Singh & Leng v Chief Executive, Department of Natural Resources
[1998] QLC 56
•22 May 1998
|
BRISBANE
22 May 1998
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 1513
Local Government: Redland Shire.
(AV97-294).
Manjit Singh and Chew Lai Leng
v.
Chief Executive, Department of Natural ResourcesD E C I S I O N
Background:
This matter relates to the whole of Garden Island, Moreton Bay, containing 14.973 hectares, which is described as Lot 12 on Plan S31782, Parish of Russell. Garden Island is located approximately 35 kms directly south-east of the Brisbane City Post Office, about 2.4 kms off-shore of Redland Bay Weinam Creek Marina, and 3.5 kms from the Redland Bay Post Office. A primary school is available on the mainland 4.3 kms away at Redland Bay, and a primary school, Post Office and shops are located 900 metres east of the subject at Macleay Island. The key issues are the sale of the subject, comparison of sales, relativity, access and services, changes in the valuation, the nature of the land, the method of valuation and the objection process.
There is fair access to Garden Island by boat from the Weinam Creek Marina to a marine facility located on the eastern side of the island. Access is available to shallow draught vessels at all tides and larger vessels only at high tide. The only service available is water from a bore on the island, all other services would need to be provided by the owner. The land is zoned as "Rural/Non-Urban" under the Town Plan of the Redland Shire effective at the date of valuation of 1 October 1996.
On 1 April 1997, the Chief Executive, Department of Natural Resources, issued a valuation at $1 million. Following an objection the Chief Executive confirmed that figure on 21 July 1997. The appellant has now appealed that figure, claiming the valuation should more properly be $600,000.
Mr S Chacko, Counsel, appeared for the appellants, calling evidence from Mr Manjit Singh and Mr I Gregory, a registered valuer, who has experience in valuing off-shore islands.
Mr R Paterson, Counsel, appeared for the respondent, calling evidence from Mr GC Ide, the Departmental registered valuer now accepting responsibility for the valuation. The original valuer who determined the valuation is no longer available to defend the valuation.
The Evidence:
The appellants argue that the valuation is not supported by sales of comparable properties, and that the Chief Executive has placed too much weight upon the sale of the subject. In the appellants' opinion that sale was not a genuine "arms length" transaction, and contains special conditions which should have been considered. Mr Chacko concedes that the subject is relatively unique in that area, being the freehold title of the whole of an island, just off-shore from the mainland. However, he also argues that the nature of the land, and difficulties associated with the lack of services, and access to the island, provide disabilities which have not been adequately addressed by the respondent.
The Nature of the Land -
It is agreed by the parties that the land consists of approximately 13 hectares of elevated plateau land providing excellent all-round views of Moreton Bay, surrounding islands and the mainland. The balance of the land is at lower elevation adjoining the marine facility on the eastern side. The soils are red clay loam, and the subject is currently used as a part-time residential site, and for some farming activities. The island is surrounded by mangroves extending out to the edge of mud flats which tend to be exposed at low tide. There is a small channel cut through those mud flats which provides vessel access to the marine facility on the eastern side of the island. Both valuers agree that under the current zoning the highest and best use of the land is as a single homesite.Access and services -
While there is no dispute that only water is available from a bore upon the island, there is considerable difference between the parties in respect of the impact of the lack of other services. Mr Ide claims that power, telephone, sewerage and mail services can all be overcome with the establishment of personalised facilities at the appellants' cost. In view of the unique characteristics and value of the island, he sees these additional costs as not significant, compared to the privacy afforded by its location. He sees no real comparison with surrounding islands where these services are extant, although he has not made any in-depth analysis of the costs of providing such services to the subject.
In the matter of access to the island, the parties are well apart. Mr Chacko notes that current parking restrictions upon vehicles and boats at the marina, make regular movements to the mainland a matter of restraint. There is a maximum waiting period for boats of 20 minutes at the marina, which Mr Ide argues can be overcome by removing the vessel from the water each time the appellants visit the mainland, or by arranging for the necessary goods and services to be standing by, waiting at the jetty. Mr Chacko disputes those observations as impractical. Mr Ide also draws support from the existence of a water-taxi service on the mainland which can be easily arranged by telephone.
