Randle v Chief Executive, Department of Natural Resources
[1997] QLC 5
•11 February 1997
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LAND COURT
BRISBANE
11 February 1997
Re: Appeal against Annual Valuation
Valuation of Land Act, 1944
Valuation Roll No: 202-1293
Local Government: Cambooya Shire
(AV96-585)
Carmel Holly Randle
v.
Chief Executive, Department of Natural Resources
(Hearing at Toowoomba)
D E C I S I O N
Background:
This appeal relates to a property located at the junction of Preston, Nass and Geitz Roads, Preston, and described as Lot 13 on RP 856447, Parish of Ramsay. The parcel has an area of 16.67 ha, and is zoned as "Rural B" under the Town Plan of the Shire of Cambooya, of 26 March 1993, and effective at the date of valuation of 1 January 1996. The key issues are the comparison of sales, relativity, the added value of the improvements, and impacts on the use of the land.
The subject is located about 11 kms radially south of the Toowoomba Post Office, on reasonably elevated lower slopes of the escarpment, which is to the north of the subject. Views from the property are restricted mainly because of the timbered country but with longer views to the south. The land falls from the north to the south. The land is bisected by two gullies which join near the southern boundary. The slopes are moderate, and were originally timbered with open coolibah forest. Access is readily available to the subject, although there is some difference of opinion in respect of the impact of a creek bed and embankments. Electricity and telephone services are available. Preston Road along part of the western boundary is bitumen sealed, with an earth drain and embankments along part of the boundary, while Geitz and Nass Roads are formed gravel surfaces.
On 12 February 1996, the Chief Executive issued a valuation of the subject at $122,000. Following an objection the Chief Executive partly allowed the claim, and on 15 October 1996, issued a revised valuation at $110,000. The appellant has now appealed that amount, claiming the valuation should more properly be $86,000.
The appellant had appealed the previous valuation of 1 January 1995 but, because of a personal injury suffered in Victoria, had been forced to withdraw the appeal as she had not satisfied the statutory period for lodgment of the appeal at that time. The matter was therefore of lengthy duration when it came before this Court.
Mrs CH Randle appeared and gave evidence for the appellant and Mr B Tannock appeared for the respondent, calling evidence from Mr SJ Doyle, the Departmental registered valuer responsible for determining the valuation.
Evidence:
Mrs Randle argued that the current value is excessive and is not supported by sales of comparable properties in the Preston area. She claims that there are two distinct markets operating in the Preston and Hodgsonvale areas. The former has seen no recent new developments and is static; while the latter is developing as it is seen as an attractive rural living area nearer to the New England Highway leading south from Toowoomba.
Mrs Randle also argues that the current soil classification by the respondent as brown soils is incorrect, as she claims the soil is really black in nature with its inherent problems for building sites with shrinkage. She claims also that the better prime residential homesites are located about 1 km to the east along the escarpment which aligns with Preston-Boundary Road.
To support her estimate of the valuation, the appellant provided evidence of the following sales:
•Sale A - (Via Walkers Spring Road - Lot 2 on RP 864739)
The sale is located about 0.8 kms directly south of the subject, and has an area of 36.39 hectares. The only improvements on the sale were fences, a bore for water, and cattle yards for grazing purposes. There was no dwelling as the dwelling had been subdivided out prior to sale. From discussions with the owner she learnt that the sale reflected a special value to the owner, whose residence has views of the sale, and is conveniently located within 2 kms drive from the sale. It has good natural water and an excellent housesite available, with views of Hodgson Creek valley. Road access to the sale is inferior (gravel), but the sale is larger than the subject. Overall the sale is seen as superior to the subject.
The sale sold in March 1994 for $230,000, and has an applied unimproved value of $140,000.
•Sale B - (Sawpit Road - Lot 3 on RP 175059)
The sale is located about 3.7 kms directly south-east of the subject, and about 5.5 kms by road. It has an area of 16.44 ha. A school bus service extends to about 200 metres north of the sale. The sale has a dwelling upon it, and as it is on the western slope of the escarpment, it has good views down to the valley to the west. The sale is about 4 kms further from Toowoomba than the subject, and has a narrow access to Sawpit Road, which is formed gravel.
The sale sold in April 1994 for $96,000 and has an applied unimproved value of $81,000.
