Rose v Department of Natural Resources and Mines
[2003] QLC 18
•13 March 2003
LAND COURT OF QUEENSLAND
CITATION: Rose v Department of Natural Resources and Mines [2003] QLC 0018
PARTIES: Russell J Rose and Jennifer A Rose
(applicants)
vChief Executive, Department of Natural Resources and Mines
(respondent)
FILE NO: AV2001/0583
DIVISION: Land Court of Queensland
PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944
DELIVERED ON: 13 March 2003
DELIVERED AT: Brisbane
HEARD AT: Gympie
MEMBER: Dr NG Divett
ORDER: The appeal is upheld, the valuation of the Chief Executive is set aside, and the unimproved value of Lot 14 on RP 825752 is determined at Forty-Eight Thousand Dollars ($48,000).
CATCHWORDS: Valuation – sales evidence – sale of the subject land – rejection of sale – onus to show why sale of subject was out of line [31] [56] [57].
Valuation – sales evidence – changes in the market – relevance of old sale of subject – choice of sales adopted – balance of probability on evidence not given [47 to 51].
Evidence – expert evidence – need for unbiased and independent manner – duties and responsibilities of expert witness – inference drawn in absence of evidence is an error of law – under reliance upon credibility of witnesses to be voided [46] [50 to 51].
APPEARANCES: Mr RJ Rose for the appellants
Mr R Paterson for the respondent
Background:
This matter relates to land at 11 Squire Street, Tin Can Bay, and described as Lot 14 on RP 825752, Parish of Toolara. The subject land has an area of 834 m² and is located about 1 kilometre north-west of the Tin Can Bay Post Office. Squire Street is bitumen sealed with concrete kerbing and channelling. Access is good to the site and all normal urban utilities are available. The subject land is zoned Housing under the Cooloola Town Planning Scheme of 19 December 1997, current at the date of valuation of 1 October 2000. The key issues are the nature of the land, the nature of the soils, comparison of sales, the sale of the subject land, changes in the market and relativity.
On 26 February 2001 the Chief Executive issued a valuation of the subject land at $50,000. Following an objection the Chief Executive confirmed that figure on 18 July 2001. The appellants have now appealed claiming the unimproved value should more probably be $45,000. At the hearing on 23 October 2002 leave was granted for the appellants to amend their estimate of the unimproved value to $40,000, which is the figure now argued.
Russell John Rose, an experienced registered valuer, appeared and gave evidence for the appellants. Mr R Paterson, Principal Legal Officer appeared for the respondent, calling evidence from Patricia Ann Quinlan, the departmental registered valuer responsible for determining the valuation. Mrs Quinlan has been based in Gympie for the last six years, and has been responsible for the Tin Can Bay residential land since 1999, when she replaced former valuer Mr Fuller. By agreement of the parties a request to relax the requirement to exchange technical reports under rule 23 at least 21 days prior to the date of hearing was agreed to by the parties, and an exchange was ordered for Friday, 18 October 2002.
The Evidence:
Without Prejudice Information –
During the hearing Mr Rose sought leave to pursue certain matters in relation to the outcome of the Without Prejudice objection conference held on 4 July 2001, prior to the notice of appeal on 22 August 2001. He concedes that he is fully aware of the need to retain the confidentiality of the parties from such objection conferences, but argues that Mrs Quinlan has in fact included departmental documents defining certain details of that meeting in her court statement. (Exhibit 7). As such Mr Rose argues that her “Action Sheet” statement on the outcome of the objection conference signed on 9 July 2001, confirms his concerns that certain matters not available until the conference date, were in fact not addressed in the original valuation of the subject land. As the objection was refused, and the original valuation retained, he argues that the current valuation has still not made adequate allowance for those disabilities.
In resisting further analysis of any material associated with the confidential objection conference, Mr Paterson relies upon s.53(4) of the Valuation of Land Act 1944, which specifically excludes considerations of those matters. However Mr Rose notes that the official document supplied by Mrs Quinlan would be accessible even under Freedom of Information legislation, and it merely documented the outcome of the conference, and does not disclose any negotiations that may have occurred. He argues therefore that it is a matter of fact, and therefore explorable to the extent of understanding its meaning at the time.
On the basis that no confidential information is conveyed to the Court about the objection conference, I accept Mr Rose’s explanation and Mrs Quinlan’s documented conference notes. However the only issue which would seem to have arisen in those notes, which was not covered during the evidence before the Court, is the matter of whether Mrs Quinlan has specifically made allowance for the nature of the soils on the subject land. That matter is explored separately later in this decision.
The Nature of the Land –
It is agreed that the subject land has an irregular shape, as a result of being subdivided from a previously larger parcel by the original owners (Salaway). Because of its irregular shape disability, Mr Rose sees the subject land as about equivalent to a 600 m² parcel. The south-eastern boundary of the subject land was surveyed as a dog leg shape around a building extension to the existing dwelling upon the adjoining Lot 3 on RP 825752, resulting in a narrower rear width of about 15 metres, compared to the frontage of about 20 metres. While Mr Rose agrees that the higher land at the rear of the subject land is the preferred building site, he argues that the restrictive width of the parcel limits the design of any dwelling that could maximize any views and breezes from that position. Mr Rose also agrees that the north-eastern side of Squire Street is higher and preferable to the south-western side of Squire Street, which tends to fall away into Wallum country. The subject land has an easy fall from south-east to north-west. and also towards Squire Street.