It was agreed by the parties that access from the mainland to the existing marine facility on the eastern side of the island takes about 20 minutes at low tide, and 5 minutes at high tide. Mr Ide suggested that there was a possible alternative location for a jetty on the western side of the island which would provide more direct access to the mainland at any level of the tide. This proposal was not examined in any detail, however it would involve approximately 150 metres of elevated jetty or pontoon to reach the seaward side of the mudflats at the nearest point.
There was also no apparent consideration to the more exposed location of this jetty in view of the prevailing north-easterly breezes, nor any possible dredging that would be needed to provide safe anchorage. Any difficulties of obtaining official permission from Queensland Transport (Maritime), or the Department of Environment in respect of the destruction of mangroves, had also not been considered. On balance I would agree with Mr Chacko that such a proposal, in the context of this valuation, would appear to have little to support it. Certainly the experience of other off-shore islands is that the provision of reasonable and reliable access is a costly and major matter. It is also a matter of fact that the actual travelling time to the island is by far the least time consuming part of any journey. The time spent in mooring and preparing the vessel becomes the major disability.
Comparison of sales -
Mr Ide provided the following comparable sales to support his valuation:•Sale 1 - (Lot 12 on Plan S31782 - Garden Island).
The sale of the subject was seen as a key sale for comparison purposes. The subject sold in May 1995 for $1,200,000, which after allowing for improvements was analysed at $1,143,300, and applied at an unimproved value of $1,000,000.
•Sale 2 - (Lot 389 on RP 801829 - Mainsail Court, Birkdale).
This is a 5,204 square metre canal fronting parcel located in the prestigious canal estate of Aquatic Paradise, located about 19 kms north-west of the subject. The sale fronts both the main canal and a side canal, and is elevated approximately 2 metres above Mainsail Court, which is bitumen sealed with concrete kerbing and channelling. There is an elevated building area of about 1,600 square metres, with the remaining falling gently towards the east and south, with uninterrupted views over Moreton Bay to the north and north-east. All services are available, and there is a 124 metre of quayline for boats.
The sale has parkland adjacent to the north, which has been developed with pathways, picnic shelters and playground facilities. The parkland provides some infringement on the privacy of the sale, as does also a small public beach area near the mouth of the main canal. The sale is zoned as "Comprehensive Development" and was purchased as a single unit housesite.
The sale was compared on the basis of existing sound land above high water mark. The sale was seen as having less control over foreshore development than the subject, with less water frontage, is smaller in area, with more restricted views of Moreton Bay, and is not as unique or private as the subject. Overall the sale is seen as inferior to the subject.
The sale sold in April 1995 for $837,000, which after allowing for improvements was analysed at $661,350, and applied at $650,000.
•Sale 3 - (Lots 611 and 612 on Plan C14568 - Shore Street North, Cleveland).
This is a 3,136 square metre site, located about 12 kms north-west of the subject, at the base of Cleveland Point. The land is high providing a good building platform and falls steeply to the front and the rear. The sale has good access to Shore Street North which is bitumen sealed. The sale has good bay views to the east and has bay frontage. All services are available. The sale is zoned as "Residential B".
The sale has a lesser frontage to Moreton Bay, has views over unsightly mud flats at low tide, is smaller in area, with more restricted views, and with less privacy or uniqueness than the subject. Overall the sale is seen as inferior to the subject.
The sale sold in July 1994 for $750,000, which after allowing for improvements was analysed at $721,000, and applied at $720,000.
Both Sales 2 and 3 were the subject of another matter before this Court, and are well known, having been inspected by the Court. Two others, Sale 4 (Sternlight Court, Cleveland) and Sale 5 (Orana Esplanade, Victoria Point) are small Residential A properties of 761 square metres and 703 square metre areas. They provide no real comparison with the subject, except to indicate that there has been a significant change in those valuations, which is discussed later.
