Smith v Chief Executive, Department of Natural Resources
[1999] QLC 55
•28 May 1999
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BRISBANE
28 May 1999
Re: Appeal against Annual Valuation
Valuation of Land Act 1944
Valuation Roll No 1361/25200
Local Government: GCCC-Gold Coast
(AV98-571)
Ernest A and Joan M Smith
v.
Chief Executive, Department of Natural Resources
(Hearing at Coolangatta)
D E C I S I O N
Background:
This matter relates to a property located at 22 Simbai Street, Runaway Bay, Gold Coast, and described as Lot 378 on RP 170003, Parish of Barrow. The subject land is located about 700 metres north of the Runaway Bay Post Office, and about 80 metres west of the St Francis Xavier School, and 50 metres north of the Runaway Bay Community Sporting Field Complex. The land has an area of 617 square metres, and is zoned as “Residential – Dwelling House” under the Gold Coast City Council Town Planning Scheme of 11 February 1994, and current at the date of valuation of 1 October 1997. The current Strategic Planning Scheme designates the land as “detached housing”. The key issues are the comparison of sales, relativity, the impact of traffic and parking, a sewer line, changes in the property market, and the impact of nearby playing fields.
The subject land is a level corner lot, with good access to Simbai Street and Vanimo Court, both of which are bitumen sealed with concrete kerbing and channelling. All services are available, and there is an underground sewer main which traverses the area of the subject land fronting Vanimo Court. The site has been filled to a depth of 2 metres.
On 2 March 1998, the Chief Executive, Department of Natural Resources, issued a valuation of the subject land at $96,000. Following an objection the Chief Executive confirmed that valuation on 17 August 1998. The appellants have now appealed that figure claiming the unimproved value should more properly be $68,000. With the approval of both parties a preliminary conference was arranged by this Court on 15 March 1999, following which the Chief Executive revised his valuation, now leading for a revised unimproved value of $93,000.
Mr E Smith appeared and gave evidence for the appellants. Mr S Montgomery appeared for the respondent, calling evidence from Mr A Dalgarno, the Departmental Registered Valuer now accepting responsibility for the valuation.
The evidence:
Mr Smith argues that the recent increase in the unimproved value of the subject land (50%) is inconsistent with the average of market percentage increases of 5% in that locality. He bases that conclusion upon advice obtained from three local real estate agents, who also advise that properties in Simbai Street are difficult to sell because of known traffic and parking problems in that street, as a consequence of the nearby school and playing fields.
In support of that conclusion Mr Smith also provides a summary of recorded sales of vacant lands, that he obtained from the real estate agents, and which he inspected personally as follows:
| Sale | Address | Date of Sale | Price | Area | Unimproved Value |
| 1 | 2 Jacaranda Avenue | 1998 | $165,000 | 506m² | $ 77,000 |
| 2 | 6 Jacaranda Avenue | - | $125,000 | 506m² | $ 68,000 |
| 3 | 32 Jacaranda Avenue | - | $103,000 | 506m² | $ 68,000 |
| 4 | 58 Jacaranda Avenue | 1991 | $120,000 | 506m² | $ 67,000 |
| 5 | 28 Kurrajong Avenue | - | $ 89,950 | 506m² | $ 72,000 |
| 6 | 12 Ashgrove Avenue | - | - | 556m² | $ 83,000 |
| 7 | 13 Ashgrove Avenue | 1996 | $150,000 | 637m² | $ 84,000 |
| 8 | 24 Ashgrove Avenue | - | $150,000 | 607m² | $ 84,000 |
| 9 | 15 Lotus Avenue | - | - | 807m² | $ 72,000 |
| 10 | 19 Lotus Avenue | - | - | 809m² | $ 72,000 |
| 11 | 22 Mungera Street | - | $ 99,500 | 607m² | $ 84,000 |
I note that Sale 10 is currently under contract, but that provides little assistance in this matter.
