Patterson v Chief Executive, Department of Lands
[1996] QLC 154
•29 November 1996
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BRISBANE
29 NOVEMBER 1996
In the matter of an appeal against a valuation
Valuation of Land Act 1944
Valuation Roll No.: 39801
Local Government: GCCC-Albert (AV95-576)
Keith R and Elizabeth A Patterson
v.
Chief Executive, Department of Lands
(Hearing at Coolangatta)
D E C I S I O N
The Chief Executive placed a valuation of $190,000 on land owned by the appellants as at a relevant date of 1 January 1995 pursuant to the provisions of the Valuation of Land Act 1944. The appellants objected against such valuation and, having failed to convince the respondent to change the figure, appealed to this Court contending that the valuation of the subject land ought to be $130,000.
The grounds of appeal were lodged in quite detailed format, however, can be summarised under three headings:-
1.The valuation of the Chief Executive is not supported by sales evidence.
2.The valuation is not supported by a valuation prepared by HTW Valuers for the appellants.
3.Since a previous valuation of $127,000 was placed on the subject land by the Chief Executive as at 30 June 1993 values have changed little and in many instances have fallen.
Keith Robert Patterson appeared for the appellants and gave evidence on their behalf. Mr Patterson is a share investor and was previously a sales manager with St George Real Estate for approximately 11 years. Valuation evidence for the Chief Executive was given by David Robert McKinnon, a registered valuer employed by the Department of Natural Resources which includes the former Department of Lands.
Mr Patterson did not provide a compendious description of the subject land, however, offered no objection to the description given by Mr McKinnon. Mr McKinnon said that the subject land has an area of 982 m² and is located at 29 Coobowie Street, Broadbeach Waters, on the Gold Coast about 1.9 km west of the Broadbeach surf beach. Access to the property is via Coobowie Street which is a full-width bitumen sealed road with concrete kerbing and channelling. Underground power supply, town water, sewerage and telephone are available to the property. The subject land comprises a fan-shaped block becoming wider towards its frontage to a tidal canal being located at the outer end of the canal, therefore having an aspect over the main entrance canal and along that entrance canal in a north to north-westerly direction. Road frontage to Coobowie Street is 12.91 metres, whilst water frontage to the canal is 36.7 metres. The block has been filled and has a revetment wall constructed along its water frontage, is level, of medium elevation and well drained. The land was zoned “Residential A” in the Town Planning Scheme of Gold Coast City, effective at the date of valuation.
The subject land is used for residential purposes and was valued as such by both the appellants and the respondent.
It is useful at this stage to make reference to some matters of general principle and law which guide certain important aspects of my considerations.
Section 45(4) of the Valuation of Land Act provides with respect to a notice of appeal:
"Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner." (emphasis added)
Section 3(1)(b) of the Valuation of Land Act provides a definition of “unimproved value” which is applicable in the subject case:
“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 manner in which improvements are to be treated on a piece of land to be valued for the purposes of the then New South Wales Legislation which included provisions similar to s.3(1)(b) mentioned above is expressed in Toohey’s Ltd v. Valuer-General (1925) AC 439. At page 443 of this case the Privy Council said:
“Now, what he (that is, the valuer) has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they had never existed.”
Having regard to the law that I have outlined above, I am to proceed as if the subject house was not there and in fact had never been there and to consider the appeal and the value of the notionally vacant or unimproved land on that basis. I must, however, consider the environment in which the subject land is located, both in terms of the advantages and disadvantages of that environment.
Mr Patterson tendered a statement and comprehensive supporting information which included, amongst other things, an extract from a publication entitled “Business Review Weekly”: issue of July 17, 1995. The article is a generalised one and is concerned with the sale prices of improved house properties in various locations throughout Australia, written by a Sara Clafton whose qualifications were not made known to me. Presumably the article was tendered to support the third ground of appeal concerning the lack of movement in land values since 1993, however, the article was not referred to during oral evidence. In short, it is of no use to me in considering this matter, particularly because it is not directly apposite to the subject land. I should add that it was Mr McKinnon’s view that whilst house prices had not noticeably changed during the 1993-1995 period, vacant land prices had moved upwards.
Mr Paterson provided a list of 10 sales of vacant land and 11 house sales which had taken place in Broadbeach Waters from April 1994 to July 1995. The house sales were taken from a more extensive list of sales which were provided, the selection being made on the basis of what Mr Patterson saw to be a similarity in the land content of the sales. I note, for example, that each of the selected house sales involves a fan-shaped block located on a canal, two features being similar to the subject land.