The appellant claims that in view of the unique nature of the subject, it is more appropriate to seek comparison with sales of comparable island properties elsewhere off-shore of Queensland. In view of the lack of any local island sales, Mr Gregory sought support from sales of islands elsewhere in Queensland as follows:
• Sale (a) - (Hook Island - Whitsunday Group).This is a 9-hectare island developed as a 12-unit resort, which sold in June 1997 for $500,000.
•Sale (b) - (Titan Island - Whitsunday Group).
This is a 2,023 square metre island located 1.4 kms west of Hamilton Island, and has been developed as a residence, guest quarters and caretaker's cottage and swimming pool. The sale is zoned as "Residential" and was reportedly sold in February 1997 for $725,000.
•Sale (c) - (Double Island - Cairns).
This is a 19-hectare island resort which sold for $3.2 million in June 1997.
•Sale (d) - (Quail Island - Capricornia Coast).
This is a 2,000 hectare island located 3 kms off-shore which is used as a residence and for primary industry purposes. It sold in July 1997 for $475,000.
Mr Gregory argues that while the subject is closer to the major urban areas of Brisbane and South-East Queensland, because of its off-shore location it also suffers from similar disabilities of isolation, lack of access, and lack of services. Each of the above islands was seen to be superior to the subject in terms of geographic features and appeal. Both parties agree that because of its characteristics, only sales in a selected niche market would be comparable.
Relativity -
A key part of the appellants' case relates to relativity of Garden Island compared to several on-shore properties opposite the subject. Mr Gregory seeks support from the unimproved values of large prestige mainland housesites or waterfront sites with similar zoning to Garden Island. He selects properties in School of Arts Road (4), Queen Street (4), and Collins Street (5), all of which vary in area from 3.84 hectares to 37.67 hectares, and provide unimproved values ranging from $18,601 to $35,127 per hectare. Mr Gregory concedes that his comparison of rates per hectare were based upon an analysis of computer records of properties without the benefit of site inspections. He claims that those parcels have vastly superior development potential due to the availability of access and services. Mr Gregory draws comparison with the subject which is seen to have a rate per hectare of $66,800.
Based upon the current zoning restrictions of minimum parcels at 20 hectares, he sees the subject being valued as a single housesite parcel with additional surplus rural land attached. He draws comparison with residential housesites at Orchid Beach on the mainland near the Weinam Creek Marina, which sold for $230,000 to $235,000. Although without water frontage, those parcels have views over Moreton Bay. Based upon that comparison, he values the subject as:
House lot with water views = $250,000
Surplus land - 14ha @ $25,000/ha = $350,000
TOTAL = $600,000
Mr Gregory argues that a potential purchaser would assess Garden Island as "retreat value" only, and his assessment method supports that conclusion. Mr Ide, however, sees the subject as quite unique as it is the only freehold single entity island property in Moreton Bay, which offers privacy, seclusion and exclusivity not enjoyed by any other parcel. He sees the balance of the land with potential for use for, say, private golf course, or some other purpose which supports the exclusive nature of the island. For these reasons he sees it as being valued at something in excess of all other housesites in the area.
Changes in the Valuation -
Mr Ide argues that changes in the sale value of the subject over the period 1986 ($430,000) to 1996 ($1,200,000) is commensurate with the percentage increase of other prestigious canal properties during the same period as follows:
Sale Date Price Date Price PercentageIncrease
Sternlight St, Cleveland
(Sale 4) Jul 1987 $ 71,500 May 1995 $ 184,000 1.57%
Orana Esplanade, Victoria Point
(Sale 5) Nov 1987 $ 65,500 Feb 1996 $ 218,000 2.33%
Garden Island May 1986 $430,000 May 1996 $1,200,00 1.79%
However, Mr Chacko argues that such a percentage increase has no relevance when comparing off-shore islands, which are a different niche market to on-shore properties. He also notes that an analysis of the unimproved value of the subject reveals an exponential increase in the valuation over time, rather than any gradual rise in the valuation. He notes the following valuations:
Date Valuation Comments
31.3.90 $ 500,000 As a large housesite.
