Solon Theo Family Trust v Department of Natural Resources and Mines

Case •

[2005] QLC 20

•

15 April 2005

LAND COURT OF QUEENSLAND

CITATION: Solon Theo Family Trust v Department of Natural Resources and Mines  [2005] QLC 0020
PARTIES: Solon Theo Family Trust (AV2003/0149, AV2003/0150)
Alexander Theologidis (AV2003/0151 and AV2003/0152)
(applicants)
v.
Chief Executive, Department of Natural Resources and Mines
(respondent)
FILE NO.: AV2003/0149, AV2003/0150, AV2003/0151 and AV2003/0152
DIVISION: Land Court of Queensland
PROCEEDING: Appeals against annual valuations under Valuation of Land Act 1944
DELIVERED ON: 15 April 2005
DELIVERED AT: Brisbane
HEARD AT: Redcliffe
MEMBER Dr NG Divett
ORDER: The appeals are dismissed, and the unimproved values as determined by the Chief Executive in the sums of Seventy One Thousand Dollars ($71,000) (AV2003/0149), Sixty Seven Thousand Dollars ($67,000) (AV2003/0150), Fifty Nine Thousand Dollars ($59,000) (AV2003/0151) and Eighty One Thousand Dollars ($81,000) (AV2003/0152) are all affirmed.
CATCHWORDS: Valuation – statutory valuation – method of valuation – highest and best use – with prevaluations under Section 34 – discretion of Chief Executive
Valuation – statutory valuation – use of sales – scarcity considered.
APPEARANCES: Solon Theo for the appellants
Mr M Heather, Senior Legal Officer, for the respondent

Background:

  1. These four matters relate to lands at Clontarf, and are located towards the southern part of the Redcliffe Peninsula, about 3 kilometres south-west of the Redcliffe Town Centre.  The four subject lands are described as: 

    ·    202 King Street - Lot 1 on SP 140030 – 600 square metres (AV2003/0149)

    ·    202A King Street – Lot 2 on SP 140030 – 621 square metres (AV2003/0150)

·    45 Maine Road – Lot 3 on RP 151746 – 579 square metres (AV2003/0151)

·    56 Donald Street – Lots 39 and 40 on RP 30322 – 809 square metres (AV2003/0152)

Each of the subject lands are zoned as Residential A land under the Town Plan of the Redcliffe City Council of 19 April 1986, effective at the date of valuations of 1 October 2002.  The key issues are relativity, comparison of sales, the nature of the land and the method of valuation.

  1. On 24 February 2003 the Chief Executive issued valuations of the subject lands at $71,000 (202 King Street);  $67,000 (202A King Street);  $59,000 (45 Maine Road);  and $81,000 (56 Donald Street).  Following objections on all four parcels, the Chief Executive confirmed those unimproved values on 20 May 2003.  The appellant then appealed those decisions, claiming the unimproved values should more properly be $50,000 for each parcel.

  2. Solon Theo appeared and gave evidence for the appellants.  Mr M Heather, Senior Legal Officer, appeared for the respondent, calling evidence from James Francis Corder, the very experienced registered valuer responsible for determining the valuations.  Following a court supervised Preliminary Conference on 6 November 2003, the matters were set down for hearing on 28 April 2004.  At the request of the appellants, because of ill health, the hearings were adjourned to 2 December 2004.  With the agreement of all parties, all four matters were heard concurrently.

Nature of the lands –

  1. The subject land at 202 King Street is a level rectangular lot with frontage of 15.117 m. to King Street, which is bitumen sealed with concrete kerbing and channelling.  There is good vehicular and pedestrian access available, and all normal urban utility services are available.  The parcel is located about 65 m. west of Maine Road, which is a major feeder road for local traffic on the Peninsula.  The locality is in a good residential area, and the parcel is currently occupied by two dwellings.

  2. The subject land at 202A King Street is a level battle-axe parcel adjoining 202 King Street, with a street frontage of 5 m. and an overall depth of 39.69 m.  There is a rectangular building area at the rear of the parcel of 20.117 m. by 21.09 m.  All access, services and locality are similar to 202 King Street, and the land is presently occupied by two dwellings.

  3. The subject land at 45 Maine Road is a level rectangular parcel of frontage 12.144 m. to Maine Road, which is bitumen sealed with concrete kerbing and channelling.  Maine Road is a main feeder road for local traffic.  Both pedestrian and vehicular traffic access is good, and the area is a good residential area, about 0.5 kilometres north of Moreton Bay, and with all normal urban utility services available.  The parcel is currently occupied by a single unit dwelling.

