Skuthorpe v Department of Natural Resources, Mines and Energy
[2004] QLC 19
•24 March 2004
LAND COURT OF QUEENSLAND
CITATION: Skuthorpe v Department of Natural Resources, Mines and Energy [2004] QLC 0019 PARTIES: Arthur N Skuthorpe
(applicant)v. Chief Executive, Department of Natural Resources, Mines and Energy
(respondent)FILE NO:
AV2002/0851
DIVISION: Land Court of Queensland PROCEEDING: Appeal against valuation under the Valuation of Land Act 1944 DELIVERED ON: 24 March 2004 DELIVERED AT: Brisbane HEARD AT: Coolangatta MEMBER Dr NG Divett ORDER: The valuation of the Chief Executive is set aside, and the unimproved value of Lot 155 on RP 93664 is determined in the sum of Two Hundred and Fifty Thousand Dollars ($250,000). CATCHWORDS: Statutory valuation – Valuation of Land Act 1944 – Alteration of valuation – Leading to a higher figure – Presumption of correctness not abandoned.
Valuation – Statutory valuation – Method of annual valuation approved.APPEARANCES: Mr AN Skuthorpe for the appellant
Mr G Smith for the respondent
Background:
This matter relates to land at 26 Pall Mall Avenue, Currumbin, and described as Lot 155 on RP 93664, Parish of Tallebudgera. The subject land has an area of 577 m² and is located at the end of Pall Mall Avenue, which is a cul-de-sac, and is about 16 kilometres south of the Surfers Paradise Mail Exchange, and about 2 kilometres by road to the nearest surfing beaches. The land is zoned Residential Dwelling House under the Town Plan of the Gold Coast City Council of 24 February 1994, effective at the date of valuation of 1 October 2001. The key issues are the nature of the land, comparison of sales, the method of valuation and relativity.
On 25 February 2002 the Chief Executive issued a valuation of the subject land at $230,000. Following an objection the Chief Executive revised that figure under s.68 on 12 November 2002 to $185,000. The appellant has now appealed claiming the unimproved value should more properly be $114,950. Following an unsuccessful court supervised Preliminary Conference on 26 February 2003, a further inspection of the property was undertaken by the respondent. As a result of that inspection the respondent now seeks leave to argue for an unimproved value of $275,000.
Arthur Norman Skuthorpe, a retired experienced business executive in construction management, appeared and gave evidence on his own behalf. Mr G Smith, Senior Legal Officer appeared for the respondent, calling evidence from Gregory Patrick Crowley, the departmental senior registered valuer responsible for determining the valuation.
With the agreement of the parties a joint site inspection was undertaken.
History of the Appeal –
The issues raised in the current matter were previously pursued in an appeal against the valuation of the subject land at 1 January 1995. In that decision of this Court the learned Member explored in some detail the particular features of the subject land, which are reported in his decision of 28 June 1996. In that matter Mr Crowley appeared as advocate for the respondent.
Mr Skuthorpe explains that his concern in the current matter is that an incorrect assessment had been made of the unimproved value of the subject land, which was heightened by a reduction in the unimproved value applied to an adjoining parcel at Lot 376 on RP 92799 (Ruck). That parcel was reduced by the Chief Executive for that 554 m² parcel from $450,000 to $285,000. Mr Skuthorpe thus concludes that the reduction applied to Lot 376 on 8 July 2003, should also have relevance to the subject land. However Mr Smith explains that the amendments to Lot 376 in July 2003 related to a later valuation at 1 October 2002. Mr Crowley clarifies that issue, noting that following an objection on Lot 376 that parcel had been reduced to $265,000 at the relevant date of 1 October 2001.