31.3.90 $ 250,000 For farming purposes.
31.3.92 $ 250,000 For farming purposes.
30.6.93 $ 250,000 For farming purposes.
01.1.95 $ 400,000 As a large housesite.
01.1.96 $1,070,000 Based on sale of subject.
01.1.96 $1,000,000 Based on sale of subject.
1.10.96 $1,000,000 Current valuation.
Mr Ide could not offer no comment on why the valuation had only been $400,000 in January 1995, other than to point out that he had not been the valuer at that time. However, he agreed that the previous valuer (Mr Brown) had been an experienced valuer of some 12 years experience. He also could offer little light on why the valuation had increased suddenly to $1,070,000 in January 1996, other than noting that perhaps the sales prior to then did not reflect the unique characteristics of the subject. He conceded that there had been no increases in either the privacy, seclusion, or exclusivity of the subject during that period. The reduction from $1,070,000 to $1,000,000 in January 1996, reflected an allowance by the valuer to "round down" the estimated valuation in accordance with their normal procedure, in order to provide a conservative valuation for eligibility for rating and land tax purposes.
The Sale of the Subject -
There was considerable dispute between the parties in respect of the weight to be allowed for the sale of the subject. Mr Singh argues that, because of special personal circumstances, that sale should not be seen as an "arms length" transaction. He claims that, in spite of his normal extensive experience in land matters, he allowed personal and family reasons to influence the agreed price and settlement arrangements. Because his family developed a high personal attachment to the island, he failed to seek local valuation advice, and purchased the island solely upon comparisons with his purchasers of a vacant building lot at Hope Island, Gold Coast, and in the light of a comparison with the Singapore property market. For those reasons, Mr Chacko argues the appellant could not be seen as a prudent purchaser.
Mr Singh concedes that, because of his personal commitment to the island, he would probably have not over-paid, in his view, for the land. However, he argues that the sale did not reflect a fair market value for the land at that time and should be excluded because it would be found to be out of line with the market trends. Mr Singh agrees that he had experience in the local property market, having also purchased two adjoining vacant housesites at Hope Island ($250,000 and $550,000), and a 230 hectare rural site in Tasmania for $100,000. Mr Gregory also argues that as there was no direct comparison of a sale of similar land in the Brisbane area, it would have been easy for the appellants to have paid a high price in view of the lack of any direct benchmark evidence to support the sale price. In view of the lack of any in-depth examination of the vendor's reaction to the sale, Mr Gregory believes the sale of the subject should be treated with caution.Method of Valuation -
As noted previously, Mr Gregory valued the land on the basis of a prestigious housesite with views of the bay ($250,000), plus "surplus rural land" ($350,000). He argues such an alternative approach was necessary in view of the lack of any direct comparable island lands in the area. He saw the value of the "surplus rural land" as limited merely to farming activities. However, he did not argue how Garden Island would use that "surplus" land in any other way than similar large rural homesites, which are best valued on a site basis.
Mr Ide compared the subject with sales of prestigious land on a site basis making some allowances for the additional area of the subject (14 hectares), compared to the main supporting Sale 2 (5,204 square metres) and Sale 3 (3,136 square metres). He agrees with Mr Chacko that a rural housesite could be viewed as comprising a housesite plus additional land, but does not accept Mr Gregory's alternative method of valuation. Mr Ide also agrees that, in view of the unique nature of the subject, an alternative approach to the valuation would assist in confirming the valuation in view of the paucity of directly comparable islands. He relies upon the changes in the valuation of other parcels discussed earlier.
In establishing his notional value of a 1,000 square metre housesite at $250,000, Mr Gregory would appear to have only slightly allowed extra for the unique nature of the subject. He agrees that mainland lots without direct access to Moreton Bay were in the range of $230,000 to $235,000. Apparently then Mr Gregory has only allowed an amount of $15,000 for the advantage of access to water. This would appear to be inconsistent with the general trend in the Redland Shire, where average canal waterfront lots are about $100,000 dearer than lots without access to water. Where, however, a canal lot has a special additional access to water, such as with Sale 2 (referred to as the "Power sale"), then the additional value is considerably more. In adopting his value of the "surplus" land at $25,000 per hectare, Mr Gregory relies upon his experience as a professional valuer on non-urban lands in the Brisbane area.
