Streit v Department of Natural Resources and Mines

[2003] QLC 3

LAND COURT OF QUEENSLAND

CITATION: Streit v Department of Natural Resources and Mines [2003] QLC 3

PARTIES:  Ingrid V and Richard J Streit

(applicants)
  v

Chief Executive, Department of Natural Resources and Mines

(respondent)

FILE NO:  AV2002/0524

DIVISION:   Land Court of Queensland

PROCEEDING:  Appeal against annual valuation under the Valuation of Land Act 1944

DELIVERED ON:  6 February 2003

DELIVERED AT:   Brisbane

HEARD AT:   Brisbane

MEMBER:  Dr NG Divett

ORDER: The appeal is dismissed, and the unimproved value of Lot 28 on RP 138603 as determined by the Chief Executive in the sum of $119,000 is affirmed.

APPEARANCES:  Dr RJ Streit for the appellants
  Ms R Trigge for the respondent

Background:

1. This matter relates to land at 104 Smith Street, Cleveland and described as Lot 28 on RP 138603.  The subject land has an area of 809 m² and is located about 2 kilometres south-west of the Cleveland Business District and about 24 kilometres south-east of the Brisbane GPO.  The land faces west to Smith Street which is bitumen sealed with concrete kerbing and channelling.  Access to the land is good and all normal urban utility services are available.  The land is zoned Residential A under the Town Plan of the Redland Shire Council of 20 February 1998, and is listed as Urban Residential under the Redland Shire Strategic Plan, both current at the date of valuation of 1 October 2001.  The key issues are the nature of the land, the presence of views and comparison of sales.

2. On 25 February 2002 the Chief Executive issued a valuation of the subject land at $119,000.  Following an objection the Chief Executive confirmed that figure on 13 August 2002.  The appellants have now appealed claiming the unimproved value should more properly be $105,000.  Following an unsuccessful preliminary conference before the Court the matter proceeded to hearing on 18 October 2002. 

3. Dr Richard James Streit appeared and gave evidence for the appellants.  Ms R Trigge, Senior Legal Officer appeared for the respondent, calling evidence from George Dudek, the departmental registered valuer responsible for determining the valuation.  At the request of the parties a joint inspection of the properties was undertaken by the Court.

The Evidence:

The Nature of the Land -

1. The subject land is a rectangular parcel of 20 metres frontage, and slightly below street level.  The land is at high elevation along a ridge line at a reduced level of approximately 35 metres Australian Height Datum (AHD).  The general terrain adjoining the subject land falls gently towards the east, south and north, and the land is generally surrounded with other dwellings.

2. The land is located about 100 metres from a local bus stop, and about 2 kilometres from the Cleveland Railway Station, both providing reasonable access to public transport.  Mr Dudek notes that the subject land has reasonable access to a district high school which is about 1 kilometre to the north.  The local Cleveland Showground is about 0.4 kilometres to the north along Smith Street.

3. While Dr Streit agrees with the proximity of those facilities, he argues that they provide increasing traffic, noise and parking restrictions at the subject land, particularly over weekends.  Dr Streit sees the increased traffic impacts, as a consequence of the Showground in particular, as a nuisance, rather than as an asset.  He argues that Mr Dudek has under-estimated the impact of traffic along Smith Street.  Mr Dudek has based his opinion upon several inspections of the area, and believes he has provided a true reflection of traffic impacts in Smith Street.  However he concedes that he had made no inquiries with police in respect of the need for speed monitoring in the area.  Dr Streit advises that Smith Street is regularly subject to speed radar traps between Long Street and Coburn Street, and entry onto Smith Street must be taken carefully due to early morning traffic flows.  Mr Dudek agrees that the hospital complex in Wellington Road about 0.5 kilometres south-west of the subject land is a generator of traffic, but argues the major traffic flows from that site are along Wellington Road and Bay Street.

