Radlett Enterprises Pty Ltd v Chief Executive Department of Natural Resources
[1997] QLC 23
•20 February 1997
|
LAND COURT
BRISBANE
20 FEBRUARY 1997
Re: Appeal against decision of the Chief Executive, Department of Natural Resources
(formerly Department of Lands)
Determination of Valuation
Local Government: Pine Rivers
AV94-206
Radlett Enterprises Pty Ltd
v.
Chief Executive Department of Natural Resources
D E C I S I O N
Radlett Enterprises Pty Ltd (“Radlett”) is the owner of land described as Lot 3 on Registered Plan 36052, Parish of Warner, County of Stanley, containing an area of 6.07 hectares and subject to an easement (“the subject land”). On 31 March 1992, the respondent, the Chief Executive, determined the unimproved value of the subject land to be $157,000. The effective date of that valuation was 30 June, 1993 and it was issued on 22 February, 1993. Radlett lodged an objection to that valuation but the objection was disallowed and Radlett notified of that by a notice dated 11 May 1994. Radlett lodged an appeal against the Chief Executive’s decision upon their objection and did so on 6 June, 1994. It stated that the subject land should be valued at $121,000, which was the valuation established in 1991. That is effectively the ground of Radlett’s appeal for the other matters referred to in Radlett’s grounds of appeal are more properly characterised as supporting arguments than grounds of appeal.
At the hearing Radlett was represented by Mr Peter Cummings and the Chief Executive by Mr Lucas, an officer in the Department of Natural Resources (“the Department”). A statement prepared by Mr Cummings together with a map showing the location of the subject land and a copy of a letter dated 26 November 1993 from the Department to Mr Cummings were admitted in evidence in support of his case. In support of the Chief Executive’s case, a statement of Mr Gavin Dunn, a registered urban and rural valuer with the Department was admitted in evidence. Oral evidence was given by both Mr Cummings and Mr Dunn. While drafting my judgement, it became apparent that there were several issues which had not been canvassed at the hearing but which seemed relevant to me in understanding the evidence that had been led. I recognise that the Land court may not assume the role of an investigative tribunal (Qualischefski and Others against Determination by Valuer-General - Shire of Laidley, Land Appeal Court, (1979) 6 QLCR 167). Exercising the powers under section 41 of the Land Act 1962, I asked the parties to consider those issues and will return to them below. At the resumed hearing, Mr Cummings continued to represent Radlett but the Chief Executive was represented by Mr Paterson, Principal Legal Officer in the Department.
BACKGROUND
Certain factual matters were not in dispute between the parties. In view of that and also in view of the evidence I have made certain findings of fact which I will now set out. In doing so, I will make brief references to the evidence upon which they are based.
On the basis of Mr Cummings’ evidence, I find that the subject land is the sole active asset of Radlett. Radlett is a family company formed in the 1970s and owned by members of the Cummings’ family. Radlett purchased the subject land with the intention of building a factory upon it. The factory was never built as Radlett was unsuccessful in obtaining Pine Rivers Shire Council’s permission to do so.
The subject land, which Radlett purchased in 1973, has an area of 6.07 hectares. Its eastern boundary runs alongside Walker Road and its northern boundary fronts onto Lawnton Pocket Road at Lawnton. The southern boundary of the subject land is formed by the Four Mile Creek. This is apparent from both Mr Cummings’ map and Mr Dunn’s report. On the basis of Mr Dunn’s report, I find that Walker Road is a gravel road in fair condition and that Lawnton Pocket Road is a bitumen strip carriageway with earth shoulders and gutters. Lawnton Pocket Road carries all of the traffic, including heavy trucks, to and from the BMG Quarries. That quarry is situated opposite the subject land on a large area of land between Lawnton Pocket Road and the North Pine River in the north.
The subject land is zoned “Rural” under the Pine Rivers Shire Council’s Town Plan gazetted on 14 May 1988 and is used for single residential purposes. Urban development has taken place south of Four Mile Creek and at some distance to the west of the subject land.
Electricity and the telephone are available to the subject land. A water main is located close to the subject land but I accept Mr Cummings’ evidence that water can only be connected to it if Radlett and four other property owners donate land for the re-alignment of Lawnton Pocket Road and it then pays for the construction of the water main.
The subject land is generally level for approximately 350 metres and then drops approximately 1 metre onto a flood plain. All of the subject land other than an area of approximately 600 square metres in the south western corner and bordered by an open drain is below the development level. The subject land is subject to flooding and would be covered in a 1:100 flood. The land in the flood plain is subject to regular flooding and nothing can be done to prevent that. That was acknowledged by Mr Dunn. Mr Dunn also acknowledged, and I find, that a house pad would be allowed upon the property provided it is built a metre above the existing level which is RL5.
