Schokman v Chief Executive, Department of Natural Resources
[1998] QLC 156
•23 December 1998
|
BRISBANE
23 December 1998
Re: Appeal against an annual valuation
Valuation of Land Act 1944
Local Government: Gold Coast City Council
(AV97-367)
Vincent R and Carol G Schokman
v.
Chief Executive, Department of Natural Resources
DECISION
Introduction
The appellants, Vincent R and Carol G Schokman, own land at Ashmore on the Gold Coast which is used for the purposes of a retirement village (the “subject land”).
In making valuations of all land in the area as at 1 October 1996, the respondent Chief Executive assessed the unimproved value of the subject land to be $575,000.00. The appellants objected. Their objection was disallowed. They appealed to the Land Court, estimating the unimproved value of the subject land was $360,000.00.
The appeal was brought under the Valuation of Land Act 1944 (the “Act”) which provides that the unimproved value of land is the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require (section 3(1)). The Act also provides that:
a notice of appeal shall state the grounds of appeal;
the appeal shall be limited to the grounds so stated; and
the burden of proving any and every such ground shall be on the owner (section 45(4)).
The notice of appeal states three grounds of appeal:
“1.Consideration has not been given to the flooding of the entire premises, Twice since 1989.
2.Extensive land fill has been undertaken.
3.Removal of unsuitable land fill conducted on a earlier excavation.”
Both parties were legally represented at the hearing - the appellants by Mr M Gynther and the respondent by Mr J O’Rourke. Expert evidence was given orally and in writing by two experienced valuers, Mr A Crawford for the appellants and Mr D Treston for the respondent, and by an engineer, Mr J Swan, for the appellants. One of the appellants, Mr VR Schokman, gave oral evidence.
Preliminary issue - the amount contended for by the appellants
As required by section 45(5) of the Act, the appellants stated in their notice of appeal the amount which in their opinion should be the valuation of the subject land. They nominated the sum of $360,000.00, the amount which the respondent had determined to be the unimproved value of the subject land as at the previous date of valuation (Exhibit 14).On the first day of the hearing, the appellants tendered a written valuation report by Mr Crawford (Exhibit 2) which concluded that the unimproved value of the subject land at the date of valuation was $320,000.00. In the course of his oral evidence that day, Mr Crawford altered some of the figures used in the calculations and concluded that the unimproved value of the land was $290,000.00. At the resumption of the hearing, following an adjournment of eleven days, Mr Crawford gave additional evidence. Using a revised set of calculations, he concluded that the unimproved value of the subject land at the date of valuation was $110,000.00. The final figure was the one advanced by the appellants.
The respondent’s legal representative did not object to the appellants contending for an amount lower than that stated in the notice of appeal. Counsel for the appellants, however, submitted that the Court may be barred from hearing a claim to such an amount. Neither lawyer cited any authority on the point and counsel for the appellants put his submissions on the merits of the case in the alternative. First, if the Court cannot consider an amount lower than that stated in the notice of appeal, the appellants contend that the unimproved value of the subject land at the date of valuation was $360,000.00. Second, if there is no such limit to the Court’s discretionary power to determine the matter, the appellants contend for the sum of $110,000.00.
It is clear that an appellant may not amend the grounds of appeal. Section 45 of the Act, however, can be read as drawing a distinction between the grounds of appeal and the amount stated by an appellant to be the unimproved value of the land. The relevant subsections provide:
“(3)An appeal shall be instituted by filing a notice of appeal in the Land Court registry.
(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every ground shall be upon the owner.
(5) Such notice shall also state the amount which in the opinion of the appellant should be the valuation of the subject land.” (emphasis added)
Although the grounds of appeal are limited to the grounds so stated, the statement of an amount is a separate and additional requirement. By contrast with sub-section (4), sub-section (5) does not say that the appeal shall be limited to that amount.
The issue was considered in Brooker v The Valuer-General (1966) 33 QCLLR 159. The Valuer-General had originally determined the value of the land to be £1,310. On objection the owners claimed that the unimproved value of the land was £400. The objection was allowed in part and the Valuer-General determined the value of the land to be £980. The owners appealed to the Land Court but the person compiling the notice of appeal wrongly inserted £980 as the amount which the appellants stated to be the unimproved value of the land. The Valuer-General submitted that the Land Court had no jurisdiction to hear the appeal because the notice of appeal did not disclose that the Valuer-General had any case to answer. The Court held that an incorrectly stated amount did not, in itself, make the notice of appeal defective and, in the circumstances of that case, the Valuer-General’s interests had not been prejudiced by the insertion of incorrect figures. The Court cited decisions in rental and valuation cases where courts had permitted an appellant to lead evidence to an amount lower than that stated in the notice of appeal (see Universal Building Co Pty Ltd v The Valuer-General (1962) 29 CLLR 321 and (1963) 30 CLLR 160, Alfred Grant Estates (Surfers Paradise) Pty Ltd (receiver appointed) v The Valuer-General (1964) 32 CLLR 23 at 35 and 33 CLLR 1) and referred to “what has become the accepted practice of allowing parties to call evidence of valuation at a figure at variance with that contained in any document filed in the Court prior to the hearing”. It held that the appellant could call evidence to a lower figure than the amount of the valuation (mistakenly) stated in the notice of appeal.
In a subsequent case, Glen Kyle Pty Ltd v The Valuer-General (1985) 10 QLCR 220, the Land Court held that there was no authority to support the amendment of the amount stated in the notice of appeal when the matter is called on for hearing. The Court, however, cited the decision in Brooker’s case as authority supporting the proposition that it is open for appellants to lead evidence to a lower figure than that stated in the notice of appeal.
In my opinion, section 45 does not prevent an appellant from leading evidence of valuation to an amount lower than that stated in the notice of appeal. Nor does it prevent the Court from determining that the unimproved value of the land was an amount lower than the amount stated there. The authorities support that conclusion.Important also is section 66 of the Act which empowers the Court to reduce or increase the amount of the valuation in dispute to the extent necessary, in the Court’s opinion, to determine the amount correctly under, subject to and in accordance with the Act. The case will be decided on that basis.
The subject land
The subject land is described as Lot 1 on RP 850272 in the Parish of Nerang, County of Ward. It is an irregularly shaped block with an area of 12,220 m². It has a southern frontage to Allunga Avenue (approximately 19 or 20 metres) and a north-western corner frontage to Cran Street (61.719 metres) and Kinarra Street (34.935 metres) in Ashmore. Both streets are wide bitumen sealed carriageways with concrete kerbing and channelling.
