Purdie v Chief Executive, Department of Lands

[1996] QLC 52

[1996] QLC 52

 

  LAND COURT

BRISBANE

26 APRIL 1996

Re:     Appeal against annual valuation
Valuation of Land Act 1994
  Shire of Emerald (AV95-311)

Colin K Purdie and Sandra K Purdie
  v.
  Chief Executive, Department of Lands

(Hearing at Emerald)

D E C I S I O N

Mr and Mrs Purdie are the owners of land described as Lot 31 on Plan E21625, Parish of Selma, containing an area of 2.011 ha.  As at 1 January 1995 under the provisions of the Valuation of Land Act (the Act),the respondent determined the unimproved value of that land at $231,000.  An objection to that valuation was disallowed and the owners appealed to the Land Court against the respondent's decision upon their objection, advising that their estimate of the unimproved value is $100,000. 
           The subject land is situated on the south-western outskirts of the Town of Emerald, approximately 1.5 km from the centre of town.  It has frontage to three streets, with bitumen sealed access available from Gray Street and Long Street, while the Powell Street frontage is of formed gravel.  It is roughly rectangular in shape, but the Long Street frontage is not parallel to the Gray Street frontage. 
           The land is zoned "Future Urban" under the town planning scheme for the Shire of Emerald and is used for residential purposes and for the purposes of a plant nursery (the "Esskay Nursery").
           Mr CK Purdie, one of the appellants, appeared and gave evidence.  Valuation evidence was given on behalf of the respondent by Mr AP Newcomb and Mr DP Jones, both registered valuers employed by the Department of Lands.
           The respondent had valued the subject land at $115,000 per ha on the basis that it had  subdivisional potential and that its highest and best use was for development into residential allotments.  It was common ground that the period immediately before the date of valuation was one of considerable movement in the market for land in the Town of Emerald.  A number of residential estates had been developed. 
           However, while the Departmental valuers contended that the market was still buoyant at the date of valuation, Mr Purdie felt that the market had reached its peak and had declined to some extent at the that time.  He thought that real estate values in Emerald have been enhanced beyond reasonable levels by speculation and demands fuelled in the last few years by an abnormal market for residential lots.  He was of the opinion that the bubble has burst and that currently there would be two to three years' stock of finished residential lots available with no immediate need for further development and certainly no demand for raw parcels of "Future Urban" zoned land such as the subject property.  It was therefore unlikely to be developed in the foreseeable future.
           As a basis of valuation, the respondent relied upon three sales of land in Emerald.  Sale No. 1 is situated in Gray Street, has an area of 2.023 ha and sold in June 1994 for $305,000.  At the time of sale the land was developed with several removable accommodation units and a large shed.  The sale was analysed to show an unimproved value of $126,000 per ha and as at the date of valuation, the respondent had applied an unimproved value equivalent to $123,000 per ha.
           The site was previously used by the Department of Minerals and Energy and sold at auction.  It was regarded as being inferior to the subject land for development purposes because development of the site would require more roads and result in reduced block yields.
           There is evidence that the purchaser of that property is a house-removalist who told Mr Jones that he saw possible removal value in the portable dwelling structures on that land which he hoped to sell to people in rural homesite areas.  He is said to have expressed the opinion that they added $50,000 to the value of the property at the date of sale.  However, his expectations had not been realised as the Emerald Shire Council had not given the necessary approvals to allow the buildings to be shifted to other sites.  He may not be able to realise $50,000 for those improvements and they were still on the site at the date of hearing and the land had not been developed.
           Sale No. 2 is also situated in Gray Street, has an area of 1.124 ha and sold in July 1994 for $170,000.  The sale was analysed to show an unimproved value of $167,500 and an unimproved value of $146,000 (equivalent to $130,000 per ha) was applied as at the date of valuation.  The property was considered to have been ripe for development and has been subdivided since the date of sale.  It is smaller than the subject land and is described by the respondent's valuer as having inferior shape and frontages. 
           Sale No. 3 with an area of 1.62 ha, is situated in Moody Street on the northern outskirts of Emerald.  It sold in April 1994 for $500,000 and the sale analysed to show an unimproved value of $270,000.  As at the date of valuation the respondent applied an unimproved value of $245,000, or $151,000 per ha. 
