Peter James Hardy v Department of Natural Resources and Water
[2007] QLC 20
•30 March 2007
LAND COURT OF QUEENSLAND
CITATION: Peter James Hardy v Department of Natural Resources and Water [2007] QLC 0020 PARTIES: Peter James Hardy
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2005/0497 DIVISION: Land Court of Queensland PROCEEDING: Appeal against Unimproved Valuation DELIVERED ON: 30 March 2007 DELIVERED AT: Brisbane HEARD AT: Mackay JUDICIAL REGISTRAR: Mr BR O'Connor ORDER: The appeal is allowed and the unimproved value of the subject land determined at Three Hundred and Forty-Five Thousand Dollars ($345,000). CATCHWORDS: Valuation – whether rock wall appurtenant to subject land – maintenance of wall – views. APPEARANCES: Mr P Hardy, on his own behalf.
Mr W Isdale, Counsel, Crown Law for the respondent.
This matter relates to an appeal against the determination of the unimproved value, for Valuation of Land Act 1944 (the Act) purposes, of land situated at 58 Ocean Avenue, Slade Point Mackay. The land is used for single-unit residential purposes and valued as such. It has an area of 453 m² and is separated from the Pacific Ocean by an esplanade some 12 metres wide. A rock wall has been constructed on the seaward side of this esplanade. The present owner Mr Peter Hardy has resided on the land for some 30 years.
At the hearing the appellant amended his valuation to $230,000; by contrast, the Chief Executive, Department of Natural Resources and Mines (the respondent), has placed a value of $360,000 on the land. The relevant date for valuation purposes is 1 October 2004.
Evidence was given for the appellant by Mr Peter Hardy, the property owner. Evidence for the respondent as given by Mrs Robyn Merritt, a valuer in the employ of the respondent.
Grounds of Appeal
Mr Hardy has attached what he describes as a "rationale for objection" to his Notice of Appeal. From this, his main grounds of appeal can be isolated as follows:
·no allowance has been made for the rock wall on the seaward side of the esplanade which adjoins the subject;
·the sale of 34 Ocean Avenue, Slade Point is not a correct indication of market value;
·the Environmental Protection Agency (EPA), Mackay Coast Study, concludes further construction of rock walls should be avoided and any future wall construction should only be on private property;
·the levels on the Mackay City Council contour maps are inaccurate;
·water seepage during the wet season and water from the water table on the road side of the subject property seeps through to the lower esplanade side causing drainage problems to the house site.
·vegetation on the esplanade inhibits views from the subject lot.
Issues
After perusing the written reports from both sides and hearing the evidence, it appears that there are five principal issues for determination in this matter:
1. Should the present cost of construction of the rock wall be deducted in assessing the unimproved value of the subject land?
2. Is the sale of 34 Ocean Avenue an appropriate one to use in current circumstances?
3. Should any further allowance be made for the contours and the seepage issues in relation to the subject land?
4. Should further allowance be made for restriction on views from the subject land?
5. Should further allowance be made for problems with erosion and costs of maintenance of the rock wall?
1. The Rock Wall
There appears agreement between the parties on certain aspects of the rock wall. It was progressively placed in its current position by Mr Hardy from some 30 years ago. The rock wall itself directly supports a State-owned esplanade which separates the subject property from the sea; a sewerage pipeline runs under the esplanade which is a further reason why it is desirable to have the supporting rock wall in place. The rock wall was formed without formal approvals of appropriate authorities, if such approvals were in fact necessary at that time. Mr Hardy estimates that current construction costs would be in the vicinity of some $80,000; this figure was not disputed by the respondent.
While the closest part of the rock wall is some distance (12 metres) from the subject land's seaward boundary, it is not disputed that the wall offers substantial protection, but not direct support, to such land. This protection would be particularly important in times of cyclonic or similar adverse weather conditions.
Notwithstanding the above, the issue of whether the cost of the rock wall should be considered in arriving at the unimproved value is essentially a legal argument, considering the relevant provisions of the Act and how such have been interpreted by applicable case precedent.
