Stock v Department of Natural Resources and Mines
[2005] QLC 2
•14 January 2005
LAND COURT OF QUEENSLAND
CITATION: Stock & Ors v Department of Natural Resources and Mines [2005] QLC 0002 PARTIES: (1) Betty A and David B Stock
(2) Kelwyn L and Linda A Riddle
(3) Corr F and Sherilyn G Piccone
(4) James P Wort
(5) Jeanette D and Trevor J Harrison
(6) Susan F Thompson
(7) Geoffrey GA and Valerie D Bunn
(applicants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILES NO.: (1) AV2003/0393,
(2) AV2003/0394,
(3) AV2003/0395,
(4) AV2003/0396,
(5) AV2003/0397,
(6) AV2003/0398,
(7) AV2003/0399DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuations under Valuation of Land Act 1944 DELIVERED ON: 14 January 2005 DELIVERED AT: Brisbane HEARD AT: Proserpine MEMBER Dr NG Divett ORDER: The appeals are dismissed, and the unimproved values as determined by the Chief Executive in the sums of –
· AV2003/0393 ($150,000)
· AV2003/0394 ($200,000)
· AV2003/0395 ($140,000)
· AV2003/0396 ($150,000)
· AV2003/0397 ($155,000)
· AV2003/0398 ($160,000)
· AV2003/0399 ($170,000)
are all affirmed.
CATCHWORDS: Valuation – Sales – Sale of subject land – Use of sale – Whether in line with the market APPEARANCES: Mr BJ Conroy for the appellants
Mr A Cradick for the respondent
Background:
These seven matters relate to lands at Mandalay Road, Mandalay, located about 9 kilometres north-east of the Airlie Beach Post Office. The lands are described as:
ParcelArea Owner
(1)Lot 15 on RP 721173 809 m² Stock
(2)Lots 13 and 14 on RP 721173 1,618 m² Riddle
(3)Lot 12 on RP 721173 809 m² Piccone
(4)Lot 10 on RP 721173 1,146 m² Wort
(5)Lot 8 on RP 721173 1,022 m² Harrison
(6)Lot 20 on RP 749029 1,293 m² Thompson
(7)Lot 1 on CP 842095 1,250 m² Bunn
Access to all seven lots is good from Mandalay Road, which is bitumen sealed with gravel shoulders. The seven subject lands are all zoned as Residential under the Whitsunday Shire Town Plan effective at the date of valuation of 1 October 2002. All seven parcels have electricity and telephone services, and also a garbage removal service. The key issues are the nature of the lands, comparison of sales, changes in the market and the impact of ocean views.
On 27 February 2003 the Chief Executive issued valuations of the subject lands as follows:
(1) – Stock$150,000
(2) – Riddle$200,000
(3) – Piccone $140,000
(4) – Wort$150,000
(5) – Harrison $155,000
(6) – Thompson $160,000
(7) – Bunn $170,000
Following objections the Chief Executive confirmed those unimproved values on 17 June 2003. The appellants have now appealed claiming the unimproved values should more properly be:
(1) – Stock$90,000
(2) – Riddle$130,000
(3) – Piccone $90,000
(4) – Wort$100,000
(5) – Harrison $100,000
(6) – Thompson $100,000
(7) – Bunn $110,000
At the hearing on 25 August 2004 the valuer for all seven appellants led evidence for a revised estimate of the unimproved values of Riddle ($135,000); Piccone ($100,000); and Wort ($110,000).
Bevan J Conroy, a registered valuer appeared and gave evidence for the appellants. Mr A Cradick, legal officer appeared for the respondent, calling evidence from Ross Malcolm Bein, the departmental senior registered valuer responsible for determining the valuations. It was agreed that all seven matters were heard consecutively, as all seven parcels had similar natures of land, and the sales evidence was also common. A joint field inspection was undertaken with both parties.
Nature of the lands –
The seven subject lands are closely related, often adjoining parcels, and all are above street level. Each parcel falls moderately from the rear to the street, with good ocean views towards Airlie Beach, across allotments on the opposite side of Mandalay Road. All parcels have a westerly aspect, and all are subject to afternoon glare problems from the sun. The Stock property, together with the adjoining Riddle property, have probably the most superior views towards Airlie Beach.
