Patterson v Department of Natural Resources and Water
[2007] QLC 123
•7 December 2007
LAND COURT OF QUEENSLAND
CITATION: Patterson v Department of Natural Resources and Water [2007] QLC 0123 PARTIES: George Thomas Patterson and Beryl Mary Patterson
(appellants)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2007/0028 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 7 December 2007 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr PA Smith ORDERS: 1. The appeal is dismissed.
CATCHWORDS: Valuation – unimproved value – factors in valuation – relativity – decision arising from preliminary conference
Valuation of Land Act 1944
Land Court Act 2000APPEARANCES: Mr G Patterson appeared in person for himself and his wife, Beryl Patterson, the appellants
Mr S Schmidt and Ms L Marshall, Department of Natural Resources and Water, for the respondent
Background
This matter involves an appeal by the appellants against a valuation by the respondent, pursuant to the Valuation of Land Act 1944 (the VLA) which valued their property situated at 29 Sandy Camp Road, Wynnum North, in the sum of $150,000 as at 1 October 2006. The appellants contend for a valuation of $125,000.
The subject land is described as Lot 9 on SP 168882, Parish of Tingalpa, containing an area of 509m².
At the location of the subject land on Sandy Camp Road, which travels in a east west direction, the residential allotments are situated on the northern side of Sandy Camp Road. On the southern side of Sandy Camp Road, opposite the subject land and surrounding lands, there is a major suburban rail line. Between the rail line and Sandy Camp Road are large, established trees which soften the outlook somewhat. The subject land is located at a low point of Sandy Camp Road, which rises to both the east and west of the subject property.
The subject land enjoys a similar street frontage to nearby residential blocks. However, the subject is impacted by a residential block to the rear of the subject which is accessed from Sandy Camp Road via the western side of the subject land.
As indicated, the subject land is located at a low point on Sandy Camp Road. The subject property is not only at a low point from an easterly and westerly direction along Sandy Camp Road, but all of Sandy Camp Road at this vicinity is lower than the rail line and suburban allotments directly to the south of the rail line at or about the intersection of Curve Avenue and Cameron Parade.
The subject land enjoys all the usual services of a developed residential allotment.
Preliminary Conference
A preliminary conference was held in this matter in accordance with section 36 of the Land Court Act 2000. I presided at the preliminary conference. The matter is somewhat unusual in that both parties agreed with the sales evidence for the area, the only point of conflict being the nature in which the disabilities suffered by the subject land should be viewed when compared to the valuations applicable to neighbouring and nearby properties of similar size. Thus, the principal point of difference related to relativity.
Both parties were keen to avoid a formal hearing of this matter and believed that nothing further could be provided to the Court than that which had been stated at the preliminary conference, save for a view of the subject and surrounding properties. Both parties requested that, pursuant to the power set out in section 36(6) of the Land Court Act 2000, I dispose of the matter without a further hearing. In consenting to this course of action, both parties also requested that, without the need for attendance by either party, I conduct an inspection of the subject and surrounding properties.
I subsequently conducted an inspection and my decision in this matter is based on the information provided to me by the parties at the preliminary conference and as viewed by myself at the inspection.
Relevant legislative provisions
Pursuant to s.13 of the VLA, the respondent is required to determine the unimproved value of the land. Relevantly, s.3(1) of the VLA says as follows:
“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.”
I note that the subject land in this matter is improved. Accordingly, put simply, the task is to find the market value of the land on the assumption that none of the improvements are on the subject land. An assessment is then undertaken as to the highest and best use of that land.
As the President said in Fairfax v Department of Natural Resources and Mines [2005] QLC 0011 at paragraphs 11 and 12:
“The principles for determination of the 'market value' of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of the property. (See Griffith CJ at 432 and Isaacs J at 441).
It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land. In Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:
'Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but – as with other commodities – the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date – and that is evidenced by sales."”
I respectfully agree with these observations.
Presumption of correctness of valuation
I now turn to section 33 of the VLA, which states as follows:
33 Status of valuation
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.
This section was considered by the High Court in the case of Brisbane City Council v The Valuer-General for the State of Queensland 1977-78 140 CLR 41 where Justice Gibbs (as he then was) made the following observation at page 56:
“In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s. 13(7) is rebutted.”
It should be noted that s. 33 of the VLA is in essentially the same terms as what was then s. 13(7) of the Act.
The issues in the Appeal
The appellants have set out a number of grounds for their appeal. The appellants claim that the valuation of the subject land is excessive and not in line with comparable properties in the adjacent area. The appellants also contend that their property, being 509m², is much smaller than any adjacent property. They also argue that the Brisbane City Council has assumed control of 83m² for drainage purposes, and that any use by the appellants of that part of the land is subject to the approval of Council.
The appellants have arrived at their estimate of value of $125,000 by assigning a dollar rate per square metre to their property (509m² at $294.65 = $150,000) then discounting the 83m² of drainage land to arrive at the rounded figure of $125,000.
The appellants also contend in their grounds of appeal that the respondent in disallowing their objection to their valuation, excluded a detailed analysis of their appeal.
Decision
In attempting to make out their case for a reduction in value by referring to the relativity of various blocks, including the subject, on a square metre basis, the appellants have fallen into error. The subject property has a residence built on it and therefore the provisions of section 17 of the VLA apply. Section 17(1) is in the following terms:
17Exclusive use for single dwelling house or farming
(1) In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use if lawful when the valuation is made.
The Land Court has considered the impact that section 17 has on valuation methodology on numerous occasions. As Dr Divett said in the case of Melit v Department of Natural Resources, Mines and Energy[1]:
[1] [2004] QLC 0026 at para [23] and [24].