Mrs Quinlan argues that the major advantage of the subject land is that from a high set dwelling it does have some glimpses of the water towards the north-west at Snapper Creek. Views to the north-east are obstructed by trees on an adjoining large parcels (Lot 34). Mrs Quinlan argues that it is on the high side of Squire Street, and nearby to the shopping centre. However she concedes that its irregular shape is a disadvantage, as is also the existence of a sewer line which passes across the parcel about 8 metres from the street alignment on the north-western boundary, to 11 metres from the street on the south-eastern boundary. These dimensions are confirmed by the Cooloola Shire Council sewerage map (Exhibit 5). Both valuers agree that the sewer line is a disability, and it would impact any building activity towards the front of the parcel. However as Mrs Quinlan argues that the best building site is towards the rear, she tends to see the sewer line as a slightly lesser disability than does Mr Rose. Mrs Quinlan advises that she did make an allowance for the shape of the parcel and also for the presence of the sewer line.
The Nature of the Soils –
There is a difference between the valuers in respect of the impact of the need for specific additional foundations, as a consequence of the nature of the soils on the subject land. Mr Rose provides evidence that during his long period of residence in the area (about 40 years) he was unaware of any similar properties which had required the same level of foundations, as now evident for the subject land. He advises that his parents, who live one lot removed from the subject land, have never had any similar problems. To support that conclusion he provides a copy of a soil test report from geotechnical experts (Exhibit 3).
Mr Rose confirms that in association with an application to the Council for approval to construct four multiple units (total area 150 m²) upon the subject land, he had been advised by the geotechnical experts of the need for extensive pier foundations. Mr Rose’s intention had been to construct a high set house and a granny flat upon the site. He summarized the foundation requirements as needing piers of 350 mm diameter, at spacings of about 2 metres, to a general depth of about 900 mm into the medium density sands. He notes that the overall site was classified as Class S reflecting predicted surface movements of less than 20 mm, and exhibiting low to negligible plasticity. Mrs Quinlan agrees that there is no significance in the approval for units on the subject land, as other parcels in Tin Can Bay could also avail themselves of such units if the demand existed.
The report advises that safe bearing is available at 150 mm into the medium density sand, which was found at the two test bore holes on the site of the proposed building units at depths of 700 mm to 1.3 metres at site 1, and at 600 mm to 1.2 metres at the higher site 2 towards the rear of the parcel. The report further advises that at such depths there would be no requirement for “drill pier reinforcement”. However the report recommends that qualified experienced operators supervised the pier construction, necessitating a reasonable high cost for the additional foundations. The piers provide bridging of the sewer line, which passes under the southern proposed unit, and must be excavated to below the sewer’s critical line.
Mr Rose concedes that the “Classification S” is normally taken as satisfactory for building purposes, but advises that the technical report confirmed that piers would be required. In an attempt to quantify the likely cost of such additional foundations, Mr Rose estimates between $5,000 to $10,000 for an average size dwelling, concluding a figure of about $5,000 for the subject land. To simplify further adjustments for subsequent revaluations, he has indicated a percentage reduction for the extra footings, based upon the existing valuation, at about 10% of the unimproved value of the site. Mr Rose notes that such costs would be higher if underground water was encountered during construction, although the geotechnical report advises that the water table had not been encountered during testing of the site.
Mr Rose argues that the need for additional pier foundations had not been a matter considered by Mrs Quinlan during her initial valuation. Mrs Quinlan confirms that her original valuation had made no special allowance for such piering, and that she had not been aware of that disability until it was brought to her notice by Mr Rose during the objection process. However she argues that there is evidence that other sales in the area have had similar soil problems, and she saw no need to further adjust her value for that purpose. To support that conclusion she supplies her Sale 2 (Emperor Street) and also a later sale in Squire Street (Lot 1 on SP 143179), which is discussed later. Lot 1 on SP 143179 also has a sewer main across the rear area similar to Sale 2 in Emperor Street. Mrs Quinlan advises that both of those sites required additional pier foundations; obtaining that advice in Squire Street from the Council building plans for that site. Mr Rose was surprised in respect of Lot 1 on SP 143179, as he advises that was a small dwelling erected on steel posts. However Mrs Quinlan confirms that the Council advised her that piers were drilled to a depth of 1 metre.
Mr Rose disagrees that there is a general requirement for additional piering across Tin Can Bay. He agrees that there is often a need for some extra widening of house foundations in Tin Can Bay, but he argues that other than in some areas near Dolphin Avenue near the shops, and near the golf course, generally piers are not necessary. He argues that the additional cost of foundations needed on the subject land exceeds those of other costs of extra foundations.
Changes in the market –
Mr Rose contends that since the last valuation in Tin Can Bay at 1 October 1998 there has been no overall increase in the value of properties from 1997 up to the relevant date of 1 October 2000. He rejects Mrs Quinlan’s adopted sales and resales at Dart Street and Toolara Road, which he argues are selectively chosen, and do not reflect the overall market trend. However he does agree that there has been an increase in waterfront lands, where he notes that there has been an increase of more than 14% between February 1999 and February 2000, even during the flat nature of the rest of the market in Tin Can Bay.