The Objection Process -
In support of his contention that the sale of the subject was out of line with the market, Mr Chacko notes that the respondent had not undertaken a thorough investigation of the sale. He argues that, in spite of advice from the appellant, and an offer to pay for the costs of interviewing the former vendor (Mrs Heine), the Chief Executive had declined to pursue the matter. The respondent agrees that some attempts were made to contact Mrs Heine, but she was apparently overseas at the time.
There was also an attempt to arrange an objection conference with the appellants (20 May 1997), but that had not occurred as Mr Singh was unavailable at the appointed time. Mr Singh had sought an adjournment of the conference to a more suitable time in view of his residence in Singapore (20 May 1997). He had advised meanwhile in his letter of 21 April 1997 (Exhibit 6), that he could arrange a statement from Mrs Heine. While the details of any "without prejudice" discussions between the parties were not a matter for this Court, the facts of the offer in respect of Mrs Heine, were part of the appeal documentation submitted to the Court.
The respondent further argues that a second letter (22 May 1997), was sent to the appellants seeking advice on an alternative date for a conference. There had been no response to that letter, and the objection had been finalised without further discussions with the appellant. Mr Singh counters that advice by noting, that the second letter from the Chief Executive referred to the appellants' letter of 20 May 1997, and not the appellants' letter of 21 April 1997. The appellants had therefore not responded, and awaited further advice in respect of his offer of 21 April 1997.
This is a case where communication between the parties has been less than effective. Had a conference occurred, it is possible that some resolution may have eventuated. However, as noted by Mr Gregory, the respondent placed considerable weight upon the sale of the subject, and is likely to have required some convincing of the "special nature" of the sale. The nature of Mrs Heine's advice on the conditions of the sale would have been influential in determining the weight to be applied to the sale. In hindsight, it was unfortunate that her advice was not sought.
Decision:
(i) Nature of the Land -
I turn first to the nature of the land and note that there is general agreement that the land provides an excellent housesite, perhaps unequalled in the Moreton Bay area. Because of its uniqueness as an entire freehold island, it is difficult to find a comparable property with exactly similar characteristics. Because of its zoning and location I agree with both valuers that its valuation should be determined as a rural housesite.(ii) Access and Services -
In the matter of access to the island, I note that there are currently facilities for the berthing of vessels both on the island and on the mainland. I accept also that an effective water taxi service is available, and that, subject to some costs, access to the island should not be a major problem for the appellants, bearing in mind the cost of the investment in the subject. However, I believe the respondent has tended to underestimate the impact of the limited access in his comparison with sales of canal parcels on the mainland. While the other bay islands of Karragarra, Macleay, Lamb and Russell Island have similar access problems, they provide no real comparison with the subject in other respects.
In the matter of services available to the island, I agree that, relatively speaking, the essential services of power, telephone and sewerage can all be accommodated within the costs of establishing an expensive residence commensurate with the exclusive nature of the land. However, in my view, the respondent has again tended to underestimate the differences in comparing similar services already available to Sales 2 and 3.(iii) Method of Valuation
The key to understanding the respondent's case lies in his estimate of the exclusiveness and uniqueness of the subject. Mr Ide argues that privacy, views, aspect, water frontage and location are superior to all other parcels in the area. In seeking his comparison of sales, Mr Ide has relied upon two sales previously adopted as the basis for another exclusive property in the area, and the subject of a decision by this Court. (See CR Gay v. Chief Executive, Department of Natural Resources (AV96-304), 30 May 1997, to be reported.