“[23]In seeking some measure of the comparative comparisons, I am reminded that residential house sites are purchased on a “site” basis, and not on any rate per square metre basis. That was demonstrated in DF and M Ward v Valuer-General (1983) 9 QLCR 48, where the Land Appeal Court said at 50:
‘Relativity with different land use market categories is not tenable. Such cross-reference of values is not a valid valuation exercise or in conformity with the cardinal principles of valuation which calls for comparisons of like with like in all relevant points of comparison including highest and best use. Sites are valued overall and not on a rate per hectare basis. The experience of the market place reflects the former not the latter practice.’
[24]The importance of “site” comparisons was also emphasised in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, where the Land Appeal Court said at 330:
‘The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. As the Land Appeal Court said in its decision on the appellants’ previous appeal (H and E Grahn v. The Valuer-General, AV89-246 and 247, 13 December 1990):
‘for the purpose of valuing residential sites, the preferable method of comparison is on a site to site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size of the lots, the situation of land and access to the lots, the shape and topography of the lots etc. and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features.’”
A follow on aspect of this appeal relates to a relativity argument as between the subject land and surrounding or nearby blocks of a similar size. The question of relativity was addressed by Member Scott in the Land Court case of Thomson v Department of Natural Resources and Mines[2] where he said, at paragraphs [7] and [8]:
“This issue has come up on more than one occasion in the past, one example being found in Gibson v Chief Executive, Department of Lands (V92-64 unreported Land Appeal Court 9 June 1995) at 6:
‘We reiterate what has been said often before – and what is Mr Tighe’s chief concern – the importance of correct relativity in the equitable distribution of the rating burden cannot be overstated. However the question before this Court is the correct valuation of the subject land, not the correct valuation of an area. It would not advance the appellant’s case to satisfy us that her neighbour’s land was undervalued: … The appellant must show that the valuation of her land was incorrect.’
A similar opinion is expressed by the Land Appeal Court in Bignell v Chief Executive, Department of Lands (AV92-65 unreported Land Appeal Court 4 March 1996) at 11:
‘What has to be decided in this case is the proper value of the subject land by reference to sales evidence about comparable unimproved properties. … If a proper valuation of the subject land makes it consistent with the relative values of neighbouring blocks then so be it. The question before this Court is ‘the correct valuation of the subject land, not the correct valuation of the area’.”
[2] [2007] QLC 0092.
I respectively agree entirely with Member Scott and with the passages he has quoted from Gibson and Bignell. Given the evidence presented in this appeal and the respective values of the subject land and surrounding blocks of a similar size, what is the proper unimproved value of the subject land?
When I consider the unimproved value of the subject land with those residential blocks to the immediate east and west of the subject on Sandy Camp Road, it is abundantly clear that a substantial reduction has been allowed by the respondent for the disabilities that the subject land has, and for its relatively small size. The three properties to the immediate west of the subject are each valued at $195,000. I note that such residential blocks are significantly larger than the subject, ranging in size from 900m² to 1,037m². However, six of the seven blocks to the immediate east of the subject range in size from 610m² to 642m². Each of those blocks is valued in the sum of $182,500, again a figure substantially above the unimproved value of the subject which is set at $150,000. In my view, the differential in valuation between the subject and those properties to the immediate east and west amply takes into account the disadvantage of the subject when viewed on a site basis.
The appellants have also referred the Court to the values of residential land to the south of Sandy Camp Road situated on Cameron Parade and Curve Avenue. I note that three residential blocks on Curve Avenue having an area of about 410m² are valued at $132,000, whilst a residential block of 450m² is valued at $139,000. As regards those specific Curve Avenue blocks, I note that the blocks valued at $132,000 have a narrow frontage and that the blocks slope away from Curve Avenue down towards the suburban rail line. The block at the corner of Cameron Parade and Curve Avenue, which is 450m² and is valued at $139,000, is of a more regular size. Further, two blocks immediately to the east of the last mentioned block, of areas of 599m² and 607m² respectively, are valued at $160,000 and $152,500 respectively. The appellants claim that each of these blocks is far superior to the subject block. Unfortunately for the appellants, the fact that blocks on Curve Avenue and Cameron Parade are valued at amounts in some cases lower than the subject in circumstances where the appellants claim those blocks to be superior does not necessarily assist their case. If the blocks on Curve Avenue and Cameron Parade are undervalued, using those blocks as a reason, on relativity grounds, to reduce the value of the subject block would only compound the error further and not result in an accurate valuation being determined by this Court for the subject land.
I am reminded of the comments made by Member Scott in the Land Court case of Dutton v Department of Natural Resources and Mines[3] where at paragraph [12] of his decision he said:
[3] [2007] QLC 0091.
“It is difficult for a lay person such as Mr Dutton to produce evidence and argue a case such that it will upset a case presented by the Chief Executive with the aid of an expert witness such as Mr Moroney. Indeed that has been recognised by the Land Appeal Court in JL and I Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, where the Land Appeal Court said at 172:
‘The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. Neither this Court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradiction to jurisdiction conferred under the Land Act.
In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.’”
Taking all of the evidence and the relative authorities into account, in my view the appellants have failed to establish that the respondent’s assessment of the unimproved value should be reduced.
Postscript
It is unfortunate that the delivery of this decision has taken longer than anticipated. At the time that I heard the matter, I only held a part-time appointment to the Land Court, my full-time appointment being as Deputy President of the Land and Resources Tribunal. Requirements of the Land and Resources Tribunal, beyond my control, necessitated all Land and Resources Tribunal work taking precedence over this matter. Fortunately, that situation has been resolved by the amalgamation of the bulk of the jurisdiction of the Land and Resources Tribunal into the Land Court, and my corresponding appointment as a full-time Member of the Land Court.
Order
The appeal is dismissed.
P A SMITH
MEMBER OF THE LAND COURT
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