Rosskern Pty Ltd v Chief Executive, Department of Lands; Rosskern Pty Ltd v Chief Executive, Department of Natural Resources

[1997] QLC 159

[1997] QLC 159

 

LAND COURT

BRISBANE

28 FEBRUARY 1997

In the matters of appeals against valuations
Valuation of Land Act 1944
  Valuation Roll No.:      587/51380     (AV95-239)
  Local Authority:           Gold Coast

Rosskern Pty Ltd
v.
Chief Executive, Department of Lands

Valuation Roll No.:      587/51380      (AV96-143)
  Local Authority:           GCCC-Gold Coast

Rosskern Pty Ltd
v.
Chief Executive, Department of Natural Resources

(Hearing at Coolangatta)

D E C I S I O N

Rosskern Pty Ltd holds land, which includes the land the subject of these appeals, on behalf of a superannuation fund whose sole beneficiary is Michael Patrick Lunney.  The subject property is located at 63 Columbus Drive, Hollywell, on the Gold Coast and comprises a parcel of land with an area of 688 m² improved with a dwelling.
           Pursuant to the provisions of the Valuation of Land Act 1944 (the Act), the Chief Executive placed a valuation of $144,000 on the subject land as at a date of 1 January 1995. Mr Lunney who is a director of the appellant company submits that the valuation ought to be $118,000. As at 1 January 1996 the Chief Executive placed a valuation of $134,000 on the land, whereas Mr Lunney says that the valuation as at that date ought to be $108,000.
           These appeals were not heard together, given the difference in basic properties relied upon by the Chief Executive’s side, however, it was agreed between the parties that the evidence given  in the each appeal, to the extent that it was relevant, be admitted in the other appeal.  The grounds of appeal were presented in comprehensive form encompassing all of the material evidence which I refer to later in this decision.
           Mr Lunney appeared for the appellant company and gave evidence on its behalf.  Mr Lunney is a retired bank manager, having been employed for some 36 years with the Commonwealth Bank and was the General Manager, Southern Metropolitan Zone Sydney, just prior to his retirement.  In that position he had a lending approval limit of ten million dollars and controlled lending of about 4,000 million dollars.  He did, for bank purposes, perform valuations and for a short period some years ago, studied land valuation practice.  He has been a landholder on the Gold Coast for some 25 years.  The Chief Executive provided valuation evidence through Ian Leonard Hawley, who is a registered valuer employed by the Department of Natural Resources, which includes the former Department of Lands.  Mr Hawley was not the original valuer in the 1995 matter.
           In his written valuation report Mr Hawley said that the subject parcel is situated about 2.2 km north, north-east of the Runaway Bay Shopping Centre and Post Office and is accessed via Columbus Drive, which is a two-lane bitumen sealed roadway with concrete kerbing and channelling.  Columbus Drive is a through Street running east to west, which links Bayview Street to Oxley Drive.  Reticulated town water, sewerage, telephone and electricity is available to the land which is an irregular shaped canal-front block.  The land has an aspect north to the water, is a predominantly level lot with a moderate bank to a revetment wall, having a canal frontage of 9 metres.  Road frontage is 18 metres.  The land was zoned “Residential Dwelling House” in the Town Planning Scheme of Gold Coast City effective at the date of valuation.  Mr Lunney agreed with the description provided by Mr Hawley.
           At the conclusion of the evidence in both matters, it was agreed between the parties that I would take a view of the subject land and the sales and relativity evidence adduced by the parties.  This view has assisted me in my appreciation of the evidence provided by the parties.
           I will deal now with the valuation evidence tendered with respect to the 1995 appeal.  Mr Lunney provided evidence of the Chief Executive’s valuations of properties located at 4 Bulolo Avenue, 158 Morala Avenue and 14 Wewak Avenue, all in Runaway Bay, which he said were “out of kilter” with the 1995 valuation placed on the subject land.  Mr Hawley was prepared to discuss the attributes of these three Runaway Bay properties, however, expressed the view that there is a distinction between the market at Runaway Bay and the market in the area of the subject land.  Having regard to this evidence and noting the adequacy of other valuation evidence of sales and relativities proximate to the subject land, I prefer not to attempt to place a valuation on the subject land in comparison with the Runaway Bay properties referred to by Mr Lunney.  It is well recognised that any comparison between basic properties which are used to indicate value and the property to be valued ought to be done on a “like for like” basis.  Whether a like for like comparison exists, depends not only on the characteristics of the property to be valued and the presence of those features in the basic property, but also the environment and the market within which each is located.  If one were, for example, to attempt to compare a canal-front property on the Gold Coast with a property of similar value in the outer suburbs of Sydney, a rational economic assessment would beg the question as to why the Sydney property values were so high.  Now, admittedly, in the instant case a comparison between the market of Hollywell and that of Runaway Bay is substantially closer than a comparison between Sydney and the Gold Coast, however, the example that I have employed attempts to demonstrate the point that both market and environment are relevant issues in a “like for like” comparison.
           There are two other aspects of the material provided by Mr Lunney which I need to dispose of before attending to the detail of the valuations provided.  The first of these relates to evidence adduced by him relating to three improved sales located at 29, 35 and 107 Columbus Drive, Hollywell.  These sales were not analysed by him back to an unimproved value and, even if they were, would not constitute the best evidence given the availability of suitable bases that are discussed later in this decision.  I cannot place any reliance on the improved sales and in this regard can do no better than to quote from Thomas Nominees Pty Ltd v. The Valuer-General (1987) 11 QLCR 283 where at 285 the then President said:

