sign detailing what was intended to be built was on display on the front boundary of that site.
I accept the evidence of the appellant, which was not seriously challenged, describing the nature and extent of the proposed development and that the details of the proposed development were on display on or about August 2001. I also accept that when built, the development will have some impact on views to the west.
I also accept that a prudent purchaser might well have other concerns about the impact of such a development. No doubt, issues such as potential loss of privacy, shade and views would occupy such a person's mind and cause him or her to be inclined to act a little more conservatively when making an offer to purchase. A major difficulty I have here is in trying to determine just how conservative the prudent purchaser might be to take into account these issues. There is no direct evidence one way or the other on this.
The views to the west, on the evidence, appear to be far less attractive and/or likely to attract a premium when compared to those to the north towards the Brisbane CBD. Further, the impact of the development next door pales in comparison to the impact on the northern views if the evidence of the appellant concerning future South Bank development is accepted.
Annexure 9 of Exhibit 2 contains a number of photographs showing the views from the roof of the residence on the land towards the CBD. The appellant's evidence was that the photographs were representative of the optimum views that could be achieved from the highest point on the improvements on the land. Generally speaking, the lower the viewing point the poorer the views.
Mr Van Hees in his report (Exhibit 3) described the land as having good views to the CBD from the rear. This appears to be somewhat of an understatement when one has regard to his oral evidence where he considered the views from the land to be superior to those from a property located at 29 Whynot Street.[10] A reference to Exhibit 17, which I accept shows views representative of those from the Whynot Street property, gives some indication as to just how "good" Mr Van Hees considered the views from the land to be.
[10] T180.
The appellant contends that the respondent has failed to take into account the existing and future impairment to CBD views caused by vegetation on land adjoining or close to the subject and by development on and in the vicinity of the South Bank precinct.
The respondent counters by asserting that in so far as vegetation is concerned, the main impediment is that caused by trees located on the land. And, in so far as future development is concerned, that is a matter for future valuations and not a matter relevant to either of the appeals presently before the Court.
Vegetation
Vegetation on and off the subject land is interfering with views towards the CBD. Importantly in respect of this issue, Mr Van Hees conceded that there were not insignificant amounts of trees on neighbouring properties which would have at the very least some effect on views.[11]
[11] T213.
The evidence of Mr Van Hees seems to be to the effect that when placing a value on the land, he did not take into account vegetation off the land which might interfere with views of the CBD. Unfortunately there was no direct evidence before me as to by how much (if at all) the value of the land would be reduced to take account of the impairment to views caused by vegetation off the land. This is a matter which I will refer again to later herein.
The Proposed South Bank Development
To an extent the debate about the level of impact caused by vegetation off the land to views would become academic if the appellant's evidence concerning future development on and in the vicinity of the South Bank precinct is accepted.
The appellant's case is that commercial development likely to occur on or near the South Bank precinct will, over time, effectively obliterate the existing CBD views. And, further that as at 1 October 2001 the prudent purchaser and, for that matter the prudent vendor, would be aware of that situation. Taking these matters into account, the appellant says that the unimproved value attributed to the land is manifestly too high.
As to the first of these matters there is not much room for doubt. A comparison of the first two photographs in Annexure 9 of Exhibit 2 with the next three photographs shows the impact on views between 2002 and 2005. The impact is clearly dramatic. Even allowing for some degree of exaggeration on the part of the appellant in the sixth photograph "prospective view from 38 Dorchester Street", any further development of the type presently constructed will take away most, if not all, of the CBD views. Mr Van Hees agreed that those buildings now constructed[12] have obliterated views of the CBD buildings behind them.[13]
[12] See Exhibit 2, Annexure 9, fifth photograph "from 38 Dorchester Street now"
[13] T215, L30-40.
In what could only be said to accord with common sense, Mr Van Hees on several occasions identified that properties with CBD views attracted a premium. However, Mr Van Hees, while acknowledging the potential impact on views resulting from development in the South Bank precinct, did not bring this into account when striking the unimproved value of the land as at 1 October 2001 or 1 October 2002. As I understand his evidence, Mr Van Hees did not consider this information to be relevant because, as at the date of valuation, those buildings did not exist. That is, they were matters to be considered in respect of some future valuation period.[14]
[14] T141, L40 to T142, L5.
The appellant refutes such an approach contending that the prudent purchaser and vendor, at the relevant date would have made appropriate inquiries which would have revealed the full extent of potential future development and its potential impact on views.
Section 3(1)(b) of the VLA contemplates the meeting of minds between the bona fide seller and bona fide purchaser. To be a "bona fide" seller for the purposes of s.3(1)(b), he or she would have to acknowledge valid points raised by a purchaser in favour of a lower price just as a "bona fide" purchaser would have to acknowledge points raised by the seller in favour of a higher price. In this context the unimproved value would reflect the fair price agreed upon between a purchaser and not anxious vendor, both being sufficiently conversant with the facts which might materially affect the value of the land.[15]
[15] Spencer v The Commonwealth (1907) 5 CLR 418 at 431-432 per Griffith CJ; cited with approval by the LAC in Chief Executive, DNRM v QNI Metal Pty Ltd & Anor [2002] QLAC 71.