Mr Smith argues that those sales are all within close proximity to the subject land, and are superior as each does not suffer from the impacts of vehicle parking and noise to the extent experienced by the subject land. He concludes that the unimproved values of those parcels are all less than the subject, supporting his conclusion that the current valuation is inappropriate. While he concedes that Sales 1, 9 and 10 each contained an old existing dwelling at the date of sale, those were likely to be subsequently demolished to make way for a new dwelling. He draws that conclusion from Mr Dalgarno’s Sale 2.
Another matter of concern to Mr Smith is the apparent inconsistency of relativity between the subject land and surrounding parcels in Simbai Street, and Vanimo Court. He notes particularly the following:
Lot Location Area Unimproved Value377 adjoining to the west 848m² $ 99,000
379 adjoining to the south 826m² $ 99,000
383 opposite across Vanimo Crt 677m² $ 96,000
373 5 lots to the west 648m² $ 87,000
Mr Smith notes that parcels along Simbai Street from the subject tend to have areas greater than the subject land, but in all cases the unimproved values of those parcels are either just slightly more than $93,000, or equal to that figure. Mr Smith argues that his advice from real estate agents is that larger parcels bring proportionately higher prices, and he believes the current unimproved value of the subject land does not adequately reflect its smaller size.
This inequity in allowing for the difference in area of the parcels is further exacerbated, in his opinion, by the impact of a sewer drainage line which passes across the front of the subject land near Vanimo Court. Mr Smith advises that he is twice a year reminded by the Gold Coast City Council (the Council) by letter, that Council has a legal right of access to service and maintain that sewer pipeline. While he could not provide a copy of that Council advice, he confirms that the access must ensure that a truck can pass along the pipeline in order to lift a very heavy manhole cover, using a special lifting device on the truck. Because of that restriction upon his land, Mr Smith is unable to fully develop the area of the sewer line, and is restricted in that area to developing lawn and some gardens. Any damage to the property as a result of the movement of the truck along the sewer line, remains a constant cost to the appellants. Mr Smith calculates that an area of 123 square metres (or 20% of the lot) is thus severely impacted for development purposes, thus reducing the value of the land.
Perhaps the major problem for the appellants however is the consistent and regular intrusion into the amenity of the subject land, by the presence of parked motor vehicles along the kerb lines of both Simbai Street and Vanimo Court. This occurs by parents dropping off and picking up children from the school, located three blocks removed to the east of the subject. The school is on the same side as a church building (Lot 177 on WD 4309), and parking for religious purposes also occurs at evenings and over weekends. Photos were supplied by the appellant to demonstrate the extent of the problem, particularly during public holidays.
Mr Smith has sought assistance from the church authorities, and the police, in an attempt to curtail the parking of vehicles, particularly across his driveway, but to no avail. The parking problem is also exacerbated by parking by patrons and parents attending the sporting complex to the south of the subject land (Lot 4 on SP 116505). That impact is also compounded by glare from floodlights at the grounds, and loudspeakers controlling the sporting fixtures. Collectively, Mr Smith argues, those intrusions into the local amenity of the area, have tended to create a buyer resistance for homes in Simbai Street, thus impacting the values.
In support of his valuation, Mr Dalgarno concedes that parking can be a problem, but argues that it is not as severe as claimed by Mr Smith. Mr Dalgano has allowed for the presence of the school, church and playing fields, noting that the locality is reasonably close to the major Runaway Bay shopping village, with good access to Southport via Bayview Street. He argues the land is close to major canal developments, and in a sought-after modern designed area.To support his conclusions, Mr Dalgarno provides the following sales of vacant lands:
· Sale 1 – (5 Pimaga Place, Runaway Bay – Lot 214 on RP 180122)
This is a 659 square metre level parcel, zoned “Residential – Dwelling House”, and located about 600 metres north of the subject. All services and access are similar to the subject land, and the sale has been filled to a depth of 2 metres. The sale is a regularly shaped inside parcel, is seen as slightly inferior in shape, larger in area, further from the major amenity areas, but is not impacted by the school. Overall it is seen as slightly superior.
