Peters v Chief Executive, Department of Natural Resources
[2000] QLC 26
•12 April 2000
|
BRISBANE
12 APRIL 2000
Re: AV99-471
An appeal against an unimproved valuation
Valuation of Land Act 1944
Local Government: BCC-Belmont
Noel C and Dawn E Peters
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
This appeal is concerned with a valuation of $127,000 placed by the respondent on the land owned by the appellants as at 1 October 1998. In the Notice of Appeal lodged by the appellants they provided an estimate of the unimproved value of the land at $115,000, however, before me evidence was led to a figure of $110,000.
That evidence was given by Noel Charles Peters, one of the co-owners, who appeared on behalf of the appellants. Ross Brian Cranstoun, a registered valuer in the employ of the respondent, gave valuation evidence in support of the valuation figure appealed against.
The subject property is located at 3 Inkerman Court, Carindale, approximately 1 km south of the Carindale Shopping Centre and Belmont Private Hospital. It is to be found in an established residential neighbourhood. Good access to the site is available from Inkerman Court, a full width bitumen sealed cul-de-sac with concrete kerbing and channelling. The usual services are available to the land. The subject land is a medium elevated fan-shaped allotment, rising moderately to the rear from road level and has an area of 746 m². It is used as a site for a single dwelling house and the parties approached the appeal on the basis that the land had a highest and best use for that purpose.
The grounds of appeal were drawn broadly, however also included references to particular properties including valuations applied by the respondent on properties neighbouring the land the subject of these proceedings. Reference was not made to those valuations in the evidence presented on behalf of the appellants. It is that evidence to which I must direct my mind in considering this appeal. Fortunately in this case the appellants obtained a "statement of reasons" pursuant to an application made under the Judicial Review Act 1991 and that statement included mention of two of the three sales referred to by Mr Cranstoun in his valuation. It will be convenient then if I commence my consideration of the evidence by reference to those sales.
Sale No. 1 in Mr Cranstoun's valuation is located at 100 Donnington Street, Carindale. The land has an area of 720 m² and sold on 23 December 1998 for $122,000. Mr Cranstoun deducted $1,500 for clearing and fencing improvements and arrived at an analysed unimproved figure of $120,500. The Chief Executive's valuation of that sale land as at 1 October 1998 was $119,000.
Mr Peters submitted that as the date of this sale transaction was after the relevant date of valuation the sale ought to be ignored. Mention was made of an earlier sale of the same land, which took place in November 1997 at which time the land sold for $105,000. He said that that sale should be considered and perhaps the sale prices ought to be averaged. Averaging of sales figures as a method of valuation was rejected by the High Court in Commonwealth v. Milledge (1953) 90 CLR 157:
" Indeed, he expressed the view, although he does not seem to have acted upon it, that the true basis for computation is not that to be found in one comparable sale, but in the average of a number, the larger the number the more acceptable the result. 'Such a statistical average' he added, 'will tend to eliminate the effect of individual peculiarities (if any) of those in the transactions'. We do not find it possible to give countenance to this view. Perhaps it would be safer to work from an average of several prices than from one price if the sales were substantially contemporaneous sales of parcels of land which were identical in all material respects, but, it must be rarely, if ever, that a process of averaging sale prices can be anything but fallacious." Per Dixon C.J. and Kitto J. at p.161.
Mr Cranstoun was aware of the sale of this land in November 1997, but said that the sale relied upon by him was closer in time to 1 October 1998 than was that earlier transaction and that the relevant market had improved by about 20% from about the time of the 1997 sale and 1 October 1998. He said also that conditions in the market between 1 October 1998 and the date of his sale were similar. The issue of "after date" sales was considered in Daandine Pastoral Pty Ltd v. Commissioner of Land Tax (unreported High Court, Williams J, 26 August 1943) and in McCathie v. Federal Commissioner of Taxation (1944) 69 CLR 1 at 16, His Honour made reference to the Daandine case and restated what he had said there:
"Values must be calculated in the light of circumstances which existed on the material date, in this case 30th June 1939, but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless."
Given Mr Cranstoun's evidence concerning conditions in the market after 1 October 1998 and up to the date of sale and my calculation that the increase in sale price between the 1997 sale and the 1998 sale of this property was 16%, therefore tolerably close to the 20% figure mentioned by Mr Cranstoun, it is appropriate that Sale 1 be referred to as a basis for valuing the subject land. I might mention that this sale was referred to by Mr Cranstoun as being his main sale. It certainly has the advantages of comparability with the subject land and some agreement between the parties concerning how the sale property and the subject land ought to be compared.
In his written valuation Mr Cranstoun compared his Sale 1 to the subject property in this way:
"Similar location, but affected by traffic on Donnington St. & Creek Rd.
