Scovell v Chief Executive, Department of Natural Resources

[1997] QLC 177

[1997] QLC 177

 

LAND COURT

BRISBANE

21 NOVEMBER 1997

Re:     Appeal against Annual Valuation -

Valuation of Land Act 1944 -

Valuation Roll No.:    1780

Local Government:    Stanthorpe (AV97-161)

Brett A Scovell
v.
Chief Executive, Department of Natural Resources

(Hearing at Stanthorpe)

D E C I S I O N

Background:

This matter relates to a property located at 21 Denham Street, Stanthorpe, and described as Lot 102 on RP 206383, Parish of Broadwater.  The subject has an area of 1,321 m² and is located about 300 metres south-west of the Stanthorpe Post Office.  The key issues are the impact of flooding, the comparison of sales, relativity and the impact of the Quart Pot Creek Beautification Area.

The subject has good access from Denham Street which is dual-lane and bitumen sealed with concrete kerbing and channelling.  Denham Street has limited through traffic.  The subject is regular shaped with direct access to the Quart Pot Creek Beautification Area.  The lot has a gentle fall from Denham Street to the creek, with pleasant views over the Quart Pot area.  The entire lot is flood-prone having been fully immersed by the largest recorded flood which occurred in 1976.  The subject is zoned as "Residential" under the Town Planning Scheme of the Stanthorpe Shire Council of 29 March 1996, and effective at the date of valuation of 1 October 1996.  Services available include town water, sewerage, telephone, electricity and daily mail delivery.  It is currently being used as a residence which is the highest and best use.

The Chief Executive, Department of Natural Resources, on 10 March 1997 issued a valuation at $18,000.  Following an objection, the Chief Executive confirmed the valuation at $18,000 on 2 July 1997.  The appellant has now appealed that figure, claiming the correct unimproved value should more properly be $15,000.

Mr BA Scovell appeared for himself, calling evidence from his wife, Mrs BM Scovell.  Mr DP Coe appeared for the respondent, calling evidence from Mr DB Redgen, the departmental registered valuer responsible for determining the valuation.

The History of Appeal:

This appeal is one of four appeals heard at the one sitting of the Court, all of which relate to the impact of flooding upon the subject, and changes in relativity with adjoining lots in the area as a consequence of the development of the Quart Pot Creek Beautification Area.  Much of the evidence provided during those hearings were similar in respect of the extent and severity of the flooding since 1976, and how the Quart Pot Creek Beautification Area was now impacting the amenity, and consequential valuations of surrounding properties.  For those reasons, those comments which are common to all four properties will be dealt with under common headings.

The Quart Pot Creek Beautification Area:

This was a stream management and beautification scheme undertaken apparently as a bicentennial project in 1988.  The scheme was designed to create scenic recreational areas and pathways, and to clean out the partly clogged and marshy old Quart Pot Creek.  The scheme appears to have improved the general amenity of the Quart Pot Creek Area which is close by to the town centre.  With the agreement of both parties in one appeal, the Court inspected the area and walkways.

At the time of the inspection the area appeared to be used by the public, although it was apparent that most existing older homes, in fact, had the rear of the dwelling facing the creek.  While there were some very pleasant vistas along the creek area, some dwellings merely had views across the creek to backyards on the other side of the creek.  Some new homes had been designed to face the creek, while some older homes had built terraces from which to view the area.  However, to summarise, I feel the area is a definite benefit to the town overall, although not necessarily to each individual owner, as will be explained later.

From an overall perspective, the "beautification area" contains five weirs and five bridges, together with picnic areas, children's playgrounds and landscaping, and concrete walking paths.  There are also two low-level foot bridges across the creek.  At its most downstream end at Weir (1) and the road crossing in Britannia Street, the weir is only about 0.3 metres high.  During flooding water backs up to approximately near Allison Street at Weir (2) near the bend in the creek near Talc Street.  The next, Weir (3), is located just upstream of the road bridge at Lock Street, and Weir (4) is located upstream of the Maryland Street bridge, while Weir (5) is further upstream near the Granite Street bridge.  The impact of those weirs is to virtually provide an artificial level of permanent water which has little flow except in periods of heavy rainfall.  The water levels provide a habitat for wild ducks.

