Re Collins
[2007] QLC 106
•6 November 2007
|
BRISBANE
21 July 1997
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 13561/5635
Local Government: Brisbane City
(AV96-767).
Peter Hans and Alison Joyce Stephensen
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
Background:
This matter relates to a property at 3 Dromos Street, Eight Mile Plains, and described as Lot 1 on RP 161388. The land is situated approximately 14 radial kilometres south-east of the Brisbane GPO. The key issues relate to the comparison of comparable sales, relativity and the impact of traffic noise. The subject has an area of 571 square metres and is zoned as "Residential A" under the Town Planning Scheme of the Brisbane City Council of 13 June 1987, and effective at the date of valuation of 1 January 1996.
The land has a regular shape with a frontage of 20.1 metres and a depth of 28.4 metres. There is good access from Dromos Street which is bitumen sealed with concrete kerbing and channelling. The land falls gently from the south to the north to a front fence around the swimming pool, and then falls about 3 metres to the roadway. Water, sewerage, electricity and telephone are all available. A Council bus service is available about 450 metres from the property. Views from the subject to the north are obstructed by older houses and large mature trees.
The Chief Executive, Department of Natural Resources, on 26 February 1996, issued a valuation at $77,000. Following an objection the Chief Executive disallowed the matter and on 3 December 1996, confirmed the valuation at $77,000. The appellants have appealed that amount claiming that the value should more properly be $70,000.
Mr PH Stephenson appeared and gave evidence for the appellants, and Mr Ross B Cranstoun, registered valuer, appeared and gave evidence for the respondent.
Evidence:
Mr Stephenson argues that the Chief Executive has not properly analysed comparable sales in the vicinity, and has also failed to allow adequately for the impact of traffic and other noise upon the subject. He argues that as the subject is one of the smallest lots in his immediate area, this has not effectively been allowed for. In his determination of the valuation Mr Stephenson relied upon the following Residential "A" sales:
•Sale 1 - (14 Fanfare Street, Eight Mile Plains - Lot 171 on RP136087).
This sale is of a 736m2 lot located about 300 metres south-east of the subject. The sale has good location and elevation amongst homes similar to the subject, above street level, with a similar frontage and better views to the east and the north. It is agreed by both parties that the sale is superior to the subject. The sale was purchased by a local resident who wanted to locate west of Warrigal Road in order to provide safer access to schools. The sale was originally marketed at $110,000, and following six separate offers up to $87,000, the purchaser finally acquired the sale for $92,000 in February 1996. After allowing for improvements, and the possible impact of an over-anxious buyer, Mr Stephenson determined an analysed value of $89,500 and an applied unimproved value of $80,000. However in view of subsequent market trends this was assessed at $77,000.
•Sale 2 - (21 Orchard Place, Eight Mile Plains - Lot 23 on RP884477).
This sale has an area of 575 square metres located about 500 metres south-east of the subject. The sale has good location and elevation, with good views to the east and north. It is close to schools, bus, and shopping. It has a smaller frontage as Orchard Place is a cul-de-sac and is seen as similar to the subject. The sale sold to an overseas buyer in July 1995, for $81,000. After allowing for improvements the sale was assessed as similar to the subject with an unimproved value of $70,000.
•Sale 3 - (Dance Crescent, Eight Mile Plains - Lot 4 on RP851847).
This sale has an area of 718 square metres, and is located about 1.2 kms east of the subject. The sale has a good location amongst homes seen as superior to the subject. It is close to parks, children's playground and open areas, and is located in a quiet area of a cul-de-sac. The appellants saw Sale 3 as slightly inferior to the subject in view of an open drain in the adjoining parkland. The sale sold in August 1995, for $82,000, which after allowing for improvements was analysed to $81,000, and an applied unimproved value of $72,000.
•Sale 4 - (Jorgie Close, Eight Mile Plains - Lot 10 on RP851847).
This sale has an area of 838 square metres and is located about 1.3 kms east of the subject. The sale has good location amongst homes seen as superior to the subject, and is located in a quiet cul-de-sac. It is close to parks, children's playgrounds, and is considered slightly inferior to the subject although it has a larger area. The sale sold in March 1995, for $80,000 and after allowing for improvements had an analysed value of $77,800 and an applied value of $70,000.