Ashmore is a residential based Gold Coast suburb, approximately two kilometres south-west of Southport. The subject land is surrounded by low to medium density residential development. It is approximately 450 metres west of the Ashmore City Shopping Centre, which includes the Ashmore Medical Centre. The nearby Southport-Nerang Road provides quick access from the subject land to the Gold Coast Hospital at Southport.
Reticulated town water, sewerage, underground power (Allunga Avenue), overhead power (Cran Street) and telephone services are available and connected to the subject land.
Apart from one qualification, Mr Crawford agreed with Mr Treston’s description of the subject land:
“The site in its natural state slopes down steeply from Cran Street to a low flooded area towards the middle of the site and then rises moderately to Allunga Avenue. The middle of the site is low and prior to development was a natural flood way. This low area is still a flood way but has been developed with underground stormwater pipes and an overland flow system. Land adjoining the site, on the western boundary, is City Council Freehold land used as a Flood Retardation Basin. This Council land has been excavated to a depth of 3.0 metres in parts with an earth wall built close to the subject land’s western boundary. The construction is to assist in slowing down the flood water and to divert the flow into the underground stormwater pipes that sever the subject site.”
Mr Crawford’s only query was with the reference to excavation to a depth of 3.0 metres which he was not in a position to quantify at the hearing.
The extent of the slope of the subject land is apparent from a contour map (Exhibit 16) which shows the land to be at elevations of between 25 and 21.5 metres along the irregular north-western boundary to Kinarra and Cran Streets, then falling to about 17 metres in a diagonal line running south-west to north-east near the middle of the block. Much of the central one third of the land is fairly flat, with an elevation of 17 to 17.5 metres. The land rises in the southern one third to almost 23 metres at the Allunga Avenue entrance.
Mr Crawford described Ashmore as a “fairly desirable suburb” but argued that “the benefits of the suburb are really destroyed in the positioning of the site in the gully with its inherent drawbacks from the humidity, the heat and the extreme cold or the extremes of weather that are suffered there.” Mr Schokman also stressed the negative features of the land. Because the site is in a gully, it is flood prone, there is no view and the land is very hot in summer and very cold in winter.
Much attention was given to the susceptibility of the subject land to flooding. The contours of that and surrounding land are such that water flows eastward along a natural drainage depression across park land to the west of the subject land, then over the subject land towards areas in the east. Pipes and drains have been installed on the park land and that land has been contoured for the overland flow of water and to mitigate flooding from that land onto the subject land by slowing the flow of water.
There are two major storm water drainage easements, to the Council of the City of the Gold Coast (the “Council”), severing the subject land.(a)Easement “B” (E176143 and J524726X) has an area of 668 square metres and is a covered underground pipe with drainage grates. The main part of the easement runs in a north-easterly direction across a low area of the subject land. Part of it runs southwards inside the western boundary and eastwards inside the southern boundary to Allunga Avenue. Part of the accommodation building has been constructed over this easement.
(b)Easement “D” (L921246R), is to the north of and runs parallel to the main part of Easement B, and continues southwards inside the eastern boundary of the land to join the north-eastern corner of Easement B. It was part of the approval for the development of Stage 2 of the retirement village, and has an area of 426 square metres. Easement “D” consists of underground stormwater pipes with a concrete overland flow path on top, looking similar to a concrete pathway.
Mr Crawford described the features of the subject land and flood mitigation works in the following terms:
“A major drainage path crosses the subject property with the result the site has been partially flooded on numerous occasions. Recent mitigation works have yet to be tested but are likely to have resolved the immediate major problem. The southern portion of the site however is lowlying and constantly affected by surface runoff and localised flooding despite the extensive mitigation works. This is due to council engineering which channels surcharge from the major drains across this property.” (Exhibit 2)
Mr Treston wrote:
“Part of the subject land is prone to flooding is (sic) times of torrential rain. There is an extensive underground storm water drainage system but flooding can still occur in the middle section of the site.” (Exhibit 3)
He agreed that, if the land flooded in 1994 and no remedial works had been done, the land would have been susceptible to flooding at the date of valuation.
Despite its disabilities, the parties agreed that the highest and best use of the land was for an aged persons’ facility. The land is zoned Special Facilities (Retirement Village). At the date of valuation it was being used for the purposes of a retirement village, dementia unit, communal facilities and a manager’s residence. The land was rezoned from Residential A to Special Facilities in October 1991. The zoning approval allowed for a maximum of 86 bedrooms. The Stage 1 development, approved in May 1986 under the Residential A zoning, allowed 50 one bedroom serviced units plus communal facilities and a manager’s residence. The rezoning was necessary to allow an application for additional bedrooms on the site. The approval for 86 bedrooms gave a density of 70.5 bedrooms per gross hectare or 1 bedroom per 142 m². The land was subsequently given approval for a “Dementia Community Room Extension” under the Special Facilities zone (Exhibit 3).
Development of the land was subject to certain constraints. The effect of the evidence of both Mr Swan and Mr Schokman was that the development must be done without steps, and ramps must not have a slope exceeding 1:14 for wheelchair movement. Extensive earthworks were necessary to provide level building platforms.
Construction of the retirement village and associated structures was carried out in two stages. Stage 1 was on the southern part of the land, with access from Allunga Avenue. It was completed before the appellants purchased the land late in 1991. When they purchased the subject land, approval had been granted for the development of the Stage 2 land for aged persons facilities. The Stage 2 land was purchased for that purpose and the houses on that land were removed.
Stage 2 was completed in 1994. It is on land which slopes down from Cran Street. Separate parking facilities are available near that entrance. Stage 2 is separated from Stage 1 by an open concrete drain which operates as a flood canal in times of heavy rain. In the approval for Stage 2, the Council prohibited any construction within the overland flow path and gave permission for the construction of an elevated footpath linking the existing development to the new development (Exhibit 2).Mr Schokman spoke about flooding on the site before and during the period since the appellants purchased it. His inquiries of Council when purchasing the land showed that there was extensive flooding of the subject land in 1989. There was further flooding in 1994, at a time when Stage 2 of the retirement village development (on the northern part of the land) was almost complete. Water to a depth of between 9 and 18 inches flooded all but the lounge in the Stage 1 buildings, which were about 1 foot above ground level. A retaining wall on the Cran Street side of the site, constructed to hold fill to above ground level, apparently prevented Stage 2 being inundated A culvert (outlet pipe) was installed in 1997 after the date of valuation. By the time of the hearing, there had not been enough rain to test the adequacy of the improved drainage system.