The Impact of Views –

1. A key concern of Dr Streit is Mr Dudek’s opinion that the subject land “enjoys distant Bay views”.  Dr Streit concedes that there are minor glimpses of the distant Bay on good days, but argues that they are very small compared to other properties in Cleveland, where unobstructed Bay views are present.  To support that conclusion he notes the presence of unobstructed Bay views from lands in Passage Street, and also in Morris Circuit in the South Cleveland Waters Estate about 1.5 kilometres south-east of the subject land.

2. Mr Dudek agrees that the views from Passage Street are unobstructed sweeping views, and are far superior to those from the subject land.  However Mr Dudek notes that sales of vacant lands in areas nearer the water with such views are considerably dearer than the subject land.  He provides no specific details of those sales, but argues that where such unobstructed views exist, then sales evidence of prices in excess of $300,000 are to be found.  Mr Dudek argues that in determining his valuation at $119,000 for the subject land, he has only allowed for the potential to achieve glimpses of the distant Bay.  He agrees such glimpses do not represent full panoramic views.

3. It is Dr Streit’s understanding that as the subject land is to be valued as if it were vacant under s.3(1) of the Act, then it is relevant to consider the presence of views as if they were from ground level on that parcel. To support that argument he provides photographs at ground level to demonstrate that views in all directions are obstructed by vegetation and other dwellings on adjoining lands. (Exhibit 4).

4. To also support his argument that even if the potential for views upon the vacant land was to be explored, he provides further photographs taken from the second floor level.  (Exhibit 5).  Those photographs again confirm the presence of tall vegetation, and generally two-storey houses clearly constructed to seek to capitalize in any possible views.  Dr Streit agrees that those later photographs were taken on the landing on the rear stairs of the dwelling. 

5. From the photographs it is clear that the design of the dwelling had sought to maximize any potential views to the east-north towards the Bay, by providing an open balcony in the north-eastern corner of the dwelling.  Subsequent inspection from that balcony confirmed Mr Dudek’s conclusion that views from that location did afford a restricted view of the Bay.  However that restricted view is over a large bird aviary and an adjoining single storey dwelling in that direction.  It is Dr Streit’s concern that should the owners of that dwelling seek approval to develop a second level, then any Bay views, no matter how now restricted, might be lost to the subject land.  He argues there is that potential to lose any views of the Bay.

6. Dr Streit is particular conscious of the current restrictions upon the subject land, having previously unsuccessfully sought to construct a third-floor attic to the current dwelling, in order to improve the views to the Bay.  That had been rejected by the Redland Shire Council, as construction of dwellings are restricted to two stories under the Building Ordnances. 

7. Dr Streit concedes that the presence of views from the land can vary according to the strategic location of a potential dwelling, which can be constructed to maximize any possible vistas between surrounding buildings.  In the case of the existing dwelling that would appear to have occurred with the location of the rear balcony on the second level.  However he continues to argue that Mr Dudek has overestimated the impact of the minor glimpses of the Bay from that location.  Mr Dudek rejects that conclusion, noting that since having seen the Bay glimpses on the Court inspection, he feels they are more substantial in nature than he had previously allowed for.  On that basis he argues his current valuation at $119,000 is very conservative. and a figure considerably higher might have been more accurate.

8. To support that conclusion Mr Dudek advises that in the Morris Circuit area of South Cleveland Waters, comparable lands with views of the Bay along the higher ridge lines have sold for about $180,000, while lower lots with less permanent views, and subject to being built out, were sold for about $100,000.  He notes that if there was a comparable lot near the location of the subject land with unobstructed views of the Bay, although there is in fact no such parcel in that particular locality, then it would have a land value in excess of $300,000.  He notes such is the premium attached to views of the Bay of any condition.  In the case of the subject land he has only applied a minimal premium for that purpose.  Mr Dudek further notes that except for unobstructed Bay views which cannot be intruded upon, all other views are never absolutely guaranteed, and there is always a level of uncertainty attached to the presence of views.