Mr Rose agrees that it is the usual practice when undertaking annual valuations using a computer-assisted approach, to compare sales over a period of some 12 to 18 months prior to the date of valuation. However he argues that the correct method of determining market movement is to seek changes in values derived from analysis of the selected basic sales, which are accepted to represent the average market level at the respective period. He argues that it is not appropriate to use a range of sales, not considered appropriate as basic sales, in order to demonstrate market change. He argues that is what Mrs Quinlan has sought to do in the current matter. Mr Rose notes that there are always other high or low sales whose comparisons can lead to a misconception of the true market level. However he agrees that Mrs Quinlan’s resales may be used as supporting evidence, but they are not conclusive evidence of change. Mr Rose agrees that a valuer must look at all the sales evidence, and not selectively adopt sales which suit any overall perception of market change.
As further supporting evidence of his opinion that the market was relatively stable between 1997 and October 2000, Mr Rose refers to an independent advice from another valuer practicing in Tin Can Bay at the time of the sale of the subject land in October 1997. He advises that valuer considered that the offer by Mr Rose for the property at that time was in line with market expectations. However there is no confirmation of that advice, or any opportunity to examine that valuer.
Mr Rose compares that determined unimproved value of $53,000 at the date of sale, with an independent valuation for financial purposes provided by another valuer in 2002, after the start of the recent property boom. That later figure of $65,000, reflected improvements to the subject land since the sale of about $10,000. Allowing for advice to him by agents that the 2002 property boom had increased land values by 10% at that time, Mr Rose argues that those differentials suggest that there had been no movement in the market between 1997 and October 2000. However there has been an increase in values during 2002. He agrees that there those two independent advices are not conclusive, but he argues they do support his opinion.
Mrs Quinlan rejects those conclusions, arguing that she had analysed all vacant sales in Tin Can Bay during the previous year, and had selected nine or ten sales, six or seven of which support a basic increase of 5%. She notes that one sale during that period did not support an increase in value. However she notes that sale in Oyster Parade which sold for $98,000, later resold for $135,000 after October 2000. She argues that the two resales used for supporting purposes only also reflect Dart Street (7%) and Toolara Road (6.4%). (see paragraph [36]).
In respect of changes in the waterfront land Mrs Quinlan explains that due to a lack of vacant, or lightly improved sales, in waterfront areas, she had insufficient evidence to increase those properties greater than the 5% applied across Tin Can Bay. She advises further that following a more recent market appraisal, subsequent to October 2000, there is now evidence to increase the waterfront lands by 40%, and the balance of the residential lands by 10% to 15%. However she advises that those more recent changes will take effect from the next valuation at 1 October 2002.
Mrs Quinlan advises that she was not responsible for the valuation at 1 October 1997 and 1 October 1998, but explains that unimproved values had not increased in that 1998 valuation. In her current valuation at 1 October 2000 she had not considered any sales used during those prior valuation periods.
Relativity –
A matter of concern also to Mr Rose is the lack of any consistent relativity across Tin Can Bay. In particular he notes the relativity between the subject land and lots in Bream Street to the top of the hill east of Emperor Street (Lots 602 to 604) and the larger lots in Squire Street adjoining the subject land. Mr Rose argues that the larger sites across Squire Street do not have the same disabilities as the subject land, yet have unimproved values of only $53,000 (Lot 7 on RP 204168) and $55,000 (Lot 1 on SP 143179). He notes also that the higher Lots 602 to 604 have unimproved values of $54,000, and are also more regular in shape. Mrs Quinlan notes that the Bream Street lots have no glimpses of the water, as does the subject land, hence the current relativities appear correct in her opinion.
Mr Rose notes that the parcels across Squire Street are valued higher than the subject land by $3,000 to $5,000, but suggest that the larger areas of those parcels, and their backing on to the Unallocated State Land, which is mowed and has a wildlife walking track through the Wallum scrub, does not reflect their true difference in value, which might reflect a premium of 10% to 20% for that adjacency to the Unallocated State Land. Mr Rose also notes that in Squire Street, which was an earlier development area, some existing 2,000 m² have not yet been subdivided, indicating, in his opinion, that there are some physical constraints, such as sand flies, which are less attractive in the market place. He argues those factors should be reflected in the relativities. He argues also that if he was to adopt a similar relativity of $12,000 for an area difference, as exists with parcels in Emperor Street near Mrs Quinlan’s Sale 2, then a lower value for the subject land at about $41,000 to $43,000 would seem relevant, compared to the parcels across Squire Street which also have glimpses of the water from the street frontage. (see paragraph [40]). Mrs Quinlan agrees that the Unallocated State Land would attract some extra premium to the lots across Squire Street, but she does not accept the level of 10%.