  4. The subject land at 56 Donald Street is a level rectangular parcel of 20.1168 m. metres frontage to Donald Street, which is bitumen sealed with concrete kerbing and channelling.  Access is good for both pedestrian and vehicular use, and all normal urban utility services are available.  The land is located in a good residential area about 0.5 kilometres north of Moreton Bay, and about 130 metres from Woody Point.  The land is currently occupied with a single unit dwelling.

  5. Mr Corder advises that while Maine Road is a feeder road through the Redcliffe Peninsula, other than at school starting and finishing times, the road is still fairly quiet.  He notes also that King Street and Donald Street are both just local traffic routes, and are not busy traffic ways.  It is also agreed that there are no local shops near any of the subject lands.  However Mr Corder argues that because of the relatively compact nature of the Redcliffe Peninsula, major shopping designations such as Woolworths and Coles are seen as within reasonable travelling distance to all areas, except perhaps the more remote areas of Rothwell.  Mr Corder advises that there is a scattering of corner shops throughout the Peninsula, so that residences are not very far from major shopping outlets.  While he agrees that distance to shopping does have some effect upon land values, he argues that on the Redcliffe Peninsula that is not a huge effect.

  6. In respect of location on the Peninsula, it is agreed that location on the waterfront is the prime residential situation.  Mr Corder advises that where there are views of the water, the land values are significantly higher.  However he agrees that while properties are never far from the water in that area, the values further removed from the water are less than the properties with water views, or nearer to the waterfront even without views.

  7. In respect of his valuation of 56 Donald Street, Mr Corder advises that because those two individual lots 39 and 40 continue to be occupied by a single dwelling only, that property is valued under s.17 of the Act as a single dwelling site, and not as two valuations.  He notes that both 202 King Street and 202A King Street are each presently occupied by two separate dwellings, and the Chief Executive has elected to value those two properties each as single residence sites, and not into two separate valuations for each of those subject lands.  Mr Corder could not advise the legal standing of the multiple dwellings on each of 202 King Street and 202A King Street, but he advises that departmental policy is currently that where such subdivision has not occurred on residential lands, then only one valuation is undertaken of each separate parcel.

  8. He agrees that could be different where multiple dwellings exist on a single parcel, which is used say for cane farming purposes.  He also advises that a single valuation is applied to a multiple unit site, say where there are ten separate owners.  It is then the responsibility of the body corporate to apportion responsibility for rating indebtedness.  Mr Corder concedes that should development continue at a level, where multiple separate dwellings were being built upon lands, and where those lands were capable of being further subdivided, then he offered an opinion that responsibility for further subdivision of those parcels should lay with the local government.  He agrees that if the Chief Executive were to exercise his discretion under s.34 of the Act under such matters on residential lands, that then could have a significant impact upon development processes.

History of the appeals –

  1. Before pursuing his evidence, Mr Theo sought the guidance of the Court in respect of his assertion that common law principles of justice had not been followed in respect of these appeals.  He argues that once he had been advised of the decision on objections which were issued by the Chief Executive on 20 May 2003, he had written to the Chief Executive demanding substantiated advice from the Chief Executive within 42 days (Exhibit 2 – letter of 26 June 2003).  Mr Theo had received no response to his letter, and now seeks to have the department's evidence rejected, as he argues that his common law rights for justice have not been addressed.  However other than his understanding of the broad principles of the common law, Mr Theo could provide no further authority for that assumption. 

  2. In respect of why Mr Theo had failed to provide a statement upon which he was to argue his case seven days prior to the hearing, as directed by the Court Order of 2 November 2004, Mr Theo advises that he had not received any Court Order.  He agrees that he had received Mr Corder's valuation reports in about February 2004, just prior to the earlier date for hearing on 23 February 2004.  However Mr Theo advises that due to his ill health, he had been unable to fully investigate Mr Corder's sales prior to the current hearing. 

  3. In respect of Mr Theo's claim that he did not receive the Court Order of 2 November 2004, and while Court records indicate it was posted jointly with the Court Notice establishing the dates of hearing for these matters on 2 December 2004, I note Mr Heather has not pursued that matter.  However it is noted that Mr Theo was aware of the proceedings, and had knowledge of the date of hearing.  That situation can be distinguished from a matter where a court ruling could be given while an appellant had no notice of the matter at all.  In the latter situation an agreed party would have the right to request a revision of any decision that may have been handed down in his absence.  However in the other situation, claiming that a notice (or order) had not been received, where there is no evidence to support such a claim, would not persuade the Court to review any decision.  In the matter of Hackney London Borough Council v Driscoll [2003] 4 All ER 1205, an application to set aside a court order made in the applicant's absence, was refused, because the applicant had prior knowledge of the matter proceeding. While not relevant in this matter, it is a situation needing careful consideration.