“It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc. with the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value.  The reason is obvious.  In applying such sales there is no room for error in analysing the value of improvements.

Where no sales of unimproved land are available, sales of lightly improved land are the next best evidence.  Seldom will the ideal be achieved of being able to refer to the sale of a parcel comparable in all respects with the subject so that it becomes a matter of using sales of lands more or less comparable and making appropriate allowances for relevant differentiating factors.”

The last remaining matter that I wish to address in these preliminary comments is the reference by Mr Lunney to the parties’ apportionment of the purchase price of the subject land at the time of purchase, which presents the figures for the value of the land and improvements separately.  Such parties apportionment is usually included in a statutory form which is lodged with the Registrar of Titles.  It was Mr Lunney’s suggestion that because the apportionment figures were endorsed by the parties, including a barrister and his wife, that some reliance may be placed upon them.  A party’s apportionment of a purchase price is nothing more than an expression of opinion which, when it is not supported by clear evidence which is subject to cross-examination, is of very limited weight.  It may well be the case that the parties expressed their honest views at the time of making the apportionment, however, it is not the honesty of the parties which is in issue, but rather the validity based upon available evidence of the opinions expressed.  Accordingly, I cannot rely on this evidence.
           Of greater value from the appellant’s side was the relativity evidence tendered in the form of determinations made by the Chief Executive as at 1 January 1995 of properties located at 29, 35 and 107 Columbus Drive.
           107 Columbus Drive has an area of 660 m², a frontage to the canal of 18.2 metres and the same frontage to Columbus Drive.  The 1995 valuation of the Chief Executive was $157,500, a figure seen by Mr Lunney to be appropriate, particularly having regard to the larger water frontage the relativity block enjoys compared with the subject’s 9 metres.  35 Columbus Drive has a water frontage of 12.662 metres, a street frontage of 27.72 metres and an area of 669 m², with a Chief Executive valuation in 1995 of $127,000. 
           The main basis referred to by Mr Lunney in support of the 1995 figure of $118,000 contended for is the Chief Executive’s determination on 29 Columbus Drive at $125,000.  This relativity property has a water frontage of 9.214 metres and a street frontage of 19.32 metres, and an area of 782 m² (somewhat larger than the subject’s 688 m²).  In utilising 29 Columbus Drive as an indicator of the unimproved value of the subject land, Mr Lunney took the $125,000 figure determined by the Chief Executive and deducted a further $7,000 from this to cater for the brick retaining wall and fence on this property.  Mr Hawley’s evidence was that the figure of $125,000 was struck on the basis that the relativity property had no improvements at all on it.  Such an approach would be consistent with a long line of authority, perhaps the best known of which is Toohey’s Ltd v. Valuer-General (1925) AC 439 where at page 443 of this case the Privy Council said:

“Now, what he (that is, the valuer) has to consider is what the land would fetch as at the date of the valuation if the improvements made had not been made.  Words could scarcely be clearer to show that the improvements were to be left entirely out of view.  They are to be taken, not only as non-existent, but as if they had never existed.”