A major concern for all appellants is the risk of dislodging boulders from the development of lands (Lot 17) to the rear of the subject lands. Several owners report boulders above their lands which were displaced during recent development works upon Lot 17. The soils of the subject lands are seen as unstable, requiring considerable cut and fill, with extensive boulder retaining walls to be constructed. Both valuers agree with those descriptions. However Mr Bein argues that those circumstances are common in that steeper country in the locality. Mr Harrison is a builder, and Mr Thompson is an engineer, both of whom see the site as presenting building difficulties.
Only the Riddle property has access to water on site, as the Riddle land has a bore in a gully passing along Lot 13 of that parcel. Apparently Mr Riddle plans to build a new house for himself upon Lot 13. All other six properties have no access to water, which, as Mr Bein notes, is common in that Mandalay Road locality. There is now no town water available to any of the seven parcels.
Mr Conroy advises that in the absence of town water there is a limit on the use of septic systems on the lands. He notes that septic systems cannot be used within 30 metres of a creek or bore, or within 4 metres of a boundary, or 2 metres of a dwelling. He notes that an enviro-cycle system needs an irrigation area of 300 square metres. It is also noted that the bore on the Riddle property restricts its use for enviro-cycle disposal. All of those criteria provide serious limitations on the subject lands. However it is agreed that each of the seven parcels are currently developed with a residence for the owners. Mr Conroy notes that the problems with septic disposal were addressed in another matter before this Court in Zolgaze Pty Ltd v Chief Executive, Department of Natural Resources and Mines (AV2000-0453), 8 March 2002, unreported.
In respect of the problems with glare from the western aspect of each property, Mr Conroy argues that such western views are generally regarded as inferior to comparable views to the north and north-east. On that basis alone he questions Mr Bein's allowance for the water views from the subject lands. Mr Bein argues that the views are generally good from the subject lands, and are some of the only ocean views looking back towards Airlie Beach, particularly at night. Mr Conroy agrees that the western glare can partly be overcome by specific building design, but argues that would generally involve additional costs when building. He argues those extra costs were likely to be considered when buying the western sloping subject lands, and should be allowed for in the unimproved value of the lands. While previous traffic accidents on Mandalay Road have been of concern, recent roadworks have now alleviated those problems.
The key feature of each subject land is the ocean views available as noted in paragraph [6]. However Mr Conroy argues that growing vegetation upon private lands across Mandalay Road will further impede those views. Mr Conroy also concedes that views from the Piccone property are also currently partly impacted by vegetation upon that parcel, although Mr Piccone is less likely to lose his views compared to some of the other subject lands. It is noted that the Wort property has vacant lands to its south; as also does the Harrison property, which will eventually become an access roadwork into the development on Lot 17 to the rear. For that reason both of those two parcels have no interruptions to views to the south-west. However Mr Wort's land is about 10 metres below the dwelling on Mr Piccone's land. There is a church hall across Mandalay Road in front of the Wort property and the Harrison property, but the subject lands being higher in elevation, look over that church hall.
The ocean views from the Thompson property towards Airlie Beach are more restricted by vegetation, but there are no problems with ocean views to the west towards the Botanica Estate lands at Woodwark across Pioneer Bay. Mrs Thompson's lot is a larger parcel of 1,300 square metres, being a reconfiguration of three lots into two, being former Lots 5, 6 and 7. The Bunn property is also a larger lot of area 1,250 square metres, also being a reconfiguration of former Lot 1 and part of adjoining Lot 168 to the north (Crown Plan 842095). Ocean views from the Bunn land are partly obstructed by trees across Mandalay Road. Mr Bein agrees that there are some obstructions to those ocean views, but argues that they are the only properties in that locality that look back to the evening lights of Airlie Beach.
While Mr Conroy has not specifically checked the relativity between the seven subject lands, he agrees that the relativities adopted by Mr Bein are probably about right. However he argues that all seven parcels have values that are too high. Mr Bein agrees that the area is very difficult to value, as each individual parcel needs to be inspected to ascertain the actual extent of any obstructions by trees to ocean views. He notes that ocean views can vary significantly from parcel to parcel, which has a significant impact upon the value of each parcel. But he agrees that overall the elevated parts of the Whitsunday area of Airlie Beach and Shute Harbour tend to be superior to the area of the seven subject lands.
