Sealy v Department of Natural Resources and Mines
[2007] QLC 65
•7 September 2007
LAND COURT OF QUEENSLAND
CITATION: Sealy v Department of Natural Resources and Mines [2007] QLC 0065 PARTIES: Michael David Sealy
(appellant)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO.: AV2005/1821 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 7 September 2007 DELIVERED AT: Brisbane HEARD AT: Caloundra MEMBER Mrs CAC MacDonald ORDER: 1. The appeal is dismissed.
2. The unimproved value of Lot 6 on RP 895333 in the County of Canning, Parish of Mooloolah at Three Hundred and Ten Thousand Dollars ($310,000) as at 1 October 2004 is affirmed.
CATCHWORDS: Valuation – unimproved capital value – flood-prone land – but flood-free house site available – appropriate sales and relativity – need to value as "existing use" even if present planning scheme does not allow – Valuation of Land Act 1944 s.3(4). APPEARANCES: Mr MD Sealy on his own behalf
Mr W Isdale, Crown Law, for the respondent
Introduction
This is an appeal under the Valuation of Land Act 1944 by Michael David Sealy (the appellant) against the determination, by the Chief Executive, Department of Natural Resources and Mines (the respondent), of the unimproved value of land owned by the appellant at $310,000, as at 1 October 2004. Mr Sealy contended that the unimproved value of the land was $140,000.
The property is 2.837 ha in area and is located 1.5 km from the Buderim central business district. It has road frontages to Cogill Road and Ballinger Road which are bitumen sealed. Mr Sealy uses Ballinger Road, which is prone to flooding, to access his land. Town water and garbage services are available to the property but there is no sewerage connection, kerbs or guttering.
The land is designated as General Rural Land in Planning Area 20 of the Maroochy Planning Scheme 2000 which states that the Precinct is intended to remain in rural use and that development for urban or rural residential purposes is not intended for land in this Precinct. However, the South East Queensland Regional Plan 2005-2006 designates the land as Urban Footprint.
The property is developed with a single dwelling and Mr Sealy keeps some sheep and horses there. A large part of the land is severely impacted by regular flooding, water flow and ponding which have been exacerbated by the continuing development of housing estates in the vicinity of the subject land. Four new estates have been developed in the last twenty years. The drainage from these developments runs with great velocity into the drain on the subject land. Construction of new houses and removal of vegetation have added to the problem. The silt brought down by the floodwaters is caught in silt dams on the property which are dug out by the Council from time to time, with the silt dumped on the surrounding land. An adjoining owner's land has been built up and the land on the subject's western boundary filled to a level above the subject to enable the development of a housing estate there. Drainage from the house roofs and swimming pools flows onto the subject land. All of these factors have created further water problems on the subject. Water also backs up over the subject from the culverts on Ballinger Road, which are blocked frequently with silt and debris. The result is that rainfall results in knee deep water lying on the subject for up to a week, such that it is impossible to come and go on the property.
Mr Sealy's grounds of appeal were -
1.Very low level swamp and flood land. Previous objection 2003 : Grievance : ID20032114.
2.No sewerage/no curb and gutters.
3.Increase in development upstream which increases storm water flooding.
4.Removal of vegetation for development which increases flooding.
5.Two sewage lines run through property.
6.Silt from upstream filling dams which increase flooding.
7.Neighbour's land build up increases flooding.
8.Neighbouring development's 3 metre high rock wall with houses.
9.General rural land : can only be used for grazing stock animals.
10.General rural land : can not be built on or subdivided.
11.Ballinger Road drain pipes insufficient causing water back up resulting in flooding on property.
12.Restriction on importing land fill to alleviate flooding.
13.Inspected by Department of Natural Resources and Mines officers.
14.Stock animals suffer foot rot.
15.Council trucks bogged on property.
16.No cultivation possible due to constant flooding and water logging.
The appellant, Mr MD Sealy, conducted the appeal and gave extensive evidence, supported by graphic photographs, describing the nature and extent of the flooding. I am satisfied that most of the subject land is severely impacted as set out in Mr Sealy's grounds of appeal and evidence and that the problems are worsening as a result of further development in the area. The major issue to be determined is the allowance to be made for that detriment.
Valuation Methodology
The valuation under appeal was made by Mr DL Cook who is a registered valuer employed by the respondent. Mr Cook valued the property under s.17(1) of the Act as a property exclusively used for single dwelling house purposes with the result that any potential for alternative uses has been disregarded.
Mr Cook's primary valuation methodology was to compare the subject directly with three sales of lightly improved land with allowances made for the limitations of the subject's lower lying land. Using that method, Mr Cook initially valued the subject at $330,000 as at 1 October 2004, having made an allowance of 12% for the subject's defects. The valuation of $330,000 was reduced by Mr Cook by 6% to $310,000 (the valuation under appeal) after Mr Sealy provided engineering reports that demonstrated that the problems with water flow, flooding and ponding on the lower lying portion of the subject land were worsening.