In comparing his sales evidence, Mr Cranstoun relied upon three sales:
•Sale 1 - (21 Orchard Place, Eight Mile Plains - Lot 23 on RP884477).
This is the same sale used by the appellants (Sale 2) and the physical attributes were agreed by the parties. However, Mr Cranstoun considered this sale as inferior to the subject. After allowing for improvements the sale was assessed at an applied value of $72,000.
•Sale 2 - (156 Bordeaux Street, Eight Mile Plains - Lot 2 on RP 884477).
This sale is adjacent to the appellants' Sale 2, and has an area of 450 square metres, and a similar shape to the subject. It has a lower elevation, increased traffic noise, a narrower street and is considered inferior to the subject. The sale sold to a local buyer in July 1995 for $80,000 and after allowing for improvements provided an analysed value of $79,450, and an applied value of $72,000.
•Sale 3 - (14 Fanfare Street, Eight Mile Plains - Lot 171 on RP136087).
This is the same sale as the appellants' Sale 1. After allowing for improvements, Mr Cranstoun determined an analysed value of $89,750, and an applied value of $84,000.
In the matter of the impact of noise from traffic, Mr Stephenson argues that during peak traffic times there is considerable increased traffic movements through Dromos Street as commuters "rat run" to avoid delays at the roundabout at the intersection of Warrigal Road and McCullough Street. As a result of this the Brisbane City Council has placed traffic signs seeking to restrict movements to "local traffic" only. There are peak-time delays at the intersection of Malbon and Fanfare Streets with Warrigal Road. The western end of Fanfare Street is cut off by a creek so any traffic build-up is mostly commuter traffic.
Mr Stephenson also argues that the impact of three rental properties within 150 metres of the subject have not been considered. However, he did not argue how those specific properties impacted the subject, but in evidence drew the Court's attention to the impact of those properties in a recent case of RD and DH Fairweather v. Chief Executive, Department of Natural Resources (4 April 1997) unreported.
In that case the appellant argued that adjoining rental properties cause noise and pollution problems, not consistent with those normally encountered with owner-occupied properties. However, the appellant was unable to demonstrate that similar disabilities did not impact the comparable sales used to determine the valuations, and it was not accepted that rental properties, by their nature, were any worse than owner-occupied residences.
In the current case there was no evidence that there existed any adjoining properties to the sales, either owner-occupied or rented, which impacted the sales. For these reasons the existence of the rented properties near the subject, appeared not relevant to the valuation.
Decision:
In the matter of the comparison of sales evidence, it is noted that both parties agree that the preferred method is to compare sales of vacant land where they occur within the vicinity of the subject, and within the relevant time period for the valuation. This principle has long been held by the courts and was clearly established in PH Clough v. The Valuer-General - (1981-82) (LAC) 8 QLCR 70. It was also noted that for these reasons Mr Cranstoun had ignored a sale of an improved property (Lot 37) in Dromos Street in view of the nature of the sale, which was a mortgagee-in-possession purchased for renovation purposes. In respect of the sales compared by the parties, it is noted that the appellants' Sales 1 and 2 were common to both parties. Both parties have sought to provide sales that were superior and inferior to the subject.
Sales 3 and 4 of the appellants were used to support relativity between Sales 1 and 2 and the subject. Mr Cranstoun argues that Sales 3 and 4 were more impacted by noise, parking and movements associated with the Glen Hotel, which is situated about 200 metres further east of the sales, and also the impact of close proximity to a group title development adjoining Sale 4. Mr Stephenson disagrees that those matters negated the relevance of the sales, and claims that prior sales of Lots 1 to 3 adjoining Sale 3 in Dance Street (October 1994 to April 1995) underpinned and reinforced the consistency of Sale 3 and confirmed that the market had not changed during that period. Mr Cranstoun was aware of the details of Sales 3 and 4 but considered them not comparable to the subject because of the open drain nearby and the hotel and group title land.
Mr Stephenson sought clarification as to why the Chief Executive had varied relativity in his approach to the applied unimproved values for Sales 3 and 4.
