Scougall v Chief Executive, Department of Natural Resources
[2001] QLC 22
•12 April 2001
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BRISBANE
12 APRIL 2001
Re: Appeals against Annual Valuations
Valuation of Land Act 1944
City of Brisbane: BCC-Kedron
(AV99-279 and AV00-186)
Raymond J Scougall
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
These are two appeals against the unimproved values applied by the Chief Executive, Department of Natural Resources, under the provisions of the Valuation of Land Act1944 (the Act), in respect of the same parcel of land for two successive valuation periods.
Introduction
The land, the subject of these two valuations, is situated at 32 Leeson Street, Boondall, described as Lot 9 on Registered Plan 161200, Parish of Kedron, containing an area of 560 m². Under the provisions of s.37(1) of the Act, as at 1 October 1998, the respondent determined the unimproved value of that land at $58,000 and as at 1 October 1999 at $61,000. Mr Scougall unsuccessfully objected against those valuations and subsequently appealed to the Land Court against the respondent's decision disallowing each of the objections. In each case he contended that the unimproved value should have been $53,000.
The Subject Land
The subject land is an irregular shaped inside allotment, rising from the street frontage to the rear north-west corner. It is zoned "Residential A" under the City of Brisbane Town Planning Scheme and has the usual urban services. Leeson Street is bitumen sealed, with concrete kerbing and channelling and provides good access to the subject land. The street is on the eastern side of Sandgate Road, and runs parallel to it, being separated from that road by the width of two allotments. The subject land is on the western side of a cul-de-sac at the northern end of Leeson Street, near Stanworth Road, being separated from that road by only two allotments. In other words, it is very close to the intersection of Stanworth Road and Sandgate Road. Directly opposite that intersection on the western side of Sandgate Road is its intersection with Beams Road. Both intersections are controlled by traffic lights.
The Previous Appeal (AV98-661):
The unimproved value of the subject land has been disputed by Mr Scougall on a number of occasions, with appeals to this Court and to the Land Appeal Court. The history of those appeals is set out in the unreported decision of this court in Raymond J Scougall v. Chief Executive, Department of Natural Resources (AV98-661), 25 June 1999. I do not propose to repeat that history; it is sufficient to say that the attributes of the subject land have been debated at length between the parties.
That appeal (AV98-661) was an appeal against the previous valuation of $58,000 made by the respondent as at 1 October 1997. In that case, as in the present cases, Mr Scougall, who is a registered valuer, gave evidence on his own behalf. Evidence for the respondent in that case and in the present cases, was given by Mr BM Kewley, a registered valuer employed by the Department of Natural Resources. That appeal was dismissed and the respondent's valuation was affirmed.
In that case one of Mr Scougall's sales was the property situated at 2164 Sandgate Road, Boondall, which sold in late June 1998. The learned Member commented in his decision that as the sale occurred well after the date of valuation, he considered it would be more relevant to the succeeding valuation. He placed no weight on that sale. That property, with an area of 600 m², sold on 29 June 1998 for $56,000. The sale was analysed by Mr Scougall to show an unimproved value of $53,500. However, in the valuation as at 1 October 1997, the respondent had applied an unimproved value to that land of $60,000.
It was common ground that the allotment is a level site with moderate elevation, with access from Sandgate Road by means of a concrete driveway along an easement over the neighbouring allotment which fronts Sandgate Road. Mr Scougall regarded the property as superior to the subject land. Mr Kewley had not used that sale as a basis for the 1997 valuation. However, he had valued the land at $60,000 and agreed with Mr Scougall that the property was superior to the subject land. Under cross-examination, he conceded that the property was the most comparable to the subject land of the sales used by himself and Mr Scougall in that case.
Although the address of the sale property is 2164 Sandgate Road, the access to it is by means of an easement over Lot 7 on RP 912565. Effectively, the sale property is, like the subject property, one allotment removed from Sandgate Road. However, it is situated to the north of the Beams Road/Stanworth Road intersections with Sandgate Road and is on the western side of that road.