  4. Mr Theo also challenges Mr Corder's valuations, arguing that it is possible that errors have been made in forming Mr Corder's conclusions.  Mr Corder agrees that it is possible for some errors to occur in the valuations, but he argues that the current objection and appeal processes would indicate that he gets it correct most often.  Mr Heather notes that during the 1 October 2002 valuation process, there had been about 13,000 objections received from a total number of 1.4 million to 1.7 million valuations across the whole State.  He notes that most of those objections (about 8,000 to 9,000) occurred in Brisbane, and of the remainder, about 150 to 200 needed attention by Mr Corder in Redcliffe, only two of which involved subsequent appeals to this Court.  He argues that demonstrates that he is attentive and considers fully any objections by owners.  He advises further that sometimes objections to revaluations occur even if there are no increases in the unimproved values.  He suggests that it is the consequential possible increases in rating charges that drive many people to object a valuation process.

  5. Another part of Mr Theo's argument relates to his understanding of the purpose of the Valuation of Land Act 1944, in that he believes that the unimproved value should not be increased unless there are adjoining vacant lands which can provide fair and unbiased evidence of any increases.  He draws support from the decision of the High Court in Maurici v Chief Commissioner of State Revenue and Anor [2002] 212 CLR 111, as he notes that mostly lands in the area have been previously developed, so that a scarcity of vacant land sales is now impacting the unimproved values unreasonably. Mr Corder rejects that argument as noted later in paragraph [28].

The method of valuation –

  1. Another matter of concern to Mr Theo is how Mr Corder could conclude new valuations for 202 King Street at $71,000 and 202A King Street at $67,000, when the original parcel containing those two new lots was previously only valued in the order of only $55,000.  He notes that the combined increased value for the two new lots of $138,000, appears unreasonably high compared to the previous unimproved value.  While he agrees that they are now two separate lots for development purposes, he argues that the new values are too high. 

  2. Mr Theo had subdivided the original parcel in January 2001 (Exhibit 3 – survey plan), and advises that the original parcel before subdivision was in the name of another member of the family, and changed hands for $68,000 prior to the subdivision.  Mr Corder was unaware of that sale, but suggests that because of that close family connection, he would need to ensure whether the sale was in line with the market before applying that value.  However he has no current evidence to reject the sale as not being a bona fide sale, although he notes the less than arms length nature of the sale.  It is also noted that the earlier date of that sale (prior to January 2001) in a rising market, does not disagree with the current application of $71,000 and $67,000 at October 2002 for the two subject lands on a site value basis.

Relativity –

  1. In supporting his valuations, Mr Corder argues that the difference of $4,000 between the unimproved values of 202 King Street and 202A King Street reflects the slightly lower values placed upon battle-axe lots in that area.  He agrees the public interest in battle-axe (or rear) lots has changed over time, as people look more to matters of privacy.  However he argues that the market place still sees street fronting parcels as more flexible and a better building area.  Mr Theo agrees, noting that much of the 621 square metre area of 202A King Street is lost in the area of the access driveway from King Street.  Mr Theo also advises that 202A King Street has been broken into on three occasions, thus supporting his view that "rear" parcels are less secure, and therefore lower in value.

Comparison of sales –

  1. The only sales evidence supplied by the appellant was the reference to the sale of the King Street land as outlined in paragraph [18]. Mr Corder provides the following evidence of sales in that area with similar services and access:

    ·    Sale 1 – (30 Laura Street, Clontarf – Lot 5 on SP 145456).  This is a 520 square metre vacant battle-axe parcel located about 0.3 kilometres south of 45 Maine Road.  Overall the sale is seen as slightly inferior to 202 King Street because of its poorer shape;  slightly inferior to 202A King Street because of its smaller size;  superior to 45 Maine Road because of its superior location;  and inferior to 56 Donald Street because of its smaller area and poorer shape and inferior location.  The sale sold in April 2002 for $85,000, was analysed at $83,000, and applied at $69,000 (83%). 

[21]

·    Sale 2 – (51 Centaur Street, Kippa Ring – Lot 2 on SP 133362).  This is a 401 square metre vacant parcel located about 1.6 kilometres north of King Street.  The sale is a level rectangular parcel, in a small dip area.  Overall the sale is seen as inferior to 202 King Street;  slightly inferior to 202A King Street;  inferior to 45 Maine Road;  and inferior to 56 Donald Street.  The sale sold in August 2002 for $92,500, was analysed at $90,500, and applied at $65,000 (71%).

[22]

·    Sale 3 – (14a Chatham Street, Margate – Lot 73 on RP 30336).  This is a 405 square metre vacant parcel located about 2 kilometres north-east of King Street.  The sale is a level rectangular parcel.  Overall the sale is seen as inferior to 202 King Street, 202A King Street and 56 Donald Street;  and superior to 45 Maine Road.  The sale sold in January 2002 for $80,000, was analysed at $78,000, and applied at $66,000 (84%).

