Orr & Hooper v Chief Executive, Department of Lands

[1996] QLC 40

[1996] QLC 40

 

  LAND COURT

BRISBANE

29 MARCH 1996

Re:     Appeals against annual valuations
Valuation of Land Act 1944
  Shire of Emerald
  (AV95-308 and AV95-312)

Dorothy A Orr
  v.
  Chief Executive, Department of Lands

AND

Michelle W Hooper

v.
  Chief Executive, Department of Lands

(Hearing at Emerald)

D E C I S I O N

These are appeals by Dorothy A Orr and Michelle W Hooper against the unimproved values determined by the respondent in respect of two parcels of land situated in Caringal Road on the northern outskirts of the Town of Emerald.
           Dorothy A Orr is the owner of Lot 8 on Registered Plan 609875, Parish of Selma, containing an area of 8.094 ha.  Michelle W Hooper is the owner of Lot 13 on Registered Plan 609875, Parish of Selma, containing an area of 8.106 ha.  As at 1 January 1995 under the provisions of the Valuation of Land Act 1944, the respondent valued each of those lands at $88,000. Objections against those valuations were disallowed by the respondent and each of the owners has appealed to the Land Court against the respondent's decisions upon those objections.
           The two properties are located in a rural residential estate situated approximately 5 km north of the Town of Emerald adjacent to the bitumen sealed Gregory Highway.  However, access is provided by means of a formed earth service road running parallel to the Gregory Highway past the western boundaries of all 14 allotments in the estate.  The service road rejoins the Gregory Highway at the northernmost point of the estate.  Although the service road provides the official access, most properties in the estate unofficially obtain access to the highway directly opposite their boundaries by means of tracks across the nature strip. Access is generally good although the properties in the area can be cut off from the town in times of flood.
           The subject lands have telephone and electricity services available.  However, there is no sewerage.  Water is provided by means of the Gregory Mine water pipeline to which the subject lands are connected.
           The two subject lands are situated in close proximity one to the other and comprise near regular elongated rectangular shaped allotments of moderate elevation for the area, with a gentle slope to the south-east.  Both are used for rural residential purposes and are developed with single unit dwelling-houses.  Both properties are zoned "Rural B" under the town planning scheme for the Shire of Emerald.
           Evidence for the appellants was given by Mr GR Williams, a registered valuer in private practice at Gladstone.  Mr Williams assessed the unimproved value of each of the subject lands as at the relevant date at $63,000.

Mr Williams' report contains the following statements:

"Both properties are surrounded by cotton farms and Central Highlands Air Taxis have their airstrip approximately 2km to the south east of the subject properties.  From October to March the spraying of cotton is intense and spray drift falls on to the properties.

Aeroplanes turn directly over the properties at a height of less than 100m when spraying the adjacent farms and the general air traffic over the properties is heavy during the cotton growing season.  Emerald Agricultural Treatment has its airstrip on Selma Road, aeroplanes from this firm divert over the subject properties when headed for farms on Foley Road to avoid the main residential town area and the air space over the Emerald Airport.

The subject properties do not have subdivision potential because of their proximity to the cotton farms."

Valuation evidence for the respondent was given by Mr AP Newcomb, a registered valuer employed by the Department of Lands.  Mr Newcomb took a somewhat different attitude to the problem of spray drift.  His report contains the following statements:

"This property is located in a precinct of agricultural activity.  Some spraying from planes occurs 600 metres to the north of the property.  This spraying activity is only carried out on days where the likelihood of 'drift' is low due to the proximity of these farms to the Township of Emerald.  Several well vegetated properties act as a buffer between the subject property and where the aerial spraying occurs.  These spraying activities occur from time to time during a 3 month period each year."