Impact of Noise –

1. Another matter of concern to Dr Streit is the intrusion of noise in the area from air-conditioning plants on the close by industrial estate in Enterprise Street, about 1.5 kilometres south-west of the subject land.  That noise at night time had been the subject of a local complaint to the Environment Protection Agency (EPA).  That body was currently undertaking discussions with the local industry with the view of reducing the noise levels.  Mr Dudek was unaware of those complaints, but argues that they would be relatively consistent upon other parcels in the area, including the sales evidence with which he had sought comparisons.  Mr Dudek further comments that he believes that any major impact from the industrial estate was likely to be from heavy traffic, which mainly (about 90%) uses Wellington Street.  He notes that traffic would have far greater impact upon sales compared in Bona Vista Court than on the subject land.

Comparison of Sales –

1. Dr Streit seeks to provide evidence of two sales of vacant lands in Morris Circuit (Lots 170 and 171), which he understands were sold in October 2001 for $110,000 and $107,000 respectively.  He advises that you can see the Bay from ground level on those two parcels.  Dr Streit obtained his information from the marketing manager of a local builder (Fiteni Homes), but was unable to confirm the details of those sales.  Subsequent inspection of those properties shows construction of new dwellings in hand.  However Mr Dudek was unable to obtain records of those transactions, which at the date of hearing for some reason, had not yet been registered with the Chief Executive.  As a consequence of the lack of specific details of those sales it could not be verified. 

2. In respect of the Morris Circuit lands, Mr Dudek advises that estate is actually in the adjoining suburb of Thornlands, and has not been compared directly to the lands in Cleveland.  He argues that the Morris Circuit lands reflect differing market factors than the subject lands, as they are more removed from the Central Business District, and access to public services.  However he speculates that the higher lands along the ridge line in the South Cleveland Waters Estate would probably have higher unimproved values than the subject lands, due to their better views of the Bay.  To support that conclusion he advises that comparable size lots on the ridge line in Morris Circuit sold for about $180,000.

3. Dr Streit also provides details, provided to him by an agent, of another sale of vacant land at 2 Bona Vista Court.  That land, of area 766 m², was apparently advertised at $107,000, and subsequently sold for about $100,000.  Mr Dudek later confirms that property was actually sold for $107,250. 

4. In respect of Dr Streit’s sale at 2 Bona Vista Court, Mr Dudek notes that property is at a reduced level below the 20 metres AHD contour line, and is therefore at least 15 metres in elevation below the subject land, and to the west of the ridge line.  As a consequence there are no views at all of the Bay, which is towards the north-east.  Mr Dudek also provides a sale in Bona Vista Court (his Sale 2), and notes that those properties are close to Wellington Street, which is a busy major traffic route.  As a consequence he sees any disturbance from traffic noise as greater at those two sales than at the subject land in Smith Street.  Dr Streit concedes that traffic is heavier in Wellington Street, but notes that the developer has constructor a 2.1 metre brick fence along the boundary to Wellington Street.  However the need to construct such a noise barrier would seem to support the higher level of noise emanating from Wellington Street.

5. To further support his estimate of the unimproved value of the subject land, Dr Streit also draws reference to a newspaper article of 9 April 2000 reporting the sale before auction of an improved property at 195 Coburn Street West, located north of the subject land near the Cleveland District High School.  That was reported as having an area of 825 m², with a highest three bedroom dwelling, which sold for $98,000.  Mr Dudek confirms that property resold on 25 September 2000 for $129,000.  Mr Dudek was unable to confirm the sale price of that property in April 2000, advising that departmental records of such old out-of-date sales are probably archived due to their lack of relevance to the current market.  In any case Mr Dudek sees that sale as an improved sale, and of little assistance in determining unimproved value.

6. To support his valuation Mr Dudek relies upon the following sales of vacant lands:

   ·Sale 1 – (9 Olympic Drive, Cleveland – Lot 5 on SP 128814).  This is a 660 m² Residential A parcel located about 400 metres south-west of the subject land.  The sale is irregular in shape, about 5 metres lower in elevation, but on the western side of the ridge with no potential views of the Bay.  The sale is nearer to busy Wellington Street and is smaller than the subject land.  Overall it is seen as inferior to the subject land. 