[23]

·    Sale 4 – (44 Shea Street, Scarborough – Lot 118 on RP 137426).  This is a 615 square metre vacant rectangular level parcel located about 5 kilometres north of King Street.  The sale is in a better location than the subject lands, and overall is seen as superior to each subject land.  The sale sold in October 2001 for $120,000, was analysed at $118,000, and applied at $113,000 (95%). 

  1. ·    Sale 5 – (43 Scarborough Road, Redcliffe – Lot 67 on RP 157262).  This is a 784 square metre level rectangular corner parcel in a superior location, but at the intersection of two busy roads.  Overall the sale is seen as superior to each subject parcel.  The sale sold in October 2002 for $115,000, was analysed at $113,000, and applied at $95,000 (84%). 

  2. Mr Theo challenges the use of sales of formerly developed parcels in that area, which have been subsequently cleared for the development of a new house.  He argues that as the locality at Redcliffe has been fully developed for many years, if there are any vacant lots they will then sell at inflated prices because of their scarcity.  He notes that was the finding of the High Court in Maurici (supra).  He also argues that to accept "settlement" prices as an indication of the value of the land, is completely misunderstanding the nature of the sale of both dwelling and land combined.  He argues that the sale of a vacant parcel is different to the sale of a house and land package, as the vacant land sale contained the potential for the purchaser to build upon that vacant parcel.

  3. Mr Theo concedes that if an old dwelling was demolished on a parcel, then the land could be sold as vacant land.  However he argues that such situations would be the odd cases, and not the normal situation.  He also agrees that in such circumstances the cost of the dwelling, and the cost of its demolition or removal, would be an extra cost associated with the actual land value.  Mr Theo had visually inspected Mr Corder's sales, but he was unfamiliar with the specific details of the sale negotiations.

  4. Mr Corder rejects that there was any scarcity factor involved in his five selected sales. He advises that across the Redcliffe Peninsula there had been 371 sales of "vacant" lands in a rapidly rising market during the two year period prior to the date of valuation. He argues that the great bulk of those sales were of old dwellings, where the house had been removed or demolished. Mr Corder advises that he had personally had to inspect every street where sales were recorded, as most of those sales were not classed as vacant land sales in the departmental records. However subsequent to the sale, the old dwellings had been demolished or removed, and often new buildings erected upon them. So he argues that in effect the purchasers were buying a vacant lot. However he has made no further adjustment to the sale prices to allow for the extra demolition costs. As a consequence, the total costs to the purchaser were likely to have been greater than as shown in the sale prices recorded with the department under s.82 of the Valuation of Land Act.  That approach perhaps may have influenced Mr Corder to make such conservative applications of his sales as discussed later.

  5. Mr Corder further advises that Redcliffe was developed mainly during the middle of the last century, so that many of the very average homes have now depreciated to the point where there is very little value left in the buildings.  He has selected the five sales provided as the most comparable to the subject lands in terms of size or location.  Mr Theo was familiar with the purchasers of Sales 1 and 2, who he notes have bought many properties in that area, and either demolished the old dwellings or renovated them.  Mr Theo also agrees that comparisons cannot be made on a per square metre basis, as battle-axe lots lose large areas because of the access area to the street.

  1. Mr Theo also queries the comparison with Mr Corder's Sale 3 (14a Chatham Street), which he notes is zoned Residential B lands.  However Mr Corder advises that Sale 3 has an area of only 408 square metres, which is too small for the erection of a multiple dwelling upon that parcel.  Mr Corder advises that the minimum area for a multiple dwelling is about 800 square metres.  Mr Theo was not aware of that town planning requirement, but argues that such small parcels could be amalgamated with adjoining parcels in order to overcome such a problem for multi-unit developments.  However Mr Corder advises that Sale 3 has subsequently been developed with a single unit dwelling, which he argues demonstrates its highest and best use.

  2. Mr Theo also challenges the use of sales in the Scarborough area, which he argues is a much more upmarket part of the Peninsula.  Mr Corder agrees with that broad general view, noting the more modern homes near his Sale 4 (44 Shea Street).  However he argues that he has allowed for that locational difference in his valuation comparisons.  He also agrees that Sale 5 (43 Scarborough Road) is closer to the Redcliffe Shopping Centre and waterfront, but notes the impact of heavy traffic passing at that location. 

  3. Mr Corder agrees that he has determined that Sale 3 (14 a Chatham Street) was in fact a "family transaction", and therefore not entirely at arms length.  However he argues that in respect of its market level the sale represented a fair transaction.  He agrees also that Sale 3 (14a Chatham Street) is smaller than the subject land at 45 Maine Road, however he argues that sale is in a better location and is therefore superior overall.  Centaur Street is also a quieter street with less traffic than Maine Road.  He advises that Donald Street is a good tree-lined street, so that Sale 3 (14a Chatham Street) is slightly inferior to the subject land at 56 Donald Street.  He also notes that Sale 3 (14a Chatham Street) has a narrow frontage, which restricts the quality of any dwelling, while 202 King Street has a wider frontage.