The sale sold in June 1997 for $115,000, which after allowing for improvements was analysed at $106,100, and applied at $96,000.
· Sale 2 – (41 Deagon Drive, Runaway Bay – Lot 141 on RP 85706)
This is a 541 square metre level parcel, zoned as “Residential – Dwelling House”, and located about 1.6kms south of the subject land. All services and access are similar, and the sale is a regular inside parcel, and is seen as inferior due to size, shape, location and surrounding developments, which are older in character.
The sale sold in May 1997 for $90,000, which after allowing for improvements was analysed at $88,000, and applied at $74,000.
· Sale 3 – (16 Drome Street, Biggera Waters – Lot 4 on RP 87786)
This is a 531 square metre level parcel, zoned “Residential – Dwelling House”, located about 1.9 kms south of the subject land. All services and access are similar to the subject land, and the sale is seen as marginally inferior due to size, but comparable in location.
The sale sold in July 1996 for $92,700, and contained an old dwelling which was subsequently demolished to make way for a new house. After allowing for extra clearing and demolishing costs ($5,000), the sale was analysed at $96,700, and applied at $91,000.
Mr Smith argues that Sales 1, 2 and 3 are all superior as none of them have the similar impacts from parking and traffic movements associated with the school and playing areas.
In respect of the impact of the sewer line across the subject land, Mr Dalgarno argues that sewer line is located 2.8 metres from the Vanimo Court frontage. Allowing for a further 2 metres from the sewer centre line, in order to ensure free movement of the Council truck, the maximum of 4.8 metres from the Vanimo Court alignment falls within the required set-back distance of 5 metres established under section 9.8 of the Queensland Standard Building Laws. As such the sewer line provides no encumbrance upon the erection of a dwelling upon the subject land, although Mr Dalgarno concedes some minor disturbance due to the need to allow for regularly biennial passage of the Council truck for inspection purposes.
Mr Dalgarno confirms that there is no formal blot on the title of the subject land, in the form of a registered easement, but that Council must exercise its right of access to the sewer line under some other local government power.
In the matter of proximity to the open space playing areas to the rear of the subject land, Mr Dalgarno sees such areas as often enhancing the amenity of the area, particularly where they provide playing areas for children. Mr Smith contests that view, noting that the playing fields have been fenced by the sporting club, and a fee to park and enter has been applied to patrons. In an attempt to circumvent those fees, many patrons park in Simbai Street and Vanimo Court, gaining access via the pathway at the end of Vanimo Court.
Mr Dalgarno also allows some additional value for the subject land as a corner site, a matter discounted by Mr Smith in view of the parking problems associated with having a double street frontage. The reason for the 50% increase in the unimproved value of the subject land, was caused by previous valuations not recording appropriate increases due to a paucity of comparable sales in the locality at that time. As a consequence, the previous unimproved values had lagged behind the market, and had now been brought into line with comparisons of available sales.
In respect of why 32 Simbai Street (Lot 373) would appear to be out of relativity, Mr Dalgarno was unable to advise of the details of that parcel, but suggests that it was likely that the unimproved value of that parcel had made allowance for some special features on that lot, such as a drainage easement. Mr Smith also had no detailed knowledge of why Lot 373 had a lower unimproved value ($87,000) than the adjoining parcels Lot 372 ($93,000), and Lot 374 ($96,000).
Decision:
I turn first to the percentage change in the unimproved value of the subject land and note Mr Dalgarno’s advice that the former unimproved values may have represented a previous lack of comparable sales to support any increase at that time. However, while that may be just conjecture by Mr Dalgarno, the important issue before this Court is to determine the unimproved value at the date of valuation at 1 October 1997.