•Sale C - (Hodgsonvale and Meyninks Road - Lot 5 on RP 910889)
The sale is a corner lot located about 3 kms directly south-west of the subject, and has an area of 19.38 hectares. The sale is good agricultural land, and has subsequently been subdivided. The sale is only 0.6 kms from the New England Highway, and is diagonally opposite the Queensland Polo Club premises which are seen as a social centre in Hodgsonvale. As a rural homesite the sale has a shorter travelling time to Toowoomba and is closer to other rural residential subdivisions in that area.
The sale sold in May 1994 for $117,000, and has an applied unimproved value of $98,000.
•Sale D - (Meyninks Road - Lot 4 on RP 856453)
The sale has an area of 15.8 hectares and is located about 1.8 kms directly south of the subject, but is accessed via Meyninks Road to the south. Meyninks Road is now partly bitumen sealed, but was a gravel road at the date of sale. The existing dwelling located at the southern end of the sale near Meyninks Road has good views to the west and north-west. The top of the local spur range is at Lot 2 on RP 178013 about half-way between Sale A and Sale D. The sale has similar views as the subject, although its topography is inferior due to its lower elevation. The sale is considered to have better soils than the subject as the sale has been cultivated for crops. The sale is seen as the most comparable site to the subject as it is grazing land.
The sale sold in May 1994 for $123,000, and has an unimproved value of $90,000.
•Sale E - (Smiths Creek Road - Lot 4 on RP 885052)
This sale is located about 5.6 kms west of the subject, is comparable grazing land, but with superior elevated views. The sale is on the western side of the New England Highway, and is near existing rural subdivisions which are popular with residents who commute to Toowoomba, particularly the University of Southern Queensland which is only 5.5 kms from the sale. The sale has an area of 14.14 ha, about the same as the subject. Access to the sale is via Mt Rascal Road which is bitumen sealed, and then by 1½ kms of gravel road in Smiths Creek Road. Views to the south-west are currently obstructed by trees on adjoining properties.
The sale sold in March 1995 for $105,000, and has an applied unimproved value of $92,000.
•Sale F - (Smiths Creek Road - Lot 5 on RP 885052)
The sale is located adjoining Sale E, and has an area of 16ha. The sale has similar characteristics to Sale E and sold in May 1995 for $107,500, and has an applied unimproved value of $95,000.
•Sale G - (Hodgsonvale Road - Lot 6 on RP 891494)
This sale is located about 3.5 kms south-west of the subject, with an area of 21.6 ha. It is good agricultural land with a permanent creek through the sale. The sale has good access via a bitumen sealed road for 0.6 kms to the New England Highway. The sale is the same distance to Toowoomba as the subject, but is more direct because of the highway. The sale has a lower elevation than the subject. The sale has a shed and has been cultivated, and there is a good homesite near the western boundary adjoining Lot 5. There would be some potential to subdivide the sale.
The sale sold in August 1995 for $100,000, and has an applied unimproved value of $85,000.
Mrs Randle argues that because of their proximity to direct access to the highway, and to other rural homesites, Sales E, F and G reflect a different market to the Preston area. She argues that the Preston area had been subdivided into smaller parcels at an earlier time when the Hodgsonvale area had no reticulated water available, and prior to the Cambooya Council tightening up its regulations. The Council has apparently now identified the Hodgsonvale area for development, possibly also recognising the "slip potential" of some of the Preston area along the side of the escarpment. She also argues that the current zoning of the subject as "Rural B", with tighter restrictions on minimum areas for new subdivision, also restricts the use of the land. In her submission she claims that the current land use classification currently prohibits the rearing of pigs or poultry which, she claims, could further improve the viability of the subject as a farming enterprise. "Rural B" has a minimum area permissible of 16 hectares.
In respect of the general paucity of sales in the Preston area, Mr Tannock agrees that there have been few sales for direct comparison in the last two years. Mr Tannock noted that the period to which he directed his attention for the valuation was between the previous valuation at 1 January 1995 and the date of issue of the current valuation at 12 February 1996.
Mrs Randle argues that advice to her from a local real estate agent suggested that a possible starting market price for her improved property in 1995 would be approximately $230,000 (Exhibit 2, Appendix 3). In seeking to confirm her estimate of the valuation, Mrs Randle had then sought to estimate the value of the improvements at $178,419, giving an estimated unimproved value of the land at $51,581.