Although there was much emphasis on the disabilities of the site, the nature and extent of those features must be considered in context. When asked by Mr Gynther how, in engineering terms, he would describe the ease or difficulty of achieving a suitable building on the block (or at least as much of it as comprised the Stage 2 land), Mr Swan said:“A level site with good material is obviously the choice of site to have because there’s no additional costs whatsoever and probably the worst site is a very steep one with poor material. This one is probably about mid way so it’s an average middle difficult site.”
In his written report, Mr Treston noted that the development of the site for Stages 1 and 2 involved drainage, filling and retaining work which included:
(a)Removal of poor quality fill. Part of the Stage 2 land had been used as a dump and that material needed to be removed. Adopt 1,950 m³ of fill excavated and removed.
(b)Import fill to replace the excavated fill and to fill the part of the second stage, where buildings were erected, to a level above a 1 in 100 year flood. Adopt 2,500 m³ of compacted fill.
(c)Construction of the concrete over land flow path (Easement “D”).
(d)Construction of the retaining walls on the north and south side of the over land flow path.
(e)Construction of the retaining walls on the eastern boundary of the new section.
(f)Construction of all of the storm water drainage pipes within the site. That is the pipes in Easement “B” and Easement “D”.
(g)Other internal drainage excluding the storm water drainage pipes within the Easements “B” and “D”.
(h)Some minor cutting, filling and levelling of Stage 1.
Cut and fill of Stage 2 (Exhibit 3).
Some of Mr Treston’s figures were disputed, and the matters of disagreement were apparent in various sets of calculations tendered and amended in these proceedings. For the moment it is sufficient to note Mr Treston’s recognition of the range of factors involved in developing the subject land.
The grounds of appeal
As already noted, the appeal is limited to the grounds of appeal and the burden of proving each ground of appeal is on the appellants.
Effect of flooding: The first ground of appeal states that consideration has not been given to the flooding of the entire premises, twice since 1989.
The evidence summarised earlier demonstrates that Mr Treston was well aware of the natural contours of the land and its susceptibility to flooding. Strictly speaking, such a finding disposes of the first ground of appeal.
However, the real issue is not whether any consideration was given to the effect of flooding but whether sufficient consideration was given to the effect of flooding when the unimproved value of the land was assessed. Mr Treston’s evidence on that point will be considered later in these reasons. For the moment I note that, in his alternative “Top Down Approach” to valuing the subject land, Mr Treston allowed a 15% reduction in value for flooding and severance due to the easements. He assumed that a prudent purchaser of the land in its unimproved state would have provided filling and drainage necessary to prevent or contain flooding. The cost of those works was included in his calculations. He considered that he had been “reasonable”, if not “generous”, in making that allowance.
Effect of fill: The second ground of appeal states that extensive fill has been undertaken.
For present purposes, the subject land is to be valued in its unimproved state. Where land has been improved one has to assume that, at the relevant date of valuation, the improvements did not exist (section 3(1)(b)). Section 6(1) of the Act defines “improvements” to mean, in relation to land, “improvements thereon or appertaining thereto, whether visible or invisible, and made or acquired by the owner or the owner’s predecessor in title”. Section 6(2), however, contains the proviso that, in the determination of the unimproved value of land, the term “improvement” does not include “invisible improvements ... where such invisible improvements have been made by the Crown” except to the extent to which, in the case of a purchaser from the Crown, the Crown “has been recouped in respect of expenditure on such invisible improvements by such purchaser ... otherwise than by payment of rent, rates or taxes”.
There was no suggestion that the Crown put the fill on the subject land. Consequently, any fill must be considered as an improvement in this case.
It is clear from his description (in Exhibit 3) of the works required for the development of Stages 1 and 2 that Mr Treston was aware that there was fill on the subject land at the date of valuation.
I am willing to consider the appeal on the basis that the respondent knew of the fill but the real issue is whether sufficient allowance was made for the value of that improvement in determining the unimproved value of the land.
Removal of fill: The third ground of appeal states that unsuitable fill was removed on an earlier excavation.
Again there was evidence that Mr Treston had regard to the removal of unsuitable fill. It is a matter of degree whether he took sufficient account of it.
A strict response to a literal reading of the grounds of appeal might lead to a dismissal of the appeal at this stage. However, as indicated, I am willing to consider how the unimproved value of the subject land was assessed in order to determine whether the respondent’s valuation should be affirmed or whether the amount should be reduced or increased.
It is appropriate at this point to note that section 33 of the Act states:“any and every valuation … of any land 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”.
As the Land Appeal Court stated in Grahn v Valuer-General (1992) 14 QLCR 327 at 328, there is high authority for the following propositions:
Section 33 creates a presumption that the value in money terms shown by the Chief Executive in his notice of valuation is correct.
Once it is shown that:
-in making the valuation the Chief Executive acted upon a wrong principle, or made a serious error of fact; or
- the valuation was made by a method fundamentally erroneous,
the presumption created by the section is rebutted.
Consequently the appellants can only succeed if they rebut the statutory presumption.
Valuing the subject land
In determining the unimproved value of the subject land, the following matters need to be addressed:
What is the best methodology or approach to adopt?
Should account be taken of the amount of headworks contributions paid to the Council to obtain approval for the development of the subject land?
Which sales of comparable land in the district are relevant to the determination of the value of the land (and can one rely on sales some months after the relevant date of valuation)?
Valuation methodology: An important issue in this case is what is the best approach to take in determining the unimproved value of the subject land.
In his written valuation report (Exhibit 3) Mr Treston said that the subject land had been valued on an unimproved basis by using a direct comparison of that land with comparable parcels of land in the vicinity of the subject land and on which there were no significant improvements. Mr Treston noted in the report that the site is prone to flooding and that it required certain drainage, filling and retaining work to enable development. His calculations were as follows:
12,220 m² @ $47.50/m² = $580,450.00
Adopt $575,000.00.
In reaching that figure Mr Treston included an amount for headworks contributions. The inclusion of headworks contributions was an issue in these proceedings and is considered later in these reasons for decision.
Mr Crawford adopted a different approach. He stated that he had assessed the unimproved value of the subject land by having regard to sales of comparable parcels of land unaffected or partially affected by adverse site conditions, applying a rate per square metre to the subject land, and then adjusting for adverse site conditions (Exhibit 2).
The quantification of the impact of the effect of the adverse site condition was done by using the actual costs faced by the owner in relation to the Stage 2 development on the northern part of the land and extrapolating them to October 1996 dollar equivalents. The components of site preparation costs were separated into those which are relevant to calculating unimproved value and those which are not. Details of the various relevant contract costs and variations to them, together with estimates of the costs for developing the southern part of the land, are set out in his written report. In his oral evidence, Mr Crawford further explained how the estimates were made by reference to the actual costs incurred on the northern part of the land with the addition of amounts for interest and profit.