Appeal AV99-279:
In the present appeal, AV99-279, that sale was used by both Mr Scougall and Mr Kewley to support their respective valuations. In fact, it was the only sale used by Mr Scougall, while it was one of three used by Mr Kewley. Mr Kewley analysed the sale to show $54,000, attributing a value to the improvements at the date of sale of $2,000, comprising clearing $500, fencing $750 and driveway $750. At the date of valuation of 1 October 1998, the respondent had applied an unimproved value of $54,000, $6,000 less than the previous valuation.
In his sales schedule when comparing the sale with the subject land, Mr Kewley commented: "In comparison to the subject, the sale is slightly larger in area, however, possesses a far inferior access, ie off Sandgate Road, an inferior outlook and a greater number of adjoining parcels. Overall the sale is considered inferior to the subject." (Exhibit 6, p.7).
As might be expected, in arguing his appeal, Mr Scougall placed great emphasis on the fact that the unimproved value of the sale property had been reduced from $60,000 applied as at 1 October 1997, to $54,000 as at 1 October 1998, while the unimproved value of the subject land had remained at $58,000. He argued that the respondent (through Mr Kewley) had acted capriciously in altering the established relativity with no foundation.
Mr Scougall had no doubt that the sale property is superior to the subject land; it is slightly more elevated, located in a superior part of Boondall, known as Boondall Heights, is surrounded by more prestigious dwellings, is within easy walking distance of shops and the State School; it is less adversely affected by traffic as it was not near an intersection and is shielded, or will be shielded, by houses between it and Sandgate Road. On the other hand, he argued, the subject land is located close to a major intersection with traffic turning and continually stopping, starting and accelerating up an incline in Beams Road; it is subjected to the glare of headlights from vehicles making right-hand turns from Beams Road into Sandgate Road; and is adversely affected by a pathway along the southern boundary which is used by residents, both day and night, as a thoroughfare to the shopping area located at Sue's Corner.
Mr Kewley admitted that he had stated in the previous case that the property at 2164 Sandgate Road was superior to the subject land. However, in that case, he had not relied on the sale, it had been put forward by Mr Scougall. Mr Kewley said he visited that property for only a few minutes and had come to the conclusion that it was superior to the subject land. However, he had since made further inquiries and come to the conclusion that, despite its superficially superior characteristics, it is inferior to the subject land for several reasons; it is more directly affected by traffic, being closer to Sandgate Road than the subject land, with no dwelling house on the neighbouring allotment to shield it; it has easement access over an adjoining property, its access is directly onto a heavily trafficked road, with egress only to the north.
In the course of his investigations, Mr Kewley had come to the conclusion that properties fronting Sandgate Road, in which category he placed the sale property, were less valuable than properties situated off Sandgate Road. Therefore, in the 1998 valuation he had reduced the valuations of properties situated along Sandgate Road, while leaving unchanged the values of the properties situated off Sandgate Road, in which category he placed the subject land.
Before proceeding further with this ground of appeal, it is necessary to examine the two other sales put forward by Mr Kewley to support his valuation of $58,000.
Mr Kewley's Sale No. 2 is situated at 39 Queenstown Avenue, Boondall, containing an area of 412 m², zoned "Residential A", which sold in March 1998 for $53,000. Mr Kewley analysed that sale to show an unimproved value of $52,500, and as at 1 October 1998, the respondent applied an unimproved value of $47,500 to that property. It is located approximately 1 km north of the subject land in what Mr Kewley described as an inferior part of Boondall. The sale adjoins a church and is situated opposite a child-care centre. It is the servient tenement for an easement giving access to a parcel at the rear. Mr Kewley considered the sale to be inferior to the subject land.
Mr Kewley also relied on another sale (Sale 3) situated at 46 Landsbro Avenue, Boondall, containing an area of 1,011 m², zoned "Residential A", which sold in February 1999 for $78,820. Mr Kewley analysed that sale to show an unimproved value of $74,120. As at 1 October 1998, the respondent applied an unimproved value to that property of $59,000. It is located slightly to the north of Sale 2. Mr Kewley described that property as situated below street level, less elevated than the subject property, however it is much larger. He thought the land to be inferior in quality to the subject land and superior in unimproved value solely due to its size.
