Pommeranz v Chief Executive, Department of Lands
[1996] QLC 90
•25 June 1996
|
BRISBANE
25 JUNE 1996
Re: Appeal against Annual Valuation
Valuation of Land Act 1944
Shire of Gatton (AV95-101)
Peter Pommeranz and Denise J Pommeranz
v.
Chief Executive, Department of Lands
(Hearing at Gatton)
D E C I S I O N
Mr and Mrs Pommeranz are the owners of land described as Lots 5 and 11 on Registered Plan 805706, Parish of Helidon, containing an area of 61.19 ha. Those lands are subject to three easements, Easement “A” on Registered Plan 151070, of 2.361 ha in favour of SEAQ, Easement “B” on Registered Plan 122504 of 0.818 ha in favour of Australian Gas Lines and Easement “C” on RP 151070 of 2.993 ha also in favour of SEAQ.
Under the provisions of the Valuation of Land Act 1944, as at 1 January 1995, the respondent determined the unimproved value of the subject land at $87,000. An objection against that valuation resulted in the unimproved value being reduced to $82,000. The owners appealed to the Land Court against the respondent’s decision upon their objection, advising that their estimate of the unimproved value is $45,000.
The subject land is irregular in shape. Lot 11 of 59.19 ha is roughly triangular, with the northern point truncated and with access to Connors Road by means of a narrow strip approximately 300 metres long. Lot 5 of 2 ha is a rectangular block adjoining the narrow access strip, with a frontage of approximately 60 metres to Connors Road.
In the report submitted by the respondent, the property is described as undulating to moderate and steeply sloping sandstone forest, with parts heavily overgrown with wattle and gum suckers. A deep gully watercourse runs north-south through the middle and western part of the property.
The property is situated on the bitumen sealed Connors Road about 3 km east of Helidon. Electricity and telephone services are available.
At the date of hearing Lot 5 was zoned “Rural Hobby Farming” and Lot 11 was zoned “Rural Conservation” under the Town Planning Scheme for the Shire of Gatton. However, there was some difference between the parties as to the timing of the zonings.
The respondent’s report states that the Gatton Shire Planning Study Proposed Strategic Plan has designated the land south of the Moonie Gas/Oil pipeline (Easement “B”), comprising all of Lot 5 and part of Lot 11, as “Rural Residential” and the balance of Lot 11 as “Rural Landscape”.
As at the relevant date the land was used for grazing and rural residential purposes. The respondent had valued the land under the concessional provisions of s.17 of the Valuation of land Act 1944 as land used exclusively for purposes of a single dwelling-house and had assessed its value as one large rural residential site.
At the hearing Mr Peter Pommeranz appeared and gave evidence on behalf of the appellants, while valuation evidence on behalf of the respondent was given by Mr DJ O’Connor, a registered valuer employed by the Department of Natural Resources (formerly Department of Lands).
The Issues
Mr Pommeranz addressed each of the grounds of appeal with written and oral evidence.
Ground 1. Out of relativity with other properties:
Mr Pommeranz compared the valuation applied to the subject land with those applied to other lands in the immediate area. He noted that while the valuation of the subject land had increased by approximately 10% each year, the valuations of some other lands, including those valued under the s.17 “farming” concession, had remained unchanged, even though they had what he considered to be more valuable attributes than the subject land.
Mr Pommeranz felt that the valuation of the subject land was excessive, compared with those applied to other properties of similar size and location. He referred to the valuations of several properties, comparing in some detail the relative attributes of each.
Mr O’Connor explained that he valued the subject land as a large rural residential site and had ignored any subdivisional potential or potential for sale as two parcels, as the provisions of s.17 of the Act required. He defended his valuation on the basis of sales of four properties in the vicinity.
One of those sales adjoins the subject land to the west. During the course of the evidence it emerged that this property sold for the specific purpose of mining sandstone. It is therefore not appropriate to use that sale as a basis for the valuation of a rural homestie.
The other three sales range in area from 18.53 ha to 82.08 ha and sold between March and August 1994. Those sales analysed to show unimproved values of $39,450, $73,950 and $92,800. As at 1 January 1995 the respondent applied unimproved values of $33,000, $55,000 and $72,000 respectively, to those properties.
By directly comparing the attributes of those sale properties with those of the subject land, Mr O’Connor was of the opinion that the sales supported the applied value of $82,000. He explained that other lands which were valued for purposes of “farming” and which had not increased at the time of the valuation, were valued by comparison with different sales and comprised a different market.