In the course of his oral evidence Mr Crawford adjusted some of those figures. After the first set of adjustments (giving an adverse site allowance of $390,000) his calculations were, in summary, as follows:
Total area of site 12,220m²
Less easements 942m²
Useable land 11,279m²
11,279m² @ $60/m² $680,000
less adverse site allowance $390,000
Unimproved value $290,000
Recalled at the second stage of the hearing, Mr Crawford made further adjustments to the adverse site allowance for the southern part of the site, increasing the total allowance to $573,423.00. Mr Crawford described how each component item was calculated and said that the approach he had taken originally to the southern part of the site “didn’t really take into consideration how bad that part of the site also was”. When deducted from the estimated unimproved value of the useable land ($680,000), the final figure was $106,577.00 and the figure which he adopted was $110,000.00 (Exhibit 17). In Mr Crawford’s opinion, a hypothetical prudent purchaser would quantify the problems and adverse conditions of the subject land and would assess what the site would be worth by considering the cost of effecting works to develop the land for its highest and best use.
The significantly different results arrived at by Mr Crawford highlight the potential problems inherent in that approach when it is relied upon as the principal method of calculating the unimproved value of land. Its reliability is significantly influenced by the accuracy of the components of the calculation, in particular the correctness of the initial rate per square metre and the correctness of the costs to be deducted, as well as other factors.
Mr Crawford’s calculations were criticised mainly for the reason that:
his initial rate per square metre was too low
he had applied no value to much of the easement land
the estimates of site works costs for Stage 1 were unreliable
the adjustment of dollar rates to 1996 values was unnecessary in relation to some costs components.
Those criticisms merit consideration.
First, Mr Treston considered that a starting land value of $60/m² was “far too low” and did not indicate whether component 2 headworks contributions were included. He estimated the value of the land fully developed was $75/m². Mr Crawford explained that he derived the figure of $60/m² by reference to the seven sales described in his valuation report and having regard to “the problems facing the site due to the nature that it is in a gully, that it is really an undesirable location albeit in Ashmore”. The seven sales to which he referred are discussed in detail later in these reasons for decision. I observe at this point, however, that if the starting value was determined having regard to the detrimental features of the site then there is a risk that, by deducting all relevant site costs from the starting sum, too much allowance is made in the calculations for those features.
Second, Mr Crawford stated that in valuing the subject land he had not assessed any value for 942 m² of land covered by easements “B” (60 m² and 456 m²) and “D” (426 m²). The areas which he treated in that way were not the full areas covered by the easements but were those areas which adversely affect the site. Mr Crawford explained that the easements constituted “very severe design restrictions” and one of the easements “is of no use”.
The easements created difficulties for linking the facilities in Stages 1 and 2 on the subject land. Mr Crawford acknowledged that one easement serves a drainage purpose and that only one of the easements does not have a building across or connecting across it. In his opinion, that land “has got a use but the extent of the use is very, very limited” and the design problems created by such easements outweighed the allowance he had made for them. His disregard of some easement land was explained, in part at least, as a way of treating the subject land and otherwise comparable sale land as the same by trying to notionally improve the land to a state where it has no drainage problems. He noted that sale 7 in his list of comparable sales had an easement of 284 m² cutting across the site, but apparently that easement is easily contained in the development design. When analysing the value of the sale land on a rate per square metre basis, however, Mr Crawford had not ascribed any value to the area covered by the easement.
Mr Treston criticised Mr Crawford’s allocation of no value to any of the land covered by an easement. In his opinion it is “technically wrong to apply no value to any sort of land”. He accepted that the easement that is bounded by the flood path provides a restriction on development and severs the site. There cannot be any construction on the easement. Special permission was required before a pedestrian bridge could be built over it. But because drainage is necessary to any development of the site and the easement provides for drainage, he suggested that the easement may have enhanced the value of the surrounding land. He also suggested that Easement D allows a buffer between the two developments on the higher ground and the open space might make the total development feel less cluttered. I am satisfied that, whether or not it is considered a restriction, the easement land would not be worth nothing. The easements with buildings over parts of them could not have no value.
It is apparent that Mr Treston’s approach was to consider the impact of easements on the total value of the subject land rather than to isolate the easement land for valuation purposes. In my opinion that is the preferable approach in this case. The location, dimensions and restrictions imposed by the easements are relevant to the way in which the subject land in its unimproved state could be developed to its highest and best use. The hypothetical prudent purchaser would be expected to consider those features in determining what price he or she would pay to acquire the land.
Third, Mr Treston accepted the actual site works costs listed in Mr Crawford’s calculations, but queried the reliability of estimates for the cost of works said to be necessary on the Stage 1 land. Having inspected the site, he considered that it did not require the sort of works that were necessary for Stage 2. Consequently he did not accept the total of $390,000.00 allowed by Mr Crawford for site works in the first revised calculations. Stage 2 was a sloping site which required the removal of old fill, the replacement of fill, excavation and the construction of retaining walls. By comparison, in his opinion, the Stage 1 land “is much more friendly to development”. It slopes gently to the southern boundary and would require compacted fill over a fairly large area of the Stage 1 land to elevate it to above flood height. The differences of opinion about the various costs are recorded in the evidence. Some are referred to later in these reasons.Fourth, Mr Treston criticised the across-the-board application of an escalation rate to bring costs to 1996 dollar values. He stated, for example, that filling costs had not increased very much over recent years because equipment has become more efficient. He suggested that, although retaining wall costs may have risen, the best way of adjusting figures to 1996 values was to apply the cost of similar improvements at that date rather than apply a percentage increase. I accept that his approach is appropriate, but note that Mr Crawford drew his figures from a recognised industry publication on construction costs, rather than applying an across-the-board increase based on the CPI.
Whether or not one accepts every detail of the criticisms made by Mr Treston, I am satisfied that they demonstrate why the method adopted, and some of the components included, by Mr Crawford should be treated with caution.