The subject land is divided by an open drain used to take run off from the showground and the Industrial Estate located to the west of the subject land on Paisley Drive. This drain runs for approximately 260 metres along the western boundary of the subject land. It then crosses the subject land in a south easterly direction until it reaches the Four Mile Creek in that part of the subject land which is near the junction of the creek and Walker Road. These findings are based on both Mr Dunn’s report and Mr Cummings’ statement.
On the basis of Mr Cummings’ statement and map, I find that the area of the open drain is subject to an easement. The area of that easement is approximately 5,600 square metres. The open drain is maintained periodically by the Pine Rivers Shire Council. Maintenance of Four Mile Creek into which the open drain flows is a matter of dispute. It has been cleared only once in twenty three years. On the basis of Mr Cummings’ evidence I find that there is always a flow of water in the drain. That is so even during dry weather when it is approximately 300 millimetres deep. In wet weather it would be five feet deep and water backs up well beyond the boundaries of the easement.
EVIDENCE AND SUBMISSIONS
Mr Dunn had not carried out the original valuation of the subject land but he had prepared a valuation for the purposes of the hearing. Mr Dunn’s valuation stated that the valuation was $157,500 and, for the basis of the valuation, referred to the attached schedule of sales. That schedule referred to five properties. Mr Cummings had not been made aware of these sales until just before the start of the hearing. Consequently, there had been no opportunity for him to check the sales.
I will summarise the information given in that schedule:
| SALE | 1 | 2 | 3 | 4 | 5 |
| Location | Hughes Road, Dakabin | 10 Nielson Street, Lawnton | Old School and Winn Roads, Cashmere | Marsden Road Kallangur | Buranda Road Clear Mountain |
| Zoning | Future Rural Living | Residential “A” | Rural | Future Urban | Rural |
| Services | Electricity and telephone available | Sewerage, electricity, town water available | Electricity and telephone available | Town water, electricity and telephone available | Electricity and telephone available |
| Access | Hughes Road is formed earth track | Nielson Street is full width bitumen carriageway with concrete kerb and channel | Winn Road is a bitumen strip non Gazetted road over B.A.W.B. land. Old School Road is a poor formed earth road | Marsden Road is a bitumen strip carrying heavy traffic to the Dakabin High School | Buranda is bitumen strip road |
| Nature of land | Well elevated gently sloping coastal forest block with southern aspect | Land below street level with a gently south easterly crossfall | Steep broken forest ridges | Easy sloping forest whose frontage is severed by a gully | Moderately sloping bastard scrub with good rural views |
| Area | 2.154ha | 615 m2 | 3 ha | 2.172 ha | 4.049 ha |
| Date of sale | 12 April 1991 | 10 April, 1992 | 30 October, 1991 | 15 November, 1990 | 12 June 1991 |
| Sale price | $93,000 | $46,500 | $100,000 | $140,000 | $137,500 |
| Improvements Value | Clearing $1,500 | Clearing $750 | Clearing $2,000 | Clearing $1,500 Fencing $1,000 | Clearing $2,500 |
| Analysed value | $91,500 ($79,000) | $45,750 ($41,000) | $98,000 ($95,000) | $137,500 ($125,000) | $135,000 ($120,000) |
| Comparison | Smaller in size than subject and in more remote location | Smaller in size than the subject and demonstrates price paid for a residential block in Lawnton | Inferior in topography, smaller in size and in a more remote location than subject | Smaller in size but superior in services and located on a busy road | Smaller in size, worse topographically and more remote in location |
| Overall comparison with subject land | Sale is inferior | Sale is inferior | Sale is inferior | Sale is inferior | Sale is inferior |
Mr Dunn said in his evidence that the subject land must be valued under the Valuation of Land Act 1944 (“the Act”) as land that can only be used for a rural home site. Any higher or better use of the land is precluded by that restriction. As a consequence, he had to look for properties which did not have any subdivisional potential or higher or better use. He located properties which are more remote but which are of a slightly smaller size to show a level of value that should be applied to the subject land. In the case of each of the five sales, the land was at its minimum site for the zoning of each. Sale 5, for example, is zoned as rural and cannot be further sub-divided. As there is no higher and best use for the land in each of the five sales, they are in no different position from the subject land.