Changes in the valuation –
Mr Conroy argues that the changes in unimproved values of the subject lands had increased since the last valuation in 1999 by about 180%, compared to the average of 30% elsewhere in the Shire. Mr Bein agrees, but argues that the previous unimproved values of the elevated lands with ocean views in that area had been too low in 1999. He attributes part of that to the failure to consider a sale in 1999 to Mr Stock, discussed later in paragraph [24]. Mr Bein notes that the Stock property had been valued in 1999 at $54,000 (Exhibit 16), when in fact the parcel had sold in August of 1999 for $125,000. Mr Bein further advises that when he took responsibility for the valuations in the area, he found that the subject lands, and other elevated lands with ocean views, were valued lower than other inland parcels behind Canondale. He argues that was clearly incorrect, and he had rectified those imbalances in the current valuations at 1 October 2002.
Mr Conroy does not accept that explanation for the rapidly increasing changes in values in 2002. Mr Conroy argues that had the revaluation considered say the sale in Mandalay Road of Lot 2 on RP 721173 for $90,000 on 31 January 2000, then the increase in unimproved values from 1999 could have been much lower than suggested by Mr Bein, based upon the Stock sale for $125,000 in 1999. Mr Conroy argues that such an increase would be consistent with his understanding of a slight upward movement in some areas between 1999 and 2002. Mr Bein agrees that had the sale of Lot 2 at $90,000 being adopted for 1999, and then an increase of between 20% to 40% been applied to the 1997 level, then the unimproved values of the subject land would be considerably lower than those currently applied.
However Mr Bein rejects that conclusion, noting that the values had not been increased between 1997 and 1999 for some reason, and it was thus necessary to catch up to the new market levels of 1 October 2002. He notes that it would still be necessary to meet the level of value reflected in the Wort sale of $160,000 in April 2002. Mr Cradick notes that Mandalay Road has increased from a virtual goat track in 1995, such that infrastructure development near Shute Harbour is now making the subject area more attractive, hence the rapid increase in values in that area.
Comparison of sales –
To support his valuations Mr Conroy provides the following sales in the Mandalay area:
· Sale 1 – (Mandalay Road – Lot 2 on RP 721173). This is an 809 square metre sale of vacant land located adjoining the Bunn property. It has similar nature, access and views, and is seen as comparable to the subject land. The sale sold for $90,000 on 31 January 2000.
· Sale 2 – (Mandalay Road – Lot 10 on RP 721173 – Bentley to Wort). This is the sale of the subject land (Wort) which sold for $160,000 in April 2002. Mr Conroy rejects this sale as a bona fide arms length sale on advice from the purchaser (Wort), who considers he paid too much for that parcel.
Mr Conroy also compares sales of vacant lands in the Shute Haven area at:
· Sale 3 – (Neerim Crescent – Lot 5 on CP S9463). This is a gentle sloping 564 square metre lot with similar access as the subject land, but also electricity, telephone, garbage services and reticulated water. There are ocean views to the south over Shute Harbour, and limited ocean views to the north. The sale sold in August 2002 for $100,000.
· Sale 4 – (Neerim Crescent – Lot 3 on CP S9463). This is a 519 square metre lot with similar features as Sale 3, but with spectacular ocean views to Hamilton Island to the east, and also ocean views to the south across Shute Harbour. The sale sold in September 2000 for $211,000.
· Sale 5 – (Neerim Crescent – Lot 7 on CP S 9463). This is a 716 square metre with similar features and views as Sale 3. The sale sold in December 2000 for $110,000.
Mr Conroy provides further sales in the Airlie Beach area as follows:
· Sale 6 – (Nara Crescent – Lot 6 on RP 908017). This is an 861 square metre parcel which has access to bitumen sealed Nara Crescent, and all Council services. The sale falls towards the rear, and there are attractive ocean views to the north and east over Pioneer Bay and Airlie Beach. The sale sold in July 2002 for $157,000.
· Sale 7 – (Airlie Crescent – Lot 7 on RP 721280). This is a 635 square metre parcel with similar access, services and features as Sale 6, and with attractive ocean views to the north and west over Pioneer Bay. The sale sold in September 2002 for $165,000.
· Sale 8 – (Nara Crescent – Lot 3 on RP 908017). This is a 808 square metre parcel with similar access, services, features and ocean views as Sale 6. The sale sold in October 2002 for $110,000.
Mr Conroy sees his Sale 1 at Mandalay as comparable to all seven subject lands, and his Sale 2 as marginally inferior to all subject lands. He then sees his Sale 4 at Shute Haven as far superior, and Sales 3 and 5 as comparable to each subject land. In respect of his Airlie Beach sales, he sees Sales 6, 7 and 8 as all superior to the subject lands. Mr Conroy argues that his Sale 7 has perhaps the least panoramic ocean views of those three sales in Airlie Beach, as Sales 6 and 8 are more elevated and have the better ocean views to the north and north-east. Mr Conroy concedes that the ocean views from the subject lands are superior generally to the ocean views from his Sales 3 and 5 at Shute Harbour. However he argues that those better ocean views need to be balanced by the inferior services available at the subject lands, particularly the lack of reticulated town water, and also the easier terrain of Sales 3 and 5 for building purposes.