The evidence of the appellant on this issue is to the effect that as at 1 October 2001:
(a)The "Thiess building" had already been constructed.[16]
(b)The intentions of the South Bank Corporation to extend commercial type development in a southerly direction was within the public domain.[17]
[16] T33, L1-20; T34, L1-10; Exhibit 2, Annexure 9, photograph "South Brisbane Panorama, 2000".
[17] T34, L20-45.
Mr Van Hees, to an extent, gave evidence not inconsistent with that of the appellant. In particular he agreed that:
(a)Buildings at South Bank and in the general vicinity had "obliterated" some CBD views and that it was the intention of the corporation to develop in a similar vein along the railway line,[18] that is in a southerly direction.
(b)The South Bank Corporation was actively pursuing development within its precinct[19] putting at risk the existing CBD views.[20]
[18] T215, L35-45.
[19] T246, L15-30; T247, L17.
[20] T127, L20-26 (second appeal transcript).
Of importance in my consideration of this evidence is that it was not suggested to the appellant or by Mr Van Hees that inquiries by a prudent purchaser or vendor would not have revealed the sort of information relied on by the appellant here.
As at October 2001 I cannot conceive any prudent person seeking to sell or buy an unimproved parcel of land not being particularly interested in the longer term status of one of its primary assets, namely the CBD views.
While the evidence on this issue may not be entirely satisfactory, it is sufficient for me to comfortably conclude that:
(i)a prudent vendor/purchaser would make the sort of inquiries contended for by the appellant; and
(ii)having made those inquiries would be alerted to the fact that most, if not all, of the existing CBD views could gradually disappear over some uncertain (but not too remote) time in the future.
Having reached the above conclusions, the most important outstanding matter on this topic is to determine whether the respondent's unimproved value should be discounted and if so, by how much? Whether or not to discount and, if so, by how much the unimproved value of the land to take account of limitations of views is a matter I will defer for the moment.
However, there are certain aspects of Mr Van Hees' evidence on this topic I consider appropriate to comment upon at this stage. As referred to above, on several occasions in his oral testimony Mr Van Hees spoke of the premium which attaches to land with good CBD views. However, in re-examination, Mr Van Hees gave evidence to the effect that even if he adopted and took into account the appellant's evidence about the loss of CBD views, his valuation of $700,000 would remain unaltered. [21]
[21] T260, L20-45.
I find this evidence surprising for at least two reasons. First, it is inconsistent with the thrust of his previous evidence. Second, acceptance of this later evidence leads to entirely illogical conclusions. By that I mean, one does not have to be a valuer to know that, in the absence of some cogent explanation to the contrary and all other things being equal (including proximity to the CBD), the block with good CBD views will be likely to achieve a more than nominally higher price than a comparable block with no such views. I reject this part of Mr Van Hees' evidence.
Scarce Sales
The appellant also attacks the unimproved value attributed to the land on the basis that the vacant sales relied on by Mr Van Hees, being transactions involving a "scarce" resource, must include a premium and therefore are not comparable sales. The appellant on this issue relied on what was said by the High Court in Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111.
As a general proposition, it has been long recognised that the best evidence of the unimproved value of land is by reference to the sales of comparable vacant land.[22] However, in Maurici the High Court recognised that a valuer would fall into error if he or she were to rely on only scarce vacant land sales which, because of their scarcity, could not be said to be fairly representative of value.
[22] See, for eg, Clough v Valuer-General (1981-82) 8 QLCR 70 at 76.
Maurici has been the subject of consideration by the Court of Appeal in New South Wales in AMP Henderson Global Investors v Valuer-General (2004) 134 LGERA 426 and by the Land Appeal Court in Department of Natural Resources and Mines v Spender [2003] QLAC 0086.
In AMP Henderson at p.439-440, Tobias JA, with Mason P and Giles JA in agreement, said:
"62Maurici was a case where the Commissioner of State Revenue fixed the unimproved value of an improved parcel of waterfront land in Hunters Hill exclusively on the basis of four sales (including a resale) of vacant or substantially vacant land. It was accepted by the parties that vacant land in Hunters Hill was scarce, if not very scarce. The Commissioner acted as he did upon the basis that he considered that s 6A of the Act required him to disregard sales of improved lands.
63The High Court, in a joint judgment, held that s 6A(1) did not so require. The Court rejected the method adopted by the respondent in that case as 'unduly selective'. …
65Accordingly, the Court considered (at 121 [19]) that the Commissioner should have had regard to improved sales and was not entitled to
'ignore reasonably contemporaneous sales of comparable improved land. Such sales, particularly in the case of a scarcity of vacant land cannot be disregarded. The contrary approach is required by the Act.'