In support of his valuation Mr Doyle provided evidence of the following comparable sales:•Sale 1 - (Hodgson-Ramsay Road - Lot 6 on RP 691494).
This is the same sale as the appellant's Sale G. The sale is "Rural A", has limited rural views, has telephone and electricity available and was inferior in nature of the land, location and views, and is considered overall inferior to the subject. The sale sold for $100,000 and after allowing for improvements was analysed at $91,500 and applied at $85,000.
•Sale 2 - (Lucks Road - Lot 1 on RP 891494)
The sale has frontage to Lucks and Strong Roads and also to the New England Highway, but access is restricted to the highway. It has an area of 6.395 hectares, and is zoned as "Rural A". Access is via bitumen-sealed roads, and the sale is 12 kms south of the Toowoomba Post Office. The sale is elevated with easy-to-moderate slopes comprising brown soil forest country. There are good rural views to the east, and telephone and electricity are available. The sale is inferior in location and size, and is considered overall inferior to the subject.
The sale sold in July 1995 for $70,000 which after allowing for improvements was analysed at $64,000, and has an applied unimproved value of $60,000.
•Sale 3 - (Smiths Creek Road - Lot 5 on RP 885052)
This is the same sale as the appellant's Sale F. The sale is zoned "Rural B", is elevated with easy sloping brown soil country timbered with coolibah forest. Telephone and electricity are available, and the sale is inferior in access and nature of the land. Overall the sale is inferior.
The sale sold for $107,500 which after allowing for improvements was analysed at $104,500, and has an applied unimproved value of $95,000.
•Sale 4 - (Smiths Creek Road - Lot 4 on RP 885052).
This is the same sale as the appellant's Sale E. The sale is zoned as "Rural B" and has similar characteristics and services as Sale 3. Overall the sale is inferior to the subject. The sale sold for $105,000, and after allowing for improvements, was analysed at $102,000, and applied at $92,000.
In comparing the appellant's sales Mr Doyle argues that the area near Sale A has a local reputation for expensive properties, and that the Preston area has a reputation for being well-established. He notes that the appellant's Sales A, B, C, and D are all prior to the current relevant period for the valuation, and he did in fact consider those sales in his assessment of the former valuation as at 1 January 1995. Mr Doyle noted that there had been a significant increase in the valuations between 1994 and 1995, but that had stabilised between 1995 and 1996. The volume of sales has decreased in this latter period, but the values have remained steady.
In comparing Sale A to the subject, Mr Doyle felt that access to the sale was inferior due to the presence of the gullies and topography. Because of its larger area Mr Doyle felt there was a more restrictive market for the sale, compared to smaller rural homesites. The sale also shared a bore which may be seen as a problem. However, he felt the current relativity between the subject ($110,000) and Sale A ($140,000) was appropriate, as is also the relativity with Sales D ($90,000).
In response to the appellant's questioning of the per hectare rate for Mr Doyle's Sale 2, he advised that the small rural lots tended to indicate a higher per hectare rate than the larger lots. However, Mr Doyle confirmed that rural residential lots were normally purchased on a site basis, and not on a per hectare basis. Mrs Randle rejected the comparison with Sale 2 as it was only half the size of the subject, and provided no real comparison.
In respect of access to the subject it was agreed by both parties that access to the current dwelling site was restricted by the creek bed, and an embankment to Preston Road which required construction of a piped culvert. However, in comparison to the access to Sale D, Mrs Randle feels the subject is comparable, while Mr Doyle feels, because of its longer road frontage, there is more flexibility with access to the subject, which he feels is therefore superior. Mrs Randle disputes that conclusion as she contends that most of the Preston Road frontage is inaccessible because of a high cutting. Mr Doyle feels access to the subject is no more difficult than to other rural sales.
In the matter of the quality of the soil of the subject, Mrs Randle advised that the black soil has caused problems with the building upon Lot 14 on RP 856447, part of the original parcel. She claims that most of the subject has that black soil also, except for a small area near the rocky ridge surrounding Lot 12 on RP 844632, fronting Preston Road. Mr Tannock questions the relevance of the type of soil as he notes the subject is well grassed and the soils of the sales all vary anyhow.