While I can understand that such percentage changes in the values are often of concern to appellants in seeking to have confidence that their personal properties have been fairly treated in any valuation, they in fact do not prove conclusively that an error has been made in the valuation process. Such rises may, at best, be an indicator to owners that they should further investigate the valuation, but there may be many reasons why a valuation is changed at what would appear to be a rate out of line with some overall statistical percentage.
This matter has been considered many times by the courts, and I note from precedents that a large increase in itself is not evidence of some error in the valuation. I note, for example, in the decision of NR and PG Tow v. Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said at page 381:
“It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.”
I move then to the comparison of sales of vacant land supplied by both parties, and note that they have adopted the method of determining unimproved value long regarded by the courts as the preferred approach, and which has been noted in many precedents. I note for instance in WM & TJFischer v. The Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at page 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.”
The principle was also clearly defined by the Land Appeal Court in PH Clough v. Valuer-General (1981-82) 8 QLCR 70, at p.76:
“ It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements.
Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement.”
However in comparing Mr Smith’s sales I note that only his Sales 7 and 11 would appear to have occurred during the relevant period for this valuation, which tends to be adopted for the year preceding the valuation, and extending up to the date of issue of the valuation on 2 March 1998. It is possible that Sale 1 occurred after 2 March 1998, and is more appropriate for consideration in the subsequent valuation as at 1 October 1998. The other known date of Sale 4 in 1991 is some years ago, and provides little assistance in this matter. I will therefore restrict my analysis to Mr Smith’s Sales 7 and 11 and Mr Dalgarno’s Sales 1, 2 and 3.
On balance I find the following comparisons to the subject land:
Sale Area Sale Price Unimproved value Mr Smith Mr Dalgarno7 637m² $150,000 $ 84,000 Superior -
11 607m² $ 99,500 $ 84,000 Superior -
1 659m² $115,000 $ 96,000 Superior Slightly superior
2 541m² $ 90,000 $ 74,000 Superior Inferior
3 531m² $ 92,700 $ 91,000 Superior Inferior
On that comparison I find that the sale price of Sale 4 would appear to be well out of line with the market, suggesting there are some special features relating to that sale, and I would therefore treat that sale with some caution. Of the other four sales the only difference between the parties lies in their separate comparisons with the subject.
In the matter of relativities with surrounding parcels, I note that Lot 373 has an unimproved value out of line with adjoining parcels, but I have no evidence to either support that an error may have occurred, or whether there are special features of that property that support the lesser value. However, as section 33 of the Act directs that a value determined under the Act is deemed to be correct, unless proved to the contrary, I then make no conclusions from that property. In comparing the adjoining parcels (Lot 377 and 379), I find those are both larger in area, which would support some additional premium for that purpose. However, in concluding that the larger areas would reflect some additional value, I note that such increases do not reflect any pro rata comparison. In comparing residential sites it has long been held that such sites are purchased on a site basis, and not on a pro rata basis. That was found in Hans and Else Grahn v. 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 value comparison. Site to 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.’ ”
That principle was also followed in R and MM Barnwell v. The Valuer-General (1990-91) 13 QLCR 13, where the Land Appeal Court said at page 18:
“It again is well established that when valuing homesites, then the best method of comparison is on a site to site basis. ”
In the end the correct method of assessing the premium that purchasers will pay for any additional value in a parcel, is to compare that parcel with sales of land of similar areas. On the evidence before me I find no major fault in the relativity surrounding the subject land in either Simbai Street or Vanimo Court.
In the matter of the impact of the sewer line across the subject line, I note that section 9.8 of the Standard Building ByLaw dictated that a corner parcel must ensure that a building should be set back from either road alignment according to the requirements established in section 9.3 and 9.4 of that Legislation. I note also that section 9.8 of the Standard Building ByLaw was replaced on 14 December 1993 by section 47 of the Standard Building Regulation 1993, which confirms those requirements. The general setback distance from road alignments is now covered by section 36 (formerly section 9.3), and alternative siting arrangements for corner allotments are now covered by section 47 (formerly section 9.4). The varying boundary clearances, where two road boundaries are involved, is now shown in Schedules 10 and 11 (formerly Figures 9.8(1) and 9.8(2)A).