The sales evidence will be considered later. At this stage I note that the sales relied on by the appellants (and which I accept as useful in these proceedings) were analysed to have an average value in the range between about $51/m² and about $80/m², with no allowance for development costs, and between about $51/m² and more than $90/m² with such an allowance. The two sales on which the respondent relied were in the range of about $65/m² and about $80/m², without any allowance for development costs. None approached $9/m², the amount arrived at as a result of Mr Crawford’s calculations concerning the subject land. By contrast, the respondent also pointed to (but did not rely on) the 1990 sale of three parcels of land which comprise part of the subject land later used in the Stage 2 development. That land was sold for a price which averaged $173/m².Although the figure which he finally advanced gave an average of approximately $9/m², Mr Crawford maintained that the result was a consequence of the valuation approach he had taken and was not inappropriate by comparison with the sales evidence cited in his report. He reiterated that the sales “were the first things put into the calculation, and then adjusted to reflect the fact that the site was such a large proportion of swamp”. The figure reflected what he considered the hypothetical prudent purchaser would pay for that site having full knowledge of its detrimental features. Mr Crawford had not investigated the 1990 purchase of three parcels of land which comprise part of the subject land. He did not offer an opinion on the apparent discrepancy between his estimate of value and the 1990 purchase price other than to suggest that the purchaser paid “far too much” for the land.
Mr Treston agreed with Mr Crawford that a prospective purchaser of the subject land would look at the costs associated with the proposed development of the land. Such costs would influence the price a prospective purchaser may be willing to pay. But, he cautioned, the sale price would be what the vendor would be willing to accept. Thus, although the “top down” method is “useful” and “a fair method” of arriving at the unimproved value, “in the end the value arrived at has to be considered fair to both parties”.
Consistently with those views, Mr Treston prepared an alternative set of calculations as a check method to determine the unimproved value of the subject land (Exhibit 13). The document, titled the “Top Down Approach”, set out the estimated value of the fully developed land from which amount was deducted a series of construction and other costs which were itemised having regard to evidence in these proceedings. In summary the calculations were:12,220 m² @ $75/m² (fully developed) $916,500.00
less site works with interest $176,289.00
$740,211.00
less 15% allowance for flooding and severance $111,031.00
$629,180.00
plus headworks (component 2)
86 beds @ $955.10 $ 82,139.00
$711,319.00Adopt $710,000.00
(an average of $58.50/m²)
The figure arrived at by the second method is significantly higher than the amount calculated using the direct comparison approach. Mr Treston explained that the subject property was originally valued as part of “mass valuations” and was done “on a straight comparison” with other properties. Although he had realised the problems associated with the subject land, it was not until the appeal that he “attempted to rationalise all the costs associated with developing the site.” Despite the suggestion in the “Top Down Approach” document of an unimproved value of $710,000.00, he did not lead evidence to the higher figure, preferring “to err on the conservative side” and support an amount which he considered was “a fair representation” of the unimproved value of the land.
Mr Treston explained the basis on which the costs of site works were calculated and accepted that, if higher amounts had been paid for those works, the figures should be adjusted accordingly.
Having regard to the valuation and engineering evidence in this case I am satisfied that the preferable method for determining the value of the subject land is on a direct comparison basis with comparable sales. The “top down approach” is a useful check where appropriate figures are used in the calculations.
Although the parties’ valuers differed in their preferred methodologies and the results which they reached in assessing the unimproved value of the subject land, there was no suggestion that the valuation made by the Chief Executive using a direct comparison with comparable parcels of land was made by a method fundamentally erroneous. Rather, for reasons just given, I consider that that method was the more reliable primary method of valuation for this case.
The only remaining basis on which the appellants could succeed is if they can show that in making the valuation the Chief Executive acted upon a wrong principle (by including an amount for headworks contributions in making the assessment of unimproved value) or made a serious error of fact (by wrongly applying relevant sales evidence or making insufficient allowance for detrimental land features).
Headworks: In assessing the unimproved value of the subject land, Mr Treston allowed an amount for the payment of component 2 headworks. He also made allowance for headworks when comparing the subject land and the sale blocks. He explained that in the Gold Coast district a developer has to pay the Council for water and sewerage infrastructure (including sewerage treatment plants and the main pipes). The amount payable is calculated by reference to the number of people who may live in the proposed development. The headworks contributions are separated into component 1 costs (which are paid at rezoning) and component 2 (paid when approval is given to the plans for proposed development). Each component is about half of the total contribution payable by the developer. Because headworks add value to land but are not defined as an improvement (and so cannot be deducted from the improved value of land), the Chief Executive has apparently adopted the practice of including headworks contributions in the unimproved value of land. Mr Treston described headworks as “something inherent in the land”. A developer would pay more for land where headworks contributions had been paid (irrespective of whether the approved buildings have been constructed) than for a similar site where headworks contributions had not been paid.
Mr Treston agreed that if land is zoned in a way that permits its highest and best use then no amount is deducted from the unimproved value of the land as an allowance for rezoning costs. If, however, land is valued for a higher and better use than its current zoning then an allowance is made for the cost of rezoning and the associated risk.
In the examples cited here, no allowance was made for the component 1 headworks because the zoning of the comparable properties was the same or sufficiently similar, allowing comparable uses of the various parcels.
Mr Crawford disagreed with any reference to component 2 headworks contributions when calculating the unimproved value of land. In his opinion, where the zoning of land allows the highest and best use of that land, headworks contributions that relate to the construction of buildings should not come into the calculations.
In support of his submission that headworks contributions should not be taken into account in determining the unimproved value of the subject land, Mr Gynther cited three judgments of the Land Court .
In Riverside Drive Estate Pty Ltd v Valuer-General (1988-89) 12 QLCR 165, the Court considered the approach to be taken when determining the unimproved value of 86.33 hectares of land which included land subdivided into 47 allotments and balance land. Different parts of the land were differently zoned. The dispute that is relevant to these proceedings was confined to the valuation of 3.62 hectares of Residential A zoned subdivided land. The Valuer-General had adopted a value calculated at a rate per hectare (which was the same rate as for Residential A zoned en globo land) to which was added an amount for headworks contribution (at a rate per allotment) and an amount for approval costs (also at a rate per allotment).
The appellant contended that the headworks contribution and approval costs should not be included in the valuation of the subdivided land. The argument was, in summary, that the charges were paid for bringing services to the subdivision and related to the provision of services external to the site, and section 11D(1) of the Act (now section 25) provided no warrant for the addition of those costs to the value of the land. (That section provides, in essence, that, where an owner subdivides land and continues to own not less than six of those parts, the parts are deemed to form a single parcel and shall be valued as such. Any enhancement in the value of the land by reason of works carried out by the owner on the subdivided land shall be disregarded.) In the alternative, the appellant suggested that it is at least unclear whether those charges should be added and any ambiguity or lack of clarity must be construed in favour of the land owner. Evidence called by the Valuer-General showed that the charges had been paid by the owner subdivider and in the market place a vendor could expect to be paid the equivalent sum by the hypothetical prudent purchaser who in turn could recoup the costs in the resale of the subdivided lots. The Valuer-General submitted that land must be valued in the environment in which it exists at the relevant date, with all its inherent advantages and disadvantages, facilities, services, etc. Land in respect of which the charges have been paid would fetch more in the market place than neighbouring land for which they have not been paid and as such add to the unimproved value of the land.