Mr Skuthorpe confirms that his estimate of the unimproved value of the subject land at the relevant date was obtained by adjusting the previous unimproved value of $110,000 by the Consumer Price Index (CPI) for the previous 12 months. Mr Skuthorpe has objected to every recent valuation of the subject land, as he feels that the approach adopted by the Chief Executive is incorrect in accordance with the requirements specified in the Valuation of Land Act 1944 (the Act). Mr Skuthorpe also agrees that there have been repeated objection conferences with the officers of the Chief Executive over the years. Mr Skuthorpe argues that the approach adopted by the Chief Executive to the valuation process is in conflict with the intentions of the Act, and as such he sees the outcomes as an “abuse of power “ within the Act. Mr Skuthorpe further explains that he is part of a local community group, who are actively lobbying the local Gold Coast City Council, to have changes to the current rating system introduced to alleviate hardship, which is growing as a result of significant rises in the unimproved value of land on the Gold Coast.
Mr Crowley advises that the reason that he now leads evidence to a valuation of $275,000 for the subject land, relates to his subsequent inspection of the land, and reflects his opinion of the impact of the significant coastal views to the north from the upper levels of the existing dwelling. Mr Crowley also confirms that he did reduce Lot 376 (Ruck) from $450,000 to $285,000 under s.68 for the 1 October 2002 valuation, in line with a similar block adjustment for all of the about 50 parcels on Currumbin Hill (Exhibit 4). However he advises that block amendment has no relevance to the current matter at 1 October 2001. Mr Skuthorpe agrees that there has been considerable communication between himself and the respondent officers over these matters in accordance with the provisions of the Act.
Nature of the Land –
Mr Skuthorpe argues that s.3(1)(b) defines the unimproved value of the land as the land free of all improvements in its original state before any improvements were made. On that basis he argues that it is incorrect to value the subject land as a parcel with extensive views, and he provides photographs of the land when he purchased the parcel in 1987 as a vacant lot. (Exhibit 3A). Those photographs show the parcel as surrounded by vegetation, and with major granite outcrops. A contour map indicates the location and dimension of those features, which were explored in great detail in AV95-319 as pages 1-3, and I will not repeat those findings.
A major difference between the parties lies in their understanding of the meaning of s.3(1)(b); and I will explore that later. However, I note that Mr Skuthorpe continues to maintain the opinion that there were no views from the subject land in its unimproved state. In the previous appeal decision the valuer (Mr Farren) at that time described the views as follows at page 2 in the decision
“Mr. Farren described the land as having a westerly aspect with an outlook and views extending from south-west to north-west. He described that the west and north-west views looking over Currumbin Creek and the Hinterland as being "exceptional", whilst he wrote that "restricted views" were available of the ocean and the coastline to the north-west. In contrast Mr. Skuthorpe in his written statement, said that the land "in its basic state...had no view."”
Apparently the previous learned Member had no opportunity to visit the site.
As a result of the joint site inspection for the current matter, I was able to confirm Mr Crowley’s opinion that views both to the south-west, west and north-west are panoramic. I not also that views to the north across the rooftops of houses on the western side of Pall Mall Avenue, extend along the coast line through to the northern beaches and Surfers Paradise. It is noted that Pall Mall Avenue falls to the north from the subject land, thus increasing the capacity for extended views towards the north. There is a large tree partly obscuring those ocean views, but the general view to the north is excellent. However I note that those views were obtained from the second level balcony of the current dwelling. Any views to the north from ground level were blocked by vegetation and the adjoining dwelling. Mr Skuthorpe agrees that some lots in Pall Mall Avenue do have views of the ocean, but he argues those parcels are on the eastern side of Pall Mall Avenue.
Mr Skuthorpe explains that due to the difficult shape and the nature of the original condition of the subject land, only 50% of the site was available for building, and that construction proved difficult and expensive to construct the pole house now existing. Because of those additional expensive construction costs, Mr Skuthorpe argues that the value of the land itself should be reduced accordingly. Mr Crowley rejects such a top-down approach, which he argues is not the appropriate method of determining the unimproved value of the land. Mr Skuthorpe concedes that the informal “pathway” along the western edge of the subject land, currently only used for electricity cable purposes, does not intrude upon the subject land. The “pathway” joins the cul-de-sac ends of Pall Mall Avenue and Albany Avenue to the south. (See Plan of Survey RP 93664 – Exhibit 2, page 7).