66In my opinion, Maurici stands for the following propositions only:
(a)Section 6A(1) of the Act does not require when utilising the comparable sales method of valuation, that only sales of vacant land should be considered;
(b) Confining one's consideration to only sales of scarce vacant land and disregarding sales of improved land which would otherwise be as comparable as the vacant land sales in terms of timing, location, outlook and other relevant features, offends the principle that a reasonably representative group of comparable sales should be considered when applying that methodology.
67In my opinion, Maurici does not stand for the proposition that if the only comparable sales are those of albeit scarce vacant land, they must be rejected because they are too few in number to constitute a 'representative group of comparable sales'. …
68Accordingly, in my opinion the primary judge erred in his understanding of Maurici. That case is not authority for the proposition that if there be only one comparable sale and it is a sale of scarce vacant land, it is required to be disregarded and the comparable sales method of valuation rejected. Obviously, adjustments will need to be made to the sale to eliminate its scarcity factor. But there is nothing new in sales having to be adjusted in order to render them comparable. Thus, in Seatainer Terminals at 434, Hope JA said:
'Theoretically a comparable sale may be of the very land to be valued, as where, for example, a contract for its sale was entered into on the very day upon which it was to be valued. This would be a most unusual situation, but often evidence is available of sales of very similar land close in point of time to the date of valuation. However, probably more often, the lands the subject of the sales relied upon are in some way different from the land to be valued, giving the latter land a higher or lower value than that to be deduced from the sales. The times of the sales in relation to the date of valuation may also have to be considered in the light of general movements in land prices. The need to make adjustments to values deduced from sales in order to arrive at the true valuation of the land to be valued does not preclude the court which has the task of valuing the land from relying upon the sales as comparable in the relevant sense, nor from the making by the court or by valuers of adjustments which may be nothing more than the best guess that can be made.' …"
The Land Appeal Court decision in Spender is of some interest here, not only because of the consideration of Maurici but also because it involved land and sales proximate to the subject land and the same valuer for the respondent, Mr Van Hees.
In considering Maurici the Land Appeal Court said in paragraphs [52] to [58]:
"[52]… The reasoning was not that sales of scarce vacant land were necessarily irrelevant, but that such sales were 'likely to be to a special and different class of buyer from buyers of improved land' and a fair estimate of value 'could only be made here on the basis of a fair, that is to say, a reasonably representative group of comparable sales. A group of comparable sales cannot be representative if it does not go beyond sales of scarce vacant land. That is not to say that sales of comparable vacant land may not provide useful evidence of value'.
[53]The Maurici land was improved land and there was, it seems, a representative group of sales of comparable improved land. In the statutory land valuation process, the assumption was required that the improvements, other than land improvements as defined, had not been made, not only on the Maurici land but on each other parcel of land in the district when subjected to the valuation process."
"[54]… The High Court reasoning, as we interpret it, was a recognition that the market for land in a predominantly built-up area was not exclusively of scarce vacant land but inclusive of land with improvements thereon. As each parcel of land in that environment, vacant or improved, was required to be valued in the statutory process, on the basis of relative value at the same date, albeit notionally as unimproved, it was wrong to adopt a basis of valuation selected exclusively from one segment of the market which in itself was not proved to be representative of the overall market for land.
[55]It is seen as an observation of reality that a buyer of a scarce vacant parcel of land at a desirable location could be categorised as a special and different class of buyer to one not wishing to build and seeking an established dwelling. It might be a popular conception, particularly among those challenging a statutory land valuation, that a buyer of scarce land would be prepared to pay a premium over and above 'fair market value' because of that scarcity factor. However for that to be proved, or disproved, for the purposes of the statutory valuation process, analysis of the overall relevant market evidence is necessary. For example, just as a sale to an adjoining owner might be shown not to have included a premium, by reference to the overall market, a sale of a scarce vacant parcel needs to be considered in light of the overall market which includes sales of improved parcels.
[56]While a purchaser of a scarce vacant residential parcel may realistically fall into a different category to the purchaser of an existing dwelling, it does not follow that the price such a purchaser will pay does include a premium over fair market value. It would be expected that the prudent purchaser of vacant land will not have confined considerations relevant to purchase price to that narrow market segment. Such a purchaser would hardly be seen as prudent in purchasing a vacant lot, developing it to its highest and best use through the construction of a dwelling if the certain outcome was an overall loss in capital value, through the land component, once improved, reducing in value to the extent of the vacant land value scarcity 'premium'. It is also seen as unlikely that a prudent purchaser of an existing dwelling would not become informed of the overall local market, including that for any scarce vacant land.
[57]Consequently, while purchasers of either improved or vacant land may be categorised as belonging to different segments of the marketplace, it does not necessarily follow that those segments are not strongly interlinked. The Maurici judgment recognises the error in a valuation basis being established from an overly selective segment of the market. …"
To my mind, relevant to this appeal, there is no inconsistency of any consequence in the reasoning of the Courts in Spender or AMP.
Turning then to the facts of this appeal and, what I perceive to be the relevant legal principles, I find that:
(i)the vacant land sales relied on by Mr Van Hees are not irrelevant sales which have to be ignored as a consequence of any principle established by Maurici, and;
(ii)the evidence of Mr Van Hees established that vacant sales in the area were indeed scarce[23] and likely to attract a premium.[24]
[23] T142, L10-35, T154, L40-50; T173, L40-45; T174, L1-35.