The Court held that it was appropriate for the Valuer-General to add to the en globo value of the land the contributions made by the owner of the subdivided land for headworks charges and approvals. The Court concluded that they “certainly add to the value of the land and can be distinguished from works carried out by the owner of the land which cause enhancement in the value of the subdivided land, which has to be disregarded” (at 169).
In similar circumstances in Kern Land Pty Ltd v the Valuer-General (V91-706, unreported decision of Mr Barry, dated 29 April 1993), the Land Court held that the “practice of including headworks charges and approval fees into the unimproved valuation is correct as neither of these costs are development works carried out by the owner on the land. If a parcel with these costs paid was offered for sale then a prudent purchaser would expect and be willing to pay more for the land than he would for a parcel without these charges prepaid” (at 11).
The third decision cited, The Proprietors “Cypress Gardens Waters 1” v Chief Executive, Department of Natural Resources (AV96-476/477, unreported decision of Dr Divett dated 21 November 1997), also involved land zoned and used for a retirement community and nursing home at the Gold Coast. In valuing the land, which was developed with 30 independent living units, the Chief Executive’s valuer added the costs of headworks charges to provide water supply and sewerage services externally to service the land. The Court quoted part of the Albert Shire Planning Scheme, which concerned the imposition of headworks contributions as a condition of approval for subdivision, and noted that the Council links the contribution to the proposed type and quantity of buildings to be erected on the land. The Court referred to earlier decisions in relation to headworks contributions and held that, while earlier cases had dealt with residential subdivided land, the principle also applies to land developed for either group title or mixed stratum plan purposes (at 18).
In reaching that conclusion, the Court quoted from the decision in Galli Developments (Queensland) Pty Ltd v Chief Executive, Department of Natural Resources (V95-05/6 and AV95-306, unreported decision of Mr Scott dated 23 May 1996) where reference was made to the practice of the Gold Coast City Council to levy headworks charges in two stages. Despite the lack of detailed evidence about the quantum of headworks charges in that case, the Court adopted a sum to be added to the raw land value and stated that the allowance for headworks “should be based … on what the purchaser will save or not have to spend in purchasing a parcel of land in respect of which headworks charges have already been paid” (at 22).
Although there appears to be no Land Appeal Court decision on the point, the decisions of different members of the Land Court cited in argument all point to a finding in favour of the valuation approach adopted by Mr Treston.
Mr Gynther submitted that the decisions in relation to headworks contributions in the Riverside Drive Estate Pty Ltd and Kern Land Pty Ltd cases concerned subdivided land, and were decided in the context of section 11D(1) (now section 25) of the Act. I accept that those cases were decided in that factual and legal context, but do not consider that the principle held to operate in those cases is restricted only to that set of circumstances. Accordingly, I reject the submission that, on this point, the Cypress Gardens Waters 1 case was wrongly decided.
Mr Gynther made three other submissions. First, he argued that the Act does not require an assumption to be made that a hypothetical purchaser or hypothetical vendor will develop or build on the land as at the relevant valuation date. Although the Act may not require an assumption to be made that the owner will develop the land to its highest and best use (and hence incur headworks charges), the Act does not require the Court to ignore those headworks contributions which have been made. As the reasons for decision cited earlier demonstrate, it would be inconsistent with the nature and purpose of the exercise to ignore the relevance of those payments to the determination of the unimproved value of land.
Second, Mr Gynther noted that the decisions cited earlier involved cases where the headworks contributions had actually been paid. Although there was no contest that the appellants paid headworks contributions for the Stage 2 development on the subject land, Mr Gynther stated that there was no evidence that a headworks charge was paid for Stage 1. I am willing to assume that the subject land was developed legally and that the necessary payments were made.
Third, Mr Gynther submitted that a headworks contribution is a one off payment. Thus, even if one accepted that a hypothetical prudent purchaser would include the amount for headworks in the purchase price in the first year after it was actually paid, the payment does not recur every year and should not be included in each annual valuation. In my opinion this submission misconceives the significance of the headworks component in the assessment of the unimproved value of the land at each valuation date. The Act provides that the unimproved value of land is the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that any improvements did not exist (section 3(1)). For that purpose, the land must always be notionally taken back to its unimproved state and one must determine what capital sum would have been paid for it at the relevant date. Assuming, as I do, that the headworks contribution (where it has been paid) is an element of that calculation, then it must always be included. If it were to be included in the year of payment but not in subsequent years then the result would be that, in those subsequent years, the unimproved value of the land would drop relative to its actual market value. Such a result would be contrary to the clear intention of the relevant provisions of the Act.
It is appropriate to take into account the amount of the component 2 headworks contribution when determining the unimproved value of the subject land. Consequently, the appellants have not shown that in making the valuation the Chief Executive acted upon a wrong principle by including such an amount.
Sales evidence: Each party provided evidence of sales of parcels of land which, they submitted, were sufficiently comparable to the subject land to enable a valuation of the land to be made.
The appellants relied on seven sales of land in the nearby suburbs of Benowa, Labrador and Parkwood, as well as the sale of land near to the subject land. The respondent relied on two sales of land in the immediate district of the subject land, the second of which was common with Sale 7 relied on by the appellants. The respondent also offered, by way of a check, the 1990 sale of three parcels of land which the appellants purchased in 1991 as part of the aggregated subject land.
In his valuation report, Mr Crawford discussed the seven sales in an order which did not reflect their relative significance to his assessment of the value of the subject land. He said, however, that the sale on which he placed the most weight was Sale 5. There followed, in no particular ranking, Sales 2, 3, 4 and 7. Mr Crawford gave slightly less weight to Sales 1 and 6. The sales evidence is analysed below in the order just listed for the appellants’ sales followed by the other sales on which the respondent relied.
Appellants’ sales: Sale 5: Lot 15 RP 907901 is located at Chelmsford Place, Parkwood. It has an area of 15,110 m² and is zoned Special Residential. It was sold in April 1997 (approximately seven months after the date of valuation) for $410,000.00, an average of $27.13/m².