In my view, those sales are of little assistance in directly supporting the unimproved value applied to the subject land. They are situated in an area which both valuers agree is inferior to the environment of the subject land. In addition, the respondent applied less to each of those properties than was shown by the sale, particularly Sale 3. That was not surprising, as the sale occurred after the date of valuation so could not provide a basis for valuing the subject land as at 1 October 1998. Sale 3 therefore, should be left out of consideration in this appeal.
In respect of Sale 2, the respondent had applied an unimproved value somewhat less than the unimproved value shown by the sale. That may be simply a conservative application of the sale. However, considered on its own as evidence, the sale provides no basis for the valuation of $58,000 applied to the subject land.
That leaves Sale 1, which both Mr Scougall and Mr Kewley agree is the most comparable to the subject land. The sale was analysed by Mr Scougall to show $53,500 and by Mr Kewley to show $54,000. Despite some haggling over the value of improvements, there is little between them. The property was valued at $54,000. The only question is whether the property is superior or inferior in value to the subject land.
After considering what each of them had to say about the property, I have come to the conclusion that while there is not much in it, the property situated at 2164 Sandgate Road is somewhat inferior to the subject land. The evidence indicates that it is closer to Sandgate Road than the subject property, there is no dwelling between it and Sandgate Road, it has easement access and its access is directly onto a busy road with attendant dangers and difficulties. In addition, its only egress is one way to the north. It is impossible to turn south. In my view, despite the problems undoubtedly suffered by the subject land, these factors tip the balance.
Did the Respondent act capriciously?
The question remains as to whether the respondent was entitled to alter the relativity of values in the area, or did he act capriciously in doing so? Mr Scougall pointed to other instances where the respondent had altered valuations as at 1 October 1998, including the valuations of two neighbouring properties, one situated on Sandgate Road and the other on Stanworth Road. Mr Kewley defended those alterations on the basis as explained earlier in these reasons, saying that he had been striving to improve the relativity of valuations in the area.
The assessment of unimproved value under the Valuation of Land Act is a difficult enough task; the attainment of relativity in values between properties is even more difficult, particularly in an area as heavily improved as the subject area. The valuer has to envisage each property being valued as if it was in its unimproved state, without any improvements whatsoever, but with all neighbouring improvements and infrastructure in their present state. The Act recognises that mistakes can be made and makes provision for correction even during a valuation period.
It is often said that valuation is an art, not a science. It depends on a valuer's opinion. From time to time a valuer may change his mind and arrive at a different opinion. However, in such circumstances, as in the present case, it is necessary for the valuer to explain why he changed his opinion. Otherwise, in the present case, it would appear that Mr Kewley simply changed his opinion about the relationship between 2164 Sandgate Road and the subject land because the sale showed a lower unimproved value than was previously applied. If his earlier opinion was correct and the sale was superior to the subject property, there would be something wrong with the applied value to the subject land. However, if Mr Kewley was wrong about the relationship between the two properties, the price paid for the sale property would be an indication that he had overestimated the value of that property.
It would be wrong to think that relativities would remain unaltered for many years. They may change for several reasons. Sales may indicate that one area or type of property is increasing in value at a greater rate than others. Relativity may be altered to correct an error or errors.
In the present circumstances, a sale on a busy road at a price lower than the presently applied value, caused the respondent's valuer to re-examine the level of values along that road. There was no suggestion that the sale was other than a bona fide sale and it was not suggested that it was out of line with the market. Both sides regarded it as demonstrating the market at the date of sale. Therefore, it was appropriate that Mr Kewley apply that sale, not only to the sale property but also to land with similar characteristics, in this case, with frontage to the busy Sandgate Road. However, he was under no obligation to apply that level of values to properties which he did not consider had similar characteristics to the sale land. He reasoned that the valuations of those properties fronting Sandgate Road should be reduced; the subject land did not front Sandgate Road; therefore the reduction should not apply to the valuation of the subject property.
In the circumstances, I accept that the respondent had not acted capriciously and was not only entitled to alter the relativity, but having come to the conclusion that the relativity was wrong, was under a duty to do so.
I turn now to the other ground argued by Mr Scougall.