In his comparisons with the Airlie Beach Sales 6, 7 and 8 Mr Conroy concedes that he may have made insufficient allowance for the generally large areas of each subject land, but he argues that the values placed by Mr Bein are still excessive. Mr Conroy also notes that Mr Bein agrees that the elevated parts of Airlie Beach and Shute Haven are all superior to the locality of the subject lands (Exhibit 15, p.3).
Mr Conroy notes that the respondent has used the higher sales in Airlie Beach as comparisons, rather than other sales which he feels would be more comparable. To support that conclusion, Mr Conroy had investigated a range of sales in the exclusive parts of Shute Haven in Passage Avenue, where absolute Esplanade frontage parcels had sold for $183,000 (Lot 909 in February 2002), $190,000 (Lot 902 in June 2002), and $187,000 (Lot 905 in July 2002). Those three extra sales are shown on the sales map for Sales 3, 4 and 5 (Exhibit 8) and are designated on that map to the north-east side of Passage Avenue as Lot 9 of area 529 square metres, Lot 5 of area 546 square metres, and Lot 2 of area 546 square metres.
Those parcels all have uninterrupted ocean views to Hamilton Island to the north-east. Mr Conroy agrees that because of the slopes of those three sales there would be building difficulties, but he argues those difficulties also relate to the subject lands. Mr Conroy argues that those extra sales demonstrate that the additional $20,000 to $30,000 paid for those superior ocean views does not reflect the true relationship between the applied values to those sales and the subject lands. He argues that ocean views are what the market pays for in Shute Haven, and the superior quality of the ocean views at Passage Avenue suggest that the subject lands have been valued too highly.
To support his valuations, Mr Bein provides the following sales in Mandalay:
· Sale 1 – (Bentley to Wort – Mandalay Road – Lot 10 on RP 721173). This is the sale of the Wort subject land in April 2002 for $160,000. The sale was analysed at $158,000, and was applied at 1 October 2002 at $150,000 (95%).
· Sale 2 – (Carter to Stock – Mandalay Road – Lot 15 on RP 721173). This is the sale of the Stock subject land in August 1999 for $125,000. The sale was analysed at $123,000, and applied at 1 October 1999 at $54,000. (Exhibit 16).
Mr Bein agrees that Sale 1 (Wort) is comparable and larger than the Stock land, and comparable and smaller than the Riddle, Piccone, Thompson and Bunn lands. Sale 1 is slightly inferior but smaller than the Harrison land. In respect of his Sale 2 (Stock), he argues that it is comparable and slightly smaller than each of the other subject lands.
To further support his valuations, Mr Bein provides six sales in Airlie Beach as follows:
SaleArea Date Price Applied Value
1 808 m² 10/2002 $110,000 $102,000 (93%)
(Lot 3 on RP 908017)
2758 m² 8/2002 $177,500 $140,000 (79%)
(Lot 5 on RP 908017)
3938 m² 12/2002 $195,000 $132,000 (68%)
(Lot 10 on RP 908016)
41,883 m² 10/2002 $390,000 $250,000 (64%)
(Lot 1 on SP 156138)
5635 m² 9/2002 $165,000 $148,000 (90%)
(Lot 7 on RP 721280)
6688 m² 10/2002 $240,000 $180,000 (75%)
(Lot 11 on A 8597)
Mr Bein notes that each of those six sales are elevated parcels with views, and all have utility services and kerbing and channelling available in Airlie Beach. He argues that those six prices support the level of value of his Sale 1 (Wort) in 2002, and the earlier Sale 2 (Stock) in 1999. Mr Bein agrees that there are good ocean views from those Airlie Beach sales, but argues that the subject lands have views unlike any other parcels in the area, as the subject land views look back towards Airlie Beach. However he agrees that generally views to the west are seen as inferior to comparable views to the north and east. He also agrees with Mr Conroy that Sale 4 (Lot 1) is a much superior parcel to the subject land. However Mr Bein could not explain why a higher level of applied values at about 94% had been applied to his Sale 1 compared to the lower applications for the Airlie Beach sales at about 64% to 79%, as he was not the valuer responsible for those sales. He believes that the applied values of $140,000 for Sale 2 in Nara Avenue (Crescent) is too low.