Because of difficulties in excavating part of the granite outcrop near the frontage to the subject land, the road pavement required an expensive driveway construction to the subject land. Because of its location at the head of the cul-de-sac, Mr Skuthorpe also suffers regular movements in front of his property by turning vehicles. I would agree with Mr Crowley that access to the subject land could not be described as “easy”, and is better described as only “fair”, and below road level. As the subject land adjoins a public parkland to its east, visitor traffic is a recurring problem also for his neighbours on Lot 375 and Lot 376 (Ruck). The parkland has a substantial water reservoir tank to the south-east of the subject land. Mr Skuthorpe speculates that a second water reservoir tank is “ear-marked” for the land adjoining his property, but concedes that was merely only a possibility at the relevant date.
In respect of the overall cost of development of the existing dwelling, Mr Skuthorpe explains that it has an area of about 700 m² (75 squares), and cost about $0.5 million to build. However he could not quantify the total additional unforeseen construction costs which arose from the difficult nature of the subject land. He also agrees that he purchased the subject land in January 1987 for $67,000, following negotiations, and a reduction in the original asking price of $75,000. That parcel was one of the last vacant parcels in the street, and he compared it with a more rectangular lot (Lot 133) about 100 metres north on the western side of Pall Mall Avenue, which was available for $48,000 at that time. Lot 133 was now valued at $237,500 at 1 October 2001. Mr Skuthorpe selected the subject land for personal reasons at that time.
In explaining his approach to the nature of the land, Mr Crowley argues that, while the unimproved value of the land is to be determined, you cannot ignore that the land has been improved; and that it had the potential to be improved in its unimproved state. He seeks support for that conclusion in the findings of Maurici v Chief Commissioner of State Revenue [2003] 77 ALJR 727; and also in ss.4 and 5 of the Act.
The Method of Valuation –
In seeking to support his estimate of the unimproved value, Mr Skuthorpe argues that the current rating system is unfair, and should be based upon an equal rating charge to all ratepayers. He argues that the current unimproved value system disproportionately impacts various groups of ratepayers, and all are supposed to be receiving an equal service from the Council. However Mr Smith notes that is in contravention of the current law where the Valuation of Land Act 1944 is designed to ensure a fair and equitable valuation basis for the generation of indebtedness to rates and land tax charges.
Mr Skuthorpe also rejects any use of a simple mathematical valuation approach, which he argues appears to reflect Mr Crowley’s current method. He also argues that Mr Crowley had not personally inspected the subject land prior to determining the 1 October 2001 valuation, in spite of the need to assess accurately the features of each parcels of land. Mr Crowley rejects that the valuation was purely a mathematical approach, referring to it rather as a “mass appraisal” approach, which took account of former relativities, and prior knowledge of the relative features of each parcel. Mr Crowley advises that the “mass appraisal” technique refers to the fact that some 130,000 separate valuations are undertaken annually on the Gold Coast alone. Mr Skuthorpe agrees many valuations have to be completed, but argues that the reason that so many mistakes occur in the valuations, is because of the current understaffing of the Chief Executive’s valuers to do the ever expanding workload.
Comparison of Sales –
Mr Skuthorpe provides no sales of his own, while Mr Crowley provides the following sales:
· Sale 1 – (23 Albany Avenue, Currumbin – Lot 165 on RP 93664). This is a 526 m² vacant parcel located about 150 metres south-west of the subject land. The sale fronts both Albany Avenue to the west and Albany Lane to the east. Because of the steepness of the parcel access is considered reasonable only from Albany Lane, which is a narrow bitumen sealed carriageway. Access to the sale is inferior to the subject land. The sale has westerly views across Currumbin Valley, and has similar unstable land with rock outcrops. The sale overall is seen as inferior due to aspect, access and views. The sale sold in January 2002 for $162,500, was analysed at $161,500, and as it was a late sale after the relevant date, was applied at $150,000.
