Pfeffer v Chief Executive, Department of Natural Resources
[2000] QLC 68
•3 November 2000
|
BRISBANE
3 November 2000
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 177 -
Local Government: Brisbane City - Toombul.
(AV99-276).
Helmut and Mary Claire Pfeffer
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
Background:
This matter relates to a property at 1737 Sandgate Road, Virginia, and described as Lot 2 on RP61092, Parish of Toombul. The subject land has an area of 885 square metres and is located about 10km radially north of the Brisbane Central Business District, and 100 metres south of the Virginia Railway Station. Access to the subject land is via a bitumen sealed dual carriageway service lane with concrete kerbing and channelling. All normal utility services are available. The land is zoned "Residential A" under the Town Plan of the Brisbane City Council (the Council) of 13 June 1987, effective at the date of valuation of 1 October 1998. The key issues are the nature of the land, impacts of noise and other intrusions, relativity, changes in the unimproved value and comparison of sales.
On 8 March 1999 the Chief Executive issued a valuation of the subject land at $57,000. Following an objection the Chief Executive confirmed that figure on 1 June 1999. The appellants have now appealed claiming the unimproved value should more properly be $50,000.
Helmut Pfeffer appeared and gave evidence for the appellants. Mr J O'Rourke, Principal Legal Officer, appeared for the respondent, calling evidence from Benjamin Kewley, the Departmental registered valuer responsible for determining the valuation.
The Evidence:
(1) The Nature of the Land -
The subject land is slightly (about 1 metre) below the road level of Sandgate Road, and is generally a level building site. The shape of the subject land is slightly irregular, and the parcel has a frontage of approximately 22 metres. Access from Sandgate Road is via a concrete culvert entrance crossing, which is showing signs of deterioration. The crossing is over an open concrete line stormwater drain. The Council has plans to develop a Virginia Bikeway outside the subject land, the development of which is proposed to replace the existing culvert crossing to the subject land.
Mr Pfeffer argues that noise from traffic along Sandgate Road, and also from the railway line to the north, are serious detriments to the subject land, a matter not disputed by the respondent. However Mr Pfeffer concedes that there has been some reduction in noise from the railway line following a noise reduction program by Queensland Rail.
Mr Pfeffer also notes ongoing problems as a result of vandalism and graffiti, particularly at night, although he agrees that such events also occur in other properties in the area. There are also examples of unruly behaviour by students at the Council bus stop adjoining the subject land. All of those activities tend to result in noise, and rubbish is left to litter the footpaths of the subject land.
Mr Kewley does not dispute those disabilities, and advises that such matters were noted following a previous objection in 1997, resulting in a reduction of some $10,000 in the valuation. Mr Kewley argues that a similar allowance for those events has continued in the current valuation.
Another matter of concern to the appellants is the existence of certain trees on adjoining properties, which appear to be causing blockage to sewage pipes, and also possibly to the foundations of the existing dwelling. Mr Pfeffer provides receipts for remedial action by a plumber to clear the drains in 1994. Mr Kewley agrees that the trees exist, but argues that when hypothetically the subject land is valued as unimproved land, it is allowed that there could be scope to erect any new building well clear of the impact of the tree roots, similar to surrounding houses. However, as the current building was possibly in the optimum location for a dwelling, Mr Kewley has made a generous allowance in his valuation for any marginal damage that might be anticipated from the impact of the trees.
In respect of Mr Pfeffer's claim that the current irregular shape of the subject land has restricted any future subdivisional potential of the subject land, Mr Kewley advises that his valuation under s.17 of the Act has ignored any higher potential, and he values the land solely as a single large residential dwelling site.
The Method of Valuation -
Mr Pfeffer seeks some support from newspaper reports that changes in the unimproved value are inconsistent with average market trends in the Virginia area. Mr Pfeffer notes that such reports reveal that average prices in Virginia are actually decreasing. Mr Kewley argues that those newspaper articles refer to broad statistics based upon sales of improved dwellings and not vacant land. Mr Kewley relies upon sales of vacant lands as his guide to unimproved value, noting that such vacant land sales disclose that not a single unimproved value in the Virginia area had been reduced in the current valuation. Mr Kewley also discounts any reliance upon percentage changes in value as a reliable method of determining unimproved values.
Comparison of Sales -
Mr Pfeffer provides no sales to support the appellants' estimate of the unimproved value of the subject land. However Mr Pfeffer argues that sales in nearby suburbs of Boondall and Northgate are not indicative of the general nature of the Virginia area. Mr Pfeffer also advises that his personal knowledge of successive auctions of an adjoining property (1739 Sandgate Road), reveals decreasing prices paid for that parcel between 1997 and 1999.
To support his valuation Mr Kewley provides the following sales:· Sale 1 - (54 Gympie Street, Northgate - Lot 163 on RP34519)
This is a 405 square metre inside "Residential A" parcel located about 250 metres east of the subject land. The sale has comparable elevation and proximity to the railway line, and in spite of its smaller size, is seen as in a superior locality and is considered superior to the subject land.
The sale sold in July 1998 for $75,000, which after allowing for improvements was analysed at $73,750, and applied at $70,000.
· Sale 2 - (2164 Sandgate Road, Boondall - Lot 6 on RP912565)
This is a 600 square metre regular shaped parcel about 4km north of the subject land, with an easement access to Sandgate Road. Access to Sandgate Road is limited to a northerly direction only. Overall the sale is seen as slightly inferior due to its smaller size, greater number of adjoining neighbours, and location.
The sale sold in June 1998 for $56,000, which after allowing for improvements was analysed at $54,000, and applied at $54,000.