Between Weirs (3) and (4) there are also bridges over Railway Street and Folkestone Street.  The Folkestone Bridge is really a seven-pipe, low-level causeway.  Apparently the current low-level structures of the three bridges at Lock, Railway and Folkestone Streets all contribute to local damming of floodwaters during periods of flood as the road virtually dams the water until it flows around the bridges and across low-lying lands adjoining the public parkways.  In the views of some of the appellants, the bridges exacerbate the flood problems.

Evidence from long-term residents of the area suggest that the culvert pipes at Weir (1), and Weirs (4) and (5) provide no problems for the residents.  However, the combination of Weirs (2) and (3) and the three bridges collectively all have adverse impact upon the already flood-prone lands adjoining the "beautification area" in that locality between Lock Street and Folkestone Street.  However, this detriment needs to be balanced by the enhanced nature of Quart Pot Creek.

The Impact of Flooding:

Evidence was given that major floods occurred in 1976, 1984, 1988, 1994 and 1996.  The highest recorded flood in the area was 1976, when floodwaters extended across the western side of Denham Street between Lock Street and Folkestone Street in the west, and almost to the western side of Granite Street, between Lock Street and Railway Street, and east of Creek Street between Railway and Folkestone Streets in the east.  A map of Stanthorpe was provided showing the 1976 flood line, which is now adopted by the Stanthorpe Shire Council as the limit of flood-prone land.  Any building erected below the 1976 flood level must either be constructed on stumps, or have a building pad built up to a level at least 0.5 metres above the flood level.

The flood line was apparently determined after the 1976 flood from verbal advice from residents about the extent of floodwaters.  As such the line has a certain degree of approximation and is presumably used as the best estimate of the extent of the highest flood line (1976) in the area.  As you move downstream the flooded areas widen considerably.

Evidence was also given that floodwaters in 1988 and 1996 rose to similar levels of 1984, in spite of the "beautification area".  Pathways, revetment walls and a car-parking area were all damaged, requiring repairs in the case of the pathways and walls.  The car park has now been abandoned.  Some houses in the 1976 floods had water up to the windows.  Other land in Bridge Street, fronting Quart Pot Creek, was also badly flooded but has subsequently recently sold in 1997 at significant prices, suggesting that the flooding has lost some of its impact to certain purchasers.

Relativity Matters:

Evidence was given that sales of improved properties in the area indicate that relativity is now changing between properties adjoining the Quart Pot Creek Beautification Area, and those lots further removed.  A map was provided showing the pattern of sales of improved properties, which indicate a developing trend for improved properties adjoining the creek to have a premium loading above improved properties on the opposite side of Denham Street.  This premium varied from 11% to 17%.

However, the respondent agrees that in view of the nature of the improved properties, the varying differences in areas, and a lack of in-depth analysis of each improved sale, the sales evidence merely provides an indication that previous relativities are now changing.  This is presumably as a consequence of an increased acceptance of the improvements along Quart Pot Creek.

However, from the site inspection there are several properties in Denham Street adjoining the creek, including an appellant, which are now for sale, apparently as a consequence of the consistent flooding.  The respondent also notes, however, that further upstream from Folkestone Street, there are some new up-market dwellings which indicate that some more affluent buyers are seeking to relocate to land adjoining the "beautification area".  Because of the higher land south of Folkestone Street the flooding problem is clearly less in that area, and values are accordingly higher.

Evidence was supplied that the respondent intends a major review of targeted areas in the Stanthorpe Shire during 1998, to allow full property inspections.  Apparently the Council is in agreement with that proposal, subject to the respondent completing a review of properties adjoining Quart Pot Creek prior to the setting of the annual rate levy for 1998/1999.   The recent change in relevant valuations of those properties in the current valuation is the major reason for the current appeals from some owners of those properties.  The outcome of those appeals will have an impact upon the respondent's review which will produce the new valuations.