[18]
· Sale 2 – (59 Crest Drive, Currumbin – Lot 331 on RP 92799). This is a 551 m² vacant parcel located about 200 metres south of the subject land. The sale fronts Crest Drive which is two-way bitumen sealed with concrete kerbing and channelling. There is direct access to the sale, but because of the very steep nature of the sale, there is difficulty in providing onsite access. Street access is also limited. There are good ocean views with an easterly aspect, and sea breezes. The sale overall is similar in location and access, and sold in August 2001 for $250,000, was analysed at $250,000, and applied at $225,000. The sale is seen as an inferior building site due to its very steep nature. The sale last sold in October 1999 for $145,000.
Mr Skuthorpe rejects Sale 1 (23 Albany Avenue) as a statistical comparison, as he notes that it occurred after the relevant date, and is therefore relevant only to a later valuation. He also rejects Sale 2 (59 Crest Drive) as he argues that was purchased by a speculative real estate agent, who paid a high price in order realise a quick capital gain. However he provides no evidence to support that conclusion.
Mr Crowley argues that the very steep nature of his two sales makes suitable comparisons with the difficult nature of the subject land. He argues that it would not be possible to drive on to either of the sales sites, and either on street parking or a decked garage would be necessary in order to park vehicles at either sale.
Relativity –
To support his assessment of market trends Mr Crowley provides historic details of previous sales to compare current relativities:
SaleDescription Area Date Price Current Comparison
of Sale unimproved
value - 1/10/2001
22 Ocean Lot 139 - RP 93664 850 m² 1/1987 $44,000 (Council land) Inferior
Grove
16 PallLot 130 - RP 93664 567 m² 1/1987 $45,000 $242,500 Inferior
Mall Avenue
13 Lansell Lot 356 - RP 92799 551 m² 2/1987 $55,000 $245,000 Inferior
Avenue
57 CrestLot 330 – RP 92799 610 m² 4/1987 $38,000 $227,500 Inferior
Drive
Subject Lot 155 – RP 93664 577 m² 1/1987 $67,000 $185,000 -
Land
Mr Skuthorpe also seeks relativity with adjoining Lot 376 (Ruck) as outlined in paragraph [5]. He notes that Lot 376 is a superior building parcel; although it has a very steep vertical drop to its frontage to Lansell Avenue to the east. The current physical access is via a right of way across the Council parkland (Lot 3 on RP 903889). However Mr Crowley notes that access is not protected by any registered easement, and is apparently at the discretion of the Council.
Because of some uncertainty about legal protection of that access for Mr Ruck, Mr Crowley had reduced the unimproved value of Lot 376 to $265,000 at 1 October 2001. Mr Crowley also advises that the ocean views from Lot 376 to the east across the Currumbin Bird Sanctuary had also been partly restricted by vegetation growth, which further supported the reduction of Lot 376 from $285,000 to $265,000, following Mr Ruck’s objection at that time. Mr Crowley also notes that the SmartMap showing that alteration now supplied by Mr Skuthorpe, was actually provided to Mr Ruck as part of a “without prejudice” conference in respect of Lot 376. (Exhibit 3C). While the “without prejudice” rule normally excludes any reference to material exchange under those circumstances, there may, in certain circumstances, be exceptions to that rule which would allow “unambiguous improprietory” exceptions. (Savings and Investment Bank Limited v Fincken [2003] 3 All ER 1091; and also 17(1) Halsbury’s Laws (4th edition reissue) paras 887 and 888). However in the current matter the SmartMap provided merely confirms Mr Crowley’s evidence.
Decision:
The Legal Principles -
Before considering the evidence I turn to the legislation and note that the unimproved value of land is provided for in s.3(1)(b) which relevantly states:
“3.(1) For the purposes of this Act –
‘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.”
Now while Mr Skuthorpe has interpreted that definition of unimproved value to mean that the only views from the land, if any, should be seen as from ground level as an unimproved parcel, that does not accord with the interpretations provided by courts at all levels in Australia. The guiding principles in respect of how the value of land should be considered were established by the High Court of Australia in 1905 in the matter of Spencer v The Commonwealth of Australia (1907) 5 CLR 418.