In that matter the difficulties confronting a valuer in determining what the market will bear for a property which is seen as at the top end of the price range, was discussed at some length. I will not repeat those findings, but suffice to note that, those who can afford the best, will often extend themselves to acquire the object of their desire (page 21). In the current matter Mr Singh has admitted that he may have paid more than what another prudent purchaser would have committed. In seeking comparison with sales of other prestigious properties, Mr Ide has relied upon comparisons on a site basis. In that regard he has followed the principles adopted in AT Dewar v. The Valuer-General (1980-81) 7 QLCR 112, where the Land Appeal Court found at page 115:"The market for rural homesites demonstrates that they are purchased on a site basis and not on a pro rata per hectare basis. "
That was also followed in DF and M Ward v. Valuer-General (1983) 9 QLCR 48,
where the Land Appeal Court found at page 50:
"Sites are valued overall and not on a rate per hectare basis. The experience of the market place reflects the former not the latter practice. "
And also in ACF and Shirleys Limited v. The Valuer-General (1978) 5 QLCR 370 at page 375; and again in H and E Grahn v. Valuer-General (1992-93) 14 QLCR 327, where the Land Appeal Court found at page 330:
"The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. "
(iv) The Sale of the Subject -
In seeking to analyse the sale of the subject, I note that guidance may be found in "Land Valuation and Compensation in Australia" by Rost & Collins, 3rd Edition (1984) which notes at page 89:
"The sales which afford most assistance to the valuer are those which most closely resemble the land being valued, providing the dates at which the sales were made are reasonably close to the date of valuation. "
The value of a sale of the land itself was established in Jowett v. Federal Commissioner of Taxation (1926) 38 CLR 325, where Rich J. said at page 329:
"A sale of the subject land, or of comparable land, affords the best means of arriving at the fee simple value of any land. "
However, any sale of a subject property should also be examined to determine whether it is in reasonable conformity with the market. That was found in Chief Executive, Department of Lands v. J and L Lorenzen (AV93-22), 1 June 1994, unreported, where the Land Appeal Court found at page 4:
"Whilst we agree that a sale of the subject land should always be considered in assessing its value we hasten to stress that such a sale is only prima facie evidence of its value. The weight which will be given to the sale is dependent upon a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable land. "
The matter of consistency with the market was also discussed in Determination of Rents and Unimproved Values for Conversion Purposes - Perpetual Lease Selections and Grazing Selections - Goondiwindi District (1974) 1 QLCR 45 where the President said at page 48:
"I think I should say at this juncture that whilst a sale of a subject property around about the relevant date in normal circumstances is cogent evidence of its value, it is always necessary to check the analysed value against the standard reflected by other sales of comparable properties to ensure that it conforms to the `norm' of the market. If the sale does not so conform caution must be used in its application and it may be even proper to reject it if it shown to be a sale out of line with the market `norm'. This check becomes vital, in my opinion, in times of a varying market be it rising or falling or in times of an erratic market. One cannot assume, ipso facto, that the analysed sale figure equates fair market value for the subject purposes. "
In seeking to determine what weight should be applied therefore to the sale of the subject in this current matter, I note that the respondent has relied upon comparable percentage increases in his Sales 4 and 5. He adopted this approach as a means of supporting his comparison of sales of vacant lands, and in the light of his experience of valuations in the area. In so doing, Mr Ide has drawn upon his knowledge and experience in accordance with precedents to be found in Bingham v. Cumberland County Council (1954) 20 LGR1, where Sugarman J. said at pages 18 and 19:
"In the absence of sufficient guidance to be had from sales, the valuer may find himself in the position resembling that to which Lord Romer referred in the Raja's case (1939) AC at pages 312 and 313, in which he `will have no market value to guide him and that he will have to ascertain as best he may on the materials before him what a willing vendor might reasonably expect to obtain from a willing purchaser for the land'. ...