Mr Rose is also concerned with the apparent lack of true relativity with the water front lands near Tin Can Bay Road and Snapper Creek. He undertakes several spot assessments of sales of improved sales on those water front lands, concluding very low applications of those parcels reflecting applied rates from 42% to 65%. He argues such low applications support that the applied unimproved values are far too low compared to the general application of other residential lands at about 90% of the sale price. Mrs Quinlan notes that those three spot analyses by Mr Rose reflect old sales in 1996 and 1997.
Mr Rose also compares the general level of Bayside waterfront lands near Tin Can Bay Road, and the Esplanade lands fronting Snapper Creek near Squire Street. It is agreed that the Tin Can Bay area is the superior location, and by inference the adjoining inland parcels near Squire Street would have a lesser value than inland parcels near Tin Can Bay Road. Mr Rose argues that water views, apart from the water front lands, are not a major factor in Tin Can Bay, where most properties can get a glimpse of the water from either on or near their property. Mrs Quinlan rejects that opinion, noting that even glimpses of the water are seen as valuable in the market place, compared to parcels with no views of the water.
Mr Rose disagrees noting that certain Queensland Housing Commission homes to the south-east in Dory and Taylor Streets, do not have views of the water, yet sold recently in 2002 for between $60,000 to $69,000. Mrs Quinlan was not aware of those sales, but argues that their recent date of sale means that they will be considered in the next revaluation. She argues that does not mean that views do not have an influence in their value.
However while such conclusions may reflect a general level of unreliability in the unimproved values of Tin Can Bay, they have little relevance in the current matter. I would agree with Mr Rose that the overall relativities indicate that there are at least two sub-market areas in the town. Mrs Quinlan’s more recent market appraisal confirms that conclusion, and I presume that the next revaluation will rectify the problem. But that is not a matter for my consideration at this time.
The Sale of the Subject Land –
A major concern of Mr Rose is the decision by the respondent to reject the sale of the subject land as a low sale in 1997. Mr Rose argues that the sale was an arm’s length transaction, reflecting a sale after an extensive period on offer, in a market that was flat. He also argues that the sale price of $48,300 reflected the unusual shape of the subject land, and the presence of the sewer line across the centre of the parcel. He notes that at the time of sale neither he nor the vendor were aware of the need for placing piers on any subsequent construction. The sale sold in October 1997 for $48,300, which he advises represented a direct vendor/purchaser transaction, with no agent fees applicable. He argues that an overall price of $50,000 reflected what the land was seen to be worth at that time.
The land had been on the market at an asking price of $60,000 for about 18 months. At the time of sale the land had an unimproved value of $53,000, which was reduced on objection to $48,000. Mr Rose believes that had the respondent accepted the sale at that time, even an applied value of $45,000 might have set a fair relativity for the parcel. He notes also that during this negotiation with the vendor, there had been two lower offers for the land which had been refused. He argues that it was an arbitrary decision of the respondent to reject the sale as a low sale.
Mrs Quinlan offers no comment on why the sale of the subject land was rejected as a low sale, as that was undertaken before she accepted responsibility for the area. However she argues that as the sale was an old sale, its application in the current matter is not relevant. However she agrees that none of her vacant sales have exactly the same disabilities of the subject land.
In summarizing his position on the sale of the subject land, Mr Rose argues that because of the specific disabilities of the subject land, preference should be given to its application. Because of its specific application to the subject parcel, he argues that the onus to prove that the sale is out of line with the market falls upon the respondent. He argues that has not occurred, and the sale of the subject land should be used to establish a true relativity. He believes without making any further allowance for the extra foundations, he feels an unimproved value of $45,000 would be appropriate. Mr Rose analysed the subject sale before foundation problems, at $45,000, after allowing $500 for landscaping and clearing, and for a new 1.8 metre fence to a total of $2,875. If the extra allowance for the footings is then applied, he seeks amendment to $40,000. He argues further that as the market has not changed, the sale is still relevant.
Comparison of Sales –
In addition to his reliance upon the sale of the subject land, Mr Rose also draws support from the following sales of vacant lands:
·Sale 1 – (Lot 13 – Sweetlip Circle). This is a 607 m² parcel located near to the Esplanade at Toolara Road. The parcel sold in July 1997 for $50,000, and was applied at 1 October 1998 at $52,000 (104%). He advises that the sale was very near the then asking price at that time.
·Sale 2 – (Lot 26 on Sweetlip Circle). This is a 607 m² parcel which sold in July 1997 for $49,000, and was applied at $42,000 (86% at 1 October 1998), and at $44,000 on 1 October 2000.
·Sale 3 – (Lot 35 – Sweetlip Circle). This is a 594 m² corner parcel which sold in January 2000 for $44,000, and was applied at 1 October 2000 at $46,000 (105%). Mrs Quinlan sees that sale as a low sale.
·Sale 4 – (Lot 132 – Anchovy Street). This is a 607 m² parcel near the shopping centre that sold in August 1997 for $35,000, and was applied at 1 October 1998 at $32,500 (93%). That property sold at auction, and was applied at 1 October 2000 at $34,000.
·Sale 5 – (Lot 133 – Anchovy Street). This is a 607 m² parcel adjoining Sale 4 which sold after auction in January 1998 for $31,600, and was applied on 1 October 1998 at $32,500 (103%), and at 1 October 2000 at $34,000.