It follows from what I have said above that the comparison made by Mr Lunney between 29 Columbus Drive and the subject land needs to be adjusted to take into account the error that he has made in further reducing the valuation of the Chief Executive.  This is not to say, however, that this error is fatal to the suitability of 29 Columbus Drive as an indicator of the unimproved value of the subject land. 
           In the written evidence tendered by Mr Lunney concerning 29 Columbus Drive, he wrote that the waterfrontage and other factors, including water views, are superior to the subject land.  By “waterfrontage” I take him to mean the length of frontage to the canal.  The suggested superiority of water views is apparently based on 29 Columbus Drive having an aspect along the canal, however, as Mr Hawley pointed out, this aspect is westerly: which I agree is the least desirable aspect.  Mr Lunney suggested that the surrounding area and services of 29 Columbus Drive are superior to the subject land, and by this I take him to mean that it is marginally closer to shopping and other facilities.  From the Chief Executive’s side, Mr Hawley expressed the view that 29 Columbus Drive, being located at the end of the canal, is in a less attractive area than that of the subject and he went on to explain that values diminished as one approached the more cluttered end of a canal.  He also said that 29 Columbus Drive is closer to Bayview Street, which is a busy and noisy thoroughfare and, having regard to these various points, he viewed 29 Columbus Drive as being inferior to the subject land.
           I have no difficulty in expressing agreement with Mr Hawley in finding that 29 Columbus Drive is inferior to the subject land.  The suggested closer proximity to services that 29 Columbus Drive enjoys over the subject is more than compensated for by its less desirable location near Bayview Street; its end of canal location is not compensated for by a westerly aspect along a narrow canal whose presence is more utilitarian than aesthetic; whilst the differences in area and frontage are so slight as to have imperceptible impact in the marketplace.
           Mr Lunney made similar comments with respect to 35 Columbus Drive as he had made for 29 Columbus Drive, although it is to be noted that the waterfrontage is in excess of 3 metres longer in the case of No. 35 than in the case of either No. 29 or the subject land, whilst the area of 35 Columbus Drive is smaller than both the subject and No. 29.  107 Columbus Drive was mentioned only in passing during oral evidence, however, it was apparent that Mr Lunney saw this property as being superior to the subject land, particularly because of its waterfrontage of 18.2 metres.  Clearly Mr Hawley also is of the view that No. 107 is superior to the subject land.
           I turn now to the basic properties relied upon by Mr Hawley.  Sale 1 is of a property of 673 m² located at 30 Walter Raleigh Drive, which sold for $175,000 on 21 September 1993.  Mr Hawley deducted improvements in the form of canal wall, fill, fencing and clearing to arrive at an analysed unimproved value of $159,000, which he applied at $155,000.  Mr Lunney offered no challenge to the analysis of the sale.  Mr Hawley expressed the view that the sale is superior to the subject saying that the properties were similar with regard to location, situation and topography, but that the sale block has an easterly outlook over water which he considered less favourable than the subject, but that the sale allotment’s larger waterfrontage, better shape and quieter street made it superior to the subject land.  Mr Lunney sees the sale as being considerably superior to the subject land and, in particular, said that the sale block is in a “very up-market area” and that the sale block had superior water frontage.  He estimated its frontage to be 25 metres whereas evidence in the form of a plan showed it to be 20.54 metres.
           Mr Hawley’s second sale is located at 16 Walter Raleigh Drive, has an area of 664 m² and sold on 15 September 1994 for $182,500.  Following the deduction of site improvements, Mr Hawley analysed the sale to an unimproved figure of $167,500, which he applied at $150,000.  Both parties agreed that the sale is superior to the subject, Mr Hawley’s reasons being the same as those advanced with respect to his Sale No. 1. Mr Lunney again overestimated the sale’s water frontage (25 metres as against 18.3 metres) but advanced this feature, the situation of the sale and its up-market environment, as showing the sale to be quite superior to the subject land.
           The third sale relied upon by Mr Hawley is located at 386 Bayview Street, has an area of 662 m² and sold on 12 April 1994 for $150,000.  After the deduction of site improvements, Mr Hawley calculated an unimproved figure of $135,500, which he applied at $113,000.  There is substantial disagreement between the parties as to the comparison between Sale 3 and the subject land.  The first point is a minor one:  Mr Hawley said that the sale is similar to the subject in regard to locality and topography, whilst Mr Lunney suggested that the sale land is closer to Paradise Point shops and services.  Mr Lunney is correct, however, this does not seem to be a matter of any great moment in the comparison between the properties.  Mr Hawley said that the sale land has a larger water frontage and the advantage of a regular shape:  points agreed with by Mr Lunney; however, and importantly, Mr Hawley said that the south-westerly aspect of the sale block over the water and its location on  a very busy roadway, Bayview Street, were particular disadvantages that needed to be catered for in the comparison.  Mr Lunney disagreed, saying that the aspect of the sale property is superior to that of the subject land; and that Columbus Drive is only marginally less busy than Bayview Street.  The canal in question appears to have the same dimensions as that overlooked by the subject land and 29 Columbus Drive and, in view of what I have said about that relativity property, it would be clear that I would prefer Mr Hawley’s opinion that the northerly aspect of the subject land is superior to a south-westerly aspect albeit along the length of a canal.  More importantly, however, is my acceptance of Mr Hawley’s evidence supported by my appreciation of that evidence during the view that I took, that Bayview Street is a busier road than Columbus Drive.  I conclude, therefore, that the subject property is superior to Mr Hawley’s Sale No. 3. 
           In addition to the sales evidence mentioned above, Mr Hawley introduced into evidence the Chief Executive’s valuation on Lot 39 on Registered Plan 163808, an allotment adjoining the subject land to its east.  The Chief Executive’s valuation is in the amount of $143,000 as at 1 January 1995.  Mr Hawley suggested that the subject land is superior to Lot 39, particularly because of the poor shape of Lot 39 which has a frontage of 10.147 metres to Balboa Court, that frontage extending towards the heart of the block which, as a result, has an awkward “boot” shape, as I would describe it, making it less easily developed in terms of the location and design of improvements than in the case of the subject land.  This disadvantage in shape is offset somewhat by the fact that Lot 39 has a larger waterfrontage (14.469 metres) than the subject land, a larger area (740 m²) and is one allotment removed from Columbus Drive, which is busier than Balboa Court.
           It is my appreciation of the evidence and the submissions made by the parties that, in making comparisons between basic properties and the subject land, Mr Lunney places much greater significance than does Mr Hawley on the length of the waterfront, whilst Mr Hawley has taken into account a variety of features, including waterfront; and places more reliance on the question of aspect than does Mr Lunney.  It will be useful then if I summarise the evidence concerning the question of waterfrontage.  A boat ramp is constructed on the subject property which allows a small boat to be launched there. It was Mr Lunney’s evidence that the canal waterway which the subject land fronts is so narrow and the length of waterfrontage of the subject land is so short that it is not possible to construct a jetty or a pontoon serving the subject land unless an arrangement can be made with an adjoining owner.  This evidence is not disagreed with by Mr Hawley, however, he asserts that the significance placed on this matter by Mr Lunney is too high.  The parties agree that the subject land is a “non direct” waterfront property in that, whilst access is available from the canal to the Broadwater, the requirement to travel under a bridge means that vessels having masts or structure of too great a height are unable to gain access to the Broadwater.  In Mr Hawley’s view, whilst it is the case that some of the properties fronting the canal which services the subject land do have jetties or pontoons, the larger proportion of them do not.  He suggests that the limitation on vessel size imposed by the need to navigate a bridge results in a boat ramp frequently being sufficient to service the needs of landowners in the area, thus the potential for the development of a pontoon or a jetty is a matter of less significance in the valuation of such lands than suggested by Mr Lunney.  The evidence from the parties was that the market values of “non direct” properties were at a lower level than “direct” properties; the question remaining as to whether a further discount should be made where a jetty or pontoon is not able to be developed at a particular property.