   The sale sold in June 2001 for $86,950, was analysed at $85,950, and applied at $81,000 (94%). 

7. ·Sale 2 – (6 Bona Vista Court, Cleveland – Lot 6 on RP 905187).  This is a 1,043 m² Residential A parcel located about 400 metres west of the subject land, and near to busy Wellington Street.  The sale has an irregular shape and is about 10 metres lower in elevation than the subject land.  Located on the western slope of the ridge, the sale has no potential views of the Bay, and looks across Wellington Street to the west.  The sale is above Bona Vista Court, and is opposite Dr Streit’s sale at 2 Bona Vista Court.  Overall the sale is seen as inferior to the subject.

   The sale sold in May 2000 for $99,750, was analysed at $98,750, and applied at $88,000 (89%). 

8. ·Sale 3 – (10A Mark Place, Cleveland – Lot 12 on SP 145875).  This is an 834 m² Residential A parcel located about 100 metres west of the subject land.  The sale is a level battle-axe shape with easement access to Mark Place.  The sale is approximately at the same elevation as the subject land, and also has similar views as the subject land.  While the sale has a slightly superior location, the restricted easement access and inferior street parking results in the sale being similar to the subject land.

   The sale is a late sale, being sold in March 2002 for $150,000, and was analysed at $149,000.  The sale is provided only as supporting evidence due to its after-date nature.  The previous application of that property at 1 October 2001 was $120,000, reflecting the subsequent increase in the property market.

9. In explaining his method of valuation, Mr Dudek advises that he has investigated all sales of vacant lands in the Cleveland and Thornlands areas, and has selected his three sales as the most comparable to the subject land.  He confirms that two of his sales are considerably inferior to the subject land, and he sees his Sale 3 as the most comparable because of its location and elevation.  However, because of its after-date nature, he relies only upon his Sale 3 to demonstrate the rising nature of the property market in that locality.  He also advises that in applying unimproved values to those sales, he has applied conservative approaches in order to allow any benefit of doubt to the appellant.

10. In order to explain further the buoyant nature of the property market in the Redland Shire, Mr Dudek advises that land prices have risen at least 10% each year for the last few years.  For that reason he rejected very old sales which he argues no longer reflect current values.  Mr Dudek draws reference to the successive valuations of the property at his Sale 3, which had unimproved values of $100,000 (1 October 1999), ($120,000 (1 October 2001), and later resold in March 2002 for $150,000.

11. Dr Streit explains that his estimate of the unimproved value of the subject land at $105,000, was merely his opinion of a reasonable figure based upon its former unimproved value at 1 October 1999 of $100,000, and comparisons with the Morris Circuit lands.

Decision:

1. Before examining the evidence I turn first to the legislation, and note that unimproved value is defined in s.3(1) of the Valuation of Land Act 1944 as follows:

   “3.(1)  For the purposes of this Act –

   ‘unimproved value’ of lands means –

   (b)in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.”

2. In seeking to understand how we must address such directions, I note the mental process to be adopted was clarified by the Privy Council in the matter of Tetzner v. Colonial Sugar Refining Company Limited (1958) AC 50 where Their Lordships said at page 57:

   “What in Their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation.  The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it.  Their Lordships see no objection in the process of valuation to regarding the land as land situated in a sugar town.  The valuer need not shut his eyes to the fact that there is a sugar manufacturing industry in existence, though he is not entitled to value the sugar mill and its accessory situated on the subject land.  Their Lordships find themselves in agreement with an illustration given by the Learned Magistrate in his judgment.  ‘If the undeveloped capital value of a city powerhouse is being assessed one does not assume a city without electricity and all the consequences of the lack of such an amenity.’”