Mr Bein also provides other sales in Shute Harbour as follows:
SaleArea Date Price Applied Value
1 546 m² 7/2002 $100,000 $130,000
(Lot 905 on S 9461)
2519 m² 9/2002 $211,000 $109,000
(Lot 3 on S 9463)
3564 m² 8/2002 $100,000 $105,000
(Lot 5 on S 9463)
4716 m² 12/2002 $110,000 $96,000
(Lot 7 on S 9463)
Mr Bein argues that each of those sales have town water, unlike the subject lands. It is also noted that Mr Bein's Sales 1 and 5 at Airlie Beach are common sales; as also are Mr Bein's Sales 2, 3 and 4 at Shute Harbour. Mr Conroy argues that Mr Bein's Airlie Beach Sales 2, 4 and 6 have very attractive uninterrupted views, and are agreed to be superior to the subject lands. He notes Sale 5 also has good views as it overlooks the Abel Point Marine. He notes that of the 10 additional sales supplied by Mr Bein, he believes that seven of those sales are superior properties, but only two of them have higher unimproved values.
Mr Conroy argues that indicates that the subject lands have been applied at too high a level. He argues that suggests that the Wort sale is out of line with the market at that time, which was showing only a slight upward movement in 2002. However he notes that the sales evidence applied does not support even that view as noted by the August sale in 1999 for $125,000 (Stock), and the January Sale 1 for $90,000. Mr Bein was not aware of Mr Conroy's Sale 1 (Lot 2), which he notes was a body corporate transaction. But he has no reason to doubt that sale. Mr Cradick offers an opinion that if any special arrangements had been allowed in that corporate transaction, it was more likely that the sale price would be on the low side, rather than on the high side. It is also noted that Mr Bein's Sale 2 at Shute Harbour (Lot 3 at $211,000) is consistent with Mr Conroy's additional sales nearby at Lot 909 ($183,000), Lot 902 ($190,000), and Lot 905 ($187,000). He explains those higher prices reflect the unobstructed ocean views to the north-east.
The sale of the subject lands –
A key part of these matters relates to the level of reliability that can be placed upon the sale of the two subject lands at $125,000 (Stock), and in particular $160,000 (Wort). For that reason I draw particular attention to those sales.
I take first the sale of the Wort property at $160,000 in April 2002. Mr Conroy argues that his inquiries of the purchaser (Wort) reveals that Mr Wort believes that he paid too much to acquire that property, which was the last vacant site available in that immediate locality. Mr Wort had sought to negotiate a lower purchase price, but was forced to pay $160,000, rather than lose the property. During that negotiation he had inquired of other lands at Airlie Beach and across Pioneer Bay at Botanica Estate and Woodwark. However he found those lands were beyond his resources, and he had to settle upon the Mandalay property.
Mr Conroy also compares the Wort sale at $160,000, and notes that in his opinion that sale price was out of line with other sales in the general locality. While he rejects the sale price of $160,000, he advises that if that sale was to be accepted, then he would need to reconsider his estimate of values of the subject lands from about $90,000 to $140,000. Mr Conroy argues that the general sales levels do not support that conclusion. Mr Conroy suggests that the previous market level in Mandalay in 1999 should have been about $90,000 to $100,000. If a 30% increase was then added to that level in 2002, then the subject lands would have resulted in values at about $130,000 to $140,000. He believes the suggested increase of about 50% to 60% in 2002 was wrong.
By comparison Mr Bein believes that if he accepts the Stock sale in 1999 at $125,000, then the Wort sale in 2002 at $160,000 appears consistent. While he agrees that Mr Wort may have felt that price was too high, in the end he purchased the land rather than let someone else also complete a transaction. Mr Bein notes that that fulfils the criteria of a genuine bona fide arms length sale as directed in Spencer v The Commonwealth of Australia. In respect of his four sales at Shute Harbour, Mr Bein argues those properties are inferior to the subject lands. He argues those four Shute Harbour sales support the sale price of the Wort sale. Mr Bein argues that the applied values of the Shute Harbour sales were applied by another valuer, and, in his opinion, all are too low. However Mr Bein agrees that he had been unable to speak to Mr Wort, as Mr Wort had not returned Mr Bein's telephone inquiries.