           That property was sold with a substantial residence, to which the respondent’s valuer attributed $230,000, together with associated improvements.  He noted that the property is a corner site located on the established north side of Emerald, where residential lot values are slightly higher.  After the residence was excised, the subdivision of the remaining land resulted in reduced block yields because of a large drainage easement located on the site.  The valuer noted that it is smaller than the subject land and located in a better part of town. 
           The respondent considered that the subject land had potential for subdivision and valued it by direct comparison with those three sales, two of which have since been developed into residential allotments.  By this process the respondent’s valuer considered that the subject land should be valued at $130,000 per hectare.  However, it is located opposite a property used for the purpose of  commercial dog kennels and it was considered that the noise of dogs barking had a detrimental effect on the subject property.
           Making allowance for some detrimental effect from the noise nuisance, the respondent arrived at an unimproved value for the subject land of $115,000 per ha, or $231,000.
           The owners argued that the land being zoned "Future Urban" had no as-of-right potential for development.  Any subdivision would require Council approval for rezoning.  They deny that there is any such immediate potential.  They state that the land is primarily used for residential purposes, but they have town planning consent for a home occupation  plant nursery.  The nursery occupies only about 2,000 m² and, they suggest, is hardly more than a payable hobby as it did not make a significant income.
           The appellants contended that their valuation is out of relativity with the valuations of a number of other properties in the immediate area, with areas of 3.563 ha, 2.878 ha and 3.477 ha, which had been valued at $75,000, $75,000 and $90,000 respectively.  However, Mr Newcomb gave evidence that each of these properties is valued under the provisions of s.17 of the Act as land exclusively used for purposes of a single dwelling house.  Therefore any enhancement in their values because of potential for any other purposes was disregarded.
           The owners also submitted that two nearby properties with areas of 2.494 ha and 2.023 ha had been valued at $90,000 and $200,000 respectively.  Those lands had been rezoned and subdivision entitlements were in place at the relevant date.  However, Mr Newcomb’s evidence in respect of the 2.494 ha property indicated it had also been valued under the provisions of s.17 of the Act.  While the 2.023 ha (McCullagh and Purcell) property had been valued as land with subdivisional potential, it was considered not to be as valuable as the subject land, because of Council requirements that considerable earthworks be undertaken.
           The owners also questioned the valuation of a further parcel of land of 2.023 ha, owned by Gray, situated on the northern outskirts of Emerald.  That property is surrounded by residential development, but was used as an earthmoving contractor's yard as well as for purposes of a dwelling house.   It was valued at only $130,000.  The owners drew the analogy between the use of their land with the use of that land.   However, Mr Newcomb said that the Department was unaware that the Gray land was being used for any purpose other than that of a single dwelling house.  He admitted that if the use included any business purposes, the valuation would have to be revised.
           Mr Purdie gave evidence that the dog kennels situated opposite the subject land generate very significant and objectionable noise and disturbance and have an adverse effect on their peace and enjoyment of the subject property.  He also argued that the land is close enough to crop-spraying activity to be adversely affected by aircraft noise, although not by the spray itself.  He thought that these circumstances downgrade the value of the subject land and affect the saleability of any lots developed from the subject property.
           While the noise from the commercial dog kennels may well affect the value of the subject land, I do not think that the aircraft noise would have any great effect.
           The issues between the parties in this case are clear.  The owners feel that their property has been valued out of relativity with other similar properties.  They consider that their land should not be valued differently simply because a small area of it is used as a plant nursery.  On the other hand, the respondent’s valuers believe that the land cannot be valued under the concessional provisions of the Act, as it is not exclusively used for purposes of a single dwelling house.
           Under the provisions of the Valuation of Land Act, the respondent is required to decide the unimproved value of the land to be valued as at the date of valuation.  Under s.3(1) of the Act, unimproved value of improved land is defined as 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 ... the improvements did not exist”.