Smaller; regular shape; lower elevation; steeper slope above street level.
Overall, this sale is considered to be inferior to the subject due to traffic and slope."Whilst he generally agreed with that comparison, Mr Peters pointed to there being limited parking in the cul-de-sac fronting the subject property and he said that noise sometimes comes from vehicles doing U-turns there. He said also that the house on the Sale 1 land had been constructed to face towards Argoon Street that is away from the source of noise on Donnington Street.
Donnington Street is closer to Creek Road than is the subject property, therefore is closer to the source of noise from that busy thoroughfare. Donnington Street also provides a connection between Creek Road and Winstanley Street and services smaller streets, which connect with it. Donnington Street forms part of a bus route.
Sale 2 in Mr Cranstoun's valuation is located at 10 Weekes Road, Carindale, and it has an area of 649 m². That land sold in November 1997 at $132,000 and after the deduction of $14,000 for clearing, fencing and a swimming pool, Mr Cranstoun deduced an unimproved figure of $118,000. The Chief Executive determined the valuation at $114,000 as at 1 October 1998.
Mr Peters said that the improvements on the sale land would cost about $20,000 to install. He made no allowance in arriving for that figure for any depreciation in the cost of construction of improvements. Mr Cranstoun, on the other hand, did apply a depreciation factor in settling on his figure for value of improvements and that approach is to be preferred. (See, for example, O'Kane v. Commissioner of Main Roads (1976) 3 QLCR 331 at 334.) The evidence was that a brick fence/retaining wall on the subject land was cracked and needed repair. I am not aware of the standard of the other improvements, particularly the swimming pool, however, the difference in improvements values between the parties is such that it seems to me that such a difference was probably catered for by the application of the depreciation allowance.
Mr Peters' second concern with this sale was that it was not an unimproved sale and therefore ought not to be relied upon, in his view, in establishing the unimproved value of land. That issue has been considered on a number of occasions and I refer in particular to WM & TJ Fischer v. The Valuer-General (1983) 9 QLCR 44 at 46 and R & MM Barnwell v. The Valuer-General (1989) 13 QLCR 13 at 17. These authorities, which were referred to with approval by the Land Appeal Court in H & E Grahn v. The Valuer-General (1992) 14 QLCR 327 at 328, say that the best basis for assessment of unimproved value was the use of sales of vacant or lightly improved parcels of land. Clearly, the addition of improvements of the order of that found on the Sale 2 land are such that the land can be described as being lightly improved.
Mr Cranstoun described the comparison between his Sale 2 land and the subject property as follows:
"Similar location, but affected by traffic on Creek Rd.
Smaller; almost regular shape; higher elevation; steeper slope above street level; outlook over park.
Overall, this sale is considered to be inferior due to traffic noise, steeper slope and smaller area."The only point of concern raised by Mr Peters with respect to the above comparison statement is that he feels that the traffic noise suffered by the subject property is greater than that experienced on the sale land. Creek Road reaches a crest near the sale land and it is this crest which in some way, Mr Peters says, limits the noise impact on the sale property. I cannot understand that. The evidence from Mr Cranstoun is that the traffic reaching the crest generates more noise than it would on a flat road area and that, in his view, the sale land would experience greater noise disability than would the subject land. He admitted that he had not heard the noise of buses from the subject property, however, that does not take the matter any further. The state of the evidence; and I include in that the map showing the comparative locations between the sale land and Creek Road and the subject property and Creek Road respectively; supports the proposition that the sale land would suffer a greater noise pollution than would the subject property. In any event, there are other points to the comparison provided by Mr Cranstoun, which lead to a conclusion that the sale land is inferior to the subject property, not comparable, as was proposed by Mr Peters.
Before I leave discussion of this sale, I should note its sale date some 11 months prior to the relevant date for valuation purposes. That date was not focused on by the appellants and for good reason, given Mr Peters' view of Mr Cranstoun's Sale 1, however, it does point to Mr Cranstoun's first sale being the better valuation evidence. The same comment would apply to Mr Cranstoun's third sale, which took place in August 1997.
Mr Cranstoun's Sale 3 is to be found in Kilmorey Street, Carindale, and it has an area of 706 m². The property sold for $125,000 and after the deduction of $1,600 for clearing and fencing, the analysed unimproved figure was $123,400. The Chief Executive's valuation as at 1 October 1998 was $123,000. Mr Cranstoun compared the sale property with the subject land in this way:
"Superior location, but affected by traffic on Scrub Rd.
Smaller area; regular shape; higher elevation; gentle slope below street level; outlook to south-west.