I conclude that Mr Lunney has been misled into placing too great a significance on the waterfrontage dimension of the subject land than is warranted.  It is my appreciation of the evidence that Mr Hawley’s approach has somewhat more balance than the approach outlined by Mr Lunney and his valuation conclusions are to be preferred.  I find that Lot 39, Columbus Drive, is inferior to the subject land for the reasons outlined by Mr Hawley and that, therefore, a valuation of $144,000 on the subject land as at 1 January 1995 is supported.    Such a figure fits neatly with 107 Columbus Drive which was valued at $157,500.  A lower valuation than $144,000 on the subject would, in my view, put it clearly out of line with 107 Columbus Drive.
           Valuations applied by the Chief Executive in the region of the subject land as at 1 January 1996 were generally lower than that applied in 1995.  Mr Lunney makes the point with respect to the 1996 valuation that, in the case of 29 Columbus Drive, there was a reduction of 10.4% from the 1995 figure of $125,000 to $112,000 in 1996; a reduction of 10.236% in the case of 35 Columbus Drive, and 9.84% for 107 Columbus Drive, whilst the subject land had a reduction in value of only 6.94%. 
           In Tow v. The Valuer-General (1978) 5 QLCR 378 the Land Appeal Court was dealing with a submission from the appellant concerning increases of valuation and at p.381 of the judgment said this:

"It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation."