With regard to the different zonings given to the land, Mr Dunn said that that is simply a matter of zoning. As each cannot be sub-divided any further, the only question becomes what can be done with the land. The only thing that can be done with the land from each of the sales is to use it as a home site. The land can then be compared on the basis of whether or not it is a good area for a residential block.
Mr Dunn referred to the values reproduced in the table above in relation to the properties at Hughes Road, Dakabin and at Marsden Road, Kallangur. He said that as one moved from those more remote properties to the urban areas, the value of the property increases. This is reflected in the value of the properties at Buranda Road, Clear Mountain and Old School Road at Cashmere. Those properties also show that smaller parcels of land for rural home sites will generally sell for less than larger parcels but not proportionately so. On a per hectare basis, the rate for the larger parcels actually drops because, while the larger parcels provide a rural quality, they cannot be subdivided. The larger parcels of land require additional maintenance. As properties get larger and larger, the increase in their value becomes only nominal. Valuation becomes a matter of site to site comparison and is not assessed on the basis of a per hectare rate.
Mr Dunn said that he did not see that the availability or otherwise of town water had any effect one way or another on the value of the property. A sum of $30,000 would need to be spent to have town water connected and yet tanks could be placed on a six hectare property without spoiling the amenity of the house. The tanks could be placed a long way from the house. In his experience, people prefer tank water anyway.
Mr Cummings said that the valuation of the subject land had increased from $121,000 to $157,000 in a twelve month period between 1991 and 1992. At that time, there was a recession and land prices were falling. It was difficult to see, he said, how there could have been a 30% increase in the valuation in a twelve month period.
Mr Cummings drew a distinction between the subject land and other land. Mr Walls, whose land is situated at the south eastern corner of the subject land, tried unsuccessfully to sell his land in the early 1990s for a price in the order of $210,000. He had signs on his property for some two years. Radlett had tried to sell the subject land in 1990. An auction had been arranged and over a thousand dollars spent in advertising through display advertisements in the Courier Mail and the Ray White magazine. The response was so poor, however, that the subject land was withdrawn from sale. Mr Cummings said in his later evidence that he had hoped the bidding would start at $120,000.
Mr Cummings had inspected three properties to which he had been referred by the Department for the purposes of comparison. Mr Cummings submitted that the area in which Radlett’s land is situated could not be compared with those areas in which these properties are situated.
On his inspection of the property at Hughes Road, Dakabin (sale 1 in Mr Dunn’s schedule referred to below), Mr Cummings found it to be an elevated area of good aspect with a number of recently constructed high quality homes including one on the site itself. A major sub-division is under construction immediately opposite the property. Water mains are being laid to and from an elevated reservoir. Mr Cummings concluded that it is a rapidly developing area.
Land on Dayboro Road at Kurwongbah to which he was referred is 16 hectares and sold for $8,700 per hectare. It is elevated land with trees and only a small frontage to Dayboro Road. A property at Moore Road, Kurwongbah is 3.55 hectares and sold for $23,900 per hectare. It has a narrow frontage of 120 metres and has a creek and low lying land near the road frontage. A high level road provides excellent access to the rear where there is a considerable area of high land. It appeared to Mr Cummings that a high quality home had been constructed.
FURTHER ISSUES AND EVIDENCE AT RESUMED HEARING
Before resuming the hearing, I gave the parties notice of the issues I wished to raise so that they had an appropriate opportunity to consider them. The issues which I raised with them both at that time and at the resumed hearing of this matter may be summarised as:
.How was the applied value (i.e. the figure given in brackets under the analysed value in the table at paragraph 12 above) assessed?
.Was the value of the subject land assessed taking into account the analysed or the applied value?
.Is the zoning in each of the shires in which the subject land and the sales were located comparable?
.Is there any designated plan that gives any of the subject land or the comparable sales any potential for development in the future?
.Are there any field notes which show the allowances which any valuer in the Department has made for the various differences in features between the subject land and the comparable sales?
.I wished to give Mr Cummings an opportunity to make any submissions he cared to make regarding the comparable sales produced upon behalf of the Chief Executive at the hearing.
.What were the unimproved values of the sales and of the subject land and the comparable sales for the previous year?
While not the person who prepared the original valuation in this case, Mr Dunn explained the way in which applied values are assessed. He said that different sales have, to different degrees, different attributes. Those attributes include such things as location, topography, services, proximity to shopping and transport, advantages, disadvantages, facilities, types of road access, size and potential in so far as zonings are concerned.