What is required to be determined in this matter is the "unimproved value" of the subject land. Section 3(1)(b) of the Act defines the term as:
"(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."
Section 6 of the Act refers to the term "improvements":
"(1)Improvements means, in relation to land, improvements thereon or appertaining thereto, whether visible, invisible or intangible, and made or acquired by the owner or owner's predecessor in title … " (emphasis added)
It is noted that the improvements do not have to be made by the current owner.
In the instant case it is necessary to determine whether the rock wall is "appurtenant" to the land.
By coincidence, the leading Queensland authority on this issue is a matter relating to a valuation of a major regional shopping centre also situated in Mackay, known as Canelands.[1] One of the key issues in that case was whether certain rock walls were appurtenant to the subject land and thus were to be deducted, as being within the term "improvements".
[1] State Government Insurance Office (Queensland) v Valuer-General 1980-81 7 QLCR 171
The presiding Land Court President, Mr Smith, initially referred to the judgment of Gibbs J (as he then was) in Brisbane City Council v The Valuer-General[2] as to what legally constitutes improvements "appurtenant" to the land:
"In the first place, an improvement in relation to land must be 'thereon or appertaining thereto'. This means that the improvements, if not on the land, must be 'such as are in the strict legal sense "appurtenant" to the property and incident to its ownership'." [3]
[2] 140 CLR 41 at 50
[3] 7 QLCR 179
The President then sought to apply this test to the Canelands situation:
"In the subject cases I have regarded all 'off site' improvements as not being relevant in ascertaining the unimproved value for the purpose of the Valuation of Land Act 1944. I would, however, make one exception namely the rock armour wall along the western boundary of portion 485 which is partially on and partially off the subject land. Without this wall the filling will erode and be washed away. I regard this part of the wall as being on and appurtenant to the subject land. Those parts of the rock armour wall which bound the western and northern boundary of the park area I do not regard as doing pertinent to the subject land. I similarly regard the gravel wall separated by Victoria Street from the southern boundary of the subject land".[4]
[4] 7 QLCR 179
It appears Mr Smith distinguished the rock wall which was partly on and partly off the Canelands land, but which directly supported the fill on that land, from another rock wall supporting park land adjacent to Canelands. Although the latter wall may have indirectly provided protection to Canelands in that it supported the adjacent park, it was not held to be "appurtenant" in the legal sense.
The Canelands decision provides useful guidance as to what is required to be valued in cases analogous to the present one. The President stated:
"It is relevant to keep in mind what has to be valued in the subject case. It is the subject land notionally stripped of its improvements and viewed in its natural state but in the environment (with all its inherent advantages and disadvantages, facilities, services, etc.) in which the subject land is actually situated at the relevant date of valuation – Tetzner v The Colonial Sugar Refinery Co. – Privy Council – 1958 A.C. 50 and Raynbird v The Valuer-General – Land Appeal Court - 21st November, 1980 – not yet reported. The effect of these authorities is that whilst portion 485 (the subject land) must be notionally returned to its natural state, the park land to the north with its protective armour wall and the roads to the east and the south are viewed as existing parts of the relevant environment. It is patent, therefore, why the value of improvements off site are not deductible items when making a valuation for the purposes of the Valuation of Land Act by the method of improved value less value of improvements. Off site improvements made and paid for by the developer, although they may affect and increase the sale price of his land in the market place, have passed into public ownership".[5]
[5] 7 QLCR 180
The President then compared the situation with a developer's estate when much of the external infrastructure had been done and paid for by the developer:
"The position is analogous to an allotment in a developer's estate which is valued for the purposes of the Valuation of Land Act on the basis of the sales history of the estate. The allotment must be viewed in the context of all the development work and roads, drainage, etc., which the developer has performed external to the allotment in question. In the market place the developer on sale no doubt recoups himself for costs he has expended in developing the estate but as regards unimproved value of individual allotments for the purpose of the Valuation of Land Act, while deductions may be made for on site improvements (e.g. clearing or filling) no deductions are made from the sale price of the allotments for off site improvements".[6]
[6] 7 QLCR 180
In my view, the rock wall in the present case is akin to the wall supporting the park lands in the Canelands case rather than the wall supporting the shopping centre site itself. It thus follows that the rock wall on the esplanade in front of the subject property is not an "improvement" under the Act and thus not deductible in assessing the unimproved capital value.