Mr Cook's check valuation was made by valuing the subject's flood free home site and curtilage (an area of 6,000 m²) by direct comparison with three sales of lightly improved comparable land and then adding an amount for the balance land which was assessed by comparison with sales of severely constrained land -
Home site (6,000 m²) - $275,000
Balance 2.24 ha @ $15,000/ha - $33,600
$308,600
Rounded to $310,000
Mr Sealy questioned Mr Cook's identification of the flood free home site and curtilage area at 6,000 m² because earlier discussions had lead Mr Sealy to believe that Mr Cook would adopt an area of 4,000 m². Mr Cook responded that house sites of 4,000-8,000 m² were common in the Buderim area and he had adopted 6,000 m² because the contour map indicated that was the flood free area on the subject land.
Mr Sealy did not advance any reason to support his belief that 4,000 m² should be adopted other than that was his understanding of the earlier discussions. He did mention a sale across Cogill Road but had no details and Mr Cook had been unable to find any information about it. I am satisfied that Mr Cook had good reason to adopt 6,000 m² as the house site area and I have therefore accepted that aspect of his valuation.
Mr Sealy did not challenge the respondent's analyses of the sales and there is therefore no need to consider those analyses in detail. Mr Sealy's major submission was that none of the sales was comparable with his property because none reflected the increasing detriment of his land. He had calculated his valuation of $140,000 by deducting $10,000 from the previous valuation of $150,000 as at 1 October 2002 to allow for the additional disadvantage suffered by his property since that valuation.
Relativity Evidence
Mr Cook compared the unimproved value of the subject with that of four properties in the vicinity of the subject and was satisfied that the values were consistent. Mr Sealy disagreed with Mr Cook's description of those properties.
Property 1 (2.031 ha) at Cogill Road, Buderim is Lot 3 on RP 127970 which adjoins the subject along part of its eastern boundary. The unimproved value is $350,000. Mr Cook described the property as smaller in area than the subject with a smaller proportion of low lying land that has been filled. The land falls moderately from the road. It is similar to the subject, Mr Cook said, with localised flooding risk identified. He had checked the contour map to confirm the flooding risk.
Mr Sealy was adamant that the property was not flood prone in the sense that water accumulated there, that it had been filled simply to level out a gully, and that even in its unimproved state the water that ran through the property drained off onto his land. I have accepted Mr Sealy's evidence in this regard because he has lived next door to this property for 20 years.
Property 2 (1.705 ha) on the corner of Cogill and Ballinger Roads is Lot 4 on RP 127970 and is located about 300 metres south of the subject. The unimproved value is $320,000. Mr Cook said that this property was similar to the subject though significantly smaller, with localised flooding risk identified in the area.
Mr Sealy, similarly, said that this property did not flood.
Property 3 (1.012 ha) is Lot 2 on RP 89533 in Ballinger Road and adjoins the southern and part of the eastern boundaries of the subject land. The unimproved value is $265,000. Mr Cook considered that this property was inferior to the subject due to its location on the busier Ballinger Road, the lower lying nature of the land and the smaller area with localised flooding risk identified in the area. Mr Sealy said that this property no longer flooded because it had been filled.
Section 3(1)(b) of the Act provides that -
"unimproved value of land means -
…
(b) in relation to improved land—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, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist."
The unimproved value of Property 3 has been struck in accordance with that section, that is on the assumption that the improvements do not exist. The result is that the value of $265,000 is determined on the basis that the land is in its original flood prone condition. There is no demonstrated error by Mr Cook in making the valuation of Lot 2.
Property 4 which is also Sale 4, is Lot 1 on RP 28014 at Centreview Court, Buderim, and has an area of 1.338 ha. The unimproved value is $440,000. Mr Cook considered this property to be superior to the subject due to its elevation and closer proximity to Buderim. Nevertheless the property has a number of disabilities – 4,719 m² of easements, high voltage power lines on the western boundary, 3 natural springs, rock, and significant electricity and sewerage connection costs. Mr Sealy did not comment on the relativity of this property.
Although there appears to be some error in Mr Cook's description of Properties 1 and 2, that error is not sufficient for me to determine that the unimproved value of the subject is out of relativity with those properties. I consider that the evidence has established that the valuation of the subject is in relativity with these four properties. In any event, the relativity principle should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (Grahn v Valuer-General (1992-93) 14 QLCR 327 at 328; Fischer v Valuer-General (1983) 9 QLCR 44 at 46). The sales evidence is now considered.
Sales Evidence
The effect of the definition of "unimproved value" in s.3(1)(b) of the Act is that it is the market value of the unimproved land that is to be determined (Stubberfield v Valuer General (1991) 1QdR 278 at 283). Market value is the price which a willing purchaser would have to pay to a vendor not unwilling, but not anxious to sell on the date of valuation (Spencer v The Commonwealth of Australia (1907) 5 CLR 418). The best basis for assessment of unimproved market value is the use of sales of vacant or lightly improved parcels of land (Fischer v Valuer-General (1983) 9 QLCR 44 at 46).