Impacts upon the Subject:

The appellant purchased the subject in 1989, and claims that the impact of flooding has had a major influence upon the use of the property.  Prior to acquiring the subject the former owners agreed to donate approximately 30% of their former land to the Council for use in the "beautification area".  An application for a boarding house was refused by Council with no reasons given, but the appellant alleges it was associated with the flooded nature of the subject.  There is major damage to the current dwelling, and some restumping of the building has been necessary, all, it is alleged, because of flood inundation over time.

During floods in 1996 the Council advised that raw sewage had entered the property, becoming a potential health problem.  The property is also subjected to surface water retention resulting in infestation of mosquitoes.  Any attempt to erect a garage upon the lot would be subject to major additional costs to raise the floor level above the known 1976 flood level.

The appellant also claims disturbance at nights from drinking parties along the "beautification area" by patrons of the nearby hotels.  These matters impact the amenity of the subject, with the deposit of rubbish and bottles left behind the subject.  The appellant argues that properties on the western side of Denham Street suffer from none of the disadvantages of the subject, yet their current unimproved value is lower than the subject.  The appellant advised that he had purchased the subject in 1989 because of its low cost ($38,500) as an improved site, although the dwelling is about 100 years of age.  The appellant acknowledges that the "beautification area" provides pleasant vistas, but his views are across the creek to backyards on the other side.  There are also some smells emanating from the creek.

During the 1996 flooding the water level did not enter the dwelling, but entered the laundry at its rear.  The subject is currently for sale because of its potential for flooding.  The appellant argues that while the "beautification area" has been completed since 1988, the relativity between land adjoining the creek and other lots further away, have not altered until the current valuation.  The appellant argues that there is no proven evidence to support any change at present, and any potential enhancement as a result of the Quart Pot Creek Beautification Area, is more than offset by the demonstrated flooding.

Comparison of Sales:

Mr Redgen confirmed that generally across Stanthorpe town area the market is in a decline.  During 1992/93 there were 80 sales of vacant land.  As at 1 October 1996 there had been only 19 sales during the relevant previous year.  He argues that there has been two markets during those periods, one static and the other reducing by about 30%.  In 1992/93 developers needing tomaintain a cash flow had been prepared to sell properties, while at the present time owners have withdrawn their properties anticipating a return in the market.

Mr Redgen provided three sales of vacant lands, none of which are subject to flooding:

·Sale 1 - (Minna Street - Lot 8 on Plan S16820).  This is a 3,761 m² lot zoned "Residential", located about 1 km north-east of the Post Office.  It is inferior in location and access, similar in services and zoning, and superior in size.  Overall it is seen as superior.  The sale is steeply sloping to the west and backs onto the railway.

The sale sold in October 1996 for $19,400 which, after allowing for improvements, was analysed at $19,400, and applied at $19,200.

·Sale 2 - (Pitt Street - Lot 14 on RP 844684).  This is a 1,099 m² lot, zoned as "Residential", and located about 1 km south-west of the Post Office.  The sale is seen as  inferior in location and size, similar in zoning and services, and superior in access.  Overall the sale is seen as superior.  The sale has a corner location.

The sale sold in April 1996 for $19,500 which, after allowing for improvements, was analysed at $19,000, and applied at $19,000. 

·Sale 3 - (Pike Street - Lot 49 on RP 21517). This is a 984 m² lot, zoned as "Residential", and located about 1.5 km north-east of the Post Office.  The sale is seen as inferior in location and size, similar in services, zoning and access, and is seen as overall inferior to the subject.

The sale sold in February 1996 for $17,000 which, after allowing for improvements, was analysed at $16,000, and applied at $16,000.

In comparing the flooded nature of the subject with the unflooded sales, the respondent has concluded that, considering the other features of the properties, the subject has a value somewhere between Sales 1 and 2 (superior) and Sale 3 (inferior).  In seeking to further understand the impact of flooding and the "beautification area" upon the values, Mr Redgen has sought comparison with other additional sales. 

Impact upon the Values:

The respondent has sought guidance on the impact of both Quart Pot Creek Beautification Area, and periodic flooding upon general values, by comparing the following four additional comparable sales:

·Sale A1 - (Stephens Street - Lot 187 on RP 861280).  This sale of 1,318 m² is seen as inferior in location, similar in access, size, services and zoning, but superior in views and is flood free.  The sale has direct access to the Quart Pot Creek Beautification Area, and is seen as superior overall.