Taking Sale 1, Mr Dunn said that the process of reasoning involved would be that
“... the purchaser believed that roads, et cetera, were going to - or better roads, bitumen roads and also a formative gravel road, would be put to the parcel, plus he also believed that water would be supplied soon to the parcel. The gravel - when the first inspection of this property was done there was actually only a dirt track in front of it. A tree was actually situated in the middle of the road. Since that - since that time when we - when I inspected it for this particular case there is now a bitumen road in front of it and the tree’s been removed and it looks very picturesque,
et cetera, and town water in the last six months has been actually put to it.” (transcript page 33)
In summary, Mr Dunn said, the purchase price was the price that was paid by a purchaser who was anticipating what was to come. What is anticipated, however, does not always come to pass. The figure of $79,000 for Sale 1 represents its
“... relativity to other parcels without services or without good road frontage to it, et cetera. So the 79,000 was set in relation to that, not in relation to anticipated.” (transcript page 34)
Later in his evidence, Mr Dunn said that
“... The policy of the department plus Court precedent is that a rating valuation is a conservative valuation. Now for sales to be arrived at we do obviously have sales that are high, where people really particularly want a block and pay over the market. We have sales that are low where people are in trouble and have to sell them. Those we discount. But that leaves us with a mean - a mean number of sales that actually fall within ranges. What generally happens is that from those sales there we take a conservative line. So there would be a sale that would reflect in that area, where we have actually used 95 or 100 per cent of the sale. Right. And that, when it translates across in relativity, turns out to be - to be that application of the - so there are more than just the one sales. But that particular sale was the closest sale to our property. That reflected walking distance to the same train station, shops et cetera. ... in Lawnton, Bray Park, [Sale 2] there in that particular time period, there probably would have been 400 vacant land sales. Not every one of those can have a hundred per cent. They cannot go along and say, well here’s sale and here’s a sale. This one here is 600 square metres. This one’s 600 square metres. This one sold for 45,000 and this one sold for 47,500. Now both of them probably are quite all right in the range of what people pay. But I see those sales as identical. So in my mind taking into account the conservative - what the Court requires - a conservative valuation, I say all right, I’ll apply $45,000 to that property. So that’s 100 per cent. But this identical property, I can’t go and then apply 47,500 because in my mind I have made a judgment that they are identical. So I actually apply $45,000. So it’s slight lower. It’s well within the basic concept of the Court within 90 per cent of the application. So it’s still being used. It’s just a conservative application is being used.” (transcript pages 36-37)
Mr Dunn agreed that a “whole raft of sales” has been taken into account in reaching an applied value of, for example, $41,000 in the case of Sale 2.
Mr Dunn was asked how he compared the subject land, which is a rural residential site, with the sales. He said that he looked at each of the sales in turn and continued:
“... the residential A block [Sale 2] that was put in was just giving a base figure in that area for a 600 square metre block. That was close to everything. It was $41,000. Hughes Road [Sale 1] was put in because it was a two-hectare parcel, or approximately a two-hectare parcel, that was removed from the walking distance to trains or shops or anything like that. And it was compared to the Marsden Road one [Sale 4], the two hectares in Marsden Road, which was well located, close in amongst urban development, good water and sewerage. And that showed - well, actually it has access to it. It doesn’t actually have them but that shows that the - the jump in values that can occur. But I used the sale price there of 91,500 to 137,500, or the unimproved to 79 to - well, the applied, sorry - of 79,000 to 125. It shows that in location-wise that people prefer to be closer in to the urban development. It’s nice to have a large block, private to everybody else, still have all the same amenities, et cetera, as an urban block. And that shows the difference in it. For people to do that nowadays in Pine Rivers, they got to continually go further and further out. So the land that’s kept in that isn’t subdivided has a premium. I have to discount or disregard the subdivisional premium that’s in there. So I can only refer to sales that aren’t tainted in any way by subdivision. Which means that I have to keep going further and further out to get those size blocks. As time goes on I’ll be a lot further out trying to get a six-hectare block because six-hectare blocks closer in obviously, left by themselves, generally have a subdivisional potential. And which we can’t take into account in our valuation. So the purpose of this is that the four-hectare one up at Clear Mountain [Sale 5] was possibly the closest to the six-hectare I could get as a single site. And it was 120,000 [indistinct] very nice area, Clear Mountain. The land itself was moderate to steep but nice rural outlook, professional-type people that live in that area. So it had a good reputation and that. But you have to drive a fair way to get to a train or a shop. So that was a comparison - a direct comparison to that. If I had six hectares in Lawnton, how would I compare it to four hectares out at Clear Mountain?” (transcript pages 39-40)
Mr Dunn said that, unless properties with subdivisional potential are being considered, it is inappropriate to assess a property’s value on the basis of the per hectare rate obtained. Where only one house may be built on a property, the amount people will pay for it will be proportional to its size. That is to say, as properties get bigger, the amount that is paid of the additional land decreases. This is so because of various factors including the extra cost of fencing larger blocks of land and the difficulties of caring for it.