Overall, this sale is considered to be inferior to the subject due to traffic."Whilst Mr Cranstoun's Sale 3 was not one of the properties mentioned to Mr Peters following his initiative under the Judicial Review Act, he had some knowledge of that land. He said that he was not sure that he would conclude that the sale land was inferior to the subject property. During cross-examination Mr Peters' attention was drawn to the level of traffic on Scrub Road, which he agreed would be greater than that experienced in Donnington Street.
The third sale provided to Mr Peters, following his request under the Judicial Review Act, was of a property at 23 Grosmont Street, Carindale. That property sold for $138,250 in February 1998, the land area being 710 m². Mr Peters said that the sale property is superior to the subject land, being of regular shape, level and fenced on three sides at the time of sale. It is in a prestigious area. He noted that the Sale 3 land had a Chief Executive's unimproved value of $115,000 as at 1 October 1998 and was convinced that in comparison with that value the valuation placed on the subject land at $127,000 was too high.
Mr Cranstoun reversed this last-mentioned proposition by saying that he was of the view that the figure of $115,000 placed on the land at Grosmont Street was too low. He did not express an opinion as to the value that he thought should apply, nor was he able to explain why a low valuation may have been applied to that land.
My understanding of Mr Peters' case is that it is not the sale transaction in regard to this property that he relies on, but rather the valuation of the Chief Executive. Now the valuation placed on a parcel of land by the Chief Executive is not a sale in the marketplace which provides an indication of value, but is an expression of opinion following the consideration of such sales. It has been said on many occasions that whilst the maintenance or correct relativity between the various valuations of the Chief Executive is a matter of considerable importance for rating valuations, in striking the value of a particular property the use of the principle of relativity should not be preferred to the exclusion of relevant, even if not ideal, sales evidence (WM and TJ Fischer v. The Valuer-General cited above). It may be that the sale transaction itself, which took place in relation to the Grosmont Street property, could be relied upon as evidence of value, however, I was not presented with any analysis of that sale which I could rely upon for the purpose of concluding a value on the subject land.
In his statement of evidence Mr Peters referred to nine other sales:
| Address | Area | Sale Price | Sale Date | Valuation |
| 26 Windsor Pl | 636 | $95,000 | 9/6/98 | $85,000 |
| 3 Portmarnock Way | 813 | $105,000 | 16/2/98 | $103,000 |
| 1 Hereford Cres | 621 | $90,000 | 10/6/98 | $82,000 |
| 3 Hereford Cres | 776 | $99,500 | 31/5/98 | $94,000 |
| 8 Hereford Cres | 638 | $98,500 | 31/8/98 | $88,000 |
| 10 Hereford Cres | 645 | $99,500 | 7/9/98 | $89,000 |
| 20 Hereford Cres | 600 | $95,000 | 7/4/98 | $90,000 |
| 49 Cribb Rd | 600 | $93,500 | 26/5/98 | $84,000 |
| 51 Cribb Rd | 600 | $94,500 | 15/4/98 | $84,000 |
The evidence was that properties in Hereford Cres and Cribb Rd were exposed to noise from the nearby motorway, though there is an acoustic barrier that would reduce some of the noise impact. There is a large electricity transmission line in the area of the above nine sales and Mr Cranstoun said that whilst he was not in a position to describe the views from any of the sale blocks as taking in this transmission line, it was the case that access to Hereford Cres involved driving under the powerlines to get there. Therefore, the presence of the electricity transmission line would be quite apparent to would-be purchasers and residents. Mr Peters said at one stage that he had selected these sales on the basis that they did not have a view of the nearby powerlines, though, as cross-examination proceeded, he became less confident of that proposition.
These sale blocks are further from shops, schools and other facilities than is the subject land, which is located in what might be described as a better area than these sales. Mr Peters' argument is not that the subject land has a value of the order of these sales, but rather that the differential in value between that applied to these sale properties and that applied to the subject land is too great to be justified.
Comparability between sale properties and land being valued is a question of fact and it is always better to select sales which demonstrate greater similarities with the land being valued than sales where large adjustments need to be made. The best evidence placed before me upon which the value of the subject land might be assessed is that provided by Mr Cranstoun and in considering that evidence, it is his Sale 1 at Donnington Street which provides the best basic evidence. Given the evidence from both sides concerning the comparison between that sale property and the subject land, I conclude that the valuation placed on the subject land by the Chief Executive has not been shown to be wrong or based on an error of fact or principle. That conclusion is supported by the other two sales referred to by Mr Cranstoun and is not upset by the nine additional sales referred to by Mr Peters, nor the property at Grosmont Street. Accordingly, the appeal is dismissed and the valuation of the Chief Executive is affirmed.
RP SCOTT
MEMBER OF THE LAND COURT
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