The valuer, in arriving at his opinion in these difficult matters may have to draw upon his general knowledge and experience, including perhaps experience in other situations which, although lacking in complete comparability, may yet provide an experienced valuer with guidance and suggestions as to the general approach which may be made and as to considerations which may become relevant. "
However, as Mr Chacko argued, because of the history of changes in the valuation of the subject, there would appear to have been a dramatic change in the value between 1 January 1995 ($400,000), and 1 January 1996 ($1,070,000). While the uniqueness of the subject provides little guidance about how the market for whole island properties may have shifted, the sudden change in the values causes some moment of concern for the appellants. One can assume that the 1 January 1995 valuation was undertaken by an experienced valuer charged with a similar task of assessing the subject at that time, arriving at a figure of $400,000. That figure cannot now be queried as not fitting the current model of increases for the area. Indeed, section 33 of the Act specifies that the value is to be accepted as appropriate at that time. That then raises the issue of the level of weighting placed upon the sale of the subject. From the evidence of Mr Ide it would appear that the sale of the subject was the determining influence, but supported by both of his inferior Sales 2 and 3. However, in view of the appellants' claim that the sale represented certain special circumstances, which could preclude the sale as an "arms length" transaction, it would have been prudent for Mr Ide to investigate the conditions of the contract of sale. That was found in the Supreme Court of New South Wales on 9 July 1979 in Inez Investments Pty Ltd v. JL Dodd (1979) 26 The Valuer 501 where Carmichael J. said at page 505:
"It follows that where a valuation of a piece of real estate is sought as at a particular date the most relevant information for analysis is the sale of that very property, if there be one, at or close to that date. The matters requiring analysis are: the terms and conditions of the contract, and was it a voluntary sale of a not anxious seller to a not anxious buyer? ....
I conclude therefore that a prime matter for investigation when a valuation is sought is to ascertain whether there is current a contract for sale of the property and, if so, to make an analysis of that sale to see how it complies with the test of value as laid down in Spencer's case. Failure to carry out these functions is to risk ignoring the best evidence of value. That was a risk the defendant deliberately took in this case and in my opinion he thereby failed in his duty as a valuer. "
However, in this matter the respondent failed to interview the previous vendor (Mrs Heine), and accepted the sale in spite of the doubts raised by the appellants. While Mr Ide may have some misgivings about accepting the appellants' version of the contract, it was unwise not to pursue Mrs Heine's explanation of the sale. While I am not convinced that there is evidence to completely disregard the sale, there is some room to believe that some part of the sale price was involved in "special considerations".
(v) Comparison of Sales -
Setting aside tentatively the sale of the subject, I note that the most comparable sales provided are:
Mr Ide - Sale 2 (Sold April 1995 for $837,000)- Sale 3 (Sold July 1994 for $750,000)
Mr Gregory - Sale (a) (Sold June 1997 for $500,000)
- Sale (b) (Sold February 1997 for $725,000)
- Sale (c) (Sold June 1997 for $3.2 million)
- Sale (d) (Sold July 1997 for $475,000)
As Mr Ide notes he has compared his Sales 2 and 3 at the site price which represents what a purchaser would pay to acquire a building site above high water mark with all the ground improvements in place. I note also that Mr Gregory has supplied sales of four islands in North and Central Queensland on a similar basis as the subject and Sales 2 and 3. However, Sales (a), (c) and (d) were all sold after the date of issue of the valuation on 1 April 1997, and must be rejected because of lack of jurisdiction to consider them. In this regard, I refer to the findings of Gold Coast Milk Pty Ltd and South Coast Co-Operative Dairying Association Limited v. Valuer-General (1983) 9 QLCR 13, where the President noted at page 17:
"The Land Court is a Court of statutory creation and its jurisdiction is likewise bestowed. It has no inherent jurisdiction. It is, therefore, a Court of limited jurisdiction and it must necessarily only assume jurisdiction when and in the manner in which the Legislature authorises it to do so."
In terms of the application of that jurisdiction, the Land Appeal Court clarified the matter of the relevant period to which the Court's jurisdiction may be applied. In RG McMurray v. The Valuer-General (1983) 9 QLCR 35, where it said at page 36:
"As is stated in the decision handed down by the learned President, the Land Court, and on appeal the Land Appeal Court, can only consider the primary production activities carried on on the land between the date of the valuation (31 March 1980) and the date of the issue of the valuation (12 February 1981). We are unable to have regard to anything that has occurred since that date. "
In comparing therefore Sales 2, 3 and (b), Mr Ides sees the subject as superior to Sales 2 and 3, while Mr Gregory sees it as inferior to Sale (b). In making these comparisons I accept that the two valuers are relying upon their experience in the area in accordance with the findings of Bingham v. Cumberland County Council (supra).