Mr Dunn identified a printout from the Department’s IVAS computer system in respect of each of the comparable sales. That printout showed the date on which the whole of a local authority area had been valued under the Act, the date on which the unimproved value takes effect for rating purposes, the amount of the unimproved value, the section of the Act under which the valuation is made and the date on which the landowner was given notice of the valuation (Exhibit 4). In tabular form, the information in that document may be summarised in relation to valuations made under section 28 of the Act in relation to the land dealt with in each of the comparable sales in the following table:
| SALE | 1 | 2 | 3 | 4 | 5 |
| Date of effect | 30 June, 1993 | 30 June, 1993 | 30 June, 1993 | 30 June, 1993 | 30 June, 1993 |
| Date of val. | 31 March, 1992 | 31 March, 1992 | 31 March, 1992 | 31 Mach, 1992 | 31 March, 1992 |
| Date of issue | 22 February, 1993 | 22 February, 1993 | 22 February, 1993 | 22 February, 1993 | 22 February, 1993 |
| Unimproved val | $79,000 | $41,000 | $95,000 | $125,000 | $57,000 |
| Date of effect | 30 June, 1991 | 30 June, 1991 | 6 December, 1991 | 30 June, 1991 | 30 June, 1991 |
| Date of val. | 31 March, 1990 | 31 March, 1990 | 31 March, 1990 | 31 March, 1990 | 31 March, 1990 |
| Date of issue | 25 February, 1991 | 25 February, 1991 | 25 May, 1992 | 25 February, 1991 | 25 February, 1991 |
| Unimproved val | $66,000 | $44,000 | $54,000 | $98,000 | $45,500 |
The valuation made with a date of effect of 6 December, 1991 in respect of the land which was the subject of Sale 3 was made under “section 2”.
When asked to explain how the previous year’s unimproved valuations assist a valuer in assessing the unimproved value for the following year, Mr Dunn said:
“The previous year itself, the 1990 valuation, was used as a base for a computer assisted valuation, so the sales analysis still happens. The computer is then given, after working out at schedule of sales, is actually given a factor to increase the properties in line with those sales. Each of those is - once the computer predicts the list of properties and those figures, they are checked by the valuer to see whether he agrees to disagree with those valuations, so the previous relativity is the base to start from for the computer system valuation. The valuations prior to that, go through the same process, so they would have no impact on the - on the process that we have gone through for the March 1992. ... what they show is what the market has actually been doing in relation to sales. It’s been increasing in that area.” (transcript page 48)
A further insight was given into the method of valuation when Mr Dunn said:
“... a lot of valuation comes from experience. The fact is I’ve worked in that area full time for the last ten years, so I’m very conversant with the prices that are being paid in other areas. What I’ve done here is purely pulled forward sales as at March 1992 to support the valuation that’s there, but when a valuation is done, it’s done as a combined effort. There’s seven valuers involved and they do the whole of the Shire at the same time, so relativity is one of the key words of our act, so therefore relativity must go through the whole of the Shire. The sales, we find in rural areas, as I say, taking into account the, as I said, some situations et cetera, do tend to reflect the same sort of money. In certain high class areas, it definitely is higher and certain low class areas, it is certainly lower, but overall a six hectare property in Dayboro will sell for a similar amount of money as a six hectare property over in say, Samford or something like that or the outskirts of Samford. ... I know from my experience that a three-hectare flooded property in Moore’s Road will sell for $95,000 because there’s a sale that show that. All it’s got is 2,000 square metres of useable area on it. I know from my experience that in Dohles Rocks Road there’s 6,000 square metre parcels selling for $110,000 next to service stations. So they’ve got a rural thing but they’re next to service stations. So what actually happens is that I’ve looked at these sales and said, well, I know from countless sales - over 500-odd sales - that I’ve looked at, or I’m aware of, that the parcel of land should be worth more than the sale out at Buranda Road, Clear Mountain - which was a $120,000 supply. What I don’t have is a top figure of where it should finish. I know that if I was using my subdivisional sales the minimum price that should be there is 450,000, even in the condition that it floods. So it’s got to be somewhere in between there. The problem also is that I have two-hectare parcels of land in places like Eaton Hill that are actually $135,000 sites. The reason they’re $135,000 sites applied is because they’re close to facilities. So I know it’s got to be worth more than that. Then it comes down to my experience. How much more? Well, the minimum I would think is $157,000. That is the absolute minimum. Because of its location, because of its closeness all the items that people want. I mean, Eatons Hill is not close to trains or transport, close to shops. This has all of those things together in a package. If you were asking me for a definitive sale that will say 