The sale sold in December 1995 for $47,000 which, after allowing for improvements, provided an analysed value of $46,300, but has been applied only at $25,000.

·Sale A2 - This is a resale of Sale A1 which occurred in June 1996 for $50,000, and was analysed at $49,300, and also applied at $25,000.

·Sale A3 - (Stephens Street - Lot 78 on RP 12361).  This sale of 1,012 m² is inferior in location, size and views, similar in access, services and zoning, and is also flood free.  The sale is seen as inferior overall, and does not have direct access to Quart Pot Creek Beautification Area.

The sale sold in May 1996 for $25,500 which, after allowing for improvements, was analysed at $23,500, and applied at $16,000. 

·Sale A4 - (Marsh Street - Lots 33 and 34 on Plan S1687).  This sale of area 4,047 m² is inferior in location, views and access, similar in services and zoning, but is totally flooded.  It does not adjoin the Quart Pot Creek Beautification Area, and is seen as inferior overall.

The sale sold in December 1995 for $20,000 which, after allowing for improvements, was analysed at $18,000, and applied at $17,800 (1.1.96), and later at $12,400 (1.10.96).

Firstly, in the matter of relativity between properties which are flooded and those properties which are flood free, I note that the sales supplied by the respondent, except for the additional Sale A4, are all flood-free sales.  I note that Mr Redgen advises that relativity between flooded and non-flooded land had not changed for the last decade, and relativity has now only changed as a consequence of the perceived impact of the "beautification area".

In comparing his additional Sales A3 and A4, I note that one is flooded (A4), and one is flood free (A3).  Both sales have similar characteristics, and the difference in the sale price ($5,400) could be attributed to the impact of the flooding.  Neither Sales A3 or A4 adjoin the "beautification area".  However, I also note that in applying Sale A4, Mr Redgen has reduced the applied value from 1 January 1996 to 1 October 1996 by $5,400 (30%).  This supports his earlier contention that generally there has been a 30% fall in values over the town since the previous valuation.  If I then compare the subject with the additional sales, allowing for a building site above flooding upon the subject, Mr Redgen has concluded that the subject is inferior to Sale A1 but superior to Sale A3.

I turn then to understand Sale A1, which was acquired and resold over a period of six months.  The most recent purchaser is a local real estate agent who has a good appreciation of the market.  Mr Redgen claims that purchaser has identified the influence of the "beautification area" upon new sales.  From the site inspection it was noted that Sale A1 is well above the flooded area, with good views along Quart Pot Creek, and is in a newly developing area with better quality new residences.  It is a more up-market place to build, and is likely to be attracting a different type of purchaser.  I believe Sale A1 is considerably superior to the subject, which is also supported by Mr Redgen's analysed value at $46,300 (June 1996).  Because Sales A1 and A2 are of a single property, Mr Redgen has not sought to use the sale as an estimate of any premium because of the "beautification area".  I also note that Sale A1 is again on the market for sale.

Because of the special features of Sale A1 it would be reasonable to conclude that, allowing for a building site above flooding, the subject would have an unimproved value nearer to Sale A3.  In his determination Mr Redgen has adopted a figure of $26,000, to which he has then made allowance for filling of a building pad.

In seeking to estimate an approximate deduction for filling, Mr Redgen has allowed for a building pad for a dwelling of about 250 m² to a depth of 2.3 metres.  This would raise the building pad to a height to satisfy Council requirements.  Costs of filling were determined, following discussions with contractors, at a depth of 2.3 metres at $9 per m³, and a further 0.2 metres of topsoil was estimated at $20 per m³. 

The total depth of 2.5 metres is seen as more than appropriate for the subject.  The previous flood levels on the subject were only to a depth of 1.2 metres.  To the imported loose fill, Mr Redgen has allowed compaction by sheepsfoot roller of 25%, providing an estimated cost of $7,100, for which he has allowed $8,000 as a deduction for fill and flood problems.  On balance I accept those estimates as reasonable.