I note also that in determining the comparability of the subject to those sales, both valuers have followed the principle noted in H and E Grahn v. The Valuer-General [1992-93] 14 QLCR 327, where the Land Appeal Court said at page 330:
"The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes.
As the Land Appeal Court said in its decision on the appellants' previous appeal (H and E Grahn v. The Valuer-General (AV89-246 and 247, 13 December 1990);
`for the purpose of valuing residential sites, the preferable method of comparison is on a site-to-site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size of the lots, the situation of and access to the lots, the shape and topography of the lots etc., and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features. ' "
Clearly there is little difference between the two experienced valuers in respect of the general nature of the properties, the only difference would appear to lie in their respective consideration of the quantum to be allowed for the unique and relative exclusivity of the subject. Mr Ide has placed his emphasis upon the subject's location and unique total freehold title to the island. Mr Gregory has placed a higher weighting upon the impact of the difficulties with access and services. By their calculations Mr Ide sees the value of the subject as greater than $837,000 (Sale 2), and Mr Gregory sees it as less than $725,000 (Sale (b)). I find comparison with Sale (b) in the Whitsunday Group of doubtful support in the current matter and I lean towards the adoption of Sales 2 and 3 for comparison purposes.
If I then compare the sale price of the subject at $1.2 million, I note the additional premium which Mr Ide attaches for its uniqueness. However, at arriving at an appropriate site value for the subject, I am persuaded that the conditions of the contract of sale between the appellants and the former vendor Mrs Heine, have not been fully investigated.
Whether there were any special circumstances involved, has not been either fully substantiated or disproved. On balance I lean towards making some allowance for the possible likelihood of special conditions which would mitigate against the adoption of the full purchase price. I have no idea as to what the quantum of the value of any special arrangements may have been, but I would lean slightly to some reduction in Mr Ide's determination.
In adopting this strategy of giving some benefit of doubt to the appellant, I note the findings of the High Court in Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of South Australia Limited and Others (1946-47) 74 CLR 358, where Dixon J said at page 373:"I have had the advantage of reading the judgment prepared by Williams J. and agree in it. 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. "
For these reasons I feel that a site value of $1,100,000 would be appropriate for the subject. I note also that such a figure was adopted for the subject land in the Gay matter (supra). In that case the subject land was a unique canal house site of area 1.049 hectares, and was seen as superior to all other housesites in the area. There would appear to be some consistency in valuing that property and Garden Island at the same level.
If I then make allowance for the value of improvements noted by Mr Ide, I arrive at an analysed value of $1,043,300. However, the evidence provides no indication as to whether the cost of "structures" at $17,000 included the cost of providing the marine facility on the eastern part of the island. From the photographs supplied to the Court I suggest they do not, as the facility is quite substantial.
I am aware that Mr Ide has sought comparison on a site basis only, and would perhaps argue that such costs are not applicable on that basis for comparison. However, I suggest that to compare a site with available access at both the "Power" property (Lot 389) and Garden Island, it would be reasonable to allow for something for the only current point of physical access at the marine facility.
I note that in rounding his analysed figure of $1,143,300 to $1,000,000 Mr Ide has provided some concession for possible unknown features. I would apply a similar approach from the indicated site value of $1,100,000 and find that an unimproved value of $900,000 would be appropriate.
Conclusion:
After having considered the whole of the evidence I am persuaded that the appellants have partly proved their case. The unimproved value as determined by the Chief Executive, Department of Natural Resources, is set aside, and the unimproved value of Lot 12 on Plan S31782 is determined at Nine hundred thousand dollars ($900,000).
(NG Divett)
Member of the Land Court
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