The en globo parcel was developed incorporating a road to provide access to the lots created on either side. According to Mr Crawford, the cost of drainage is estimated at $10,000.00, and earthworks (which included boulder retaining walls at the rear of the southern lots and further walls to the rear of the western lots) were estimated to cost $55,000.00, giving total construction costs of about $65,000.00. The resultant figure of $31.44/m² demonstrated, in Mr Crawford’s opinion, the lack of appeal of sites that require significant civil works. Although the sale land was not affected by significant drainage or flooding problems, it did require substantial retaining walls. It was in an inferior location to the subject land but, because it was not flood affected, he concluded that overall this sale land was “far superior” to the subject on a direct comparison basis. It could, however, be regarded as the best comparison when a comparison is made for sites with adverse conditions.
The respondent sought to throw doubt on the arm’s-length character of the purchase because of the relationship of the vendor and the purchaser. The vendor was 591 Toorak Rd Pty Ltd and the purchaser was Northstar Pty Ltd. Mr Crawford regarded it as an arm’s-length sale but he had not investigated the sale fully and had not spoken to the parties. Evidence from the Australian Securities Commission shows that the directors of the vendor are Marisa Galli and Paul Louis Galli of Victoria, and the directors of the purchaser are Lorenzo Galli and Mark Galli of Queensland. (Exhibit 15). Mr Treston had made inquiries at the development site and had ascertained that those people are related to each other. He considered that a sale between family members or family related companies “should be discarded immediately” and should not be advanced as an indicator of fair market value.
Although he was not familiar with the site, Mr Treston was also concerned that the price paid was “very low” for that sort of land.
A standard valuation text, Land Valuation and Compensation in Australia by RO Rost and HG Collins, instructs that sales between members of a family “must be treated with great caution as evidence of value” and sales between related companies “are of questionable validity as evidence of value”.
I am satisfied that there was a close family (and possibly business) relationship between the parties and for that reason it would be unwise to rely on the sale. A comparison of the rate per square metre paid for the land with the prices paid for other properties on which the appellants rely adds to the doubt about the utility of evidence about the sale in these proceedings.
Sale 2: Lot 1 on RP 7399 is located in Central Street, Labrador. It has an area of 4,806 m² and is zoned Duplex Dwelling Zone. It was sold by the Queensland Government in May 1996 for $315,000.00, an average of $65.54/ m².
The site has been developed with a medium density development which appeared to have no significant site problems. It is located on top of a hill and, although it does not have great views, it benefits considerably from the elevation.
The parties agreed that Ashmore is a preferred area to Labrador. Mr Treston suggested that, because the sale land is located in Labrador a few kilometres from the subject land, the sales evidence is of “very limited use” when compared with evidence about sale blocks in Ashmore which are much closer to the subject land.
Generally speaking, the smaller of two large blocks of similar residential land would be more valuable on a rate per square metre than the larger block. Mr Crawford suggested that a parcel of about 4,000 m² would be in the order of 5-10 per cent. more valuable on a rate per square metre basis than a block with an area of about 1-1.2 hectares.
Although the sale land is significantly smaller than the subject land, is in a different (and somewhat inferior) location, and is elevated with no significant site problems, it can be used as a guide to the range of values against which the unimproved value of the subject land can be determined.
Sale 3: Lot 4 on RP 904051 is located in McMillan Street, Labrador. It has an area of 4,808 m² and is zoned Duplex Dwelling Zone. It was sold in February 1997 (approximately five months after the relevant date of valuation) for $265,000.00, an average of $55.12/m². There is an easement over 96 m² in the north-east corner. If allowance is made for site works, including 65 metres of 1.5 metre high retaining wall at $175.00/m² ($17,100.00) and $10,000.00 for drainage, the land value is analysed to $60.75/m². Although Ashmore is a preferred locality, Mr Crawford’s opinion was that the lack of site amenity in the subject land supports the comparison.
Mr O’Rourke queried whether reliance could be placed on this sale given that it took place five months after the date of valuation. The relevance of after date sales was considered by the Land Appeal Court in Scougall v Chief Executive, Department of Natural Resources (AV93-119, AV94-364, unreported decision dated 13 September 1996). The following paragraphs repeat that Court’s statement of the law.
It is undoubtedly the case that, for annual valuation purposes, the best sales evidence concerns sales of comparable blocks of unimproved land which occurred within a year before the date of valuation. Some support for the use of subsequent sales can be drawn from the following passage from Williams J in McCathie v Federal Commissioner of Taxation:
“Values must be calculated in the light of circumstances which existed on the material date, ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale supervening events occur which alter the condition previously existing, the subsequent sales would not be comparable and would be useless.” ((1944) 69 CLR 1, at 16; see also Daandine Pastoral Co Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 229 at 304).
In GA Nichol v the Valuer-General (1961) 28 QCLLR 161 the Land Appeal Court rejected a submission that sales after the effective date of valuation should be ignored. Having quoted the dicta of Williams J in McCathie, the Court noted that his Honour had stated the rationale for the approach as being the tendency of courts “to admit evidence of any events prior to the date of the trial which will throw any real light on the issues” (69 CLR at 16 and authorities cited there). In the opinion of the Land Appeal Court, “there appears to be no sound reason why a Court or any of the parties should be denied the assistance of sales of comparable land occurring after the effective date, provided market conditions or other relevant conditions have not materially altered” (at 292).
The statement by Williams J has been applied by other courts. In Federal Commissioner of Taxation v Harries (1980) 30 ALR 10, Bowen CJ stated that, if evidence of subsequent events is available which shows that the possibility of an event occurring has become a reality, it is proper for the Court to have regard to the actual events when assessing the position as it was at the relevant date (at 18; see also Deane J at 19). In the same case, Fisher J referred to the limitation on the principle stated by Williams J, namely that subsequent events can only be used to determine the weight to attach to circumstances which existed at the relevant date. The subsequent event cannot create an expectation which was not in existence at the relevant date (at 25 quoting from John Martin (Elizabeth) Limited v Commissioner of Land Tax (1965) SASR 217, at 225).In the present case this Court can only have regard to later sales evidence to confirm the circumstances which applied at the relevant valuation date. In some annual valuation cases, the date of sale may be so far after the relevant date of valuation, and so close to the next date of valuation, that evidence about the sale should be disregarded or given very little weight. In Eastwood Pty Ltd v The Valuer-General (1987) 11 QLCR 169, the appellant submitted that only one sale presented by the Valuer-General in that case could be used as a basis for valuation because the other sale was an after date sale. The Court considered that the sale in issue had occurred “a mere 26 days after the relevant date” and there was no suggestion that there was any change in the market place in “that short space of time”. It held that the valuer quite properly had had regard to the later sale (see (1987) 11 QLCR at 173, 176-177).