·Sale 6– (Lot 22 – Emperor Street). This is a 600 m² parcel near the Esplanade adjoining Snapper Creek, which sold in February 1998 for $37,000, and was applied at $38,000 at 1 October 1998.
Mr Rose argues that all of the above sales, except for his Sale 4, were seen as low sales by the respondent, when in his opinion, they all reflected a fair market value. On that basis he argues that relativities in the area are inappropriate. Mr Rose concedes that his Sale 1 (Lot 13 Sweetlip Circle) resold again in September 1998 for $67,000. He also agrees that parcel was increased from $52,000 (1 October 1998) to $55,000 (1 October 2000 – Exhibit 4). However Mr Rose advises that the later resale was a sale that was specifically desired by the purchasers, and he agrees that the $67,000 was a high sale.
To support her valuation Mrs Quinlan relies upon the following sales of vacant lands, all with similar zoning and services:
·Sale 1 – (Summer Way – Lot 6 on RP 892617). This is a 864 m² parcel located about 1.3 kilometres south of the Tin Can Bay Post Office, and about 2 kilometres from the subject land. The sale is in a new subdivision, is above street level, is generally level then sloping towards the rear boundary. The sale is in a superior surrounding development, and has a regular shape, but is inferior in location to shopping and water views. The sale sold in September 2000 for $47,000, was analysed at $45,000 and applied at $44,000.
·Sale 2 – (Emperor Street – Lot 3 on RP 159261). This is a 611 m² parcel located about 0.5 kilometres north of the subject land. The sale is at street level and falls slightly to the north-west to the rear. There are views of the water towards the north-east and north-west. A sewer line crosses the sale towards the rear part of the parcel (Exhibit 5). The purchaser was a builder and was aware of the soil classification of M (moderately reactive), and the need for piers during construction. Subsequently a two-storey dwelling necessitated piers to a depth of about 1 metre.
The sale is superior in shape, has similar services, zoning, soil problems and access to shops, and is in a slightly inferior location. Overall the sale is seen as superior to the subject land. The sale sold in January 2001 for $62,500, was analysed at $61,500, and applied at $58,000.
As noted in paragraph [19] Mrs Quinlan also provides a sale and resale of land in Dart Street (Lot 31 on RP 140246) which sold for $50,000 in October 1998, and resold for $53,000 in November 1999. She also refers to a resale in Toolara Road which sold in February 1999 for $126,500, and resold again in February 2000 for $134,600. Mr Rose argues that those outlying areas do not reflect similar patterns to the areas closer into town.
As further support that Mr Rose was selectively choosing low sales for his comparison purposes, Mr Paterson was granted leave to refer to some further sales, all of which Mr Rose was familiar with. (Exhibit 4). Those additional sales may be summarized as follows:
Sale Area Sale Price Date Applied Value (1/10/1998) Applied Value (1/10/2000) Lot 13 Sweetlip Circle 607 m² $67,000 September 1998 $52,000 $55,000 21 Sweetlip Circle 875 m² $62,500 December 2000 $50,000 $53,000 149 Anchovy Street 610 m² $40,000 January 1998 $32,500 $34,000 38 Marlin Way 607 m² $44,000 March 1999 $34,000 $35,500 46 Marlin Way 607 m² $39,000 May 2000 $34,500 $36,000 57 Marlin Way 630 m² $37,5000 October 2000 $34,000 $35,500 6 Mallett Street 608 m² $62,500 May 1999 $50,000 $53,000 99 Drummer Street 607 m² $46,500 October 1998 $34,000 $35,500
In respect of Mrs Quinlan’s Sale 1 (Lot 6 Summer Way) Mr Rose argues that parcel is near level on a ridge, and does not suffer from similar sewer line disability. He argues further that the sale is in a good area and adjoins a low scale caravan park (Lot 60). There is also a kindergarten opposite the caravan park on the corner of Sweetlip Circle and Trevally Street. In his opinion the sale is slightly superior to the subject land, although he agrees that there is little difference with that property and the subject land.
In respect of Mrs Quinlan’s Sale 2 (Lot 3 Emperor Street) Mr Rose argues that views from that parcel are superior to the glimpses from the subject land. He also seeks support in relativity between Sale 2 (Lot 3) and another larger parcel of 1,003 m² area, two lots removed to the north of Sale 2 (Lot 1 on RP 49660). He agrees that the sewer line passes across both Lot 3 and Lot 1. However, because it crosses towards the rear of Lot 3 (Sale 2), and across the centre of Lot 1, he argues it provides a greater disability to Lot 1. Mrs Quinlan agrees with that conclusion. Therefore Mr Rose argues that as both Lot 3 (Sale 2) and Lot 1 have views of the water to the north-west and north-east, the major differences between those two parcels relates to the difference in area.
Mr Rose notes that Lot 3 (Sale 2) has an area of 611 m², and valued at $58,000, and Lot 1 has an area of 1,003 m² and is valued at $70,000. On that difference in applied value of $12,000, he seeks a similar relativity between the subject land (834 m²) and Lot 1 on SP 143179 (1,012 m²) across Squire Street, which has an applied value of $53,000. (see paragraph [23]).