  4. In respect of his Sale 5 (43 Scarborough Road), Mr Corder advises that there has subsequently been constructed two separate dwellings upon that parcels.  Mr Corder also agrees that both his Sales 4 and 5 are near the schools, but he has not seen any major problem with parking at school starting and finishing times each day, as he notes that is only for short periods.

Decision:

  1. I turn first to the appellant's concern that his common law rights were not recognised by the respondent's refusal to respond to his letter of 26 June 2003 (Exhibit 2).  Now an understanding of the common law principles could be enunciated as that part of the law of England which was developed and administered by the old common law courts, and which is based upon the common customs of the country.  It is opposed to equity and statute law, which is the law laid down in the Acts of the Parliament.  It is not local law or the results of legislation (Osborns Concise Law Dictionary, 7th edition by R Bird, Sweet and Maxwell, p.80). 

  2. In the current matters before the court, the statute controlling the valuation of the subject lands is the Valuation of Land Act 1944 as amended.  That statutory law was approved by an act of Parliament, which establishes the rules by which land is valued for the purposes as follows:

    "An act to make better provision for determining the valuation of lands for rating purposes, and for matters incidental thereto or consequent thereof."

  3. Now I note that a "statute" is described as an act of Parliament which may be of the following kinds:

    ·    Declaratory, which do not profess to alter an existing law

    ·    Remedial, which alters the common law

    ·    Amending, which alters statute law

    ·    Consolidating, which consolidates several statutes

·    Disabling or restraining, which restricts the alienation of property

·    Enabling, which removes restrictions

·    Penal, which imposes penalties.  (Osborns, 310).

In the context of the current matters the Valuation of Land Act 1944 is a statute which establishes the rules for valuing land for the purposes of rating, and as such is seen as a consolidating act of the Parliament to provide one basis across the State for that purpose.  It is noted that where common law and a statute conflict, then the latter prevails.  (Craies on Statute Law, 7th edition by SGG Edgar, Sweet and Maxwell, p.338). 

  1. In respect of an annual valuation, and in particular the responsibilities cast upon the parties involved in an objection to a new valuation determined by the Chief Executive under s.37 of the Act, I note that the Chief Executive must notify the owner (s.41A), the owner may then object (s.42), and the Chief Executive must consider the objection and notify the owner of his decision (s.43).  Before the Chief Executive makes his decision, the Chief Executive may, by agreement, confer on a without prejudice basis (s.43A), but in the event any failure to agree, the only avenue open to the owner is then to appeal to this Court (s.45).  There is no statutory direction for the owner to demand further explanation of the justification for that valuation, except in evidence to this Court.  On that basis I see no grounds for Mr Theo's claims that his rights have been ignored. 

  2. In respect of Mr Theo's concerns that Mr Corder's opinions may include an element of error, I note that valuation is not an exact science.  However the opinions of specially trained experts such as registered valuers, has long been recognised by the courts.  The courts have found that valuation evidence is the use of a practical estimation, as noted by the Land Appeal Court in Department of Natural Resources v Radlett Enterprises Pty Ltd (1997-98) 18 QLCR 397, at 406:

    "As was observed in Secretary of State for Foreign Affairs v Charlesworth, Pilling and Co (1901) AC 373 at p.391:

    'It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others.  Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity.'"

  3. As Mason J in the High Court said in Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980-81) 146 CLR 336, at 381:

    "Valuation is a matter of estimation, not of precise mathematical calculation."

    Indeed it is intended to be an interpretation of a market, which in itself is imprecise, even when it is created by vendors and purchasers who satisfy the often quoted qualifications necessary to meet the test explained in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418. (Radlett, p. 405).

  4. While the judgment of an experienced valuer is a legitimate guide to his professional opinion of an area, it is always open to ensure that such judgment is supported by evidence in the market place.  That was outlined in the text "Land Valuation and Compensation in Australia" Rost and Collins (3rd edition) 1984, which reads at 22:

    "A registered or licensed valuer is regarded as a person who possesses special training.  He is entitled to express opinions as to value or other matters appertaining to his vocation, but these cannot be more valid than the information and reasoning upon which they are founded.  In general, opinion evidence is not admissible unless it is given by a witness called as an expert.  Court judgments have emphasised that the weight of an expert's opinion concerning the value of land depends upon the foundation upon which it rests."