157,000 is exactly right, I cannot give it to you. I have to say that it’s my experience that I would say that’s a minimum value for that area. And I tried to back that up by saying well, look, they’re buying 600 square metre blocks in the area for $46,000. How much would a prudent purchaser in that location go to buy six hectares. Flooding that it does, true. In the back parts, flooding every year. But the fact is you can still utilise that land in the normal sense to go down and have a picnic. If you look at the maps that were supplied with the original valuation, the parcel that backs on to the subject across Four Mile Creek is a park. That’s what its purpose is. If there is a picnic area. So - though I doubt if anybody can actually get down to use it but the point is that it eventually will join up to other parks as subdivision happens, right? That’s the council’s plan. The - an absolute definite sale I cannot give you, I can only rely on my experience and say that I know that it’s worth more than these. I know that, in my opinion, $157,000 would be the minimum for six hectares in that area...” (transcript pages 51-52)
Mr Cummings prepared a submission and included in it his comments regarding the land which was the subject of the comparable sales. He stated that each of the sales is above the development level. He made the following comments about the sales put forward by Mr Dunn:
| SALE | MR CUMMINGS’ COMMENTS |
| 1 | Elevated area, good aspect, with recently constructed high quality homes and new subdivisions being developed. |
| 2 | Area fully developed including this property since the sales. Closer to amenities than subject land. Has water and sewerage. Much smaller area. |
| 3 | New house on site, close Lake Samsonvale. High quality homes under construction in the area. |
| 4 | Zoned future urban. Recently developed estate adjacent. |
| 5 | Trendy area. Good quality homes. Elevated site on fringe of Samford Valley area. |
Mr Cummings relied on the sale of Lot 2 on Registered Plan 88905, Volume 3108 Folio 103, Parish of Warner, County of Stanley. The sale is located at Dixon Street, Strathpine and the sale price on 26 July, 1990 was $137,000. Mr Cummings said that the land, which is adjacent to the Westfield Strathpine Shopping Centre, was extensively filled before the sale. He assessed the applied value as $115,000.
Mr Cummings said that there had been no development in the area of the subject land for the past 23 years apart from the increase in the quarry activity. Filling is not permitted by the Pine Rivers Shire Council. No decision may be made about further development until the quarry ceases its operations. Water, and sewerage are not available to the subject land.
CONSIDERATION
As section 33 of the Act provides,
“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.”
This provision must be read with sub-section 44(4) which provides that the owner of the land has the burden of proving any and every ground of appeal in the notice of appeal he, she or it lodges. The practical effect of these two provisions is that, in this case, the burden of proving that the Chief Executive’s valuation is incorrect lies upon Radlett. It does not fall upon the Chief Executive to defend his valuation. In establishing whether Radlett has discharged that burden, regard may be had not only to the evidence which Mr Cummings led but also to the whole of the evidence in this case.
Part of the evidence is the evidence given by Mr Dunn both at the hearing and the resumed hearing as to the comparable sales supporting the Chief Executive’s valuation. On the basis of his evidence, I find that he has assessed both an analysed and an applied value for each of the five comparable sales he has taken into account. I find that those values and the description of the land involved in each of the sales is as set out in the table at paragraph 12 above. The analysed value in each case is the sale price less the value of any improvements and that accords with the definition of “unimproved value” in paragraph 3(1)(b) of the Act.
On the basis of his evidence, I find that Mr Dunn has considered the “applied value” in each of the comparable sales and taken that, rather than the analysed value, into account in valuing the subject land. The analysed value, I find on his evidence, is assessed after taking into account a group of sales for comparable sales. No evidence was given of those sales. Sales at the higher and lower end of the price scale are discounted and the sales that fall in the middle range in between are taken into consideration. Taking that middle range of sales, a conservative value is calculated and values are adjusted to that conservative value. The applied value for each of the comparable sales reflects that conservative value assessed in this way. That applied value is shown in the table at paragraph 12 above.
It would follow from the manner in which the applied value has been calculated that it would equate with the unimproved value assessed for each. This is so in relation to all but Sale 5 where the applied value has been assessed as $120,000 and the unimproved value as $57,000 (see tables at paragraphs 12 and 28 above). This aspect was not explored further at the hearing and I will not do so in these reasons.