Mr Rose also spoke to the estranged wife of the purchaser of Sale 2 (Lot 3) who agreed that piers were required on the new substantial dwelling, but she was unable to quantify the actual cost. It is Mr Rose’s opinion that the costs were likely to have been less than what might be expected on the subject land. However he concedes that the soil classification M is more unstable than the classification S of the subject land. Mr Rose also feels that as Sale 2 (Lot 3) is a much wider parcel with better views than the subject land, and compared to the larger parcel of 1,003 m² on Lot 1 to the north, he feels that Sale 2 reflected a low level of value than what might have been expected. Mrs Quinlan agrees that Sale 2 is a good Lot, apart from the footing problems. Mr Rose speculates that the lower value may have been because of the foundation problems, although he has no support for that observation. Mr Rose also notes that a parcel in Emperor Street to the south-west of Sale 2 (Lot 36 on T73134) has an area of 809 m², has no views of the water, and has an applied value of $63,000 (Exhibit 7). Mr Rose argues that Sale 2 is far superior to the subject land.
In respect of the additional sales referred to by Mr Paterson (paragraph [37]), Mr Rose agrees that some of those sales are high sales, but argues that he selected his sales mainly because they were sales which had proceeded to auction. He argues that the extra sales (Exhibit 4) do not detract from his argument, although he agrees that there were other higher sales available during the relevant period. However he concludes that generally the lower valued lands were applied at much higher rates of application than the dearer sales, thus unsettling the overall relativities.
Mr Rose also notes that some of those extra sales showed an increase in value, while others showed a decline. That he suggests support his conservative view that the market was about the same in October 2000 as it had been in October 1998. While it may have fluctuated upwards between 1998 and 1999, he argues that it returned to the same level in 2000. Mr Rose notes that his sales range from 1997 to his Sale 3 (35 Sweetlip Circle) in January 2000 to reflect that stable pattern.
Mr Rose also provides a further Sale 7 at the corner of Mallett Street and Impey Avenue (Lot 507), which sold for $48,000 in April 1997. He argues that the only reason he included that sale was to demonstrate that was in line with the sale of the subject land at $48,300. He agrees that when he purchased that property from a mortgagee in possession in 1999 for $40,000, that was a low sale. However he argues that when Lot 507 was later resold with $17,500 of improvements in July 2000 for $67,500, that later resale supports the 1997 sale at $48,000.
Decision:
On the evidence the key issues are clearly whether the application of the sale of the subject land in October 1998 had truly reflected its alignment with the market at that time; and whether there had been a change in the market between 1998 and 2000. While it is agreed by both valuers that relativity between waterfront parcels, and inland parcels, has, over a period of years, changed, and is now inconsistent, that is not a matter for consideration in this matter. There is also the matter of the impact of the stability of the soils.
I am reminded by Mr Paterson that it is the role of an expert witness to provide assistance to the Court in an unbiased and independent manner; and to assist the Court by providing material facts which provide a balanced assessment of the situation. In that regard he relies upon the findings of Cominos and Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311, where the Land Appeal Court noted the findings of several leading Courts in that matter. For purposes of reminding all experts in such matters, the Land Appeal Court summarized on p.338 as follows:
“In view of the above, it is relevant to remind those concerned with the preparation of experts’ reports of some of what Cresswell J. said in The Ikarian Reefer [1993] FSR 563 at p.565:
‘The duties and responsibilities of expert witnesses in civil cases include the following:
1. Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation: Whitehouse v. Jordan [1981] 1 WLR 246 at 256, per Lord Wilberforce.
2.An expert witness should provide independent assistance to the court by way of objective, unbiased opinion in relation to matters within his expertise: Polivitte Ltd v. Commercial Union Assurance Co. Plc [1987] 1 Lloyd’s Rep 379 at 386, Garland J. and Re J. [1990] FCR. 193, Cazalet J. An expert witness in the High Court should never assume the role of an advocate.
3.An expert witness should state the facts or assumptions upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion (Re J., supra).’
It is clear that in saying that, Cresswell J. had just as much in mind the expert’s report as the evidence given orally at trial.”
In the current matter Mr Paterson draws attention to the dates of Mr Rose’s sales, which, with the exception of his Sale 3 (35 Sweetlip Circle) were all old sales prior to the previous date of revaluation. While Mr Rose has based his case upon his opinion that the market level had not changed between 1998 and 2000, it was really his professional responsibility to demonstrate that matter to the Court. I believe the provision of one sale in January 2000, well before the relevant date of 1 October 2000, does not satisfy Mr Rose’s assertion that the market had not changed over the relevant period. On that basis I accept Mr Paterson’s comment that Mr Rose’s choice of sales evidence left something to be desired in respect of the relevance of the passage of time.
As a further outcome of Mr Rose’s apparent selected choice of the dates of his sales, Mr Paterson argues that it is a reasonable conclusion to assume that the more recent sales did not support Mr Rose’s conclusion that the market had not changed between 1998 and 2000. Mr Paterson draws support for that conclusion from the findings of the High Court in Jones v Dunkel & Anor (1959) 101 CLR 298, where Menzies J said at p.312:
“(iii) that where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.”