Sale Price Improvements Analysed Applied
Value Value
S.3 (Lot 4) $82,000 $1,000 $81,000 $70,000
S.4 (Lot 10) $80,000 $2,200 $77,800 $75,000
This inconsistency, he claims, shows a lack of rigorousness, and supports his claim that similar lack of consistency had occurred in analysing the subject. Mr Cranstoun advised that from his memory of Sale 3 (Lot 4) there had also been some filling of the parcel. Mr Stephenson felt too much had been allowed for this purpose.
In analysing his Sale 2, Mr Cranstoun argues that the property had been bought by a local buyer who was familiar with the market, and his Sale 2 supported the appellants' Sale 2 as a normal "arms length" transaction. Mr Stephenson argues that his Sale 2 and the respondent's Sale 2 were the only sales in an estate of 37 lots which sold in the price range of $80,000. The subsequent 35 lots had all remained unsold until about April 1996 when most have now subsequently been sold for amounts of the order of $70,000. This, he argues, places some doubt on the prudent nature of the appellants' Sale 2 and the respondent's Sale 2, which he believes did not reflect the nature of the market during the relevant period. While Mr Stephenson does not seek to use these later sales, as they occurred after the relevant period, he claims that their subsequent transactions at the lower level supported that the appellants' Sale 2 and the respondent's Sale 2 were out of line. However, Mr Cranstoun argues that the latter sales had been sold at a reduced price to a company that on-sold as developed house and land packages.
In this respect, there are two matters for consideration. In his decision to not use the later sales adjoining the appellants' Sales 2 and the respondent's Sale 2, Mr Stephenson has correctly interpreted the jurisdiction of the Court. It was clearly directed in RG Murray v. The Valuer-General (1983) 9 QLCR 35 where the Court found at p. 36:"As is stated in the decision handed down by the learned President, the Land Court, and on appeal the Land Appeal Court, can only consider the primary production activities carried on on the land between the date of the valuation (31st March, 1980) and the date of the issue of the valuation (12th February, 1981). "
However, it is also relevant for the Court to consider trends, factors and conditions, in determining the unimproved values at the relevant date. However, this needs to be considered in the context of the decision of the Land Appeal Court in Beedell Farms and Grazing Pty Ltd v. The Valuer-General (1979) (LAC) 6 QLCR 322, at p. 329:
"At the same time we stress that the object of the exercise that we have to carry out is to arrive at an unimproved value as at a relevant date. Trends, factors and conditions affecting the market as at that date must be taken into account but only to the extent that they were present or were reasonably foreseeable as at that time. Viewing matters as we are over 3 years after the relevant date, care must be taken to ensure that hindsight does not unduly colour or unduly influence our opinion of market conditions and their reasonable foreseeability as at the relevant date. "
In the matter of hindsight over a period of nine months from the date of the respondent's Sale 2 (July 1995 to April 1996), while I accept that the lower quantum of the sales of the remaining 35 lots in that subdivision would be considered in any later valuation, I also feel that it is relevant to at least raise some concern with the relevance of the quantum of both the appellants' Sale 2 and the respondent's Sale 2 at approximately $80,000. This is particularly so in view of Mr Cranstoun's evidence that 21 Orchard Place is the closest in area to the subject, and his advice that later sales reflected a bulk purchase price to the house and land builder. The key to the comparison of sales lies in the analysis by the parties of the appellants' Sales 1 and 2 which are common to both.
In analysing Sale 1 (14 Fanfare Street), Mr Stephenson has originally applied an unimproved value of $80,000, but then re-assessed that value to $77,000 to reflect a 5% reduction in view of the over-eager nature of the purchaser. Mr Cranstoun has assessed the unimproved value at $84,000, having discussed the sale with the owners, and being aware of their concerns to locate west of Warrigal Road for direct access to schools.