$110,000.00 Exhibit 17
$290,000.00 Exhibit 2 (amended version)
$320,000.00 Exhibit 2 (original version)
$370,000.00 Exhibit 18
$710,000.00 Exhibit 13 (amended version)
$715,000.00 Exhibit 13 (original version).
Exhibits 2, 17 and 18 were prepared for the appellants and lead to sums well below the amount ($575,000.00) appealed against in this case.
I have carefully reviewed the calculations and the evidence about them. Rather than analyse the various workings, I make the following observations about those aspects of them which are relevant to the grounds of appeal in this case.
In relation to grounds 2 and 3 I have expressed a willingness to consider whether the Chief Executive made sufficient allowance for the value of fill in determining the unimproved value of the subject land and whether he took sufficient account of the removal of unsuitable fill. There was relatively little firm evidence concerning the removal of fill and its replacement. Rather the Court was asked to draw inferences.
Mr Treston stated, on the basis of information provided by Mr Schokman, that 1,933 m³ of fill was removed and 3,067m³ of uncompacted fill was imported to the site. That fill was on the northern or Stage 2 area. Mr Treston rounded the amount removed to 1,950 m³ and costed it at $10.00 m³ based on information gleaned from various contractors on the Gold Coast. He allowed about a 30 per cent. compaction rate for the imported fill and so allowed for 2,500 m³ of compacted fill at $12.00/m³. Mr Treston also allowed for some filling and levelling of the old section of the site (6,800 m² x 0.25m @ $5.00/m²).
In addition to the site works on the northern part of the site, Mr Crawford allowed for the excavation of 7,800 m³ of soil from the southern part of the site and the import of 13,320 m³ of fill. Although there was no evidence that such excavation had taken place or that fill had been imported, a plausible argument was advanced for the appellants that some excavation would have been necessary and that imported fill would have been required. Mr Crawford suggested that if the agreed amount of fill had to be removed from the rear of lots in the northern part of the land then other land along the same contour would require similar treatment. The result of that treatment would be that the land would be raised to a level 300 mm above the 1 in 100 year flood level. Consequently the site would be flood free.
If one applies to Mr Crawford’s estimates the costs of removing soil and importing fill which Mr Treston used, there is a substantial difference between the parties in relation to the costs for those items.
In the absence of clear evidence about the nature and quantity of soil removed from, and fill imported to, the lowest area of the subject land, it is not possible to make a finding in terms of the quantities advanced by Mr Crawford. It may be that not all the area below the relevant contour line was as marshy as the soil removed from the northern section, or that it would not have been necessary to remove and replace all of it and then add a layer to reach a flood free level across the block. Various engineering and design factors would need to be considered and the appropriate works would have to be determined by reference to the type and location of the easements.
I am also not convinced that the hypothetical prudent purchaser would have required (and negotiated) a reduction of the purchase price of the subject land equal to the cost of removal of soil and importing of new fill as calculated by Mr Crawford.
Mr Treston explained, in relation to his “Top Down Approach” document, that because he had originally made a direct comparison between the subject land and sales, he had not required a complete listing of the site works when making his original valuation. However he had made a “significant allowance based on the concluded sales evidence to take into account all the problems associated with the site”. I am satisfied that, in assessing the unimproved value of the subject land on a site comparison basis, Mr Treston made a substantial allowance for the site’s disabilities (particularly its susceptibility to flooding) but did not make sufficient allowance for the need to remove soil and to import fill in its place.
Despite the numerous estimates of what could, should, or may have been done on the site to get it to a state suitable for development, an incontrovertible finding cannot be made on what additional allowance Mr Treston should have made for those disabilities on a comparative sales basis. I have concluded, however, that a deduction of $50,000.00 from the amount assessed by the Chief Executive would be appropriate.
Summary of conclusions
For the reasons given earlier I make the following findings and observations:
(a)It was open to the appellants to lead evidence to a lower figure than that stated in their notice of appeal and the Land Court may determine that the unimproved value of the subject land was an amount lower than the amount stated there.
(b)The appeal is limited to the three grounds of appeal in the notice of appeal which, in essence state that (in making the valuation appealed against):
·consideration has not been given to the flooding of the entire premises, twice since 1989;
·extensive fill has been undertaken; and
·unsuitable fill was removed on an earlier excavation.
The burden of proving each ground of appeal is on the appellants.
(c)The evidence demonstrates that Mr Treston was well aware of the natural contours of the land and its susceptibility to flooding and that there was fill on the subject land at the date of valuation, and that he had regard to the removal of unsuitable or poor quality fill from the site. Although that evidence may, on a strict reading of the grounds of appeal, dispose of the appeal, I consider that the real issues raised by the grounds of appeal were whether sufficient consideration was given to the effect of flooding when the unimproved value of the subject land was assessed, whether sufficient allowance was made for the value of fill on the land, and whether Mr Treston took sufficient account of the removal of unsuitable fill.
(d)Section 33 of the Act states that “any and every valuation … of any land 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”. Section 33 creates a presumption that the value in money terms shown by the Chief Executive in his notice of valuation is correct. Once it is shown that in making the valuation the Chief Executive acted upon a wrong principle, or made a serious error of fact, or the valuation was made by a method fundamentally erroneous, the presumption created by the section is rebutted. Consequently, the appellants can only succeed if they rebut the statutory presumption.
(e)Although the parties’ valuers differed in their preferred methodologies and the results which they reached in assessing the unimproved value of the subject land, there was no suggestion that the valuation made by the Chief Executive using a direct comparison with comparable parcels of land in the vicinity of the subject land was made by a method fundamentally erroneous. Rather, I consider that the method was the more reliable primary method of valuation in this case.
(f)It is appropriate to take into account the amount of the component 2 headworks contribution when determining the unimproved value of the subject land. Consequently, the appellants have not shown that in making the valuation the Chief Executive acted upon a wrong principle by including such an amount.
(g)Although Mr Treston adopted an appropriate valuation methodology in assessing the unimproved value of the subject land on a site comparison basis, and made a substantial allowance for the site’s disabilities (particularly its susceptibility to flooding), he did not make sufficient allowance for the need to remove soil and to import fill in its place.
(h)A deduction of $50,000.00 from the amount assessed by the Chief Executive would be an appropriate adjustment in this case.
Order
The appeal is upheld, the valuation of the Chief Executive is set aside and the unimproved value of the subject land as at 1 October 1996 is determined to be five hundred and twenty five thousand dollars ($525,000.00).
GJ NEATE
MEMBER
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