Serious errors of fact
Mr Scougall also alleged that in making the valuations, the respondent made serious errors of fact. Mr Scougall no doubt had in mind the principles established by the High Court in Brisbane City Council v. The Valuer-General (1978) 140 CLR 41. The Court referred to the presumption in the Act that a valuation made by the Valuer-General is correct until proved otherwise, but held that the presumption can be rebutted if it is shown that in making the valuation the Valuer-General -
acted upon a wrong principle, or
made a serious error of fact, or
the valuation was made by a method fundamentally erroneous.
Mr Scougall contended that Mr Kewley had made several serious errors of fact in the previous appeal AV98-661. He referred to passages in the transcript that indicated that when questioned about the effect on the subject land of headlights from traffic turning from Beams Road into Sandgate Road, Mr Kewley had said that there were ample trees to divert or block any light. By means of photographs tendered in the present case, Mr Scougall was able to demonstrate that the foliage on the trees was not thick; they were deciduous trees and therefore for a considerable part of the year had no foliage.
Mr Scougall also referred to passages in Mr Kewley's evidence in the previous case which indicated that he thought the subject property would be shielded from traffic noise by two dwelling houses on the properties between the subject land and Sandgate Road, as well as by the trees. Mr Scougall's photographs indicate that the subject property is not fully protected by the two dwelling houses and he contends that the gap between them tends to funnel the noise onto the subject land. He also contends that the trees do nothing to reduce the noise level.
The photographs indicate that Mr Kewley may have, to some extent, overestimated the benefit that the subject land derived from the trees and other houses. I have no doubt that the subject land does suffer from noise and from lights from traffic turning from Beams Road. However, they also indicate that the subject land being somewhat further removed than the houses fronting Sandgate Road, would suffer less than they do. The subject land has to be considered as if it was in its unimproved state and that the improvements did not exist. In those circumstances, a potential purchaser of that land would no doubt design a house in such a way as to minimise the effects of noise and headlights.
Notwithstanding that Mr Kewley may have misjudged the ameliorating effect of the trees and houses, I am by no means convinced that this amounts to a serious error of fact. When valuation of the subject land is compared with those of the neighbouring properties fronting Stanworth Road ($58,000) and Sandgate Road ($56,000), it does not appear to me that there has been an error which would have materially have affected the valuation.
Conclusion
In my view, Mr Scougall has failed to prove the grounds of appeal that he chose to argue. Therefore, the unimproved value of $58,000 applied to the subject land as at 1 October 1998 must stand.
Appeal AV00-186
In this case, Mr Scougall has appealed against the unimproved value of $61,000 applied by the respondent to the subject land as at 1 October 1999. His case was based on the relativity of the valuation of the subject land with the valuations that had been applied to other lands which had been mentioned in previous appeals as being similar to the subject property. He referred in particular to the property situated at 2164 Sandgate Road which had been used as a sale by both parties in appeal AV99-279. As in that case, Mr Scougall maintained that the property was superior to the subject land. The respondent had again applied an unimproved value of $54,000 to that property as at 1 October 1999.
I have examined in detail the relative merits of that property and the subject land. I have found that on the evidence, on balance, the subject land is superior to the property at 2164 Sandgate Road. I do not propose to make any further comment about that comparison.
Mr Scougall also referred to the relativity of three properties whose valuations had remained the same at the 1998 and 1999 valuations. The property at 14 Depot Road, Deagon, was valued at $49,000 on both occasions; the property at 1737 Sandgate Road, Virginia, was valued at $57,000 on each occasion, whereas the property at 12 Banksia Street, Boondall, was valued at $64,000 as at 1 October 1998 and at $62,000 as at 1 October 1999.
Mr Scougall maintained that these were examples of how the respondent had acted capriciously when undertaking the valuation. He argued that based particularly on the value applied to 2164 Sandgate Road, together with the other evidence presented in appeal AV99-279, the value of the subject land as at 1 October 1999 should be $53,000.
Once again, Mr Kewley was the valuer for the respondent. Mr Kewley explained that based on sales evidence, he came to the conclusion that for the 1999 valuation, the properties adjoining Sandgate Road had not increased in value, but those properties off Sandgate Road had increased. He said that ample sales had occurred to indicate the increase in the valuation. In support of his valuation of $61,000, he relied on three sales.