2. Reliability of 34 Ocean Avenue
Mr Hardy argues this was not a sale to a prudent purchaser as the latter claimed to have no knowledge of the EPA's stance as regards the maintenance and improvements of rock walls in front of the property. It is claimed that, had the purchaser known of the EPA study, he would have paid a lesser amount. This is disputed by Mrs Merritt. She points to the fact that the purchaser lived in the area, was experienced in real estate dealings, he sold the land at a very substantial profit within a year or so of his purchase and that the sale figure of $435,000 has only been applied in comparison to the subject at a level of $400,000. Further, there is other sales evidence advanced by Mrs Merritt, namely at Eimeo and on the opposite side of Ocean Avenue, which lend more general support to the overall sales evidence.
In my view, sale of 34 Ocean Avenue is the most reliable sale for comparison purposes with the subject lot.
3. Contours, Seepage
Mr Hardy argues that the Mini Map plans of the Mackay City Council are quite inaccurate and that the Department would have wrongly relied on such in assessing the relativity of Nos. 58 and 34. He also complains of seepage caused by water from the Ocean Avenue side flowing through to affect parts of his property. Mrs Merritt refers to her report in relation to different gradients of Nos. 34 and 58, making an allowance in the comparison, noting No. 34 is substantially superior. Overall under these headings, I do not consider any further allowance should be made for the factors of contours and seepage.
4. Views
Mr Hardy claims views from a vantage point in the rock wall adjoining No. 58 give the latter lot similar views to No. 34; however, he states views from the boundary of No. 58 are severely limited, mainly due to vegetation on the esplanade. He has encouraged such vegetation so as to protect against erosion; however he is doubtful whether the council would give permission to remove such and thus enhance his view, even if such was requested.
Mrs Merritt in her report states that there are excellent views available from the subject land across Slade Bay.
While I acknowledge Mrs Merritt has made recognition of No. 34 as superior and rates the subject some $40,000 overall less due to varying factors, I consider a prudent purchaser may make some further allowance for the view restrictions referred to above by Mr Hardy.
While there may be potential to improve the view from the property boundary by clearing of the esplanade, a prudent purchaser would recognise possible difficulty in obtaining council approval to clear yet also be mindful of the advantage of leaving at least some vegetation for erosion protection.
5. Erosion, Maintenance of Wall
Mr Hardy claims erosion problems are greater on No. 58 due to the level of the beach and more exposed frontage. Mrs Merritt again has considered this factor in her comparison in rating No. 34 as superior. However, there is the incidental factor of necessary maintenance to keep the rock wall in place being greater for No. 58. As determined above, the rock wall itself is not legally an improvement and no deduction can be made; however, in all the current circumstances, I consider a prudent purchaser may make some additional allowance for the fact that he may, as a practical measure even if not legally so required, have to make a contribution to ensure maintenance of such wall.
Counsel for the respondent in address referred to s.33 of the Act whereby the Chief Executive's valuation is presumed correct until proven otherwise. He also emphasised that Mr Hardy had called no valuation evidence to support his case; in contrast Mrs Merritt is an experienced valuer in the Mackay region. Both of these points are acknowledged.
However, viewing the evidence in totality, I consider there is justification for making a minor reduction in the respondent's valuation for the aspects of ongoing wall maintenance (more required on No. 58 than No. 34) and the view limitations on No. 58 as discussed above. I will make an additional allowance of $15,000 for both factors.
Order:
The appeal is allowed and the unimproved value of the subject land determined at Three Hundred and Forty-Five Thousand Dollars ($345,000).
BR O'CONNOR
JUDICIAL REGISTRAR
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