If I examine the requirements of section 47(1) I find that all fences and ornamental structures within a 3 cord area defined in Schedule 10, must, without specific Council approval, be restricted in height to a maximum of 1 metre. I note also that the setback distances of 6 metres from both road alignments, as required by section 36, must be applied. However, certain relaxation of one of those road setbacks may be approved, subject to Council consent. The criteria for consideration, where the average depth of the allotment in question is not greater than 24 metres, and is measured at right angle to the alignment, is established in Schedule 11.
In the current matter the depth of the subject land from the Vanimo Court alignment is approximately 19.7 metres. The existing 2-storey building (greater than 3.5 metres high), could have the setback from the Vanimo Court alignment relaxed to approximately 5.3 metres. The evidence shows that the centre line of the sewer pipe is 2.8 metres from the alignment. If I allow a further distance of 2 metres to allow for movement of the council truck, I find that the location of the building has been impacted by the Council Building Setback Requirement, and not by any additional requirement of Council in order to service the sewer manhole.
I turn then to what is clearly the key issue in this matter. The impact of vehicle parking, from either the parents of children at the school, or parishioners at the church, is demonstrated by photographs to be of such a nature as to intrude upon the normal amenity of a property not impacted by schools or churches. There is evidence that Mr Dalgarno has made allowance for that parking problem, but the question is whether the severity of the problem has been adequately assessed.
The photographs supplied by Mr Smith were taken on Easter Saturday, when church attendances were likely to be above average. While Mr Smith argues that parking on Saturday evenings is just as severe, his choice of one of the special few days in the religious calendar, tends to over emphasise his argument. By comparison, Mr Dalgarno’s photographs showing no cars parked in Vanimo Court on a very wet afternoon, also tends to underestimate the problem. On balance I accept that there is a serious problem for the residents in that area and comparisons with sales of areas which do not have that problem, must make allowance for that impact.
In considering the impact of the playing fields to the south of the subject land, I accept that patron parking, noise and intrusive floodlights are further disabilities of the subject land. Those impacts are likely to be experienced to a greater extent by parcels directly backing onto the playing field areas (Lot 4 on SP116505). As such, the impact upon the subject land would be less than the adjoining parcels Lots 377 and 379.
In respect of the corner influence, I agree with Mr Dalgarno that the market generally supports that such parcels normally attract some premium. However, after balancing all of the factors considered, I believe that the corner location of the subject land may have been afforded greater weight than might be warranted, in view of the detrimental impact of the parking problem. Because of its relatively smaller size, and the requirements to provide setbacks to any buildings from both alignments, I find that flexibility for building upon the parcel is considerably less than on either adjoining parcel. I agree that there is no real impact upon any building as a consequence of the location of the sewer line. However the requirement to ensure that the Council has unrestricted access, on a biennial basis to the manhole on the sewer line, must restrict the free and unencumbered use of the subject land. On that basis alone there should also be a conservative estimate of the unimproved value.
Summary:
In summary I find that the method of valuation adopted by Mr Dalgarno has not been flawed, and that he has sought to make allowance for the relevant impact. However I believe that the resulting value of the subject land should be considerably less than either adjoining parcel in view of its smaller size, its need to provide access for Council operations, and its parking problems associated with the school, church and playing fields. On balance I believe a figure of $90,000 would more properly reflect the true relativity of the subject land.
Conclusion:
Having considered all of the evidence I am persuaded that the appellants have partly proved their case. The appeal is upheld, the unimproved value as determined by the Chief Executive is set aside, and the unimproved value of Lot 378 on RP 170003 is determined at Ninety thousand dollars ($90,000).
(NG Divett)
Member of the Land Court
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