The result of Mr Dunn’s approach is that the value of the subject land is not assessed by direct reference to the sale prices achieved for the comparable sales but to an applied value assessed after reference to other sales, the details of which were not made available. Is that an appropriate method of valuation? Mr Paterson submitted that it is for it is well established that a conservative approach should be adopted in assessing unimproved value for the purposes of assessing revenue. He contrasted valuations obtained for the purposes of compensation where it is proper to adopt a more liberal estimate of valuation. In support of his submission, Mr Paterson referred to the cases of The Determination of Unimproved value for freeholding purposes - Grazing Homestead Perpetual leases 10/3109-10 (Charleville District) Edward James Richardson v The Crown (1990/91) 13 QLCR 236, Commissioner of Succession Duties (S.A.) v Executor and Trustee Agency of South Australia Limited (1946-1947) 74 CLR 358, and Westenra Pty Ltd (unreported, Special Lease 06/100090, Land Court, 28 April, 1995).
I have also had regard to Spencer v The Commonwealth of Australia (1907) 5 CLR 418 in which Isaacs J said:
“To arrive at the value of the land at that date, we have ... to suppose it sold then not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and the cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.” (page 441)
That approach to be adopted in determining that value was explained by Wells J in Brewarrana Pty Ltd v Commissioner of Highways (S.A.)(No.1) (1973) 32 L.G.R.A. 170 when he said:
”It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to have been sold, or the same thing as its true value. Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances (using that word in its broadest sense) appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418 and in later cases to warrant a court’s reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape, slope, view, land use (actual and potential), scope for, and difficulties of, development, services and amenities; and in relation to the transaction of sale, the valuer must weight such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special considerations that induced or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or effected. I do not for a moment pretend that I have been exhaustive. What I am concerned to emphasize is that, as I understand the evidence, and according to the inferences that I feel I can safely draw from it, there is no hard and fast rule by the application of which a valuer may, whatever the circumstances, draw the line that clearly separates the sales that are comparable from those that are not. It is, in my view, all a matter of degree: some adjustment is always necessary; too much adjustment will render it unsafe to use a sale, subject to such a degree of adjustment, for the purpose of the reasoning process in the comparable sales method. Just where the line is to be drawn is, it seems to me, the very sort of question that is fit for the expert valuer to determine; the assessment of the risks of adjustment is peculiarly within his sphere of skill. The valuer must use his skill to winnow out the element of comparability if it is there, and use it with discretion. It is perhaps worth while adding that just because a sale is excluded from use in the comparable sales process of reasoning, it does not necessarily follow that it must be discarded from all consideration. The evidence in this case suggests strongly to my mind that, at the initial stages, a valuer will almost certainly look at all known sales in potentially relevant areas, if for no other important periods. He will, while doing so, also be culling possibly comparable sales for further consideration. It is fitting to observe that, in my judgement, the two Crown valuers undertook a much wider and more thorough survey of the sales and prices in the area generally than did the plaintiff’s experts.” (pages 179-180)
As Mr Paterson submitted, regard must be had to the purpose for which a valuation is being prepared. This was explained by Dixon J in Commissioner of Succession Duties (S.A.) v Executor and Trustee Agency Company of South Australia Limited when he drew a distinction between determining a valuation for the purposes of assessing the amount of compensation to be paid to a landowner and determining a value for the purposes of assessing the amount of a tax. He said:
“... there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.” (pages 373-374)
This distinction has been referred to favourably in cases such as Westenra and Richardson to which Mr Paterson also referred. There is, however, nothing in any of the cases that suggests that the adoption of a conservative approach justifies a departure from the fundamental principles set out in cases such as Spencer and Brewarrana. A conservative approach simply means that, in the case of doubts, those doubts are resolved in favour of a conservative estimate.
Just as Wells J described in Brewarrana, Mr Dunn has considered a wide range of sales. He has done so in his search for comparable sales and that is undoubtedly a proper approach for him to have adopted. He has used his long years of expertise and great familiarity with properties in the Pine Rivers Shire in winnowing out those which he has determined are, and those which are not, comparable with the subject land. The concern that I have is not with this process but with his next step. That step was to determine an applied value in respect of each of the sales and to do so in the way in which I have already described (see paragraph 37 above) and to determine the value of the subject land by reference to those applied values. Does that approach conform with the test set out in Spencer and with the approach described in cases such as Brewarrana.?