In respect of the impact of an overhead high voltage power line which crosses the subject on the east near Nass Road, Mr Tannock argues that, while there would be some restrictions on building in that area, the better area to build upon is really along the western side of the subject. He also points out that the appellant's Sale B also has an overhead powerline crossing it, which apparently caused no concerns for the purchaser as that sale proceeded quickly.
Decision:
In the matter of the comparison of sales of comparable properties, I note both parties have sought to adopt the well-established principle of comparing sales of vacant, or lightly developed land, for determining the unimproved value of the subject. (See PH Clough v. The Valuer-General (1980-81)(LAC) 8 QLCR 70. Both parties have relied upon three common sales:
Sale Sale Price UCV Appellant Respondent
G and 1 $100,000 $85,000 Not comparable Inferior
F and 3 $104,500 $95,000 Not comparable Inferior
E and 4 $102,000 $92,000 Not comparable Inferior
The appellant's major argument is that the Preston and Hodgsonvale areas attract different markets, the latter having a higher attraction as rural homesites for commuters to Toowoomba. If her conclusion is true, then there would also be some disquiet about directly comparing Mr Doyle's Sale 1 for the same reason. However, I also note that Mrs Randle concedes that there is a demand for "prime residential" near the Preston-Boundary Road and the escarpment just east of the subject. On that evidence it would be imprudent to reject the sales nearer to the New England Highway, although some weight needs to be allowed for the increased accessibility to Toowoomba. Such a balancing process is of course the skill of an experienced person in valuation matters.
From the evidence I would agree that Sale A reflects a special purpose for the purchaser and should be accordingly treated with some caution. However, there is no dispute by the parties that it is considerably superior to the subject. Mrs Randle sees the subject as comparable to Sale B ($81,000) and Sale D ($90,000), and inferior to Sale C ($98,000). Mr Tannock agrees that Sale 2 ($60,000) is also inferior. In summary Mr Doyle provides four sales all of which are seen as inferior; while Mrs Randle provides two sales as superior, and two sales as comparable. The remaining three sales, she believes, provide no real comparison with the subject.
In respect of whether rural residential properties can be effectively compared on a per hectare basis, I note that in comparing his sales on a site basis Mr Doyle has followed precedent laid down by the Land Appeal Court, which said in H and E Grahn v. The Valuer-General (1992-93)(LAC)14 QLCR 327, at p.330:"The appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single residential purposes."
Before further examining the likely range of comparison, I note that Mrs Randle has sought to check the unimproved value by an analysis of the improvements upon the subject. I am aware that she has some difficulty in reconciling the depreciated value of the improvements, and has arrived at a resulting unimproved value of the land at a substantially lower figure ($51,581) than her final estimate. The difficulty for her in that approach is really to determine the added value of the improvements and not their replacement value. In this regard I note the findings of O'Brien Nominees Pty Ltd v. The Valuer-General (1979)(LAC) 6 QLCR 280, where the Land Appeal Court found at page 284:
"The basic properties have sold at prices considerably below the value of the improvements assessed on the traditional method of replacement cost less accrued depreciation.
In such circumstances it is unrealistic to conclude that land, the commodity basic to the enterprise, has a minus or nominal value. It is logical to assume that in times of adversity and depression, when purchasers pay less for properties as a going concern, that the lesser price attaches not only to the land component but also to the improvements. The question facing valuers in analysing improved sales in these circumstances is what value is fairly to be attributed to the improvements.
It appears to us that the only tenable approach is to abandon the traditional method of replacement cost as at the sale date less depreciation and to adopt an `added value' concept. "
In view of the availability of comparable sales of vacant lands in the area, I believe the difficulties of determining the "added value" in the current circumstances is hard to justify.
I turn then to the nature of the land and note the possible impact of the soils upon buildings, which are apparently black in nature. While I have no doubt that there could be some difficulties for future buildings, with prudent building procedures, these should not adversely impact the unimproved value. I note also that the impact of the overhead power lines near Nass Road has been allowed for by the respondent, and also for the impacts of the embankment which inhibits access from Preston Road. I note also the difference in zoning between Sales 1 and 2 ("Rural A") and Sales 3 and 4 ("Rural B"). I note there are some further restrictions upon the "Rural B" land.