    That was also followed in the decision of the Land Appeal Court in Santos Limited v Valuer-General (1988-89) 12 QLCR 231, which followed the principle that a value based upon sales was "to be preferred to a valuation based on opinions". (p.235/6).

  5. If I turn then to Mr Corder's professional opinions based upon his analysis of the sales evidence, I find guidance in Brewarrana Pty Ltd v Commissioner of Highways (SA) (1973) 32 LGRA 170, where Wells J said at 179 to 180:

    "It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar.  But allowances must always be made before such sales can be so used.  No two parcels of land are identical in all respects:  the sale price of any given piece of land is not necessarily the price at which it ought to be sold, or the same thing as its true value.  Before using any allegedly comparable sales, therefore, the valuer must consider whether, having regard to the circumstances (using that word in its broadest sense) appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v The Commonwealth of Australia and in later cases to warrant a court's reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land.  … there is no hard and fast rule by the application of which a valuer may, whatever the circumstances, draw the line that clearly separates the sales that are comparable from those that are not.  It is, in my view, all a matter of degree:  some adjustment is always necessary;  too much adjustment will render it unsafe to use a sale, subject to such a degree of adjustment, for the purpose of the reasoning process in the comparable sales method.  Just where the line is to be drawn is, it seems to me, the very sort of question that is fit for the expert valuer to determine;  the assessment of the risks of adjustment is peculiarly within his sphere of skill."

Impact of scarcity –

  1. Now while Mr Theo argues that Maurici directs that scarce sales of vacant lands should be rejected, I find that the principles espoused in Maurici needs to be seen in perspective.  In that matter both parties had agreed that there had been a scarcity of sales of vacant lands in the highly developed Sydney suburb of Hunters Hill.  For that reason the High Court had concluded that in seeking comparisons with sales of vacant lands in areas removed from Hunters Hill, the Government valuer (Mr Croker) had failed to identify the level of scarcity present in the market at Hunters Hill.  The High Court noted at paragraph [21]:

    "Nothing that was said by his Lordship in Tetzner bears upon the way in which a valuer should go about the task of selecting and applying comparable sales under the applicable legislation. The appellant does not suggest, to borrow his Lordship's words, that the valuer should close his eyes to any relevant fact. Indeed the contrary is the case. It is, the appellant submits, the respondent's valuer who closed his eyes to relevant matters. He should have had regard to all of the relevant facts including the scarcity of vacant land, the possibility of a particular and limited class of persons in the market for it, the scarcity or otherwise of improved land, the added value of the improvements to comparable lands, and in particular, truly comparable sales, which ideally would include like land similarly improved to the subject land. And whilst it is true that s 6A is intended to apply to each valuation made under it, its statutory operation in relation to all valuations, that is, all pieces of land to be valued, is another factor which cannot be ignored, and requires that a scarcity of vacant sites not be the determinant factor in valuations made under the Act." 

  2. Now that principle has been the subject of close scrutiny in many matters since February 2003, but perhaps the most definitive interpretation of that direction is to be found in Department of Natural Resources and Mines v GE and JEJ Spender [2003] QLAC 0424, 19 December 2003, to be reported. In that matter the Land Appeal Court said at para [54]:

    "54]  Probably the most controversially interpreted aspect of the Maurici judgment in terms of well-established precedent was the finding that the statutory requirement for the valuation of all parcels of land in an area, on the assumption that improvements had not been made on each of the improved parcels, was a factor that could not be ignored, to the effect that "a scarcity of vacant sites not be the determinant factor in valuations made under the Act" (emphasis added).  We do not interpret that finding, as some have done, as suggesting that there is "a notional clearing of the whole area".  The absurdity of such an interpretation would have the converse "likely" effect of scarcity, being a likelihood of an over-supply of vacant land in each locality.  The High Court reasoning, as we interpret it, was a recognition that the market for land in a predominantly built-up area was not exclusively of scarce vacant land but inclusive of land with improvements thereon.  As each parcel of land in that environment, vacant or improved, was required to be valued in the statutory process, on the basis of relative value at the same date, albeit notionally as unimproved, it was wrong to adopt a basis of valuation selected exclusively from one segment of the market which in itself was not proved to be representative of the overall market for land."

  3. In the current matter, Mr Corder provides evidence of 371 sales of lands which have subsequently been cleared and redeveloped.  Most of those were old improved parcels where the added value of the building had reduced to practically zero.  I do not find that constitutes evidence of "scarcity" as perceived by the High Court in Maurici. 

  4. I note also Mr Corder's observation that it is often the resulting increase in rating indebtedness, rather the increase in unimproved values, that drives owners to appeal the process.  That was recognised in Poole Island Holdings Pty Ltd v Chief Executive, Department of Natural Resources (RV98-913) 25 June 2001, unreported, where the Land Appeal Court noted at p.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 rent, 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.'"