Ground 2. Not supported by sales evidence:
Mr Pommeranz did not know those three sales used by Mr O’Connor to defend his valuation, but he knew the areas in which they were situated. He did not consider that any of them were appropriate as a basis upon which to value the subject land. He endeavoured to prove this ground of appeal by reference to the appellants’ purchase of the subject land and other transactions.
Mr Pommeranz said that he and his wife had purchased Lot 11 in November 1991 for $110,000. He produced his own analysis of that sale, arriving at a value of improvements of $85,000, which left an unimproved value of $25,000. Mr Pommeranz obtained assistance from a builder to arrive at the replacement cost of the buildings, from which he deducted depreciation. He explained that his analysis did not include $5,000 worth of clearing, nor the effects of the easement. He thought that $25,000 was a realistic unimproved value in 1991.
However, Mr Pommeranz said that immediately after purchase the respondent valued the land at $65,000. Since that time it had increased by about 10% per year. He felt that the respondent’s valuations disregarded the disabilities suffered by the land.
Mr Pommeranz said that about 12 months after they purchased Lot 11, they purchased Lot 5 for $30,000 to enhance the prospects of subdivision of the land as it provided a wider frontage to Connors Road. He felt that they had paid $5,000 above the value of Lot 5.
To further support this ground of appeal, Mr Pommeranz referred to three properties fronting Connors Road and similar to Lot 5, each of 2 ha, which were sold in 1991 for $26,500, $27,450 and $27,500. He said that those properties have been on the market for less than the purchase prices for some years and remain unsold. However, the respondent has valued two of them at $31,000 and the other at $31,500.
Another property of 2.48 ha was also sold in 1991 for $26,950. Four years later it resold for $32,000. The respondent has increased its unimproved value to $31,500.
All these properties adjoin the subject land to the south and all have frontage to Connors Road.
Mr Pommeranz referred to three other sales. One sale of 16.18 ha sold recently for $95,000 with two houses, fencing, two dams, three bores and other improvements. Mr Pommeranz said it had none of the disabilities of the subject land and the respondent had valued it at $36,500. The implication in Mr Pommeranz’ evidence was that if the improvements on the sale were valued, the unimproved value would be somewhat less than that applied by the respondent. However, no such analysis was produced, so I have no indication of the value of those improvements.
The other two sales referred to by Mr Pommeranz were of two properties each of 64.75 ha, somewhat to the north of the subject land, which were purchased together in 1991 for $55,000 each, or $110,000. After being on the market for about 3½ years, one was sold for $52,000 in May 1995. Mr Pommeranz’ submission was that this sale certainly did not support a 10% increase in valuation.
Since the original purchase, the other property had been subject of a powerline easement. After being on the market for some four years, it sold in December 1995 for $42,000. Mr Pommeranz submitted that this sale was evidence, not only of the depressed real estate market, but the effect upon value of powerline easements over land.
Ground 3. Does not reflect the use of the land:
Mr Pommeranz made the point that the subject land is the appellants’ home and not a commercial property. However, as Mr O’Connor has valued the land under the concessional provisions of s.17 of the Valuation of Land Act and has ignored its potential for subdivision or for any purpose higher than a rural homesite, it is difficult to see how Mr Pommeranz could establish that ground of appeal.
Ground 4. Has many special disabilities:
(a) Limited availability of water:
Mr Pommeranz explained that underground water in the area was limited in supply and expensive to obtain. He spoke of costly efforts by his neighbours to obtain any reasonable water, the best supply being about 700 gallons per hour. The supply on the subject land is 100 gallons per hour.
(b) No services:
Mr Pommeranz explained that there were no services to the subject land, apart from electricity and telephone. There were no town water or sewerage services available.
(c) Has many easements.
The subject land is affected by three easements, an SEQEB powerline easement, some 40 metres wide which runs through Lot 5. Combined QEC powerline easement and Australian Gas Line natural gas main easement together are 40 metres wide and over 600 metres long, running through Lot 11. Mr Pommeranz said that altogether over 3 ha of the subject land is affected by easements. He has also been advised that AGL intends to resume a further 20 metre wide easement affecting an additional 1.2 ha. Although it is not relevant to the subject valuation, such an easement would severely restrict future subdivision of the land.
Mr Pommeranz was concerned that the subject land is also in the shadow of the Eastlink proposal. Although none of the land is directly affected, the Eastlink route is over neighbouring land to the east, approximately 200 metres from the appellants’ house. However, it seems that the Eastlink proposal will not proceed.
(d) Has been quarried in the past:
It appears that the northern part of the property had been quarried some time in the past, stripped to the rock, an average of about 1.2 metres deep, and has never been rehabilitated. Mr Pommeranz said the land is almost unusable.