I am also aware that in considering whether any failure to provide other more recent sales, the balance of probability is that those sales might not support Mr Rose’s argument that the market had not risen, is also for consideration in this matter. In such matters, which are not of a criminal nature, I am directed that “a balance of probability is enough” (The Insurance Commissioner v Joyce (1948) 77 CLR 39, at p.49).
The importance of this Court having the benefit of all the relevant material which might influence the correct determination of the unimproved value of the subject land, was also emphasized by the decision of the Court of Appeal in New South Wales in The Australian Gas Light Company v The Valuer-General (1940) 40 SR NSW 126. In that matter the Court found, among others, that any inference drawn in the absence of evidence is an error of law. Jordan CJ found at p.138:
“(3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences: …
(4) Such a finding can be disturbed only (a) if there is no evidence to support its inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences.”
However while Mr Paterson’s claim that Mr Rose has failed to provide a balanced appraisal of all of the sales evidence available, it is an assessment of the evidence itself provided to the Court which must finally determine the outcome of my decision. I am aware that often an appellant may have more limited access to the full range of sales in an area, which might appear to restrict them in submitting their case. However I am also reminded that a Court should not place undue reliance upon a witness’s credibility. That was emphasized in the High Court of Australia in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (1999) 73 ALJR 306, where Kirby J said at p.329:
“Trial judges should strive, so far as they can, to decide cases without undue reliance on such fallible considerations as their assessment of witness credibility.”
The Sale of the Subject Land –
If I put aside for the moment whether the date of the sale of the subject land should now be treated as an out of date sale, I can consider the actual sale in October 1997 at $48,300. I note that the sale of the subject land was considered by the High Court of Australia in Jowett v Federal Commissioner of Taxation (1926-27) 38 CLR 325, where Rich J said at page 329:
“A sale of the subject land, or of comparable land, affords the best means of arriving at the fee simple value of any land … .”
The Land Appeal Court also considered the matter of the sale of a subject itself in The Chief Executive, Department of Lands v J and L Lorenzen (AV93-22) 1 June 1994, unreported, where the Land Appeal Court said at p.4:
“Whilst we agree that a sale of the subject land should always be considered in assessing its value we hasten to stress that such a sale is only prima facie evidence of its value. The weight which must be given to the sale is dependent upon a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable land.”
The matter was also considered by this Court in Determination of Rents and Unimproved Values for Conversion Purposes – Perpetual Lease Selections and Grazing Selections – Goondiwindi District (1974) 1 QLCR 45, where the President of the Court said at p.48:
“... whilst a sale of a subject property around about the relevant date in normal circumstances is cogent evidence of its value, it is always necessary to check the analysed value against the standard reflected by other sales of comparable properties to ensure that it conforms to the ‘norm’ of the market. If the sale does not so conform caution must be used in its application and it may be even proper to reject it if it is shown to be a sale out of line with the market ‘norm’. This check becomes vital, in my opinion, in times of a varying market be it rising or falling or in times of an erratic market. One cannot assume, ipso facto, that the analysed sale figure equates fair market value for the subject purposes.”
In seeking support for the use of the sale of the subject I find the findings of Inez Investments Pty Ltd v JL Dodd (1979) 26 The Valuer at 501 (also Land Valuation and Compensation in Australia, 3rd edition by Rost and Collins (1993) p.87). In that matter Carmichael J said at p.505:
“… where a valuation of a piece of real estate is sought as at a particular date the most relevant information for analysis is the sale of that very property, if there be one, at or close to that date. … a prime matter for investigation when a valuation is sought is to ascertain whether there is current a contract for sale of the property and, if so, to make an analysis of that sale to see how it complies with the test of value which is laid down in Spencer’s case. Failure to carry out these functions is to risk ignoring the best evidence of value.”
It is important to note that Carmichael J was saying that the sale should be analyzed and not merely adopted. In analyzing the sale of a property the actual price of the land and the improvements must be accepted and not adjusted by the valuer to bring it into line with the price which in his opinion that property should have realized. (Rost and Collins, p.87). If the sale appears to be out of line with the market then the correct approach in the analysis is to reject the sale for comparison purposes. (Collins & Ors v The Minister (1922-24) 6 LGR 84.
In assessing the sale price of the subject land within the market the approach to be taken was outlined in Best v Housing Commission of New South Wales (1949) 17 LGR (NSW) 129, where Sugerman J said at p.130:
“At each end of this range there is a group of sales at a price which is uniform, or practically so, and disregards minor differences between blocks. The first question in the present case is where the subject land comes between these two extremes. When that question is answered, the evidence shows that the general approach of the defendant’s valuer by way of fixing a basic price is the more correct one and that there is little room for such variations as are suggested by the plaintiff’s valuers, particularly on the score of elevation and outlook.
However, I agree with Mr. MacFarlan that there is an error in the defendant’s valuer’s method in so far as he takes an average price derived from the comparable sales as a starting point. (see cf. McCathie v. Federal Commissioner of Taxation [1944] 69 CLR 1, at p.15). The correct approach is to assign the subject land by comparison to its proper place in the scale of values disclosed by the sales proved.”