[24] T174, L5-10.
(iii)having identified that a premium attaches to scarce vacant land it is necessary to make adjustments to take account of the "scarcity factor".[25]
(iv)Mr Van Hees had not made any allowance for the scarcity premium in applying to his sales.
[25] AMP at [68].
Unfortunately, the evidence on the appropriate premium to apply is far from clear. The evidence indicates that the premium for vacant land in a "generic" or "normal" street would be in the order of 10%. But, for properties with CBD views, the premium would probably be higher.[26] There is a touch of irony in this part of the appeal. If Mr Van Hees' opinion of the land is accepted, the premium for scarcity would exceed 10%. On the other hand, if the appellant's description of the land concerning views is accepted, the premium would be closer to only 10%.
[26] T261, L15-35.
For the reasons canvassed above, I do not consider that a prudent purchaser or vendor would consider the land to have secure permanent or near permanent CBD views. On the other hand, the land is within walking distance of South Bank and the CBD and, on any take of the evidence, will have some form of commercial high-rise views to the north. It would not be a "generic" or "normal" block as I understand Mr Van Hees to use those words.
Doing the best that I can in the circumstances, I will apply a 15% discount to take accord of the "scarcity premium" acknowledged by Mr Van Hees.
Before leaving this topic there are two matters in particular about which I feel I should give some comment. First, the application of the discount. Second, the so-called improved sales evidence.
As to the first matter, it occurs to me that a 15% discount of the sales relied on to value the land may not necessarily convert to a 15% reduction in the unimproved value of the land being valued. In the absence of any probative evidence one way or the other, I intend to adopt a global approach and say that it does.
The second matter is a little more complicated. In Spender the Land Appeal Court[27] found that no "flaw" existed in the valuation approach in that case as the unimproved value attributed to the land was supported not only by the vacant land sales but also by the sales of improved land.
[27] At paras [76] and [77].
In this appeal Mr Van Hees also gave oral testimony that in assessing the unimproved value of the land regard was had to both improved and unimproved sales.[28] Having regard to all the evidence on this topic, I cannot accept that Mr Van Hees placed any real or material reliance on improved sales when determining the unimproved value of the land. In reaching this conclusion, I have had particular regard to the following evidence:
[28] T167-170 and Ex 15.
(i)The valuation report of Mr Van Hees (Exhibit 3) makes no mention of improved sales. In fact at page 4 of the report it is expressly stated under the heading "Basis of Valuation":
"The valuation has been made having regard to vacant land sales as to the attached schedule …" (emphasis added)
and at page 5:
"The subject property has been valued at $700,000 having regard to its heritage listing and vacant sales evidence." (emphasis added)
(ii)Mr Van Hees had not carried out any meaningful analysis of the improved sales.[29]
(iii)Mr Van Hees' oral testimony in cross-examination is at odds with there being any meaningful reliance on sales other than the vacant sales referred to in his report.[30]
[29] T168, L40-50; T169, L1-10.
[30] T177, L1-15.
On the facts before me I do not see any conflict with the findings or conclusions reached in Spender and the application of a discount factor in this case.
The Lack of Reliability inherent in the Respondent's Sales
The discussion above concerning the application of scarce vacant land sales could have been dealt with under this heading. However, given the relatively few cases that I am aware of dealing with Maurici, I thought it better to deal with it as a separate topic.
The appellant, however, also attacks the sales relied on by the respondent on two further bases. First, as I understand it, on the basis that Mr Van Hees' first sale at 34 Dorchester Street was a "developer's sale" reflecting an artificially inflated price. In support of this assertion the appellant relies on newspaper articles referring to property "scams". In the absence of cogent evidence linking this sale with scams of the type referred to in the "Courier Mail" of 27 February 2002,[31] I can place no weight on those articles. No such evidence exits, in my view.
[31] Ex 2, Annx 5.
The appellant also relies on a comparison of the 34 Dorchester Street sale with sales at 47 Hamstead Road and 32 Middle Street, Highgate Hill[32] as supporting his assertion that this sale is inflated or otherwise out of line with market evidence.
[32] Analyses at Ex 2, Annx 6.
On its face, the sale of the 34 Dorchester Street property does show a significantly higher price. However, there may be any number of explanations to explain the price difference. For example one or both of the other properties may have been sold cheaply for reasons unknown or the improvements on the land might have been a particular problem for redevelopment resulting in a lower price. This is, of course, speculation but it shows, I think, that there could be any number of factors explaining the so-called sale price anomaly.
The evidence that concerns me most about this sale is that for the 2001 valuation year Mr Van Hees knew about the sale but did not rely on it because it was a sale involving land with development potential which should be ignored when valuing the subject land.[33]
[33] T231, L35-45; T232, L1.