I note also that Mr Redgen informed the Court that the Council had in fact allowed several new buildings to be erected in the flood plain, subject to one in McGlew Street constructed on a building pad, and another in Creek Street being a transportable dwelling erected on stumps.  It was therefore reasonable for him to value the subject on the basis of building up a building pad above flood level. 

Decision:
         In the matter of the method of the valuation I note that Mr Redgen has valued the subject as a "single unit dwelling house" under s.17 of the Act:

"Exclusive use for single dwelling house or farming.
17 (1)   In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.

(2)     In subsection (1) -

‘a single dwelling house’ means -

(a)a dwelling used solely for habitation by not more than 1 family;"

As such Mr Redgen has afforded a concessional consideration in the value.

The comparison of sales of vacant lots has been used in accordance with precedent widely adopted by the Courts.  This principle was followed in PH Clough v. The Valuer-General (1981-82) 8 QLCR 70; and also in WM & TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at p.46:

"It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels."

In the matter of the impact of flooding upon the subject, I note that repeatedly the subject has been inundated by floodwaters, although water has so far not entered the main building.  However, the entire lot is noted as flood-prone land, and there are special building conditions that would be attached to any new building upon the subject.  There would also be a recognition in the mind of any prudent purchaser that the land is impacted by floodwaters at periodic intervals.  Such a disability would result in a reduction in the valuation compared to the higher land west of Denham Street.  The impact of flooding would involve not only the immersion by floodwaters, but also any damage and costs involved in repairs to fencing and other improvements.

In the impact of relativity along the Quart Pot Creek, I note that upstream of Folkestone Street the values indicate an increase, in view of their higher elevation and improved views along the Quart Pot Creek Beautification Area.  Likewise, there are some indications from the raw improved sales along Denham Street that relativities are changing.  However, until the improved sales are fully analysed, or in light of further sales of vacant lands in that area, it is premature to increase the unimproved value of the subject at this time solely for that reason.

The impact of the "beautification area" is providing a positive contribution to the creek environment.  There is no doubt that the area is more pleasant than prior to the construction of the beautification works.  I have no doubt that, south of Folkestone Street, the environment is now attractive to purchasers who now see advantage in fronting the creek area, and are prepared to pay a premium to do so.  However, to conclude that premium extends also through the area from Folkestone Street to Lock Street is not supported by the evidence at this time.  I believe that area is not experiencing the same benefit from proximity to the "beautification area" as is being experienced upstream of the Folkestone Bridge.  Until reliable evidence of sales supports a broad application of a premium, I suggest the impact of flooding balances any possible enhancement in values as a consequence of the "beautification area".

However, in comparing the direct comparable sales, I note that the respondent sees the applied valuation of the subject at something less than $19,000 (Sale 2) and more than $16,000 (Sale 3).  Mr Redgen has sought to apply a conservative approach to the determination in accordance with the findings of Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of South Australia Limited (1946-47) 74 CLR 358, where Dixon J said at pp.373-374:

"I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases.  In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax.  While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test.  In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate."

Based then upon his direct comparison with his Sales 1, 2 and 3, and noting that the appellant has not provided any detailed sales analysis of other sales to support his case, I find that the appellant has not discredited Mr Redgen's determination of the valuation at $18,000.  That such a figure appears to coincide with a 15% increase in value over the lots on the west side of Denham Street, is more a coincidence at this time, than any justification of such a premium for direct access to Quart Pot Creek.  That cannot be assumed until a detailed analysis of recent sales of improved properties has been fully completed.

Under s.33 of the Valuation of Land Act, the onus to prove his case falls squarely upon the appellant.  Unless the appellant can prove that the Chief Executive has made an error, the appeal must fail.  This was established by the High Court in Brisbane City Council v. The Valuer-General (1977-78) 140 CLR 141, where Gibbs J found at p.56:

"In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong practice, or made a serious error of fact, the presumption created by section 13(7) is rebutted."

Conclusion:

After having heard the whole of the evidence in this matter, I am not persuaded that the appellant has proved his case.  The appeal is dismissed and the unimproved value of Lot 102 on RP 206383, as determined by the Chief Executive, Department of Natural Resources, in the sum of Eighteen Thousand Dollars ($18,000) is affirmed.

NG DIVETT
  MEMBER OF THE LAND COURT