As a basis for his valuation of $63,000 for each of the subject lands, Mr Williams relied upon two sales.  His Sale No 1 is of an allotment of 9.911 ha situated immediately to the north of Lot 8.  That property sold in September 1992 for $80,000.
           Mr Williams described the sale property as a hatchet-shaped allotment, purchased by the daughter of an adjoining owner, who obtains water from a bore on her father's adjoining property.  As there is some doubt about the reliability and quality of the water from the Gregory Mine pipeline, access to an alternative supply is an advantage.  Therefore, Mr Williams considered the purchaser to be over-anxious and the sale to be a high sale.
           However, during the course of his evidence Mr Williams said that he had not interviewed the parties to the transaction.  He had merely inferred from the circumstances that it was a classic adjoining-owner purchase and therefore would be a high sale. 
           Mr Newcomb also relied upon that sale (his Sale No. 3) which he described as being well drained with some views..  He also commented upon its hatchet shape and the fact that it was an old sale.  He noted that the purchaser was motivated to buy because of neighbouring relatives.  His report stated that it "demonstrates the saleability in this area despite neighbouring rural pursuits".  This I took to be a reference to the spray drift problem.   
           Despite the analysis of the sale showing $76,000, the respondent applied an unimproved value of $95,000 to that land as at 1 January 1995.  Mr Newcomb explained that in his opinion the market had risen considerably between the date of sale and the relevant date of the 1995 valuation.  In his comparison with the subject lands, Mr Newcomb said that the sale property is a larger block with comparable views, but with a narrower road frontage.
           Mr Williams' second basis of valuation is the sale of Lot 8, one of the subject lands, in March 1994 for $188,000.  At the time of sale the property was improved with a house and supporting infrastructure, to which Mr Williams attributed an added value of $125,150.  This left him with a land value of $62,850, which he rounded to adopt $63,000.
           Mr Newcomb did not use that sale.  He said that he would avoid analysing the sale of an improved property when there were unimproved sales available.  He relied upon the sales of two other properties, neither of which are situated in the same estate as the subject lands.
           The first of Mr Newcomb's sales has an area of 0.6436 ha and is situated in Pritchard Road.  It sold in November 1994 for $57,000.  Mr Newcomb analysed that sale to show an unimproved value of $55,000.  The respondent had applied an unimproved value of $45,500 as at 1 January 1995.
           That property is also a hatchet-shaped allotment, much smaller than the subject lands, but with more extensive services available.  However, like the subject lands, it does not have sewerage.  Mr Newcomb considered that the sale was inferior to the subject lands as the hatchet shape would necessitate higher costs of development and it had a smaller frontage.
           Mr Newcomb's second sale is situated in Tourmaline Road, has an area of 1.83 ha and sold in November 1994 for $85,000.  Mr Newcomb analysed that sale to show an unimproved value of $83,000.  The respondent had applied an unimproved value of $62,500 as at 1 January 1995.           Mr Newcomb considered that sale property to be inferior to the subject lands, because it was smaller, lower lying and with no real views.  He remarked that the land had been developed since sale into three lots.  However, that exercise had, as he put it, "proved less than ideal", because of the physical state of the property, resurvey requirements and the need to build up 50% of the allotment to give it appropriate drainage.  He thought that it should have been used as a rural homesite.
           Mr Newcomb's third sale was Mr Williams' Sale No. 1 and has already been discussed.  As noted earlier, Mr Newcomb was of the opinion that the market for land had increased considerably since the date of that sale for $80,000.
           As support for this contention, Mr Newcomb produced the details of sales of four parcels of land situated in a rural residential estate which he described as being situated about 10 minutes' drive east of Emerald on the bitumen sealed Capricorn Highway.  Each of those parcels of land is of approximately 40 ha in area.  Two of them sold in June 1993 for $65,000 and $72,000, while the remaining two sold in August 1994 for $100,000 and December 1994 for $85,000.  Mr Newcomb contended that the difference in sale prices between June 1993 and late 1994 indicated a considerable increase in the market for rural residential land.
           I did not find those comparisons helpful.  To start with, the sales are considerably larger than the subject lands and situated in a different environment.  Although it was not commented upon by Mr Newcomb, the sales in 1993 are of irregular hatchet-shaped allotments with narrow frontages to the highway and long narrow hatchet handles leading to the balance of the allotments, which could add considerably to the costs of development and provision of services.  On the other hand, the two sales in 1994 are of regular shaped rectangular allotments with much larger frontages to the highway.  These differences may well have had an effect on sale prices quite apart from the differences in their dates of sale.
           In a further attempt to demonstrate the increase in the market for rural residential sites, Mr Newcomb referred to the sale and resale of a property of 14.404 ha situated in Pritchard Road, with frontages to three other streets.  That property sold in December 1994 for $85,000 and resold in January 1995 for $125,000.  However, Mr Newcomb did not interview any of the parties to those transactions.  It was suggested to him that the property originally sold because of its perceived subdivisional potential and resold to the ultimate purchasers for the same reason.  Mr Newcomb could not respond to those suggestions.
           Once again, I did not find this evidence to be helpful.  I note that there is a difference of only 20 days between the sale and the resale for an additional $40,000.  I also note that the respondent applied an unimproved value of $87,000 to the property as at 1 January 1995.  It seems clear to me that there were circumstances surrounding those transactions which required further investigation.  Without those details I am not prepared to accept that evidence as an indication of the increase in values for rural homesites in the Emerald area.
           That then leaves the valuers with their original sales.  Mr Williams has submitted a sale in 1992.  He contended that there was little or no increase in the unimproved value of lands in that estate between the date of sale and the date of valuation because of the unique problems experienced by that particular area.  He attempted to support that sale with the improved sale of one of the subject lands. 
           The sale of the subject land is usually the best evidence of value.  However, where the property is extensively improved, then the accuracy of an analysis of that sale to unimproved value depends upon the accuracy of determining the added value of improvements.  The difficulties involved in such an exercise are well known and a small error in the valuation of improvements can have a substantial effect upon the unimproved value so derived.  I can have little confidence in such a basis of valuation.
           Mr Newcomb's evidence is only slightly better.  The first of his sales is of a much smaller parcel situated in a better serviced part of Emerald.  I note that the sale was analysed to show an unimproved value of $55,000, while the respondent applied an unimproved value of only $45,500 as at the relevant date.  It is so different to the subject lands that it provides little assistance in arriving at their unimproved values. 
           Mr Newcomb's second sale is of a property which has been since developed into three lots.  The implication is that the property sold because of its subdivision potential.  That appears to be borne out by the fact that the sale analysed to show an unimproved value of $83,000 and yet the respondent had applied an unimproved value of only $62,500 as at the relevant date.  Mr Newcomb's evidence indicated that the subdivision of that land was not as profitable as it might have been and therefore the property would have been better used as a rural homesite.  Be that as it may, the evidence indicates that the property was not sold as such and that sale provides no basis for the valuation of the subject lands.
           That then leaves both valuers with a common basis in the form of a sale which occurred some 28 months prior to the relevant date.  Mr Williams contends that there had been little or no increase in the value of land between the date of that sale and the relevant date.  Mr Newcomb, on the other hand, contends that there had been a substantial increase.