Whilst Tow was concerned with an increase in value, there is no material difference in principle between that authority and the submission raised by Mr Lunney, therefore I must hold that the evidence and argument raised by him concerning the difference between the percentage reduction in value of the subject land’s unimproved value and that of other properties is not relevant for the purposes of my jurisdiction.
           In addition to the percentage difference argument which I have just disposed of, Mr Lunney referred to Nos 29, 35 and 107 Columbus Drive as the properties whose 1996 determinations by the Chief Executive supported the figure of $108,000 contended for by him.  No. 29 Columbus Drive was valued by the Chief Executive at $112,000; No. 35 had a figure of $114,000 applied to it, whilst No. 107 was valued at $142,000.  It follows that the points of comparison on which I have made findings above, apply equally for the purposes of the 1996 valuation, so I will not repeat those matters here. 
           In support of his valuation, Mr Hawley included two sales.  The second of these is, according to Mr Lunney’s evidence, located in Runaway Bay, a suggestion not challenged from the Chief Executive’s side.  Having regard to what was said earlier by Mr Hawley and my acceptance of that evidence relating to the different market at Runaway Bay, I will not place reliance on this sale.  The other sale referred to by Mr Hawley is of a property at 7 Gretel Place, which has an area of 690 m², and sold on 5 August 1995 for $144,500.  Following the deduction of site improvements, Mr Hawley calculated an unimproved figure of $129,000, which he applied at $120,000.  Mr Hawley considers the sale to be inferior to the subject land as the sale is irregularly shaped, has a westerly outlook over water and is located toward the end of a canal.
           Mr Lunney vigorously put the view that Mr Hawley’s sale property is superior to the subject land.  He thought that the water views from the sale block were superior to the subject, a point with which I cannot agree, in particular, as Mr Lunney thought the aspect to be northerly, whereas the evidence from maps indicates quite clearly that the aspect is to the west.  Mr Lunney again stressed the larger waterfrontage of the sale land (at 19.647 metres) and suggested that the sale block was closer to the Paradise Point shops and services, though there would appear to be little practical difference.  He also said that the sale block was somewhat removed from the “end of canal” disability; however, the evidence I heard, and my view of the sale, indicated that he is wrong in this regard.  Mr Lunney commented that the sale block, being located in a cul-de-sac, enjoys a quieter environment than would the subject land which is exposed to the through road of Columbus Drive.  Unfortunately, this point was not pursued with Mr Hawley.  Overall, I accept Mr Hawley’s evidence that the subject land is superior to his sale.  The remaining question is whether in striking his valuation for the subject land he has made appropriate allowances for the differences between the blocks.
           In addressing this question, some reference might be made to the reliance that Mr Hawley placed on the 1996 valuation of Lot 39, Columbus Drive, in the amount of $129,000.  He said that the method of valuation employed was to follow a mass appraisal process of reducing values by 10% as indicated by the sales relied upon, and to then consider the resultant value placed on each lot.  He did this in the manner that valuers do bringing to bear his learning and skill in adjusting values to reflect his appreciation of the proper relationship that ought to exist between the valuations of individual properties.  In the instant case for the 1996 valuation Mr Hawley concluded that the application of a 10% reduction in value from the 1995 figure for the subject land resulted in a valuation which was not in proper relationship with, amongst others, the adjoining Lot 39.  This is a conclusion with which I would agree and in stating this I should make reference to an authority which supports the approach employed by Mr Hawley.  This issue was touched on in Barnwell v Valuer-General (1990-91) 13 QLCR 13 at 17 from which this quotation is taken:

"It has been well recognised over the years that previously established relativity in unimproved values can and does change from valuation to valuation.  If there was no justification for a change in relativity, the valuer's task would be very simple in that all that would be required to establish value would be accomplished by the use of an adjusting formula.  This, of course, is undesirable."

In drawing the conclusions that I have on the evidence, I should mention that it is appropriate to have regard to determinations of the Chief Executive in striking a valuation on land subject to appeal. 
Section 33 of the Valuation of Land Act provides as follows:

"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."

The High Court case of Brisbane City Council v. The Valuer-General (1978) 5 QLCR 283 at 303 provides the guide as to what is required for an appellant to show that the Chief Executive's valuation is wrong:-

"The question then is whether a court on appeal is bound to accept the Valuer-General's figure as correct unless it is positively established that the true value is lower, or whether it is enough to show that the value was reached as the result of an error in principle.  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."

I find on the evidence that Mr Hawley has not proceeded on any wrong principle, nor has he made any serious error of fact.
           In the result, each of the appeals is dismissed and the valuations of the Chief Executive are affirmed.

RP SCOTT
  MEMBER OF THE LAND COURT