If I look then at the Stock sale in 1999, I find that the respondent had not investigated that sale for the 1999 revaluation. On reflection, Mr Bein now believes that the Stock sale of $125,000 probably reflected a fair indication of the market level at that time, and in his opinion, the later Wort sale was probably a fractionally low sale. Mr Bein agrees that he was not aware of the subsequent Sale 1 in 2000 at $90,000. While he agrees that Mr Stock had purchased that property while on holidays from his former residence in Sydney, he argues that is not uncommon, and should not be concluded as an ill informed buyer in the market place. Mr Conroy also agrees that he had not spoken to the parties on his Sale 1 (Tall Structures Pty Ltd to Jofrey Pty Ltd), and he could provide no further details on that sale in January 2000. Mr Conroy summarises his evidence by agreeing that the market has risen in that area, but the main increases have been subsequent to 1 October 2002. Mr Bein argues that the best sales are those in the same street, including the two subject lands.
Decision:
I note first that there is no real difference between the valuers in respect of the general nature and services of the subject lands. In the matter of potential danger from displaced boulders by development upon the land to the rear (Lot 17), I believe that is essentially the result of the development process, and will eventually abate. It is also a matter often encountered on steep sloping lots where views are the main objectives of owners. The extent of boulder walls reflects the instability of the soils, and some allowance should be considered for that purpose. In respect of the nature of the lack of town water, and problems with septic disposal those are matters not always reflected in the sales evidence, and some further consideration should be made on the subject lands.
To understand the problems associated with septic disposal, I am referred to a decision of this Court in Zolgaze Pty Ltd (supra). Mr Conroy previously referred to that matter in a later matter in these hearings in Wyndare Pty Ltd v Chief Executive, Department of Natural Resources and Mines (AV2003/0390) 28 September 2004, unreported, at paragraph [12]. For the benefit of the appellants in the current matters, I will repeat those findings in the Wyndare Pty Ltd decision.
If I consider the impact of the Council septic policy, in the decision of Zolgaze v Chief Executive, Department of Natural Resources (supra) I find that dealt with a residential parcel of 516 square metres (Lot 3 on S 9461), located in Passage Avenue, about 150 metres to the north of the sales evidence in that matter. In the Zolgaze decision, the learned Member accepted the evidence of the valuer (Mr Bein) who had maintained an earlier allowance of $20,000 in the valuation for ongoing "pump out" costs associated with the necessity to install a "pump out facility" to service the septic system, as the small area of that parcel precluded adequate septic absorption trenches. The appellants accepted that an allowance for "pumping out" for septic should be allowed, but argued that costs for such a disability should reflect $45,000, rather than the $20,000 allowed. The background to those allowances was explained in paragraphs [8] to [10] of the Zolgaze matter.
In respect of the quantum of allowance of $20,000 made in that matter, the Member noted that there was no particular science to determine the level of allowance, nor any calculation that was presented. It merely represented an opinion as to what the market place would reflect based upon the need to install a pump out facility if the land was to be developed for its residential use prior to a sewerage system being put into place. The Member further noted that purchasers in 1999 were probably unaware of the septic code and its implications. However later sales in 2000 and 2001 did not indicate a downward trend in value as people presumably became aware of the code. On that understanding in the Zolgaze decision, while accepting Mr Bein's allowance of $20,000, it supported his current conclusion in the Wyndare matter that the market had adjusted to that code by October 2002. On the basis of that understanding I believe that the market place had also adjusted by October 2002 in the current matters.
In the current matters a difference between the valuers lies partly in their assessment of the premiums that attach to ocean views, and whether that varies according to the aspect of the views. It is agreed that glare from the afternoon setting sun across Pioneer Bay would be an imposition upon the owners facing west. However, as Mr Cradick notes, there are means by which that glare can be minimised, and that would be a matter taken into consideration by a potential purchaser. However I accept that the more expansive ocean views to the north and north-east of the sales would be significantly superior to the western views from the subject lands. The question is to what extent is that premium determinable? I feel that Mr Bein may have over-estimated the value of the views looking back towards Airlie beach.
The sale of the subject lands –
Before considering the total sales evidence, I look at the two sales of subject lands. If I consider first the Stock sale in 1999, I find that sale would appear to be in conflict with the subsequent Sale 1 of Mr Conroy's at $90,000 in January 2000. However there has been no complete analysis of that latter sale, and there is as much uncertainty about whether Sale 1 was a low sale, as there could be with the Stock sale being a high sale. However both of those sales are virtually the only sales in the Mandalay Road area in that period.