In Spencer, the matter of how to ascertain the value of land “for the most advantageous purpose for which it was adapted”, (441), was then clarified by Isaacs J when he said at 441:
“To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”
Clearly the value of land is to be determined in full understanding of all the features and circumstances of the land, following negotiations between a well informed and prudent buyer and seller, who are both willing to trade but not anxious to do so. It would be unreasonable to conclude that either party would not be aware of the potential for extensive views from the subject land once a dwelling was later constructed on the site. That potential to maximise any ocean views would have been paramount in the mind of either vendor or purchaser of the subject land. The current views as noted in paragraph [10] demonstrate that point. Such potential views would have existed in the unimproved value of the land.
If I turn then to Mr Crowley’s evidence to lead to a higher valuation at $275,000, while defending the current unimproved of $185,000, I note guidance in two recent decisions of this Court. In the matter of A and S Lamari v Chief Executive, Department of Natural Resources and Mines (AV2001/0471) 26 September 2002, unreported, the President accepted that a valuation at $1,850,000 had been issued in error, and an amended valuation at $2,145,000 had been subsequently issued to correct that error. The appellants had only appealed against the $1,850,000 figure, assuming that their appeal would also stand in respect of the subsequent valuation amendment. The President noted the powers of a court to vary the determined valuation in accordance with the evidence under s.66 of the Valuation of Land Act 1944, and determined the appeal on the $1,850,000 figure, resolving in a final unimproved value of $2,145,000. In that matter the decision to change the valuation under s.28(1)(h) had been executed.
In the later matter of AMP Life Limited & Ors v Chief Executive, Department of Natural Resources and Mines (AV2000-0637 & Ors) 18 December 2002, to be reported, the issue resolved around whether the Chief Executive could lead evidence to a higher figure than that originally issued, without first executing fresh valuation notices under s.28(1)(h), similar to that now proposed to that in the current matter. Section 28(1)(h) provides legislative directions when an error in a valuation is seen to need to be adjusted between annual valuation dates. The AMP Life Limited matters involved two large regional shopping centres at Garden City in Brisbane and Pacific Fair on the Gold Coast. In that matter the learned Member found that there was nothing in law to prevent the Chief Executive from leading evidence to a higher figure, and the presumption of correctness under s.33 was not abandoned by leading such a new valuation figure on appeal. However he cautioned that if the appellant’s grounds of appeal were not comprehensive in addressing that higher figure by the Chief Executive; then any new grounds submitted by the appellant would also only need to address the presumption of correctness of the existing valuation by the Chief Executive at the lower figure.
The matter of whether a party could lead evidence to a higher figure than the value appealed against, was also considered in Body Corporate for The Astor Terrace Car Park & Anor v Chief Executive, Department of Natural Resources (AV2001/0642 & Ors) 28 November 2002, to be reported. In that matter the Chief Executive sought leave to lead evidence to a higher figure, which was resisted by counsel for the appellants, arguing that the Court did not have jurisdiction to hear such a variation. The Member found:
[28] Evidence is regularly given that valuations may often be determined in a conservative manner, where there exists some element of doubt about the reliability of the determination. (Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited & Ors (1946-47) 74 CLR 358, at 373.) In such circumstances it may also be relevant for a valuer, after reconsidering his valuation, to seek to amend the final figure that he now leads to the Court. That approach, in my opinion, is not inconsistent with the intentions of s.33.
[29] However, in saying that a valuer’s evidence may seek to lead to a higher figure than that previously adopted by the Chief Executive, does not lead to any conclusion that such a variation may change the very basis of the appeal, and in effect to create a new case to be responded to by the appellant. That would be in contravention of principles adopted by the courts.”
The impact of those decisions in the current matter is that the original valuation appealed remains at $185,000, but Mr Crowley is legally able to lead evidence to his opinion that the true unimproved value should be $275,000.
I also note that the powers of this Court are provided under s.66 of the Act as follows:
“66. Order of Court
Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Appeal Court may –
(a) affirm the valuation appealed against; or
(b) reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act;
and, subject to section 70, make such order as it sees fit with respect to the payment of costs.”
In respect of the obligations of an appellant to prove his case in respect of a Notice of Appeal, I note that s.45(4) directs:
“45.(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner.”
I note also that s.33 of the Act directs:
“33. Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered.”
