O'Sullivan v Valuer-General
[2013] QLC 5
•21 February 2013
LAND COURT OF QUEENSLAND
CITATION: O'Sullivan v Valuer-General [2013] QLC 5 PARTIES: Michael John O'Sullivan
(Appellant)
v Valuer-General
(Respondent)FILE NO: VLA638-10 DIVISION: General Division PROCEEDINGS: Appeal against valuation under the Valuation of Land Act 1944. DELIVERED ON: 21 February 2013 DELIVERED AT: Brisbane DATE OF HEARING: 27 September 2011 HEARD AT: Townsville MEMBER: His Honour, Mr WL Cochrane, Member ORDERS: 1. Appeal Dismissed. CATCHWORDS: STATUTORY VALUATION – Valuation of Land Act 1944 – UNIMPROVED VALUE – IMPROVED LAND – PRESUMPTION OF CORRECTNESS – EVIDENTIARY ONUS. APPEARANCES: Kevin Charles O’Sullivan.
Mr P Prasad, solicitor for Respondent.
Background
This is the decision in an appeal in respect of land located at 31 Dommett Street Wulguru in the City of Townsville which land is otherwise described as Lot 240 on RP 705928 Parish of Stuart and has a Property ID 5147005.
The valuation appealed against was as at 1 October 2009 effective from 30 June 2010.
The land was valued at $175,000 and has an area of 1,012 m². An objection by the Appellant against that valuation was disallowed and the value remained unaltered.
The disallowing of the objection brought by Mr O’Sullivan was based upon the following reason by the Director General:
“When compared to sales prices of similar properties, the delegate decided the figures supported the applied value and no reduction in valuation should be made.”
In his appeal Mr O’Sullivan identified the following grounds:
“(a)Many more improved properties (houses) have been advertised for sale in Wulguru during the last year between $200,000 and $300,000.
(b)The street is not accessible during heavy rain and the property acts as drainage to properties at the rear.
(c)In my opinion, corner allotments usually attract higher prices yet two corner properties in Dommett Street are $52,000 and $55,000 cheaper on your valuation then the rest of the street.”
Mr O’Sullivan contends that a more appropriate valuation is in the sum of $120,000, thus $55,000 below the Respondent’s valuation.
At the hearing of this matter Mr O’Sullivan did not call any evidence other than to give oral evidence on his own behalf supported by statements which he had filed.
The Respondent through Mr Prasad called evidence from a registered valuer Mr Daniel Patrick Maguire who is employed by the Respondent department.
Mr Maguire’s report which had earlier been filed was Exhibit 5.
Legislative Provisions
Because of the date of the valuations namely being effective from 30 June 2010 with a date of valuation as 1 October 2009 this appeal is, pursuant to the provisions of s.268 and s.269 of the Land Valuation Act 2010, to be considered and determined pursuant to the Valuation of Land Act 1944 (VOLA). The relevant version of VOLA is embodied in Reprint No. 9 (B).
Further because the subject land is improved with a dwelling house constructed upon it the provisions of VOLA s.3(5) come into play.
VOLA s.3(5) provides:
“3 Meaning of unimproved value
(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 negotiated as a bona fide sale; and
(b) in relation to improved land—the capital sum that the fee simple of the land might be expected to realise if negotiated as a bona fide sale, assuming the improvements did not exist.
(2)However, the unimproved value of improved land can not be less than the sum that would be obtained by deducting the value of improvements from the improved value on the date of valuation.
(2A)The assumption mentioned in subsection (1)(b) is limited to the instant in time when the valuation is to be made on the date of valuation.
(2B)For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with—
(a) a local planning instrument; or
(b)a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land; or
(c) the making or use of an improvement to the land.
(2C)Nothing in subsection (1)(b) requires an assumption, in relation to improved land, that the improvements have never been made.
(3)In addition, the restrictions and limitations in any deed of grant or certificate of title in respect of any racecourse shall be disregarded in ascertaining the unimproved value of the land of the racecourse concerned.
(4)Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that—
(a) the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and
(b)such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used; and
(c)there is no greater risk than that which applied to the actual use of the land in its actual condition, on the date of valuation, in realising the use of the land, or continuing the use of the land, for any purpose for which it was being used on the date of valuation;
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made.