When confronted with this contradiction Mr Van Hees sought to justify the use of the sale in this appeal by reference to there being little or no difference in the rate per m² being paid for unit development land when compared to single dwelling residential land.[34] However, in cross-examination, Mr Van Hees to my mind displayed only questionable loyalty to that theory.[35]
[34] T232, L5-10; also at T142, L27-32.
[35] T233, L30-50; T234, L1-5.
This sale involved land clearly intended for more intensive development. To this end it was subdivided into three separate lots. In the absence of any reasonable explanation as to how this sale transformed from unreliable evidence to reliable evidence in the space of one year, I am not prepared to accept it as a comparable sale. In my view no such explanation exists.
That, of course, is not the end of the matter as Mr Van Hees has two other sales which he relies on. And, in respect of these sales, I accept that with appropriate adjustments for location, scarcity, size and views, they do provide evidence of value for the subject land.
The second attack on the sales relied on by the respondent is on the basis that the best (most reliable) sales evidence of the unimproved value of the land is by reference to sales of other heritage listed properties.
In this appeal the only sale of a heritage listed property is that of "Wairuna" located at 27 Hamstead Road, Highgate Hill.
According to Mr Van Hees, the appellant's analysis of this sale was flawed as it resulted in an unrealistically low land value. In the opinion of Mr Van Hees, at least one deficiency in the analysis is the use of "restoration" figures in arriving at the value of the improvements. I agree, I do not accept that prudent parties would approach the sale of a house such as this on the basis of the improvements having a market value equivalent of full replacement value.
The exercise in Exhibit 2, Annexure 10 is also, in my opinion, too artificial in that in arriving at the estimated market value of "Wairuna" without heritage impact the appellant has adopted and used the respondent's unimproved value attributed to the land. I do not accept such an approach as being realistic.
For the reasons canvassed above, I do not accept the appellant's grounds for attacking the reliability of all of the respondent's sales evidence provided that appropriate adjustments are made.
Before leaving these matters, I should also point out that I do not accept the appellant's analyses of the 21 Strath Street and 30 Stephens Road properties as reflecting the so-called "analysed land value". No evidence was put before me to show that a prudent vendor and/or purchaser would treat depreciation and/or maintenance in the way it is dealt with in these exercises. Also, in my view, there are too many question marks over the standard of the improvements as at the dates of sale of those properties to be at all comfortable with the appellant's treatment of these sales.
The Impact of Heritage Listing
The respondent applied a 10% discount to what would otherwise have been the unimproved value of the land. The adoption of 10% was as a direct consequence of the Land Appeal Court decision in Roberts v Chief Executive, Department of Natural Resources (1998) 19 QLCR 186. In fact, at one stage it was suggested to me by counsel for the respondent that the decision in Roberts was binding on me.
I find this part of the respondent's case curious. The question as to by how much the market value of any parcel of land is affected by heritage issues is always going to be, to a large extent, affected by questions of fact peculiar to each property. Further, the Land Appeal Court in Roberts clearly pointed out that in arriving at the 10% discount figure it was doing the best that it could on the unsatisfactory state of the evidence before it.
Having regard to the evidence of Mr Van Hees about the impact of the heritage issues, I am left with the impression that he did not take a lot of time to consider the actual impact of the heritage listing. That is, he was content with adopting the 10% applied in Roberts as an applicable precedent. Overall, it seemed to me that Mr Van Hees did not consider the heritage listing to be much of an impediment at all and that the 10% discount applied was sufficient to cover any inconvenience caused by the listing.
On the other hand, I found the evidence of the appellant to be overly pessimistic on the same topic. According to the appellant, the appropriate discount for heritage issues would be 33%[36] on the basis that among other things the heritage listing meant that there was no prospect of converting the house to reflect "modern standards" or to take advantage of views to the north. However, as I understand the evidence, the listing would not prevent, for example, a swimming pool being constructed on the land. Nor would it prevent the selection of an attractive internal and external colour scheme. Nor would it prevent a degree of modernisation internally. I also find that the appellant's original concerns about the ability to open up the house to take advantage of the northern view towards the city were overly pessimistic.[37]
[36] T47.
[37] T70, L25-45; T71, L1-25.
I do, however, accept that the heritage impact is a matter of some significance. For example, the design of the dwelling is such that the natural internal lighting is very poor and I accept that it would be more difficult and probably more expensive to rectify this than it would absent heritage constraints. Maintenance issues would also be likely to be of some concern to the prudent purchaser.
I also accept that while the northern verandas may be able to be opened up, one could not be so confident concerning the western part of the building. The same could be said for "opening up" the house by removing internal walls to make larger rooms and/or replacing the original windows with larger ones to increase natural lighting and views.
Having said all this it seems to me that the range, from the more optimistic to the pessimistic end of the spectrum, is 10% to 33%. The evidence does not allow me to be any more precise than to say 10% is not sufficient and 33% is too much in my view.
In the circumstances I will adopt 15%. I have tended towards the lower end of the range largely on the basis that the potential for opening up of the northern veranda would in my view be a significant factor in the mind of the prudent purchaser and vendor.