· Sale 3 - (14 Depot Road, Deagon - Lot 35 on RP104737)
This is a 562 square metre "Residential A" level site located about 7km north of the subject land. Access is via a service road, and the sale is opposite a Taoist temple, and about 80 metres east of the Gateway Overpass. Overall the sale is seen as inferior due to its smaller size, inferior outlook and location.
The sale sold in June 1997 for $50,000, which after allowing for improvements was analysed at $49,000, and applied at $49,000.
Mr Pfeffer is not specifically aware of the sales, although he notes that Sale 1 is in an area where older dwellings on two old surveyed parcels are relocated to allow for a second dwelling. Mr Kewley confirms that is the situation with his Sale 1, but argues that reflects what the market is prepared to pay even for a small parcel about half the size of the subject land.
Mr Kewley also confirms that his three sales reflect only a few of the range of sales in that area. He has chosen those three sales as they reflect, in his opinion, the characteristics reflected in the subject land. He notes for example that his Sale 3 is in a Queensland Housing Commission area where many properties are occupied by tenants, similar to the two adjoining properties to the subject land. Mr Kewley has made appropriate allowances for the differences between the sales and the subject land.
Relativity -
Mr Pfeffer seeks relativity with the adjoining parcels either side of the subject land. He notes that 1731 Sandgate Road (Lot 1) is valued at $52,000, and 1739 Sandgate Road (Lot 3) is valued at $47,000. Mr Kewley argues that the current relativity of $57,000 reflects the larger area and greater frontage of the subject land. Mr O'Rourke argues that it is inappropriate to make variations in the unimproved value merely because either neighbouring property is tenanted. He contends that personal behaviour is not entirely a function of whether a person owns or rents a property. I would agree with that conclusion.
Decision:
(i) The Nature of the Land -
I note first that Mr Kewley concedes that there are disabilities of the subject land that relate to noise, public disturbance, and difficulties with access. However I also note that those matters have been included in an allowance already made in the unimproved value, and which has continued to be applied since 1997. Mr Kewley also advises that, while he has valued the land in its unimproved state, he has made some further allowance for the presence of trees upon the adjoining parcels. On balance those allowances would appear reasonable.
In considering the meaning of unimproved value I turn to the definition of "unimproved value" as defined in s.3(1)(b) which states:
"Meaning of 'unimproved value'
3.(1) For the purposes of this Act -
'unimproved value' of land means -(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. "
In seeking further clarification of the meaning of "unimproved value" as it applies to the subject under this Act, I note also the findings of the Privy Council in Tetzner v. Colonial Sugar Refining Co Ltd (1958) AC 50 where Their Lordships said at page 57:
"What in Their Lordships' opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer's computation. The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it."
That principle was also followed in the findings of the Privy Council in Tooheys Limited v. The Valuer-General (1925) AC 439, where Their Lordships said at page 443:
"Now, what he has to consider is what the land would fetch as at the date of the valuation if the unimprovements 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 never had existed. It is, therefore, to approach the question from a completely wrong point of view to begin with a valuation which takes in the improvements and then proceed by means of subtraction of a sum arrived at by an independent valuation in order to find the required figure. What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvements; what would it fetch in the market? It will be observed that the value is not what has been sometimes designated by the expression 'prairie value'. The land must be taken as it exists at the date of valuation."
In simple terms the land is to be treated as if all improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant.
The Method of Valuation -
I note that the appellant seeks support in changes reported in valuations in surrounding areas. In this matter I note that precedent in this Court has cast doubt upon the wisdom of adopting a percentage change between valuations as evidence of unimproved value. I note for instance in NR and PG Tow v. The Valuer-General (1978) 5 QLCR 378, the Land Appeal Court said at page 381:"It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation."
That was also followed by the Full Court of Queensland in C and BD Henricks v. The Valuer-General (1983) 9 QLCR 59, where Macrossan J (CJ) said at page 63:
"The appellants also relied upon a schedule, exhibit 4 in the Land Appeal Court, which showed percentage increases in the value applied by the Valuer-General to a number of selected parcels of land from the date of the preceding valuation up to the March 1979 valuation date. The percentage increase shown in the selected cases was in each instance considerably less than the increase applied to the subject land as between the two valuation dates. The weakness in such a selective comparison is obvious as there could be any number of reasons why blocks in the same valuation area should increase in different rates over a period of five years."
Clearly there could be many reasons why parcels of land could increase or decrease over a period of time. The real test is to compare the subject with sales of comparable properties. In this regard, I note also that Mr Kewley has adopted the accepted method of comparing sales of vacant, or near vacant land, rather than to compare sales of improved properties. (See PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, at page 76).
On the evidence before me there is nothing to discredit Mr Kewley's comparisons with his sales.
Relativity -
On the matter of relativity I note first that the subject land has been valued as a single residence site under s.17 of the Act which states:"17.(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 is lawful when the valuation is made. "
On that basis it is inappropriate to consider whether the shape or area of the parcel has further subdivisional potential. However, in comparing the land as a single residential site, I note that area is only one factor for consideration. That was clarified in Hans and Else Grahn v. Valuer-General (1992-93) 14 QLCR 327, where the Land Appeal Court said at page 330:
"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 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 similar finding was also followed by the Land Appeal Court in R and MM Barnwell v. The Valuer-General (1990-91) 13 QLCR 13 at page 18.
Summary:
In summarising this matter I note that s.33 of the Act directs:
"33. 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."
I also note that under s.45(4) of the Act the onus is upon the appellants to prove the grounds of their appeal. On the evidence before me I find that the appellants have not discharged that onus of proof.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 2 on RP61092 in the sum of $57,000 is affirmed.
(NG Divett)
Member of the Land Court
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