It seems to me that it does not. What I am asked to compare is not the price which was obtained for the five comparable sales and adjusted according to the particular features of the land and of the sales but an applied value which, in the valuer’s opinion, was the amount which the purchasers of each of the five purchasers should have paid for the land. The applied value becomes a matter of opinion, even though it must be acknowledged that the opinion is expertly based. Inherent in the assessment of what each purchaser should have paid for the properties at the heart of the comparable sales must be an adjustment for the particular features of the land and the particular sale. Those features are quite lost, however, in the context of the adjustment made in relation to sales, the details of which are not made available to the appellant or the court. It follows that I find that the method which has been adopted in assessing the unimproved value of the subject land in this case is not correct. It follows that the presumption established in section 33 of the Act is rebutted (Brisbane City Council v The Valuer-General (1978) 140 CLR 41 at 56-57).
In considering the appropriate value to be attributed to the subject land, I have had some difficulties in comparing it with the sales relied upon by Mr Dunn. While I accept Mr Dunn’s evidence that each property can only be used for a rural home site and that any higher or better use of the land is precluded, it remains that only Sales 3 and 5 are zoned “Rural” as is the subject land. The others are zoned variously “Future Rural Living”, “Residential `A’” and “Future Urban”. A further point of distinction between all of the five sales and the subject land relates to the development level. The land to which each of the five sales relates is, I find, above the development level. That is the evidence of Mr Cummings and is consistent with the evidence of Mr Dunn. The subject land, on the other hand, is not. All of the subject land other than an area of approximately 600 square metres in the south western corner and bordered by an open drain is below the development level. That land is subject to regular flooding and, at this time, I find that nothing can be done to prevent the flooding.
All of the properties, other than Sale 2, are similar to the subject land in that they have telephone and electricity available. Sale 4 also has town water available and Sale 2 has sewerage. Although it was suggested in the course of evidence that people prefer rainwater and, by inference, that the presence or absence of town water is not of any great consequence, I find that it is a point of some consequence in a potential sale of a property. Without town water, a potential purchaser must make provision for adequate tanks to collect rainwater and/or to store water which he or she must purchase and arrange to be taken to the property. Either way, the potential purchaser must take into account the inconvenience and, at least initial, cost of arranging its collection and storage.
The absence of town water is something the subject land shares with Sales 3 and 5. Sale 5 was regarded by Mr Dunn as the closest comparison he could find with the subject land and, on the evidence, I agree with him. Sale 4 is considerably smaller than the subject land and, as Sale 5 is available, I have not given it further consideration. Although smaller than the subject land, Sale 5 is only some 2 hectares smaller. It shares the same zoning as the subject land and its lack of town water. It is superior to the subject land in that it is regarded as well located and popular on Mr Dunn’s evidence and it is moderately sloping and enjoys good views. The subject land is relatively flat and does not enjoy any particular view. That is a point of difference between the subject land and Sale 5 and is not balanced by the subject land’s being more conveniently located to shops and transport. The advantage that the subject land enjoys from that proximity to services is outweighed by its proximity to the quarry and the fact that the quarry is an ongoing operation. I accept the evidence of both Mr Dunn and Mr Cummings that heavy trucks use Lawnton Pocket Road to travel to and from the quarry.
They create noise which can be heard on the subject land.
A further point of difference between Sale 5 and the subject land is the drainage easement over the subject land. It covers an area of 5,600 square metres, which is a relatively small portion of the subject land but an open drain on the easement effectively divides the lower reaches of the property. There is always 300 mm of water in the drain and, in wet weather it rises to a level of 5 feet and floods several acres of the subject land well beyond the boundaries of the easement.
Taking all of these matters into account, I have concluded that the larger area of the subject land and its proximity to shops, transport and other services would be outweighed in the mind of the potential purchaser by the superior location of Sale 5, its rural views, its being entirely above the development level, its not being subject to flooding and its not being subject to an easement and the consequent difficulties of the open drain on that easement. I have concluded, therefore, that the prudent purchaser would, as at 31 March, 1992, have been prepared to pay the same for the subject land as he would have been prepared to pay for Sale 5. That is, I find that the unimproved value of the subject land at that date to be $135,000.
For the reasons I have given, I
1.Allow the appeal; and
2.Set aside the determination of the Chief Executive dated 22 February, 1993 that, with effect from 30 June, 1993, the unimproved value of the land described as Lot 3 on Registered Plan 36052, Parish of Warner, County of Stanley and containing 6.07 hectares and subject to an easement is $157,000.
3.Determine that, with effect from 30 June, 1993, the unimproved value of the land described as Lot 3 on Registered Plan 36052, Parish of Warner, County of Stanley and containing 6.07 hectares and subject to an easement is $135,000.
S A FORGIE
MEMBER OF THE LAND COURT
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