(5)To remove any doubt, it is declared that—
(a)the benefit of a lease, agreement for lease or any other instrument of any type relating to land, or improvements on land that enhances the value of the land, as unimproved or improved must be included in its unimproved value; and
(b)the following apply for assessing the unimproved value of land—
(i)the bond rate must be adopted in analysing—
(A)the added value of improvements on the land including any allowance to be made under this section or section 5; and
(B)the added value of improvements involved in any comparable sale of improved land;
(ii)no amount can be deducted for goodwill whether in analysing the improvements on the land, or any comparable sale of improved land, or otherwise;
(iii)no deduction for any profit and risk allowance or development premium can be made for the realisation of the use of the land, or for continuing the use of the land, for any purpose for which it was being used on the date of valuation;
(iv)if the land is improved and the assessment includes a comparison with sales of vacant or lightly improved land, or with sales for redevelopment, an amount representing the development premium inherent in the value of the land as improved must be added to the level of value established by the sales;
(v)the benefit to the land of the payment of infrastructure charges or of infrastructure construction must be included; and
(c)the term ‘unimproved value’ defined under this section has been given a special meaning that must be applied whether or not that definition accords with the ordinary meaning of that term.”
Pursuant to s.63(A) of the VOLA the burden of proof lies upon the appellant and the hearing itself is limited to the grounds stated in the notice of appeal.
The Subject Land
The best description of the subject land is that contained within the report prepared by Mr McGuire the valuer called by the Respondent.
Mr McGuire describes the setting for the subject site in the following terms:
“The subject property is situated at Wulguru approximately 6 kms south of the Townsville CBD.
Wulguru is an established suburb with a variety of different houses and landscapes. Lexington Street and Coral Sea Crescent provide panoramic views of Townsville and Magnetic Island. The suburb has a high level of government housing.
The Edison Street Plaza is the main shopping centre of the suburb consisting of Edison Street Seafood, Video Hire, Chinese Dining, a Bakery, a St Vincent De Paul Store, a Butcher, a Hairdresser and a Handy Mini Mart. Wulguru is a centrally located suburb with two major shopping centres nearby being Fairfield Waters and Annandale Central.
There are several parks and soccer fields as well as a scout hall.
The surrounding educational establishments include James Cook University, William Ross High School, Southern Cross Catholic Primary School, Annandale State Primary School and Townsville Junior Grammar School.”
Mr McGuire points out that Dommett Street (on which the subject land is located) is a bitumen sealed road with concrete kerbing and channelling on the south east and bitumen with an earth shoulder on the north-western side providing easy and direct access to the subject property.
All relevant services including electricity, telephone, reticulated town water and sewerage are connected to the property which is slightly above road level and regularly shaped with views across the road of the Cluden Racecourse.
The subject land is improved with a residential dwelling and it was not in dispute between the parties that the highest and best use of the subject land is for a residential dwelling.
That reflects the zoning of Residential pursuant to the Townsville City Plan 2005.
The Evidence of Mr O’Sullivan
Mr Kevin Charles O’Sullivan explained to the Court that while he was not the registered proprietor he held a life tenancy in the land which was registered in the name of his son. Mr Prasad for the Respondent had no objection to Mr Kevin Charles O’Sullivan appearing in that capacity.
Mr O’Sullivan had provided to the Court a number of documents which were treated as though they were valuation reports notwithstanding his lack of formal qualifications.
Accordingly, his correspondence to the Court received on 21 September 2011 became Exhibit 3, a clarification of that correspondence dated 27 September 2011 became Exhibit 4 and a later response to the formal valuation report of Mr Maguire was admitted and marked as Exhibit 6. That document was received on 27 September 2011.
Mr KC O’Sullivan gave oral evidence under oath.
At the beginning of his evidence, without any notice to the Respondent, Mr O’Sullivan sought to tender a number of photographs showing his property and views of other houses as well as the racecourse. That was not resisted by Mr Prasad and photographs which comprised Exhibits 7, 8, 9, and 10 were made exhibits before the Court. Mr O’Sullivan also tendered an extract from the Townsville Bulletin of Saturday September 3, 2011 involving an advertisement for sale of a property located at 21 Pasteur Street in Wulguru.
In his oral evidence Mr O’Sullivan sought to highlight what he described as “a few of the disadvantages of living in Dommett Street”.[1]
[1] T. 1-20 L. 12.
Those disadvantages included:
(a) Insufficient stormwater drainage;
(b)Sleep disturbance caused by racehorses on their way to training, both being walked up the bitumen road and in horse floats;
(c)The effect of the public address system at the racecourse;
(d)Service vehicles on the racetrack causing dust nuisance.
It is noteworthy also that Mr O’Sullivan sought to draw attention to a number of advertisements and sales of properties which occurred in 2010, 2011 which evidence largely ignores the reality that the valuation was as at 1 October 2009.