The next element of his approach was to tender a valuation document prepared by HTW Valuers dated 10 November 1993, apparently authored by Jon G Tyson, which placed a value on the subject property as improved at $260,000, apportioned as $150,000 to land and $110,000 to improvements. Mr Tyson was not called in support of his valuation, nor was there any reference in the document to the evidence upon which he had based his conclusions. The adversarial system employed under the English-based system of law adopted in Australia has, as a basic premise, the proposition that each side puts its strongest case in such a way that the other side may offer whatever challenge it considers appropriate within the law. From the respondent’s side, for example, Mr McKinnon, whose valuation was tendered in evidence, was presented for cross-examination, the appellants having the opportunity to challenge his evidence of valuation, his reasoning and the factual basis upon which he had proceeded. No such opportunity was made available to the respondent with regard to Mr Tyson’s valuation which, I have said, is not a “speaking valuation”. Accordingly, no reliance can be placed on the opinions expressed in the HTW valuation. Mr Patterson explained that the valuation firm, Taylor Byrne, had valued the subject property as improved at $260,000 being the same figure adopted by HTW, however, this does not change my view of the position regarding the HTW valuation.
I should mention that the HTW valuation and that of Taylor Byrne were prepared for Mr Patterson in his role as the executor of a will under which a half interest in the subject property had been bequeathed to his wife, the valuations being for the purpose of establishing a purchase price for the remaining interest. Mr Patterson and his wife purchased the subject property at the price indicated by the valuations.
Putting aside for the moment what I have said about the HTW valuation document, I will proceed to consider the approach Mr Patterson adopted in this appeal. This was to take the 11 improved property sales presented by him in evidence and to say that such sales supported the $260,000 HTW figure. The sales were at prices of $243,000, $250,000, $252,000, $260,000, $280,000, $310,000, $310,000, $315,000, $359,000, $375,000 and $475,000 respectively. I was offered no detailed comparison between the improved sale properties and the subject property, nor was there any detailed description of improvements on either these sale properties or on the subject land. I note also that the sales were selected on the basis that the land was similar. I cannot rely on this evidence to draw a conclusion that the improved value of the subject land at the relevant date or, in fact, in November 1993 was $260,000. Much more detail of the evidence and comparison between properties would be needed to produce a suitable conclusion.
Having said this, I should make it clear that the establishment of a value on the subject land, as improved, would be of little assistance unless cogent evidence of the value of improvements was available. I have nothing on this from the appellants excepting for the expressed and unsupported view contained in the valuation document from HTW Valuers.
Mr Patterson provided the following schedule setting out the vacant land sales that he had referred to in support of this appeal:
“ Address Sale Date Sale Price UCV70 Cypress Drive 7/3/95 $160,000 -
72 Cypress Drive 7/3/95 $160,000 -
74 Cypress Drive 7/2/95 $165,000 $123,000
86 Cypress Drive 15/9/94 $130,000 $123,000
88 Cypress Drive 17/10/94 $130,000 $123,000
90 Cypress Drive 15/11/94 $130,000 $123,000
102 Cypress Drive 15/7/94 $158,000 $123,000
31 Goolagong Court 26/8/94 $150,000 $135,000
3 Lamb Court 7/3/95 $160,000 $123,000
5 Lamb Court 7/3/95 $160,000 $123,000
Averages $150,300 $124,500 ”
As I understand his case, Mr Patterson uses these vacant land sales in two ways. First, he expressed the view that the subject land is “better than some of these waterfront blocks but not as good as others. Consequently the value of the land component of 29 Coobowie would be similar or marginally higher to the above averages”. Second, he calculated the average difference between the land sale price and the unimproved value applied by the Chief Executive to be $25,800, and said that this figure indicated the added value of improvements in the form of clearing, filling, levelling and revetment wall on the subject land.
Neither of these methods of the application of land sales accords with proper valuation practice. In striking a valuation for a piece of land by use of the direct comparison method, it is usual to make adjustments to the price indicated by basic sales having regard to material differences in the features of the land to be valued, compared with the basic evidence. An averaging method is unacceptable. (The Commonwealth v. Milledge (1953) 90 CLR 157.)
Establishing a figure for the value of improvements on a piece of land must occur, having regard to the actual improvements on the land and not by the method used by Mr Patterson. He did, in referring to the figure of $25,800, say that “Many land developers would argue the figure to develop the raw land into saleable waterfront lots would be substantially greater”, however, did not substantiate this claim by reference to detailed and cogent evidence.