Mr Kewley's Sale 1 is situated in Garozzo Street, Boondall, containing an area of 782 m², zoned "Residential A", which sold in April 1999 for $97,500. Mr Kewley analysed that sale to show an unimproved value of some $96,200, and as at 1 October 1999 the respondent applied an unimproved value to that land of $90,000.
Sale 1 is a corner allotment located close to the subject land, but on the other side of Sandgate Road. It is further removed from Sandgate Road than the subject land and Mr Kewley considered the location to be superior. However, there is a "reasonable amount" of traffic along Garozzo Road, which links Sandgate Road with Groth Road to the west. He considered the sale property to be superior to the subject land because of its superior location and because it is larger.
Mr Kewley's Sale 2 is situated in Roghan Road, Boondall, containing an area of 662 m², zoned "Residential A", which sold in March 1999 for $72,000. Mr Kewley analysed that sale to show an unimproved value of $71,250 and as at 1 October 1999 the respondent applied an unimproved value of $70,000 to that property.
The property is located approximately 1.2 km to the north of the subject land in a superior part of Boondall. The sale is exposed to traffic and adjoins a public walkway. Mr Kewley considered that the sale property was superior overall to the subject land because of its location and greater area.
Sale 3 is the property which was Sale 3 in Mr Kewley's evidence in respect of appeal AV99-279, to support the unimproved value of $58,000 applied by the respondent to the subject land. This sale property, situated in Landsbro Avenue, Boondall, sold in February 1999 for $78,820, and was analysed to show $74,120. As at the date of valuation, 1 October 1999, the respondent applied an unimproved value of $65,000 to that property. At the date of the previous valuation, the respondent had applied an unimproved value of $59,000.
Mr Scougall contended that the sales evidence did not support the increase in valuation applied by the respondent. However, he could not refer to any sales that would indicate a flat or falling market. He questioned the relevance of Sale 3, as it had been used in appeal AV99-279 to support the unimproved value at that date. However, as previously discussed, that was a late sale and played no part in determining the unimproved value as at that time.
Mr Scougall pointed out that as at 1 October 1998, an unimproved value of $59,000 had been applied to the property known as Sale 3. Then the property sold in February 1999 for $78,820. Mr Kewley analysed that sale to show an unimproved value of $74,120, but had applied only $65,000 to that property as at 1 October 1999. It was now being put forward as evidence to indicate there had been an increase in the market. Mr Scougall contended that the respondent was acting inconsistently to attempt to use the sale to support a valuation for one year and then use the same sale for the next year, not apply the sale, and then say that it is evidence that indicates a rise in the market.
Mr Scougall had no knowledge of the other two sales used by Mr Kewley. However, as Sale 1 is situated in a better environment, and further removed from Sandgate Road than the subject land, and with dwellings between it and the road, Mr Kewley admitted that it was substantially superior to the subject land.
In respect of Sale 2 on Roghan Road, Mr Kewley admitted it is in a more prestigious area than the subject land, and that Roghan Road carries only a moderate amount of traffic.
When it was put to him that none of the sale properties indicated a rising market, the following exchange occurred:" Then how can they indicate a rising market?-- In relation to the existing levels of value. I class that as a rising market.
You haven't listed anything in there, you have just said the sales indicate a rising market, so can you explain to the Court how those sales indicate a rising market?-- In relation to the existing levels of value." (Transcript p.72, lines 12-22).
Later Mr Kewley confirmed that this was his reasoning when he answered to the question:
"But they indicate a rising market because they show higher figures than the valuations previously applied?-- Yes, that's correct."
(Transcript p.74, lines 12-16).
Do those sales indicate an increase in unimproved value?
The evidence in these two cases indicates that Mr Kewley has changed his opinion about the relativity of values between properties situated on busy Sandgate Road and those properties situated off it. In the 1998 valuation, based largely on the sale of the property at 2164 Sandgate Road, Mr Kewley felt that the values applied to the properties fronting Sandgate Road were excessive, and he reduced those values. However, he felt that properties not fronting Sandgate Road had not reduced in value and by and large he left the valuations unchanged.