The Nature of the Land –
In respect of Mr Skuthorpe’s concern that only 50% of the subject land is available for building proposals, I note that is not contested by Mr Crowley when he has valued the residential land on a site basis. Indeed the two sales adopted are also very difficult sites for a dwelling. The use of a site value approach was adopted in DF and M Ward v Valuer-General (1983) 9 QLCR 48, at 50; and also in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 330.
In respect of determining the unimproved value of an improved parcel, I note that in matters where there is an agreed scarcity of sales of vacant or lightly improved comparable parcels, such as experienced in the matter of Maurici v Chief Commissioner of State Revenue (supra), the approach of valuing land by comparison with sales of improved properties was seen as a useful check in determining the unimproved land value. In such circumstances the problems of determining the added value of any improvements on such improved sales, is a matter likely to lead to uncertainty in respect of the impact of scarcity in the marketplace. However in the current matter there is no evidence of any scarcity of sales for comparison purposes, and Maurici can be distinguished accordingly.
The Method of Valuation –
In respect of the appellant’s concern about the current rating system, I agree with Mr Crowley that is irrelevant in this matter, which is directed at determining the correct unimproved value of the subject land. While Mr Skuthorpe may feel that rating charges should merely reflect an equal accountability for all ratepayers, the laws of Queensland direct otherwise. Should the Gold Coast City Council seek to provide a more equal charging of rates, that capacity lies entirely within its own powers under s.963 of the Local Government Act 1993.
In exercising that discretion the Council levies rates for a property under s.1008 of the Local Government Act 1993. The basis upon which the rate is levied is covered by s.1025, which directs that the basis of rating shall be “relevant information” notified to the Council; and maintained in a “record of every parcel of rateable land in its area” under s.994(1), which must also comply with the regulations under s.994(2).
The Local Government Regulations 1994 establishes under r.37(1)(c) the “unimproved value of the land”. Section 72(1) of the Valuation of Land Act 1944 establishes that the valuation of any land made under that Act shall be –
“72.(1)(b) the unimproved value of the land for the Local Government Act 1993;”
By those directions of the legislation it is clear that the Local Government is empowered to determine rating recoveries, based upon unimproved values established under the Valuation of Land Act 1944. Those two responsibilities are linked, but entirely separate public authority functions.
Mr Skuthorpe claims that the current legislation is not providing a fair and equitable rating burden upon all ratepayers. A similar concern was raised by the appellant in the matter of Poole Island Holdings Pty Ltd v Chief Executive, Department of Natural Resources (RV98-913) 25 June 2001, unreported. In that matter the appellant Dr Rosanove sought to challenge the method of valuation outlined in the Valuation of Land Act 1944; suggesting that the Act was outdated, and should be amended,. In rejecting such a proposal the Land Appeal Court noted at para (3):
“The jurisdiction of this Court on appeal and the Land Court at first instance does not extend to a consideration of such matters as rates or rents, but is confined to valuations made under the Valuation of Land Act 1944. That was made clear by the Land Appeal Court in NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said at 381:
‘The Valuer General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result. Rates are fixed by local authorities and may be varied annually according to the fiscal requirements of the local authority concerned. Any such variation may be made at any time during a valuation period and may be entirely independent of a new and increased valuation.’”
In the current matter Mr Skuthorpe’s appeal must be considered in light of the legislation which is the direction of the Parliament. It is within that context that all parties must seek to determine the unimproved value of the land. It is this Court’s responsibility to ensure that the Chief Executive follows that direction. Any amelioration of rate indebtedness to the Council lies entirely within the power of the Council itself to provide a remedy.