It is notorious that land values can both rise and fall in a relatively short period of time.
Mr O’Sullivan also contended[2] that the assertions contained in Mr McGuire’s report could not be supported by the evidence.
[2] T. 1-22 L. 1-10.
Fairly viewed, Mr O’Sullivan’s concerns were that, as he apprehended it, the valuation was based upon sales of vacant land and his observation was that that seemed to be a difficult exercise because there was not much vacant land in Wulguru, it being an older suburb.
Clearly Mr O’Sullivan did not understand the manner of the analysis which is carried on by valuers in analysing the sales of developed land to reach a value for the unimproved land.
Mr O’Sullivan was not able to point me to any aspect of Mr McGuire’s report which I am prepared to find was prepared in error or which ignored relevant aspects of the valuation process.
Mr O’Sullivan’s oral evidence also included a number of argumentative statements which might have been better saved for his submissions at the close of the case.
His approach was to articulate a number of propositions about changing valuations and sale prices from one year to the next but, so far as I was concerned, he failed to back up his propositions with any valid evidence.
In addition Mr O’Sullivan was concerned that some blocks of land of the same size had attracted different valuations.
In cross-examination of Mr O’Sullivan, Mr Prasad for the Respondent aptly summarised Mr O’Sullivan’s concerns when he put to him the following:
“So, Mr O’Sullivan, … the way you’ve – what you believed to be the valuation of your property is a comparison to other streets or at the back of Dommett Street being a lower valuation than yours and looking at relativities (of) other valuation figures to come up to your valuation?”[3]
[3] T. 1-34-35.
Mr O’Sullivan confirmed that that was the case but agreed, further, that he believed that corner blocks are worth more normal blocks.[4]
[4] T. 1-35 L. 10.
With respect to the proposition that corner blocks were worth more than “normal” blocks, Mr O’Sullivan conceded that he has no evidence to back up that proposition.
In fact, Exhibit 11 which was tendered by Mr O’Sullivan to demonstrate a reduction in values was, itself, a corner block.[5]
[5] T. 1-36 L. 30.
Also in cross-examination[6] Mr O’Sullivan conceded that the valuations that he was referring to in part of his material were valuations in respect of the 2010 valuation exercise carried out by the Respondent and not the 2009 valuation exercise in respect of which he had brought the appeal. Further, some of the sales and advertisements he sought to rely upon post dated the valuation date by a substantial period.
[6] T. 1-36-37.
In his response report which had become Exhibit 6 Mr O’Sullivan referred to properties located at 26, 30 and 49 Coral Sea Crescent which property valuations and sales attempts reflected varying valuations.
In cross-examination he conceded that his approach to those properties was purely speculative and that generally he had not inspected any of the properties but relied upon his general knowledge of the area to assert that they probably had views. Further, he conceded that while he relied upon the price of which properties had been advertised he was unable to confirm whether or not those properties had in fact been sold.
With respect to the report of Mr McGuire (Exhibit 5) Mr O’Sullivan took exception to Mr McGuire’s utilisation of sale of vacant land which he said were comparable but 5 out of 6 of which, according to Mr O’Sullivan were located in an area known as Garbutt or in other suburbs.
Mr O’Sullivan’s contention was that utilising vacant land sales in areas other than Wulguru was misleading and did not result in comparable sales. Notwithstanding his contention that the land relied upon by Mr McGuire was neither nor possessed of similar attributes he conceded that he had not been to those lots of land but again relied upon his general knowledge of the Garbutt area.
Unfortunately while Mr O’Sullivan seems to possess a heartfelt belief that the valuation of the property in which he was interested was wrong his approach has failed to provide to me any evidence upon which I would feel able to rely to set aside the considered valuation produced by the Respondent.
The Evidence of Mr McGuire
Mr McGuire’s report became Exhibit 5. He was called to give oral evidence and was cross-examined by Mr O’Sullivan.
I have already referred in paragraph [11] to the apt description of the subject land provided by Mr McGuire.
At paragraph [15][7] Mr McGuire expresses the view that the subject property has been valued on the basis that the highest and best use is for a residential dwelling.
[7] Exhibit 5, p. 5.
That approach was not sought to be contradicted by Mr O’Sullivan.
So far as methodology is concerned Mr McGuire adopted a Direct Comparison Approach to his valuation and compared the subject property to what he contended was sales of a similar nature or lesser to derive the valuation figure.