3. That also follows the findings of the Privy Council in Tooheys Limited v. The Valuer-General (1925) AC 439 where Their Lordships said at page 443:

   “Now, what he has to consider is what the land would fetch as at the date of valuation if the improvements made had not been made.  Words could scarcely be clearer to show that the improvements were to be left entirely out of view.  They are to be taken, not only as non-existent, but as if they never had existed.  It is, therefore, to approach the question from a completely wrong point of view to begin with a valuation which takes in the improvements and then proceed by means of subtraction of a sum arrived at by an independent valuation in order to find the required figure.  What the Act requires is really quite simple.  Here is a plot of land;  assume that there is nothing on it in the way of improvements;  what would it fetch in the market?  It will be observed that the value is not what has been sometimes designated by the expression ‘prairie value’.  The land must be taken as it exists at the date of valuation.”

   In simple terms the land is to be treated as if all improvements had not occurred, while all the existing surrounding developments at the time of the valuations are to be considered extant.

1. Defined in simple terms what we must do is to consider the subject land as if it were vacant, but all other surrounding improvements are to exist in their current form.  The question then to be asked is what price would a willing but not overanxious purchaser be prepared to pay to acquire the parcel with all of its potential benefits and disabilities.  Because the land is to be considered as if it were vacant, then there would remain the potential to capitalize on any particular features of the land which would legally be able to be developed.

2. In the case of a Residential A parcel in that locality, that would include the construction and location on the parcel of a two-storey dwelling in order to maximize the benefits of any views of the Bay, however how small those glimpses may be.  From the site inspection such views do exist towards the Bay in the north-east, although such views are quite restricted.

3. In considering the value that might be involved in such a hypothetical sale, I am reminded of the definition of the value of land which has long provided guidance to the courts.  That was explained by the High Court of Australia in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 where Griffith CJ said at p.432:

   “In my judgment the test of value of land is to be determined, not by enquiring what price a man desiring to sell could actually have obtained for it on a given day, ie whether there was in fact on that day a willing buyer, but by enquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’  It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural.  The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.”

   That definition of what constitutes a bona fide sale has long been adopted by the courts, and is a matter which must weigh heavily in the mind of a valuer when he seeks to analyse sales for comparison purposes.

4. Now while Dr Streit might speculate on the possibility that either neighbour to the north-east might subsequently build to a higher level, and thus remove even the limited views of the Bay, that would be a matter for a subsequent valuation.  Indeed the potential for a possible impact upon a valuation was clarified in the matter of Chief Executive, Department of Natural Resources v Body Corporate for Golden Sands Community Title (AV99-280) 15 December 2000, unreported, where the Land Appeal Court said at p.6:

   “It is our view that the statutory provision contemplates a valuation based not on some refined view as to the use of the land, but on its use ‘for any purpose for which it was being used’;  that is, in the present case, for the use of units or apartments for residential purposes.  The use of the broad word ‘purpose’ does not in our view invite an inquiry as to whether the manner and quality of the use for that purpose in the case of ‘Golden Sands’ differs from the manner and quality of use in the case of a more modern structure.  The word ‘purpose’ must be construed objectively in the context of the section with a purpose, and thus the use, ascertained from the nature of the building, not from some inquiry or observation of its occupants.”

The Nature of the Land –

1. In considering the impact of noise from the industrial areas to the south-west, and also the disabilities encountered from traffic along Smith Street, I believe Mr Dudek is correct in his assumptions that such disabilities would at least be no worse than would be encountered on any of Mr Dudek’s sales analysed.  Indeed I would agree that the heavier traffic along Wellington Street would be a greater disadvantage than along Smith Street.  While the subject land is surrounded by vegetation and dwellings on surrounding parcels, it does enjoy the advantage of breezes more significant on higher lands.

2. In considering Mr Dudek’s allowance for the potential for limited views of the Bay, I note that any premium for that purpose has been restrained, compared to lands with the more expansive and permanent views of the water.  Indeed the higher lands near Morris Circuit would appear to attract a premium up to $80,000 for those better views.  The more restricted Bay views from Mr Dudek’s Sale 3 (10A Mark Place) would support the more conservative premium for views.