In respect of the appellant’s concern with the current mass appraisal approach to valuations, I note that has been addressed by the Courts. The process of mass appraisal of valuations using a large computer system has been the subject of considerable concerns since it was first introduced into Queensland in 1985. However, while there has been various appeals against the reliability of such a system, perhaps the clearest direction in that regard is to be found in the decision of the Land Appeal Court in BG and AK Wilson v Chief Executive, Department of Lands (1994-95) 15 QLCR 63. In that matter the Land Appeal Court considered similar evidence to that currently provided by Mr Crowley as to how he goes about his task of an annual valuation. The Land Appeal Court determined at 70:
“‘Charts’ are prepared and values fed into a computer. From there comes a printout of predicted valuations which is then checked as best it may be done for correctness. The results of such an exercise are reflected on the relativity maps tendered in evidence. We see no merit in the inferences sought to be drawn by Mr Wilson that if an error is found in relativity the whole of the valuation process is put in doubt. It has been said on many occasions that valuation is not an exact science. It rests upon the opinion of those in the market place who will prefer one aspect to another, one suburb to another and so forth. It is the duty of the valuer to interpret and apply that market on principles which require comparisons to be made of “like with like” wherever possible. The process of annual valuations which was introduced by legislation in 1985 was designed to avoid the penalty of an owner being cemented to a value for rating purposes for up to five years and possibly eight years. The scheme of annual valuation enables values to follow the market on an annual basis. The scheme would not work without the aid of computers. … In the context of an annual valuation, the process involves the activity described previously including the “charts” and the collation of that material from the charts by the computer processors through to the public display of the printouts containing the respective valuations and relevant dates. The process in our opinion does not offend the statute.”
I note also Mr Skuthorpe’s use of the Consumer Price Index (CPI) as a means of updating the previous unimproved value of the subject land. There is a common misconception that the CPI provides a reliable measure of increases in the market value of lands. However the CPI figure, which is widely publicised throughout the community proper, is no more than a statistical representation of the quarterly changes in the price of a basket of goods and services available. That basket includes eleven main groups, including food, alcohol and tobacco, clothing and footwear, housing, household furnishings, health, transport, communication, recreation, education and miscellaneous items. There is no direct links to movements in the value of land. While CPI changes are used to measure trends in inflation in the community, it has no wide correlation with the market for land.
Comparison of Sales –
I turn then to the appellant’s claim that Mr Crowley’s Sale 1 (23 Albany Avenue) as a late sale should be rejected from any comparisons. In comparing both Sales 1 and 2 I note that both of those sales were used in a previous decision of this Court in KG Phillips v Chief Executive, Department of Natural Resources and Mines (AV2002/0369), 30 October 2003, unreported, and I will repeat those conclusions.
In comparing Sale 1 on 9 January 2002, I note the decision in Daandine Pastoral Company Pty Ltd v Commissioner of Land Tax (1943) 7 The Valuer 299. In that matter Williams J in the High Court of Australia said at 304:
“Values must be calculated in the light of circumstances which existed on the material date, in this case, 30 June 1939, but subsequent events can be taken into account in order to determine the proper weight to be attached to such circumstances. Subsequent sales are just as admissible in evidence as prior sales provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale, supervening events occur which alter the conditions previously existing, the subsequent sales would not be comparable and would be useless.”
Support for the use of subsequent sales is also to be found in McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1, at 16; and also Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, at 18. However in Harris, Fischer J noted (at 25) that the subsequent event cannot create an expectation which was not in existence at the relevant date.
In seeking comparisons with sales of vacant or lightly improved lands, Mr Crowley has followed an approach well favoured by courts at all levels when determining the unimproved value of land. That has been followed on many occasions, and was clearly supported in the matter of WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at 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. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence.”
That was also adopted by the Land Appeal Court in R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17; and also in PH Clough v Valuer-General (1981-82) 8 QLCR 70, at 76.
While Mr Skuthorpe provides no evidence of sales of his own choice, the sales by Mr Crowley reflect the following comparisons:
SaleArea Applied Value Comparison
1526 m² $150,000 Inferior
2551 m² $225,000 Comparable
While Sale 2 is seen to have an inferior building site compared to the subject land, its broad ocean views and easterly aspect are seen to balance those disabilities. Sale 2 looks southerly along the ocean coast line to the Coolangatta and Greenmount Beaches. By comparison Sale 1 has a westerly aspect, looking across the hinterland. The steepness of both Sales 1 and 2 are relatively comparable, although Sale 1 has a double street frontage to both Albany Avenue and Albany Lane. The location of both sales are similar, yet Sale 1 is applied at $150,000, while Sale 2 is applied at $225,000. Clearly the difference of $75,000 is seen in the marketplace to reflect the better ocean views and easterly aspect with prevailing breezes at Sale 2. It is acknowledged that Sale 1 occurred some five months later than Sale 2 on a rising market, which would mean at a comparable date the difference in value would be greater than $75,000.