Mr Cranstoun rejected that "scarcity" of vacant land in an area was reason to reject the sale, as not reflecting a true market. He commented that while there were only a few vacant lots left in an area, those parcels set the market for vacant land in that area, assuming of course there was some scope for comparison between vacant lots in the area. When only one vacant parcel remained, then the market for that land really became a comparison between a developed lot where the dwelling could be demolished or sold for relocation. The matter of scarcity needs to be considered entirely within the context of a market. Whether the owner actually did pay too high a price for Sale 1 must be analysed within the context of the text outlined in the decision of the High Court of Australia in Spencer v. The Commonwealth (1907) 5 CLR 418, where Griffith CJ said at page 432:"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e. whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell'? It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."
In comparing Sale 1 (14 Fanfare Street) to the subject, it is noted that Sale 1 backs onto a legal pathway strip to the CSIRO Experimental Sugar Farm at the rear. Sale 1 has a greater slope than the subject, but traffic past Sale 1 is likely to be less than for the subject. Sale 1 also has a larger area (736 square metres) than the subject (571 square metres). While both parties agree Sale 1 is superior, the matter for consideration is whether Sale 1 really has an applied value of $77,000 (Mr Stephenson) or $84,000 (Mr Cranstoun).
In comparing Sale 2 (21 Orchard Street) with the subject, it is noted that Mr Stephenson assessed the applied value at $70,000, and Mr Cranstoun at $72,000. Mr Stephenson sees Sale 2 as similar to the subject, while Mr Cranstoun sees Sale 2 as inferior to the subject. As there is little difference between the applied values of the parties, the key lies in whether Sale 2 is seen as similar or inferior to the subject.
In this matter I note that Sale 2 is at the end of a cul-de-sac, although it does have walking access to Warrigal Road via a pathway along its southern boundary. There is an access restriction strip along the western boundary of Sale 2 fronting Warrigal Road. (Lot 101 on RP 884477).
In respect of outlook, it is noted that views from Sale 2 to the east and north are mainly over rooftops, while views from the subject are towards large trees. The relative value of those views would depend entirely upon the perception of the buyers. In the longer term it is likely that, as trees grow near Sale 2, there would be little difference between the two sites.
Mr Cranstoun argues that the subject is in an area of larger lots, and well-established homes. However, Mr Stephenson argues that homes in the vicinity of the older area of the subject sell in the range $120,000 to $220,000, while homes near Sale 2 are in the range $200,000 to $450,000. Those dearer homes will tend to prove more attractive to prospective buyers of vacant lots near to Sale 2.
In summary, there is little to chose between Sale 2 and the subject in respect of their areas, outlooks and dimensions. The subject has a better frontage for access purposes, but Sale 2 has a similar access to Warrigal Road in terms of presentation of the home and pedestrian access. Sale 2 would appear to be in a higher economic area with newer homes, but the subject is in an area of larger parcels. On balance, I believe the subject is marginally superior to Sale 2.
However, in assessing the values to be placed upon both Sale 2 and the subject, I feel that Mr Cranstoun has been conservative in applying a value at $72,000 for Sale 2 from the analysed value of $79,500, accepting that, subsequent to the relevant period, the balance of the 35 lots were acquired by a builder as a bulk sale. It is common for such sales to occur at a discount of approximately 10% on the asking price. The subsequent sales at about $70,000 support the general sale price of about $80,000. Likewise I believe that Mr Stephenson has been over-generous in assessing the impact of an "anxious" buyer for Sale 1 in reducing his estimated applied value to $77,000. I would tend to support Mr Cranstoun's assessment of Sale 1 at $84,000.
On balance, I believe the subject is only slightly superior to Sale 2 at an applied unimproved value at $72,000, and the applied unimproved value of the subject would be $74,000.
Summary:
In determining amendments or alterations to the valuation, the onus of proof rests upon the appellants, under section 33 of the Valuation of Land Act 1944:
"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 be correct until proved otherwise upon objection or appeal or until altered or further altered. "
In summarising, I believe that the appellants have partly proved their case, in that the comparison of sales by the Chief Executive has shown only a marginal increase between Sale 2 and the subject.
Conclusion:
After having considered the whole of the evidence, the appeal is upheld. The unimproved value as determined by the Chief Executive is set aside, and the unimproved value of Lot 1 on RP 161388 is determined at $74,000.
(NG Divett)
Member of the Land Court
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