In other words, the respondent is required to determine the unimproved market value of the property as at the date of valuation.
           It is well established that in this process each property must be considered on the basis of its highest and best use.  However, there are several exceptions to this principle which must be considered.  In this case, the relevant provisions are contained in s.17 of the Act, which reads as follows:

"(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 for use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in the case of potential use as aforesaid, the potential use is lawful when the valuation is made.

(2)In subsection (1) -

'a single dwelling house' means -

(a)a dwelling house is solely for habitation by not more than one family;

...

'farming' means -

(a)the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or

(b)any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock;

if the business or industry represents the dominant use of the land, and -

(c)has a significant and substantial commercial purpose or character; and

(d)is engaged in for the purpose of profit on a continuous or repetitive basis."

The valuers for the respondent have taken the view that the subject land does not qualify for a concessional valuation under either limb of s.17.  They reason that the land is not exclusively used for purposes of a single dwelling house because there is the plant nursery enterprise also conducted on the land.
           Mr Purdie argued that the latter use of the land is limited and endeavoured to play down the operation of the plant nursery as only a minor, low-key activity, which had grown from a hobby.  However, having regard to previous decisions of this Court and the Land Appeal Court, it is clear that the subject land cannot be regarded as being exclusively used for purposes of a single dwelling house.  It has been held on many occasions that the word “exclusively” in this context is absolute.  (See, for example, Curtis v. Valuer General (1979) 6 QLCR 83.) Therefore, the property is not entitled to a concessional unimproved value under the first limb of s.17 of the Act.
           The second limb of  s.17 requires a concessional valuation to be made when land is used for purposes of farming.  "Farming" as defined in the Act, does not require exclusive use, provided that the business or industry meets all the other criteria and represents the dominant use of the land.  The owners did not contend that the land was used for purposes of “farming”.  Indeed, Mr Purdie went to some lengths to emphasise the limited nature of the plant nursery activity.  He called it a home-occupation, an over-grown hobby and emphasised the residential use of the land.
           In the circumstances, I find that the respondent was correct to value the subject land on the basis of its highest and best use.  It seems clear from the evidence that the land has potential for subdivision and that should be taken into account.  However, before that potential can be realised the land must be rezoned, which would require Council approval.  In addition, there is the question of how the proximity of the dog kennels affects the potential for development.
           When questioned about the sufficiency of the allowance because of the dog kennel nuisance, Mr Newcomb said that he thought that the allowance of about $30,000 was sufficient to create a sizeable buffer along the boundary.  However, he did not explain upon how this could be effectively achieved.  On the other hand, Mr Purdie gave a graphic description of how the noise from the dog kennels commenced at about 5.30 a.m. and continued throughout the day.  The boarding kennel occupancy increased considerably during the Christmas and school holidays.
           From the sales submitted by the respondent, I find that the only reliable sale is Sale No. 2.  Sale No. 1 could well have been bought with other influences in mind, while Sale No. 3 included a very substantial residence, the value of which has a profound effect on the value of the remaining land.  I am not prepared to place great weight on either of those sales.  On the other hand, while Sale No. 2 is the more reliable, it is much smaller than the subject land and a difficult shape.  It was valued at $130,000 per hectare.
           After considering the whole of the evidence, I have come to the conclusion that although the subject land has subdivisional potential, the proximity to the dog kennels would, if not deter, at least delay the development of the subject land.  A prudent developer might well seek to purchase land where his estate was not affected by such a noise nuisance.
           In the circumstances, I feel that further allowance should be made for these factors and that the subject land should be valued at $100,000 per hectare.
           Accordingly, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value of the subject land is determined at Two Hundred Thousand Dollars ($200,000).

JJ TRICKETT
  PRESIDENT OF THE LAND COURT