In the matter of the dates of the sales provided, I note that the appellant concedes that some of her sales (A, B, C, and D) all occurred some time prior to the relevant period of 1 January 1995, to 12 February 1996. These apparently were obtained as part of the former aborted appeal to the previous valuation. I note also that Mr Tannock concedes that, because the market had moved little in the intervening years, those sales may still provide some relevance for the current state of the market. However I also note that he has relied instead upon other comparable sales within the relevant period. On balance I accept the key sales as being Sales (1 and G), Sale 2, Sales (3 and F) and Sales (4 and E). However, because of the agreed stability in the market subsequently, I believe Sales A, B, C and D add some weight to the comparison.
Summary:
I note that in making his valuation Mr Doyle has given regard to his four sales (1, 2, 3 and 4) all of which are inferior to the subject. While the matter of relativity was not argued, I conclude that in his deliberations, Mr Doyle has taken notice of the unimproved values of surrounding parcels. Without that evidence, however, I have some difficulty in fully understanding how he graded the quantum of the value by which the subject exceeded the four sales. I know, however, that the respondent agrees that Sale A (as at 1995 applied value of $140,000) is superior. By conclusion therefore Mr Doyle has placed the subject somewhere between $140,000 (Sale A) and $95,000 (Sale 3). In so determining he has used his experience as a registered valuer in accordance with the findings of Bingham v. Cumberland County Council (1954) 20 LGR1 where Sugarmann J. said at pages 18 and 19:
"In the absence of sufficient guidance to be had from sales, the valuer may find himself in a position resembling that to which Lord Romer referred in the Raja's case (1939) AC at pages 312 and 313, in which he `will have no market value to guide him, and he will have to ascertain as best he may from the materials before him what a willing vendor might reasonably expect to obtain from a willing purchaser for the land.' "
This was also noted by the Land Appeal Court in the majority decision in King Ranch Pastoral Company Pty Ltd v. The Valuer-General 35 CLLR 255, where the Land Appeal Court went on to say at page 262:
"The valuer in arriving at his opinion in these difficult matters may have to draw upon his general knowledge and experience, including perhaps experience in other situations which, although lacking in complete comparability, may yet provide an experienced valuer with guidance and suggestions as to the general approach which may be made and as to considerations which may become relevant. "
Having concluded therefore that the respondent has adopted a correct method in determining his valuation, I note that the onus of proof in this matter rests upon the appellant under Section 45(4) of the Valuation of Land Act which says:
"45.(4). Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner. "
However in seeking whether the appellant has not only to prove her grounds of appeal, but also the quantum of her estimate of the valuation, I turn to the decision of the High Court of Australia in Brisbane City Council v. The Valuer-General 140 CLR 41, where Gibbs J. said at page 56:
"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s.13(7) is rebutted. "
(See also 5 QLCR 283, at page 303.)
In that decision the reference to section 13(7) now refers to section 33 which says:
"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. "
In the Brisbane City Council case, the High Court went on to say at page 57:
"The effect of these provisions is that an owner on appeal to the Land Appeal Court has the burden of proving the grounds of his appeal, but not the burden of proving that the amount which in his opinion should be the valuation is correct. Obviously the Court, if it allows an appeal, may determine the valuation at an amount different from that for which the owner contends. "
In seeking to determine any benefit of doubt in the current case, I also note the decision of the High Court in Commissioner of Succession Duties v. Executor Trustee and Agency Company of South Australia Limited and Others (HC) 74 CLR 358, (1946-47), where Dixon J said at page 373:
"I have had the advantage of reading the judgment prepared by Williams J. and agree in it. I should like, however, to add for myself that 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. "
On balance, and allowing some benefit of doubt towards the appellant, I believe a valuation in excess of Sale 3 ($95,000) has been justified, and I believe a figure of $100,000 would be appropriate.
Conclusion:
Having considered the whole of the evidence, I am persuaded that the appellant has partly proved her case. The appeal is allowed, the unimproved value as determined by the Chief Executive, Department of Natural Resources, is set aside, and the unimproved value of Lot 13 on RP 856447 is determined at One hundred thousand dollars ($100,000).
(NG Divett)
Member of the Land Court
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