Method of valuation –

  1. Another issue of interest in this matter is the process of valuation adopted by Mr Corder in his valuation of the two subject lands at 202 King Street and 202A King Street.  Those two parcels were created by subdivision of the previous Lot 537 of area 1,221 square metres (Exhibit 3), and that has now created two separate parcels of areas 600 square metres and 621 square metres.  While Mr Theo accepts that the two separate valuations are now required, he questions the new unimproved values of $71,000 and $67,000, for an area of land previously valued at only $55,000.  But as Mr Theo notes, the value of residential lots in a normal market situation is determined on a site basis, and not on a per square metre basis.  While purchasers may pay more for larger parcels, they do not do so on a pro rata basis (DF and M Ward v Valuer-General (1983) 9 QLCR 48, at 50; Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 330).

  2. The issue driving the value of a parcel of land is the highest and best use of that land.  In determining the highest and best use of a parcel, it is important to have regard not only to the value of the land, but also planning and other relevant factors.  That was noted in the Supreme Court of South Australia decision in Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410, Jacobs J said at 415:

    "Common experience shows that land ideally suited for commercial development will fetch a higher price per unit of area than residential land, but it does not follow that the highest and best use of all land is a commercial use, for the highest and best use means exactly what it says – the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential.  The first task of the valuer is to determine what that use is and then to value the land on that basis.  It is not appropriate to determine the highest and best use by reference only to value."

  3. An understanding of the highest and best use of the subject lands at 202 King Street and 202A King Street may be gained by reference to the highly regarded text in Land Valuation and Compensation in Australia, Rost and Collins (supra), where it notes at 86:

    "In taking into account the highest and best use of land, it is necessary to have regard only to those uses which are legally possible.  Under a planning scheme, land ideally located for use as a service station may perhaps be zoned strictly for residential purposes, or a similar restriction as to its use may result from a covenant in the title to the land.  In these circumstances, the highest and best use legally possible would be for residential purposes, and this would determine its value."

  4. In looking then at the use of the subject lands in King Street, it is agreed that their highest and best use is for residential purposes.  If I then look to the Valuation of Land Act 1944, I note that in deciding which lands are to be included in a single valuation, s.34 directs:

    "34.(1)  Unless the chief executive otherwise directs, there shall be included in 1 valuation –

    (a)several parcels of land which adjoin, and are owned by the same person, and where either no part is leased or all the parcels are let to 1 person;  or

    (b)several parcels of land in the same area which do not adjoin but are worked as 1 holding and used exclusively for the purposes of farming, and are owned by the same person and which, if let, are all let to 1 person.

    (2)  However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships."

  5. Now that discretion in respect of multiple lots within a single valuation is entirely at the considered discretion of the Chief Executive;  and s.17 in respect of the subject land at 56 Donald Street directs accordingly that only a single valuation will occur for that property.  However the use of the single unit dwelling residential lands at 202 King Street and 202A King Street for the erection of two separate dwellings in a Residential A zone, raises the question of the highest and best use of those sites.  The question is should they be valued for single residence purposes, or for multiple residence purposes?  Whether then those uses are appropriate uses under the Town Plan was not clarified, but it is a matter that the Chief Executive could consider in deciding whether a single valuation or two separate valuations could be applicable for each site.

  6. The legislation does not direct that no more than one valuation could be applicable to a single land parcel.  Indeed the principle of multiple valuations of a single parcel of cane lands in North Queensland was supported in Colonial Sugar Refining Company Limited v Valuer-General (1970) 37 CLLR 176, at 185.  In that matter the meaning of the word "parcel of land" was consistent with that now included in s.2 of the current Act, and is taken to mean:

    "'parcel of land' means every part of an area of land which is separately held by an owner, or any part of an area of land which the Chief Executive directs should be valued as a separate parcel."

  1. In a subsequent matter of RM and AJ Beanland v The Valuer-General (1990-91), 13 QLCR 113, the Land Appeal Court, when considering the care which should be exercised by the Chief Executive when making such a discretion, said at 120::

    "In particular the statement that the discretion may be exercised subject to a requirement that it not be exercised unreasonably implies a wider basis of review than the authorities permit.  Minister for Aboriginal Affairs v Peko Wallsend Limited above p.39 to 42.  By the same token we agree in general with observations of Mr Dodds in relation to the predecessor of s.14 in Colonial Sugar Refining Company Limited v Valuer-General (Shire of Hinchinbrook), 1970, 37 CLLR 176, at 187 that the section –

    '… gives him such power only after he has directed himself, as it were, on the facts applicable to any piece of land.  The duties conferred on the Valuer-General by the Acts are essentially practical ones involving examination of all the facts relating to an area of land before deciding how it should be valued for the purposes of the Act.  If these facts satisfy him that part of such an area should be valued as a separate piece of land then he may so direct and that result follows.  But if the facts do not support such a direction and the Valuer-General still values any part of an area of land as a separate piece of land, then, in my view, his direction can be subjected to review and may be set aside.'"