Before leaving this topic I do not accept the evidence relied on by the respondent to show that there is little, if any, difference in the price paid for heritage listed properties when compared to non-heritage listed properties.
To this end the respondent relied on two sales. One at 14 Sutherland Avenue, Ascot (heritage listed) and the other at 64 Enderley Road, Clayfield (said to be non-heritage listed).[38]
[38] Refer to Ex 9 for sales details.
This evidence is too uncertain to carry any weight in my view. First, there is a question mark over whether or not at the date of sale prudent inquiries might have revealed that the Clayfield property was also to be heritage listed.[39] Second, the evidence is far from certain as to the relative standard of the improvements, particularly internal improvements, to each of these properties at the respective dates of sale.
[39] T187-T188.
The Allowance under Section 17 of the VLA
As I understand the appellant's case on this topic it is to the effect that, first, the respondent has made insufficient or no allowance for the fact that because the dwelling is heritage listed it is to be valued on the basis that its highest and best use is for single unit residential purposes. Second, that a proper application of s.17 would have resulted in an overall discount to the value of the land of in the order of 23%.
In support of the 23% discount for the application of s.17 the appellant placed particular reliance on the respondent's treatment of a property located at 19 Abingdon Street, Woolloongabba, comprising of a dwelling located over three separate 405 m² blocks.
According to the appellant, the unimproved value (as at October 1999) for the three lots as one house site was $300,000 showing a discount of in the order of 23% when compared to the unimproved value attributed to each of the lots separately, being $130,000 for each.
Unfortunately, no cogent evidence was put before me to show that, assuming the appellant's analysis of the historical situation concerning Abingdon Street was correct, that would automatically or realistically apply to the subject land.
Mr Van Hees at p.2 of his report states that s.17 was taken into account in that the land was valued as a vacant residential site suitable for single detached residential purposes only.
The appellant did not, in my view, prove that s.17 was not in fact taken into account. That is, he did not satisfy the burden placed on him pursuant to s.45(4) of the VLA in respect of this ground of appeal.
Summary and Conclusions
For the reasons canvassed above, I find that it is necessary to adjust the unimproved value of the land to take account of the "scarcity" factor and the impact of the heritage listing.
There is also one other unresolved issue namely the consequences of my findings concerning the views available from the land. The evidence as to by how much the value of the land might be affected depending on the extent of available views varied significantly. However, in the second appeal more focus was given to this issue.
It was Mr Van Hees' evidence that as at 1 October 2002 the land with no views, the most important views being those of the CBD, would have a value of $600,000 to $700,000 tending towards the higher end of value. With views the land had a value of $900,000.[40] This is the best evidence before me on this issue and reflects a premium of about 30% for views. There is nothing to suggest that this premium would have changed to any material extent between 1 October 2001 and 1 October 2002. There was other evidence suggesting that the premium for CBD views could exceed 100%. However, on balance, I found that evidence to be more indicative of generalisation and less persuasive than the more specific and direct evidence I have chosen to rely on.
[40] T129-130 (second appeal transcript).
I do not accept that even in the worst case scenario the land would have no views to the north. However, I do accept that a prudent purchaser would have some real concerns about the security of the existing CBD views into the future and would be likely to require a discount to take account of that risk.
Doing the best that I can with the evidence before me I will adopt a 20% discount to take account of the risks associated with maintaining the present views. This discount includes the impact to views overall, whether the impact be due to trees off the land and/or the buildings to the west and/or development at or near South Bank.
Taking all of these matters into account the respondent's valuation needs to be adjusted to take account of the "scarcity factor" (15%), my findings in respect of present and future views (20%) and, finally the heritage issues (15%). I realise that applying these discount percentages involves an impression of artificial exactness. However, such an approach seems to be the only one available on the evidence. I would also add that the final result does not appear to be an unrealistic one having regard to the totality of the evidence before me.
As I understand the evidence of Mr Van Hees, if the land was not affected by the heritage listing (and therefore did not require to be discounted by 10%), he would have valued the land at near enough to $775,000.
Adopting the figure of $775,000 arrived at by the application of scarce vacant sales and discounting by 15% to take account of the premium said to attach to such sales results in a figure of $658,750.
Having regard to my findings concerning views and applying the 20% discount adopted by me results in a figure of $527,000.
The figure of $527,000 represents, in my view, the unimproved value of the land before taking into account the heritage issues which I see as quite a separate influence affecting the value of the land. Discounting by a further 15% to take account of the heritage issues associated with the land results in a figure of $447,950 which I will round off to $448,000 for the purposes of the 2002 appeal.
In determining the unimproved value of the land for the 2002 appeal, I accept that on a direct comparison with Mr Van Hees' Sales 2 and 3 (ignoring "scarcity" and heritage issues), if the land had the secure CBD views Mr Van Hees attributed to it, the land would have had a value in the order of $775,000. However, for the reasons expressed above, I do not accept that the land has such views and therefore the value would have to be reduced accordingly. Applying the 20% discount to take account of my findings associated with views would result in a value of $620,000. This figure, to my mind, sits reasonably comfortably with Mr Van Hees' Sales 2 and 3 after taking into account differences including location, size and views.