It seems to be common ground that there was some increase in the market value of rural residential land in Emerald between late 1992 and early 1995.  It seems also reasonable to conclude that there is some effect upon the value of the subject lands because of the possibility, if not reality, of spray drift.  In addition, there is the noise from aircraft operating from nearby airstrips.  Indeed, Mr Newcomb said that $10,000 had been allowed in his valuation of each of the subject lands for those problems.  There is also some doubt about the reliability and perhaps the quality of the water supply to the subject lands.
           On the state of the evidence the appellants have not convinced me that they have discharged the onus of proving that the unimproved values applied by the respondent are substantially incorrect.  However, sufficient evidence has been adduced to make me question whether the respondent has allowed sufficient for the detriments suffered by the subject lands. 
           Having regard to the situation of the subject lands in an environment where cotton is grown and therefore the spraying of cotton could be expected, the fact that the land is situated in the vicinity of two airstrips used by spraying aircraft, the formed earth access road and relative lack and reliability of services provided to the area, I am of the opinion that the respondent should have allowed something further for these matters in determining their unimproved values.  Therefore, I am of the opinion that a further allowance of $8,000 each would be appropriate.
           Therefore, the appeals are allowed, the valuations of the Chief Executive are set aside and the unimproved values of Lot 8 and Lot 13 on RP 609875, Parish of Selma, are each determined at Eighty Thousand Dollars ($80,000).

JJ TRICKETT
  PRESIDENT OF THE LAND COURT