Comparison of Sales -

1. I turn then to Dr Streit’s reliance upon the reported sale at 195 Coburn Street.  I note that even though that was an out-of-date sale, it also suffers from the problems of being a highly improved sale.  The difficulties of relying upon comparisons with improved sales, when determining unimproved values, was clarified by the Land Appeal Court, when it explained why vacant land sales were preferred in the matter of PH Clough v Valuer-General (1981-82) 8 QLCR 70 at page 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.” 

2. In respect of the lack of definitive detail of Dr Streit’s two reported sales of Lot 170 and 171 in Morris Circuit, I am reminded by Ms Trigge that it is not the role of the Court to further investigate the grounds of the appeal for the appellants.  The legislation is quite specific in respect of the onus for an appellant to prove his grounds of appeal.  That is enshrined in s.56(2) of the Court which directs in respect of a Notice of Appeal:

   “56.(2)  Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated, and the burden of proving any and every such ground shall be upon the owner.”

3. In seeking to substantiate any grounds of appeal the Land Appeal Court directed in the matter of BT Dillon v Valuer-General (1986-87) 11 QLCR 231, at p. 233:

   “The Legislature has not given this Court any investigatory powers under the Valuation of Land Act. If the Appellant’s case is not strong enough in its own right to establish the values contended for or to disprove the Valuer-General’s values, the Court is not empowered of its own volition to probe the fairness or correctness of the Valuer-General’s values and by this means arrive at its own estimate of value.”

4. That constraint was also placed upon the Court when the Land Appeal Court directed in JL and I Qualischefski & Ors v Valuer-General (1979) 6 QLCR 167, at p.172:

   “Neither this court nor the Land Court in the subject jurisdiction may assume the role of an investigating tribunal requiring the Valuer-General to substantiate his case. This is in contradiction to jurisdiction conferred under the Land Act.

   In appeals of the nature of the subject, the onus which the appellant must assume is not an easy one to discharge without the assistance of a registered valuer who can lead evidence as to sales analyses and/or comparison with valuations made by the Valuer-General in respect of comparable properties.”

5. In seeking comparisons I am therefore left with Dr Streit’s sale at 2 Bona Vista Court at $107,250;  and Mr Dudek’s sales at 9 Olympic Drive (applied at $87,000), 6 Bona Vista Court (applied at $88,000), and 10A Mark Place (analysed at $149,000).  If I was to apply a conservative application of the sale price of 2 Bona Vista Court at say 89% (similar to 6 Bona Vista Court, I could conclude an applied rate for that sale at about $95,500, which is not inconsistent with Mr Dudek’s sale in the same street at 6 Bona Vista Court, which was applied at $88,000.  In any case both sales in Bona Vista Court have greater intrusions than the subject land, are much lower, and with no potential for views of the Bay.  While the 10A Mark Place sale was not applied because it is a late sale, and more relevant to the next valuation, a conservation application of that sale at say 95% would result in an unimproved value of about $141,500. 

6. If I turn then to Mr Dudek’s other comparisons I find that he has determined a 19% increase in the unimproved value from the previous figure of $100,000 in 1 October 1999.  While such an increase reflects a considerable change in the market’s appreciation of land values over a two year period, it is not inconsistent with the general market trend.  In that regard I note that large increases in themselves are not a reason for considering that an error has been made, so long as sales are available to support such a conclusion.  That was outlined by the Land Appeal Court in NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where it said at p.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.”

   The evidence supports such an increase.

Conclusion:

1. Having considered the whole of the evidence I am not persuaded that the appellants have proved their case.  The appeal is dismissed, and the unimproved value of Lot 28 on RP 138603 as determined by the Chief Executive in the sum of $119,000 is affirmed.

NG DIVETT

MEMBER OF THE LAND COURT