He had described the property as being a two story residential dwelling with which description Mr O’Sullivan took issue pointing out that the living area was a single story above a garage and storage area under the house. In my view nothing turned upon that alleged mis-description by Mr McGuire.
Mr McGuire relied upon six land sales not all of which were in the immediate subject Wulguru in which the subject land was located.
Mr McGuire explained that in his report in saying[8]:
“The vacant land sales that I have used are from the areas that would be regarded as the most appropriate given their date of sale, their location, size, proximity to services, amenities, the dwelling types, socio-economic environment, to draw on as evidence to support a level of valuation.”
[8] Exhibit 5, p. 6.
The sales upon which Mr McGuire relied were:
Sale No. Locality/Address Area Date Sale Price 1. 32 Kennan St
Oonoonba554 m² 16/10/2009 $143,000 2. 71A Peel St
Garbutt Qld 4814399 m² 01/09/2009 $155,500 3. 33 Lancaster St
Garbutt Qld 4814809 m² 03/04/2009 $179,000 4. 49 Coral Sea Cres,
Wulguru Qld 48111307 m² 08/03/2009 $385,000 5. 20 Pasteur St
Wulguru Qld 48111012 m² 15/07/2008 $200,000 6. 37A Tenth Av,
Railway Estate Qld 4810809 m² 15/08/2009 $205,000
Mr McGuire’s evidence was to the effect that his Sale No. 5 at Pasteur Street in Wulguru was the best evidence of value because that particular lot was similar in size, shape and location to the subject. He also, in his report, Exhibit 5, pointed out that the sale was an older one in a declining market, but, that the subject land had the superior land that overlooked Cluden Racecourse and was closer to the main road by more than 200 metres then the subject. It also had proximity to the motorway, busway and schools.
That sale was for $200,000 thus being at a price that represented 17% more than the subject land which in turn was 20% larger than the Pasteur Street site.
I am satisfied that it was appropriate for Mr McGuire to place the weight on his sale No. 5 that he did.
Mr McGuire’s sale No. 3 at 33 Lancaster Street Garbutt was for a site slightly smaller in size and similar in shape but closer to the Townsville CBD. In his report Mr McGuire had unhelpfully described the subject property as being either approximately 6 kms south of the Townsville CBD[9] or 7.5 kms from the CBD.[10] In either case however the Lancaster Street site being only 3.5 kms from the CBD according to Mr McGuire had better proximity. That land had no particular views or outlook.
[9] Exhibit 5, p. 3.
[10] Exhibit 5, p. 6.
Sales 1 & 2 which I need not examine in detail were relied upon by Mr McGuire to provide evidence supporting the lower end of the sales range whereas sale No. 4 at Coral Sea Crescent, to Mr McGuire’s mind indicated the top end range within the subject suburb of Wulguru. That was a block which was nearly 30% larger than the subject and while it had poorer access and a poorer frontage it had a superior building pad and superior views including 180° views of the CBD, water views and Magnetic Island.
Mr McGuire also relied upon sales No. 1 and 2 as providing evidence of the lower level of prices for smaller blocks ranging between 400 m² and 550 m². Those blocks reflected a price between $143,000 and $155,000. That is to say, in broad terms, they reflect prices approximately 15% lower than the subject for land which is less than half the size.
Mr McGuire concludes that the range of sales relied upon by him demonstrate that the $120,000 as at 1 October 2009 for the subject property is too low.
I agree with him.
As to the contentions by Mr O’Sullivan regarding the value of corner blocks compared to regular blocks Mr McGuire expressed the view that that is a matter of “beauty is in the eye of the beholder where some purchaser will consider it an advantage, others will consider it detriment. For a regular shaped block, a corner block, you can have two street access. Some people might regard that as invasion of privacy with excessive pedestrians or vehicles.[11] He did however concede that a corner block did carry with it the option of variation for access and location of things like garages.
[11] T. 1-51 L. 40.
As to the issue of flooding and drainage matters nothing was put to Mr McGuire seeking any concessions from him that he failed to take such matters into account in his valuation of the subject land.
Although Mr O’Sullivan sought to challenge many of the propositions advanced by Mr McGuire in his cross-examination of him I do not feel that he had any or any substantial success in illiciting any concessions from Mr McGuire that his valuation exercise was flawed or that the valuation contended by him was erroneous.
Accordingly, I find that Mr O’Sullivan has failed to discharge the burden of proof cast upon him by s.63A of the VOLA and accordingly the appeal is dismissed.
HIS HONOUR, WL COCHRANE
MEMBER OF THE LAND COURT
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