Then in the 1999 valuation, he could find no evidence to increase the valuations of the properties fronting Sandgate Road, but he concluded that there was evidence to increase properties situated off Sandgate Road.
Mr Scougall based his entire case in Appeal AV00-186 on relativity. Over the years, the Land Appeal Court has established a number of propositions concerning relativity, which are conveniently set out in the decision of Grahn v. The Valuer-General (1992) 14 QLCR 327. Those propositions are as follows:"It is desirable that valuations made for the purposes of the Valuation of Land Act1944 of comparable lands should bear proper relativity, one to the other, so long as the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis." (R & MM Barnwell v. The Valuer-General (1989) 13 QLCR 13, at p.16 and cases cited in it).
"Whilst maintenance of correct relativity is of considerable importance for rating valuations, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence." (WM & TJ Fischer v. The Valuer General (1983) 9 QLCR 44, at p.46.)
"If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error.' (R & MM Barnwell v. The Valuer-General (1989) 13 QLCR 13, at pp.16-17 and cases cited in it).
Conclusion
Applying the propositions from those authorities to the facts in the subject cases, I have found that there was sufficient evidence in 1998 from the sale at 2164 Sandgate Road for the respondent to alter the relativity between the properties situated on that road and properties situated off it, like the subject land. However, the situation is different when examining the valuation for the subsequent year. Mr Kewley came to the conclusion that there should be no increase in the valuations of the properties fronting Sandgate Road.
However, on the basis of two, perhaps three sales, he concluded that there has been an increase in the value of properties situated off Sandgate Road. These sales are not resales of properties which sold at an earlier time which would be the best definitive evidence of an increase in the market. Instead, those sales simply indicated an increase over the previously applied values. In only one case (Sale 2) did Mr Kewley apply that sale almost exactly. In each of the other two sales, his application of value is considerably less than the analysed sale price.
In my opinion, such evidence does not lead to the conclusion that there has been an increase in the market. All it indicates is that some properties sold for more than the respondent had applied to them at an earlier valuation. If there was sufficient evidence, it may indicate that there was a general increase in the market, in which case the properties fronting Sandgate Road should have increased as well. To my mind, it is not satisfactory evidence on which to change the relativity of values as Mr Kewley did in this case.
As has been demonstrated throughout these appeals, errors can be made. Because of a paucity of sales evidence, levels of value can be applied which are not sustainable in the face of later sales evidence. In such circumstances, the respondent is justified in altering those valuations.
However, in my view, to alter valuations simply because a couple of sales were transacted at figures higher than the presently applied values, and to alter relativities as a consequence, cannot be justified. Therefore, I am of the opinion that the evidence does not indicate that the unimproved value of the subject land should have been increased to $61,000 as at 1 October 1999. It should have remained at $58,000.
Orders
In respect of appeal AV99-279, the appeal is dismissed.
In respect of appeal AV00-186, the appeal is allowed, the valuation of the respondent is set aside, and the unimproved value of the subject land as at 1 October 1999 is reduced to Fifty-eight Thousand Dollars ($58,000).
Costs
At the conclusion of the hearing of these two cases, both parties applied for costs in the event that they were successful. Mr O'Rourke, for the respondent, submitted that Mr Scougall is a constant litigant, adopting virtually unchanging grounds of appeal, which had been commented on by the learned Member in the case of appeal AV98-661.
However, although Mr Scougall has been unsuccessful in one of these appeals, he was successful in the other. In the case of the 1998 valuation, in my view, there were clearly grounds upon which Mr Scougall could appeal. The respondent had altered the relativity and done so on the basis of a sale of a property which his valuer had indicated in a previous appeal was superior to the subject land. This is a matter which could not be resolved without coming to Court.
On the other hand, Mr Scougall asked for costs on the basis that the respondent had made a serious error of fact. As pointed out, in my view, although errors had been made by the respondent's valuer, they did not amount to serious errors of fact.
In the circumstances, I make no order as to costs.
JJ TRICKETT
PRESIDENT OF THE LAND COURT
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