Now in accepting Mr Bein's approach of retrospectively adopting the Stock sale, I find that precedent directs that some caution needs to be applied when a single sale is used. For example in the matter of Waalt Homes v Commissioner of Highways (SA) (1987) 64 LGRA 346, Gobbo J said at 354:
"It is well-established that the use of comparable sales is to be preferred as the primary method of valuation, and it is obvious that the hypothetical development analysis method offers many opportunities for error in its various assumptions and calculations. But this argument can be given too much weight, for one error of judgment in applying a comparable sale can readily lead to a significant error in the final valuation. Particularly is this so if there are few sales and no obviously discernible trend."
I note also that while the sale of the subject land is often the best evidence of its value, caution also needs to be applied in its adoption. That was determined in The Chief Executive, Department of Lands v J and L Lorenzen (AV93-22) 1 June 1994, unreported, where the Land Appeal Court said at 4:
"Whilst we agree that a sale of the subject land should always be considered in assessing its value we hasten to stress that such a sale is only prima facie evidence of its value. The weight which will be given to the sale is dependent upon a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable land."
That was also emphasised by the President of this Court in Determination of Rents and Unimproved Values for Conversion Purposes – Perpetual Lease Selections and Grazing Selections – Goondiwindi District (1974) 1 QLCR 45, where he said at 48:
"I think I should say at this junction that whilst a sale of a subject property around about the relevant date in normal circumstances is cogent evidence of its value, it is always necessary to check the analysed value against the standard reflected by other sales of comparable properties to ensure that it conforms to the 'norm' of the market. If the sale does not so conform caution must be used in its application and it may be even proper to reject it if it is shown to be a sale out of line with the market 'norm'. This check becomes vital, in my opinion, in times of a varying market be it rising or falling or in times of an erratic market. One cannot assume, ipso facto, that the analysed sale figure equates fair market value for the subject purposes."
The principle espoused in all of those decisions is that the sale of a subject land must be tested against the market norm in an area at the relevant date. Now for whatever reason the previous valuer in this area did not adopt the Stock sale. Perhaps the significant rise reflected in that one sale caused that valuer to be cautious about applying a single sale as a true reflection of the rising market? However I agree with both current valuers in this matter that the adopted unimproved value of $54,000 for the Stock property, completely underestimated its true level of value at that time.
Now while there may be some truth in Mr Cradick's opinion that the corporate sale of Mr Conroy at $90,000 was likely to be a low sale, I also accept Mr Bein's opinion that merely because Mr Stock was a virtual absent purchaser from interstate at that time, does not mean that he had not fully informed himself of market conditions in 1999. With the existing state of communications and internet services, that would appear unlikely. The question is which of those two sales at $90,000 and $125,000 reflected the market level at that time? The test of that issue is likely to be found in other sales in the area.
I turn then to Mr Bein's Sale 1 (Wort). Now while Mr Conroy is advised by Mr Wort that he had paid too much for that sale, Mr Bein on the other hand feels that the Wort sale was perhaps a fraction on the low side (paragraph [33]). If I look then at the criteria that determines whether a sale is to be seen as a bona fide market level, I note guidance from the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418. In that decision, which has guided courts at all levels, the leading decision of Griffith CJ at 432 is well known. But in the current matter the words of Isaacs J perhaps provide a clearer understanding of Mr Wort's situation when he sought to purchase his subject land in September 2002. In Spencer, Isaacs J 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."
The rule in Spencer emphasises the informed nature of a prudent buyer and seller in negotiating a contract of sale such as the Wort sale. While Mr Wort may have felt that he paid too much, the seller (Mr Bentley) had the opinion that if Mr Wort did not pay the price of $160,000, then someone else would do so. In the end Mr Wort decided to purchase the land, rather than lose it to another buyer. Those circumstances would seem to define the level of prudence of a buyer as noted in Pastoral Finance Association Limited v Minister [1915] 15 SR (NSW) 535, where Lord Moulton said at 540:
"Probably the most practical form in which the matter can be put is that he was entitled to that which a prudent man in his position would have been willing to give for the land sooner than fail to obtain it."
While that decision in Pastoral Finance related to a matter of compensation for land resumed for a public purpose, the Privy Council determined that it was the market value of the land which should be ascertained for the land located in Kirribilli Point in Sydney. (See also Land Acquisition, 4th edition, D Brown, 1996, p.98). The same test would appear to relate to the Wort sale in the current matter. On that guidance I accept that the Wort sale reflected the market level at April 2002, some 6 months prior to the relevant date. The question then is to what extent did the market vary between April and October 2002?