Mr Cook relied on Sales 4, 5 and 6 to support his primary valuation of the subject site at $310,000. Each of those sites has significant defects which, while not identical with the subject's constraints, do provide evidence of the market for constrained land. The only comment made by Mr Sealy concerning these sales was that the soil from Sale 4 was washing down on to the subject land. He brought no evidence and made no other submissions about them. In my opinion, Mr Sealy has failed to establish that the sales are not sufficiently comparable with the subject such that they should not be used in the valuation. I have concluded therefore that these sales support the respondent's valuation.
Mr Cook's alternative valuation was made by classifying the subject land into a flood free house site and balance land. His sales 1, 2 and 3 were used to support the valuation of the flood free house site at $275,000.
Sale 3 (6,419 m²) was the only sale challenged in detail by Mr Sealy. The sale is located within 500 m of the subject and was analysed by Mr Cook to $400,000. The applied unimproved value was $275,000. Mr Cook regarded the sale as the best evidence of the value of the subject's house site. He described the site as hatchet shaped with the majority of the land under Q100 level. It is lower lying than the subject with a minor watercourse traversing the site. He considered that the sale was inferior to the subject due to its size, and that the sale demonstrated the level of demand for home sites in the locality. Mr Cook's opinion was that the subject was a preferable site as compared with the sale, because of the flood free house area of 6,000 m² on the subject.
Mr Sealy considered that the sale was not comparable with his property because the defects were easily managed by construction of a bridge over the watercourse and other relatively minor improvements. By contrast, the problems caused by water on his property could not be solved.
Mr Sealy's conclusion that the problems of the Sale 3 land were far less than those of the subject land appears to be based on a comparison of the whole of the subject land with the sale, whereas Mr Cook used the sale to support his valuation of the flood free house site on the subject. Thus the proper comparison to be made is between the house site on the subject, which is flood free, and the sale property most of which lies below the Q100 level. Taking those factors into account, I consider that the sale supports the unimproved value applied to the subject.
There being no other evidence or submissions to challenge the applicability of these sales, I find that the valuation of the flood free area of the subject at $275,000 is supported by the evidence of Sales 1, 2 and 3.
Sales 7, 8 and 9 were relied on by Mr Cook for his valuation of the balance lower lying area of the subject (2.24 ha) at $15,000 ha. Mr Cook said that he had initially valued this area at $30,000/ha but had reduced that valuation to $15,000/ha after Mr Sealy produced the engineering reports which showed that the problems on his land were getting worse. Each of these sales has significant defects and is located in an inferior area to the subject. The applied unimproved values are -
Sale 7 - $180,000 – 1.149 ha
Sale 8 - $285,000 – 2.168 ha
Sale 9 - $27,000 – 1.049 ha (adjoining owners sale)
Mr Sealy pointed out that Sale 9 was designated as Sustainable Rural Residential Land under the relevant planning scheme whereas his property was General Rural Land. Section 3(4)(a) of the Act provides that in making a valuation under the Act it shall be assumed that the land may continue to be used for any purpose for which it was being used at the date of valuation. As Mr Sealy was using his property for residential purposes as at the date of valuation, it is appropriate to value the land on that basis by comparison with sales of properties which are designated for that use. Mr Sealy made no other submissions challenging this sales evidence. As Mr Cook has allowed for the further deterioration of the applicant's property, I consider that a valuation of $33,600 for the subject's balance land is well supported by this evidence.
Conclusions
Section 33 of the Act provides that a valuation made under the Act by the chief executive shall be deemed to be correct until proved otherwise. The effect of the section is that there is a presumption that the respondent's valuation is correct so that the appellant bears the onus of proving that the valuation is incorrect.
The main thrust of Mr Sealy's grounds of appeal and submissions was that his property was so severely affected by flood water, ponding and water flow that it could not be worth the value placed on it by the respondent. There is no doubt that Mr Sealy's property is severely and adversely affected by those factors. Mr Cook's evidence showed that he was aware of the problems on the subject property and he explained in detail how he had made allowances for the detriments in his valuation. Mr Sealy did not bring any evidence that proved that there was any error in the respondent's sales evidence nor in the allowance made for the subject's defects. Nor did Mr Sealy prove that the respondent's valuation methodologies were in error. The result is that Mr Sealy has not discharged the onus of proof placed on him by s.33 of the Act. In those circumstances, the appeal cannot succeed.
Orders
1.The appeal is dismissed.
2.The unimproved value of Lot 6 on RP 895333 in the County of Canning, Parish of Mooloolah at Three Hundred and Ten Thousand Dollars ($310,000) as at 1 October 2004 is affirmed.
CAC MacDONALD
MEMBER OF THE LAND COURT
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