The 2003 Appeal
As the issues raised in this appeal are essentially the same as those raised in the 2002 appeal, I propose to deal with them under the same headings. The respondent contends that as at 1 October 2002 the unimproved value of the land is $900,000. The appellant, in his Notice of Appeal pleaded for a figure of $410,000. However, by the conclusion of his case the appellant contended for a range of between $215,000 to $300,000.
Local Influences
For the reasons addressed in deciding the 2002 appeal, I do not accept that the valuation of the respondent needs to be altered to take account of these matters.
Relativity
For the same reasons that I rejected the appellant's attacks on the respondent's valuation based on relativity arguments in respect of the 2002 appeal, I reject them in this appeal.
Activities Off the Land
For the reasons addressed in deciding the 2002 appeal, I would adopt the same discount figure of 20% to take account of the impact on views caused by development in the South Bank vicinity, the development of the lot to the immediate west of the land and for trees, located off the land. I do not believe that anything of significance occurred between October 2001 and 2002 which would cause a review of that figure. For reasons which will become apparent, it is unnecessary for me to actually apply this discount in determining this appeal.
In my view the appellant did not put forward any cogent evidence in this appeal justifying any further interference with the respondent's valuation to take account of the building next door (apart from views). In this discussion I include the nuisance caused by building works and amenity issues such as loss of privacy resulting from that building when completed.
Scarce Sales
As was the case for the 2002 appeal, the valuer for the respondent, Mr Van Hees stated in his report, Exhibit 23:
"The valuation has been made having regard to vacant land sales as to the attached schedule …" (at p.3) (emphasis added)
and
"The subject property has been valued at $900,000 having regard to its heritage listing and vacant sales evidence." (at p.4) (emphasis added)
Nowhere, in his report does Mr Van Hees refer to any consideration of improved sales.
As was the case in the 2002 appeal, there was an attempt made to shore up the valuation of the respondent by reference to a reliance on improved as well as vacant sales. In this context reference was made to Mr Van Hees' working map (Exhibit 34), which was said to record improved and unimproved sales. As it turned out, there was only one improved sale in the area recorded on Exhibit 34 being a Brisbane City Council heritage listed property referred to as the "Street" sale or property. This improved sale was considered to be a "low sale" by Mr Van Hees in any event.
I found the evidence of Mr Van Hees on this topic somewhat confusing. While on one hand it was being said that improved sales were relied on in the valuation exercise, there was no mention of them in the valuation report and the working map refers only to one improved sale which was not relied on. Further, on more than one occasion Mr Van Hees, in my view, in his oral testimony made it quite clear that his valuation was in reality based on the vacant sales evidence recorded in his report.[41] For these reasons I do not accept that Mr van Hees had any meaningful regard at all to improved sales in valuing the land.
[41] T75, L5-25; T100, L5-30; T102, L15-25; T105, L1-30.
The evidence was clearly to the effect that vacant land was just as scarce in 2003 as it was in 2002. Accordingly, it would be necessary to apply a discount to take account of the premium likely to be associated with the limited volume of vacant land coming onto the market. There is no cogent evidence before me in this appeal which indicates that I should change the discount rate of 15%. However, for reasons which will become apparent, it is unnecessary for me to apply this discount in determining this appeal.
Lack of Reliability inherent in the Respondent's Sales
In addition to attacking the sales relied on by the respondent based on what he perceived to be the correct principles set out in Maurici, the appellant again attacked the sales evidence on other grounds.
First, on the basis that the most appropriate sales evidence was that of heritage listed properties, and, to a lesser extent, of other improved properties. Second, on the basis that the sales evidence relied on by the respondent was not otherwise comparable.
By reference to the "sales evidence" addressed by the appellant in his statement (Annexure 3 of Exhibit 24), Sales 4 to 8 inclusive are said to be not comparable. Sales 1 to 3 inclusive are analysed by the appellant in Annexure 4 of Exhibit 24.
As was the situation in the first appeal, I do not accept the appellant's analysis of the heritage listed property "Wairuna". For the same reasons I am of a similar view concerning the "Street" property analysis.
In the absence of any evidence to the contrary, I do not accept that a prudent purchaser or vendor would treat the value ascribed to the improvements and/or the land in the way the appellant has in his analysis of each of these sales. It was the opinion of Mr Van Hees that the appellant had materially overvalued the improvements on the heritage listed properties. I accept Mr Van Hees' opinion on this issue.
The appellant also relies on the improved sale at 30 Stephens Road. This was a sale also relied on by him in the 2002 appeal. In what had been a strongly rising market in the year between November 2001 and October 2002, the relevance of this sale to this appeal is greatly weakened. The appellant himself acknowledged that the land value of $207,000 produced by his analysis of the sale would have to be increased by some 55% to make it comparable to the market at the date of valuation.[42]
[42] T12, L7-18.