Comparison of sales –
Before considering the previous ales evidence, I note that there is general agreement between the valuers that the elevated lands with ocean views are superior in both the Airlie Beach and Shute Harbour areas compared to the subject lands. (paragraphs [13] and [21]). It is also agreed that the presence of ocean views is a key factor in the market's appreciation of lands in the whole area.
An analysis of the Shute Harbour sales reveals that of the three common sales, only two (Lots 5 and 7) are agreed to have ocean views with some intrusions from vegetation to the north, but similar ocean views to the subject lands across Shute Harbour to the south-west. The clearly superior uninterrupted ocean views of Lot 3 towards Hamilton Island to the north-east are reflected in that much higher sale price. The additional sales of Mr Conroy in Passage Avenue at Lot 909 for $183,000 in February 2002; Lot 902 for $190,000 in June 2002; and Lot 905 in July 2002 for $187,000 support the higher prices paid for the uninterrupted ocean views from those parcels. The sale of Lot 3 in Neerim Crescent for $211,000 also has those uninterrupted ocean views to the north-east, and supports the premium for such features. I would agree that all of those parcels with uninterrupted north-east ocean views are superior to the subject land. However I also agree with Mr Bein that there is some inconsistency in the applied values of those Shute Harbour sales. The sale price of Lot 905 in Passage Avenue for $100,000 in July 2002 is inconsistent with the nearby market evidence, and I would treat that sale with caution.
If I look then to the Airlie Beach sales, I find the following comparisons:
SaleArea Price Date Comparison
Lot 6 861 m² $157,000 7/2002 Ocean views
(Nara Crescent)
Lot 5 758 m² $177,500 8/2002 Ocean views
(Nara Crescent)
Lot 10 938 m² $195,000 12/2002 Ocean views
(Nara Crescent)
Lot 3 808 m² $110,000 10/2002 Battle axe – common sale
(Nara Crescent)
Lot 7 735 m² $165,000 9/2002 Common sale/harbour
(Airlie Crescent) views
Lot 11 688 m² $240,000 10/2002 Harbour views
(Airlie Crescent)
Lot 1 1,883 m² $390,000 10/2002 Far superior/ocean views
(Kara Crescent)
Clearly the restricted access and inferior views of Lot 3 in Nara Crescent account for the much lower price. As all of those Airlie beach sales have both town water and sewerage available, with the exception of Lot 3 (Nara Crescent), I agree that they are all superior to the subject lands.
The question then to be addressed is the apparent inconsistent application of those sales to reflect the previous relativities between the parcels. I would agree with Mr Bein that the old relativities may not reflect the true market place appreciation of the impact of ocean views, compared to the availability of town services. I also agree with Mr Conroy that ocean views are what buyers now pay for, and perhaps a revision of the old relativities may be required in the future in some places.
However there was agreement that relativities between the subject lands appear reasonable, and I will retain those relativities in my decision. The question really now is to compare the only Mandalay sale (Wort) in the same period as the Airlie Beach and Shute Harbour sales. On the sales evidence at both Airlie Beach and Shute Harbour, allowing for the different areas and topography of each sale, there is nothing to indicate that the market had changed much over the second half of 2002. While the evidence is that the market overall had increased about 30% in that locality between 1999 and 2002, it would be simplistic to seek to apportion the increase over a specific period in 2002. I accept therefore the level of sale value of the Wort sale at $160,000 in 2002. That is also consistent with the comparisons of sale prices in both Airlie Beach and Shute Harbour. The application of the Wort sale at 95% is a reasonable conservative approach to the applied unimproved value, bearing in mind that it occurred some six months prior to the relevant date.
Summary:
In summarising these matters I am reminded that the onus to prove their cases rests with the appellants under s.45(4) of the Act. Unless that onus of proof is demonstrated, then s.33 of the Act directs that the valuations of the Chief Executive are deemed to be correct. On the evidence that onus of proof has not been expunged.
Conclusion:
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 -
· AV2003/0393 ($150,000)
· AV2003/0394 ($200,000)
· AV2003/0395 ($140,000)
· AV2003/0396 ($150,000)
· AV2003/0397 ($155,000)
· AV2003/0398 ($160,000)
· AV2003/0399 ($170,000)
are all affirmed.
NG DIVETT
MEMBER OF LAND COURT
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