Following the inspection visit it is agreed that the subject land has comparable views to Sale 1 to the west, and excellent views from the dwelling to the north. However, because of the rooflines to the north along Pall Mall Avenue, I believe the ocean views from the subject land are slightly inferior to the panoramic ocean views from Sale 2 (59 Crest Drive).
If I seek then to balance the difference between Sales 1 and 2, I find that while having similar locations, area, slope and instability factors, the only differences between those two sales was the difference in aspect and the quality of the views. While Sale 1 has broad views to the west, similar to the views from the subject land, those views at Sale 1 are less attractive than the views to the ocean. However the subject land also has good ocean views to the north. On balance the westerly aspect of the subject land partly balances its better views to the north.
While I have no evidence to separately quantify the premium that attaches for the difference between the ocean views to the east and the hinterland views to the west, I believe that would reflect about $50,000 of the difference between Sales 1 and 2. The remaining $25,000 was likely to reflect the inferior westerly aspect of Sale 1. If I then allow for the western aspect of the subject land, compared to the eastern aspect of Sale 2, and the more comparable ocean views of the subject land, although not as expansive as the ocean views from Sale 2, I could conclude an unimproved value of about $225,000 for the subject land. However Mr Crowley sees Sale 2 as an inferior building site.
Relativity –
I turn then to the current relativities provided by Mr Crowley in paragraph [21], and I note that 57 Crest Drive (Lot 330) adjoins Sale 2 and is slightly larger than Sale 2. By comparison with the subject land I note the following relativities:
LotRelativity in 1987
16 Pall Mall Avenue 0.672
13 Lansell Avenue 0.821
57 Crest Drive 0.567
Subject land 1 ($67,000)
If I was to apply those relativities in 1987 to the subject land at 2001, I could conclude unimproved values of between $300,000 and $400,000 for the subject land. Clearly the old relativities have changed since 1987. However I note that Mr Crowley sees all of those three parcels as inferior to the subject land. The original relativities may demonstrate Mr Skuthorpe’s opinion that he paid relatively a high price for the subject land in 1987, due to his limited available time in Queensland at the time of sale, and also his personal wish to relocate near one of his friends on Lot 132. On balance therefore I will treat those original relativities with some caution.
If I look then at Mr Crowley’s opinion of relativity with the adjoining Lot 376 (Ruck), I find that he sees those unimproved values of Lot 376 ($265,000) and subject land ($275,000). The unimproved value of $265,000 for Lot 376 allows for $20,000 for the less certainty of access to Pall Mall Avenue for Mr Ruck. However the joint site inspection did not see the ocean views from the second level of Mr Ruck’s residence, in order to draw direct comparisons with the ocean views from the dwelling on the subject land. I believe it would be fair to accept that the potential ocean views from Lot 376 are at least comparable to ocean views from the subject land. It is also agreed that the easterly and more even slope of Lot 376 would add a premium to that parcel compared to the steeper and inferior aspects of the subject land.
On balance I accept that Lot 376, without the allowance for uncertainty surrounding the physical access to Pall Mall Avenue, would have an unimproved value of $285,000. If I allow for slightly lesser ocean views and an inferior site for the subject land, I could conclude a value of $250,000 for that parcel. It certainly is in excess of $185,000. I believe that $250,000 would also allow for the inferior building site on Sale 2 at $225,000.
Conclusion:
Having considered the whole of the evidence I am persuaded that the unimproved value of the subject land is incorrect. The valuation of the Chief Executive is set aside, and the unimproved value of Lot 155 on RP 93664 is determined in the sum of Two Hundred and Fifty Thousand Dollars ($250,000).
NG DIVETT
MEMBER OF THE LAND COURT
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