(e) Surrounded by sandstone quarries:
Mr Pommeranz explained that the subject land was surrounded on three sides by working sandstone quarries; on the north, on the entire eastern boundary and on the west. He said that in 1992 it was a peaceful secluded house site, but now is subject to dust and continual noise, every day and sometimes all night. It is also subjected to loud random blasting, and large vehicles travelling on the neighbouring property, but close to the appellants’ house, have resulted in a loss of privacy. The quarries are classed as mines, giving the prospectors the right to enter onto private property, and he fears that it is inevitable it will happen to their property. He sees that as a further threat to the appellants’ privacy and security. He regards the quarrying activity as a major disability, severely affecting the unimproved value of the subject land.
Mr O’Connor said that he was aware of all those disabilities when making the valuation of the subject land. He felt that he had taken them into account in the comparisons that he had made with the sales. However, he did concede that on hearing how severely the subject land was affected by dust and noise from the quarrying on adjacent land, he had reduced the value by $5,000 upon objection.
There was also some dispute between the parties as to the zonings of the subject land and when they were altered. However, as Mr O’Connor has valued the subject land as a rural residential site and ignored its potential for subdivision, the arguments about zoning are not relevant to the unimproved value as a rural residential site.
The Legal Issues
Under the provisions of the Valuation of Land Act 1944 the respondent is required to determine the unimproved value of each and every parcel of land as at 1 January 1995. It has been well established that the most appropriate way to arrive at the unimproved value of a parcel of land is by reference to sales of comparable land at about the date of valuation.
The subject land would normally be valued for its highest and best use. If it had potential for subdivision, this would normally be required to be taken into account in assessing the unimproved value.
However, s.17(1) of the Valuation of Land Act requires that where land is used for purposes of a single dwelling-house, any enhancement in the value of that land for any other purpose must be disregarded when the valuation is made. It is under that provision that Mr O’Connor valued the subject land as a single rural residential site, rather than taking into account its potential for subdivision or its value as two separate parcels.
In doing so he has adopted the traditional approach of comparing the subject land with sales of unimproved or lightly improved land in the area. He has made allowances for what he considered to be the relative attributes of the sales and the subject land.
Mr Pommeranz disputed the relevance of sales used by Mr O’Connor. Instead, he referred to the purchases of the subject land in 1991 and 1992, and advanced some sales in the area and other properties which he said had been on the market for some time and which had not sold. He also endeavoured to demonstrate the fall in value of some properties which are affected by powerline easements, particularly the small properties fronting Connors Road and the larger property to the north which sold for $42,000 after having been purchased for $55,000 some four years earlier.
Findings
After carefully considering the evidence regarding the sales, I reject the sale of the property to the west of the subject land because it was bought specifically for mining. I was unable to get much assistance from Mr Pommeranz’ analysis of the purchase of Lot 11, as it is too remote in time, or from the improved sale he referred to.
The asking prices for the 2 ha parcels and the sale of the 2.48 ha parcel are of no assistance in arriving at the unimproved value of the subject land as at 1 January 1995.
That leaves the three remaining sales used by Mr O’Connor, together with the two sales to the north, referred to by Mr Pommeranz.
On the basis of those sales, I find that the unimproved value of $87,000 originally applied by Mr O’Connor seems to be well supported, when the attributes of the sales and subject property are compared and adjustments made.
It remains to consider whether Mr O’Connor has made sufficient allowance for the disabilities suffered by the subject land.
Mr Pommeranz referred in some detail to the disabilities. Mr O’Connor said that he was aware of them and had taken them into account in making his valuation. However, he conceded that following an objection he had reduced the valuation by some $5,000 because of the effect of quarrying on adjacent land. This would seem to indicate that Mr O’Connor was not aware of the extent of the quarrying when he applied the original valuation of $87,000 to the subject land.
Mr O’Connor suggested that if the land was unimproved, it would be possible to site a house where it would be less affected. The present house is situated close to the eastern boundary and suffers considerably from the mining activity and from the nearby access road. After hearing Mr Pommeranz’ evidence and the tape recording which he produced to demonstrate the noise of the quarrying and associated operations, I have formed the opinion that even considered in its unimproved state, it would be difficult to site a house on the subject land where it was completely free from the interference and noise of mining.
Although Mr O’Connor has made an allowance of $5,000 for the effect of the disabilities, I have come to the conclusion that an allowance of $10,000 from the original valuation of $87,000 would have been more appropriate in the circumstances and I will allow a further $5,000.
Order
Accordingly, the appeal is allowed, the valuation of the respondent set aside and the unimproved value of the subject land is determined at Seventy-seven Thousand Dollars ($77,000).
JJ TRICKETT
PRESIDENT OF THE LAND COURT
0
0
0