If I consider now the circumstances of the sale of the subject land in the current matter, I find that Mrs Quinlan has not analyzed that sale, which was rejected as out of line by her predecessor. I note that initially the subject land had been applied at a figure of $53,000, and then reduced to $48,000 on objection by the appellants. There was no evidence as to why that reduction of $5,000 had been made by the Chief Executive. The only evidence given was that the Chief Executive believed that the sale of the subject land had been out of line with the market place.
If I look then at the current evidence of sales that may have been relevant at the October 1998 revaluation, I find in the current evidence that Mr Rose and the respondent advanced smaller sales of area about 600 m² which reflected applied values of
· $32,500 (132, 133 and 149 Anchovy Street)
· $34,000 (38 and 57 Marlin Way and 99 Drummer Street)
· $34,500 (46 Marlin Way)
· $38,000 (22 Emperor Street)
· $42,000 (26 Sweetlip Circle)
· $50,000 (6 Mallett Street)
In addition the larger parcel at 21 Sweetlip Circle (875 m²) was valued at $50,000.
On the comparisons with those available sales, I note that the subject land has a larger area of 834 m², but has the disability of the irregular shape, and also the sewer line across the parcel towards the front with Squire Street, and was applied at $48,000. I note that 21 Sweetlip Circle is located a similar distance from the Esplanade as the subject land, and while in a newer location, is further removed from the shopping centre. On balance I believe that the more regular shape, and greater width of 21 Sweetlip Circle would indicate a slightly superior nature of that parcel. On balance I feel the initial application of the subject land at $53,000 was in fact high, and I agree that an application of $48,000 would be more in line with the applied value of 21 Sweetlip Circle at $50,000. However 21 Sweetlip Circle does not have the same disability of a sewer line crossing the building area.
If I then compare the sale of the subject land at $48,300, with the initial sale of Lot 507 at the corner of Mallett Street and Impey Avenue, I feel those two sales are not inconsistent. I note that Lot 507 has an area of 794 m² and is a corner parcel without a major sewer disability. On balance a fair estimate of those two parcels would support the sale of the subject land as relatively in line with the market at $48,300. The fact that the sale occurred directly between the parties should have no impact upon the Spencer test for an arm’s length transaction. On that basis I believe there is no evidence before this Court to disclose why the sale of a subject land should have been rejected as out of line. The extensive period of advertising of that parcel was likely to reflect the specific nature of the parcel, compared to other similar parcels at that time.
If I then make a similar allowance for the added value of improvements upon the subject land, including clearing, fencing and landscaping, I could conclude an allowance as supplied by Mr Rose of $3,375, giving an unimproved value approximately $45,000 effective at the date of sale in 1997.
The Nature of the Soils –
On the evidence before me I accept that the subject land does have a classification S, reflecting soil movements, but at the lesser end of relative movement in foundations. The impact of that class of soil is no worse than that anticipated at Mrs Quinlan’s Sale 2 (Emperor Street), and presumably also at Lot 1 on SP 143179 in Squire Street. If I accept comparisons with those properties on a sales basis (Sale 2), and also on a relativity basis (Lot 1), I find there is no need for any further allowance for the instability of the soil at the subject land.
Changes in the Market –
On balance in this matter I accept Mrs Quinlan’s advice that she had analysed all vacant sales in Tin Can Bay, and had selected nine or ten of the more comparable sales, most of which reflected an overall basic increase of 5%. Her two supporting resales of Dart Street and Toolara Road confirm that conclusion, and I will accept that the local market for inland parcels has increased to that extent. I make no further comment about any changes in the waterfront lands, except perhaps to note that they possibly exceeded the increase for inland parcels.
If I then hypothetical apply a 5% increase to my calculated applied value of $45,000 (see paragraph [62], I could conclude an application of the subject land at 1 October 2000 at $47,250 (say $48,000).
Relativity –
If I then adopt Mr Rose’s comparisons between Sale 2 (Lot 3) and the adjoining Lot 1 in Emperor Street, I note that reflects a difference in value of $12,000 between the smaller Lot 3 (611 m²) with a sewer line in place, and the larger Lot 1 (1,003 m²) with a greater impact from that sewer line across its central building area. If I translate that across to Squire Street I find a comparable sewer disability difference between the parcels, but Lot 1 on SP 143179 has the advantage of adjoining open space as Unallocated State Land, which is agreed would be seen as an advantage.
I also accept that there are glimpses of the water from the both the subject land and Lot 1 on SP 143179. On balance I believe a differential less than $12,000 would be an appropriate relativity between those two parcels. However the subject land is larger than Lot 3 in Emperor Street, which suggests that a further reduction in differential should be appropriate for the larger size of the subject land. I do not accept that the shape of the subject land has the effect of considering it to be approximate to a 600 m² parcel. If I accept $48,000 for the subject land, that would conclude a difference of $7,000 with Lot 1 on SP 143179 at $55,000. On balance I believe that relativity is supportive of the evidence.
Conclusion:
Having considered the whole of the evidence I am partly persuaded that the appellants have proved their case. The appeal is upheld, the valuation of the Chief Executive is set aside, and the unimproved value of Lot 14 on RP 825752 is determined at Forty-Eight Thousand Dollars ($48,000).
NG DIVETT
MEMBER OF THE LAND COURT
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