  2. Mr Corder advises that the matter of multiple valuations on a single parcel of land is currently a regular practice of the Chief Executive on cane lands, and other parcels used for grazing purposes.  However he advises that for the present time, that exercise of discretion has not been undertaken for residential lands.  However he concedes that it may become necessary if a wider use of multiple separate dwellings were approved by local governments on Residential A or single unit land uses under the Integrated Planning Act 1997 (IPA), where the use of such lands under the planning regime has been seen as for single residential purposes.  But that is not a matter for consideration in the current matters.

  3. It is not for this Court to seek to influence the Chief Executive in exercising his discretion under the Act.  (Chief Executive, Department of Natural Resources v Hedges (1999) V97/181), 28 May 1999, unreported.  In that matter the President of this Court considered the competency of reviewing the exercise of such a discretion vested under the Act, and noted that it could only occur if that discretion was exercised capriciously or unreasonably.  (RM and AJ Beanland v The Valuer-General (1986-87) 11 QLCR 131). However the President directed that the Chief Executive should change his decision to issue four separate valuations, and that he should issue one single valuation under s.17 of the Act.

  4. That was overturned by the Land Appeal Court (20 QLCR 122). The Land Appeal Court concluded at 126:

    "We therefore agree with the Chief Executive's submission that the power to direct if he wishes to use that discretion, lies with the Chief Executive or his delegate.  If he merely fails to give a direction the matter rests there.  If he gives a direction and the reasons for that direction are exposed, that direction is open to review as was found by the majority of this Court in Beanland v The Valuer-General (1990) 13 QLCR 113.

    It is our finding that the Chief Executive was not required under the Act, to include in one valuation, several parcels of land which do not adjoin but are used, other than for purposes of farming, as one holding, and on which is erected a single dwelling house."

Comparison of sales –

  1. In seeking comparisons with sales of vacant or lightly improved lands, Mr Corder has followed a principle long upheld by courts at all levels (PH Clough v Valuer-General (1981-82) 8 QLCR 70, at 76; WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, at 46; and Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 330).

  2. If I turn then to the sales evidence I find the following comparisons:

Subject land Sale 1
520 sq. metres 		Sale 2
401 sq. metre 		Sale 3
405 sq. metres 		Sale 4
615 sq. metres

Sale 5
784 sq. metres

202 King Street
600 square metres
UCV $71,000

 Slightly inferior Inferior Inferior Superior Superior

202 A King Street
621 square metres
UCV $67,000

 Inferior Slightly inferior Inferior Superior Superior

45 Main Road
579 square metres
UCV $59,000

 Superior Inferior Superior Superior Superior

56 Donald Street
809 square metres
UCV $81,000

 Inferior Inferior Inferior Superior Superior

  1. On the evidence there is nothing to demonstrate that Mr Corder has followed a wrong principle, or made an error of fact.  Unless that had occurred, precedent directs that the unimproved values of the Chief Executive are taken to be correct (Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41, per Gibbs J at 56). That is further supported by s.33 of the Act. I further note that in respect of the notice of appeal, the onus is upon the appellants to prove their cases under s.45(4) of the Act. That has not occurred.

  2. In the matter of the applications of the five sales, I note that Mr Corder has sought to take a very conservative approach to those analyses.  It is also noted that the market was rising steeply during the relevant period, at a time when property prices were widely advertised as very buoyant.  That Mr Corder chose to apply only a conservative application of 83% to Sale 1, which occurred in April 2002, and 71% to Sale 2, which occurred in August 2002, I feel reflects his concern to seek to maintain overall relativities in that area.  While it is within this Court's jurisdiction under s.66(b) of the Act to determine unimproved values at levels either below or above those established by the Chief Executive, in the absence of proof that Mr Corder has made some error in his opinions, I see no reason to vary the current unimproved values.

Conclusion:

  1. Having considered the whole of the evidence, I am not persuaded that the appellants have proved their cases.  The appeals are dismissed, and the unimproved values as determined by the Chief Executive in the sums of Seventy One Thousand Dollars ($71,000) (AV2003/0149), Sixty Seven Thousand Dollars ($67,000) (AV2003/0150, Fifty Nine Thousand Dollars ($59,000) AV2003/0151) and Eighty One Thousand Dollars (81,000) (AV2003/0152) are all affirmed.

NG DIVETT

MEMBER OF THE LAND COURT

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Spencer v The Commonwealth [1907] HCA 82
Hedges v Chief Executive, Department of Natural Resources [1998] QLC 157