In addition to the issues associated with the date of this sale, I am also concerned about the lack of certain evidence as to the state of the improvements as at the date of sale. Further, in the absence of evidence to the contrary, I am not prepared to accept that the prudent purchaser of a residential property would treat depreciation and maintenance in the way it is dealt with by the appellant.
For the above reasons I do not accept the exercises carried out in Exhibit 24, Annexure 4, as being of any real assistance in arriving at the unimproved value of the land as at 1 October 2002.
Turning to the sales relied on by the respondent, it is my view that they also provide no probative value of the subject land as at the date of valuation.
The last three of these sales involve the three lots subdivided out of the land which was Mr Van Hees' first sale in the 2002 appeal. Each of these blocks is 421 m² in area, a size, at face value, not immediately comparable to the land which is said to have the benefit of s.17 of the VLA.
In what was clearly no coincidence, each of these lots sold on the same day for the identical sale price of $610,000. One might be forgiven for having some reservations about the bona fides of those sales for these reasons alone. However, it gets worse.
The evidence makes it tolerably clear that there was a real prospect that each of these sales formed some sort of business arrangement between one or both the other two purchasers and the Tabrizi purchasers involving some form of development on each lot.[43] The details of this arrangement remain unknown.
[43] T116, L37-45; T117-T118, L1-5.
Further, the appellant produced evidence to the effect that these sales involved considerable development works carried out on the land prior to sale which, in the opinion of the appellant, would have to be brought into account in any analysis of those sales. I agree with him. This evidence was to the effect that there was in the order of $305,000 worth of development carried out before the sales.[44] Mr Van Hees sought to challenge the value and/or costs of the works said to have been carried out on these lots, however, it seemed quite clear to me that Mr Van Hees was not in a position to refute all of the evidence put by the appellant. That said, I do not accept the appellant's analyses of these sales for a number of reasons. First, the cost of the works carried out do not always convert into value in the hands of the owner or future owner. No cogent evidence was put before me to show that that was the case here. Second, the analysis involved a number of imponderables which were never satisfactorily resolved. These included matters such as the value of residing next to a heritage listed property, the added value of code relaxations and the added value of pre-existing approvals.
[44] T13, l5-28; Ex 24, Annx 4; Ex 33.
For the reasons canvassed above, I do not accept the first three sales relied on by the respondent provide reliable evidence of value of the land the subject of this appeal.
The other two sales relied on by the respondent are located at Hawthorne Road, Hawthorne. Each of these lots is just over 500 m² in area, has only 11 metres of road frontage and drops away steeply to the rear. The location and physical characteristics of these sales do not give an immediate air of comparability to the subject land.
Going a very long way to offset the other less attractive physical characteristics of these lots, each has quite spectacular views of the Brisbane River and of the CBD.[45] It is extremely unlikely that these views will ever be built out.
[45] Ex 37.
It was accepted by Mr Van Hees that the subject land really has no river views. And, for the reasons already canvassed, it is my view that, contrary to Mr Van Hees' approach, any prudent purchaser of the land would have real concerns about the long-term preservation of the CBD views.
For all those reasons I reluctantly conclude that the Hawthorne sales are of no real assistance in this appeal. I say reluctantly because my reasoning results in there being no sales evidence upon which I am prepared to place any weight.
One of the few issues in these appeals which did not evoke much controversy was that between 2000 and 2003 there was a buoyant and rising market.
The appellant's treatment of his sale at 30 Stephens Road would indicate that he saw an increase in the market of some 55% between November 2001 and October 2002. By implication, the respondent's assessment of value at October 2001 and at October 2002 suggests an increase of some 30%. Statistical data of a very general character[46] indicates an average rate of increase of in the order of 25% per annum in the five years between 1997 and 2002 in areas close to South Brisbane (West End and Highgate Hill). It is my impression from the evidence that the rate of increase was escalating at a greater rate towards 2002.
[46] Ex 24, Annx 8.
Doing the best I can with the evidence before me, I will adopt a rate of increase of 30%. Applying this rate to my assessment of $448,000, being the unimproved value as at 1 October 2001, results in a figure of $582,400 which I will round off to $582,000.
Accordingly, I will adopt the figure of $582,000 as the unimproved value of the land as at 1 October 2002.
The Impact of Heritage Listing
Having regard to the way in which I have determined this appeal, it is not necessary to now separately deal with this issue.
Notwithstanding this, I would say that, if required, I would have adopted the rate of 15% under this heading.
The Allowance under Section 17 of the VLA
Having regard to the way in which I have determined this appeal, it is not necessary to now separately deal with this issue.
Orders
(1)Appeals AV2002/0419 and AV2003/0686 are allowed.
(2)The unimproved value of Lots 16 and 17 on Registered Plan 11691, Parish of South Brisbane, County of Stanley, as at 1 October 2001 is determined at Four Hundred and Forty-eight Thousand Dollars ($448,000).
(3)The unimproved value of Lots 16 and 17 on Registered Plan 11691, Parish of South Brisbane, County of Stanley, as at 1 October 2002 is determined at Five Hundred and Eighty-two Thousand Dollars ($582,000).
RS JONES
MEMBER OF THE LAND COURT
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