Mr McKinnon was aware of land sales on Cypress Drive, however, preferred to not rely on them on the basis that they largely included sales between the developers and the RSL Art Union; because subsequent sales had been recorded at figures of approximately $30,000 higher than the initial sales; and because the Cypress Drive properties were located on a lake, whereas the subject land fronts a canal which provides access to tidal waterways. Mr McKinnon referred to three sales in his valuation, the first being located at 32 Sunshine Boulevard, Broadbeach Waters, a block of 556 m², which sold in February 1995 at $133,000. Mr McKinnon analysed the sale to an unimproved figure of $128,000 which was applied at $105,000. In his view, the sale property is inferior to the subject because of its smaller area, inferior aspect over a narrow (30 metre wide) canal and its position on a busy through road. Mr Patterson’s response to this transaction was to make reference to a sale at 34 Sunshine Boulevard which took place in July 1995, apparently for a price of $114,500. I was not provided with any description of the improvements, if any, on the sale land, nor of the attributes of the land itself. Accordingly, I am not able to draw any conclusions as to how this transaction may have been of assistance in the matter. The difference in price between this sale and Mr McKinnon’s Sale No. 1 was not explained to me, it being Mr McKinnon’s view that the sale date was further removed from the relevant date than that of Sale No. 1 and therefore the sale more proximate in time was the better basis. Given the state of the evidence, I can take the matter of the sale of 34 Sunshine Boulevard no further.
Mr McKinnon’s second sale was of a block having an area of 827 m² which sold at $165,000 in August 1993. Mr McKinnon analysed the sale to an unimproved figure of $152,600, which was applied at $138,000. His third sale took place in September 1993 and involved an allotment of 804 m² which sold at $157,500. Mr McKinnon analysed the sale price back to an unimproved figure of $145,400 which also was applied at $138,000 by the Chief Executive. Sales 2 and 3 are located in Mermaid Waters and it is this difference in location which was raised as a point of criticism by Mr Patterson. He expressed the view that the average price of houses in Mermaid Waters would be higher than Broadbeach Waters; that canals in the vicinity of the sale blocks are wider than those near the subject and that the sale blocks are closer to the surf beach than is the subject land. With regard to this last point, Mr McKinnon pointed out that, whilst the surfing beach may be geographically closer, access to it is circuitous travelling west first of all, then north before heading to the beach itself. In Mr McKinnon’s view, the fact that his Sales 2 and 3 in comparison with the subject land are both smaller in area, have narrower waterfrontage and have an inferior aspect over the water, given that the subject is located at the entrance of a canal, all indicate that the subject land is superior to these two sales.
Mr Patterson pointed out that whilst the subject land may have a wide water frontage, its frontage to the street is comparatively narrow. No practical disabilities were mentioned as flowing from the size of the road frontage. Indeed, it seems to me, having regard to the large size of the subject land and its outlook over a canal at its rear, that a frontage of 12.91 metres would not pose any real problem in the design and construction of a suitable residence.
At my invitation, Mr Grennan, who appeared for the Chief Executive, tendered a relativity map showing the values applied by the Chief Executive to other allotments in the vicinity of the subject land. Mr Patterson objected to my receiving this evidence, however, I elected to admit it on the basis that it is appropriate that valuations made for the purposes of the Valuation of Land Act of comparable lands should display relativity one to the other. (Barnwell v. The Valuer-General (1989) 13 QLCR 13). As Mr Patterson said that he did not accept the correctness of such valuations, it is appropriate that I refer to s.33 of the Act:“Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered.”
Given that Mr McKinnon had in the instant case employed, as bases, sales which he saw as being inferior to the subject land, I considered it appropriate to check the value placed on the subject land by the Chief Executive against similar properties. The evidence tendered showed two other fan-shaped allotments near the subject land with valuations of $190,000 placed on them. Nothing more by way of comparison with those relativity properties was offered by Mr McKinnon.
In Clough v. The Valuer-General (1981-82) 8 QLCR 70 at 76 it was said:
“It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value.”
Paying particular regard to this quotation, the valuation evidence relied upon by Mr McKinnon is preferred in this matter and his application of that evidence to the subject land appears to be supported by the relativity evidence tendered. Neither the evidence adduced on behalf of the appellants nor any challenge made to Mr McKinnon’s valuation convinced me that the grounds of appeal had been proven. The appeal is therefore dismissed and the valuation of the Chief Executive is affirmed.
RP SCOTT
MEMBER OF THE LAND COURT
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