Tardent v Department of Natural Resources, Mines and Water
[2008] QLC 186
•3 October 2008
LAND COURT OF QUEENSLAND
CITATION: Tardent v Department of Natural Resources, Mines and Water [2008] QLC 0186 PARTIES: David G Tardent
(appellant)v. Chief Executive, Department of Natural Resources, Mines and Water
(respondent)FILE NO.: AV2007/0186 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation of land under the Valuation of Land Act 1944 DELIVERED ON: 3 October 2008 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Mr RS Jones ORDERS: 1. The appeal is allowed.
2. The unimproved value of Lot 4 on registered Plan 149677, Parish of Tallebudgera, County of Ward, as at 1 October 2006 is determined in the amount of Two Hundred and Thirty Thousand Dollars ($230,000).
CATCHWORDS: Unimproved value of land – s.3(4) Valuation of Land Act 1944 –access via encroachment – lack of access – impact on unimproved value of land. APPEARANCES: Mr DG Tardent, for the appellant.
Mr G Smith, Principal Legal Officer, Department of Natural Resources and Water, for the respondent.
Background:
Mr Tardent, the appellant, has appealed against the assessment of the unimproved value attributed to his land by the respondent, the Chief Executive, Department of Natural Resources and Water. The unimproved value determined by the respondent as at 1 October 2006 (effective 30 June 2007) is $420,000. In his notice of appeal the appellant states that the unimproved value of his land should be nil. The reasons for this are articulated in his notice of appeal in the following terms:
"The property has no legal access. Unable to obtain legal access in the foreseeable future and hence there is no market value of this property on which to base a valuation. …"
The subject land is located at 677 Tomewin Mountain Road, Currumbin Valley and is more properly described as Lot 4 on Registered Plan 149677, Parish of Tallebudgera, County of Ward. It is located approximately 31 km from the Southport Post Office in a southerly direction and contains an area of 4.62 hectares.
On the hearing of this appeal the appellant was self-represented. The respondent was legally represented by Mr G Smith, a Principal Legal Officer employed by the respondent.
Issues in the appeal
In reality there is only one issue in this appeal, namely the impact on the unimproved value of the land (if any) resulting from the problems associated with vehicular access to and from the land from Tomewin Mountain Road.
I say that this is the only real issue in the appeal because the appellant conceded that if his concerns about access are unfounded, then the respondent’s valuation of $420,000 is reasonable.
Some Relevant Statutory Provisions
Pursuant to s.33 of the Valuation of Land Act 1944 (VLA), the valuation appealed against is deemed to be correct and the appellant bears the burden of proving that it is wrong. In Brisbane City Council v The Valuer-General[1] Gibbs J, in delivering the leading judgment of the High Court, considered that the presumption in favour of the correctness of the statutory valuation may be rebutted where it can be shown that the valuation was based on a wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method.
[1](1977-78) 140 CLR 41 at 56-57; see also G E Cominos & Co Pty Ltd v Chief Executive, Department of Lands (1996-97) 16 QLCR 311 at 331-332 (LAC).
In this case the subject land was valued pursuant to s.3(1)(b) of the VLA. That is on the assumption that as at the date of valuation the improvements on the land did not exist. However, s.3(4) provides:
"(4)Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that—
(a)the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and
(b) such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used;
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made."
Vehicular Access
Tomewin Mountain Road is a steep winding two lane bitumen sealed carriageway with earth verges. The road frontage of the land is approximately 290 metres. For the most part the land slopes up very steeply from the road. In addition to being steep, the land is also heavily timbered along its road frontage.
Because of the topography of the land and the road which, generally speaking, rises from north to south, the access point to the land was designed to be as close as possible to its south-western corner. From the south western corner an internal access road of concrete construction then turns back in a northerly direction to the building sites on the land.
As I understand the evidence about this, access was negotiated on behalf of the appellant by his father with the Gold Coast City Council. This occurred some time in the mid 1980’s. Unfortunately however, the actual vehicular access point to the land, that is where it crosses from the road to private property, is in fact located on adjoining land being Lot 382 on Plan WD4389. That land is under the control of the Environmental Protection Agency of Queensland (EPA).
The access point to the land encroaches onto the land controlled by the EPA by about 53 square metres. That area is now cleared and covered in concrete and a rock retaining wall. There is no suggestion that the appellant acted in any untoward way concerning this access. In fact it would appear that the vehicle crossover from the land to the road was located after consultation between the appellant's father and a "councillor" of the Gold Coast City Council and built by council employees or employees of the Department of Main Roads.[2]
[2]Ex 4, p.58
The evidence of the appellant and of the surveyor and engineer called by him, Messrs Priest and Barton respectively, is clearly to the effect that the only sensible and practical access to the land is via the present encroachment on the EPA land.[3] Mr Hughes, the surveyor relied on by the respondent, did not seriously challenge this evidence but, not unreasonably, said that before any reasonable conclusions concerning vehicular access could be reached, engineering advice was required.
[3] See also surveying evidence of a Mr Leite at Ex 4, p.11 and p.13
The appellant did call an engineer, albeit now retired, Mr Barton.[4] In his report[5] he identified two alternate access scenarios if vehicular access had to be located wholly within the subject land. The cheapest of these options (option 1) was said to be $873,000. The respondent did not call any engineering evidence to rebut that of Mr Barton. However, Mr Smith carried out a quite vigorous cross-examination of Mr Barton during which it was revealed that he had made an error in his calculations concerning option 1 of about $480,000. This was a result of Mr Barton failing to bring into account certain calculations and adjustments concerning retaining wall works.[6] Bringing this figure into account his costings for scenario 1 should have been about $394,000.
[4] As at the date of the hearing Mr Priest was also retired as a licensed surveyor.
[5] Ex 3
[6] T52-T53
Mr Barton also conceded that his calculations involved a degree of guesswork and that his estimates might vary by in the order of plus or minus 20%. However, in this context Mr Barton did say that the reason for guesswork was, at least to some extent, because of the uniqueness and difficulty of the works required.[7] One further matter concerning Mr Barton's evidence needs to be addressed. In preparing his estimates he used current day costings. According to Mr Barton, as at the date of valuation, costs might have been between 10% and 20% less.[8]
[7] T41 to T42
[8] T56
At the conclusion of the evidence Mr Smith submitted that Mr Barton's evidence was so unreliable as to be essentially worthless. I disagree. There is no doubt that when being confronted with the access problems the subject land has, the prudent purchaser would seek surveying and engineering advice. Mr Barton's evidence is the only engineering evidence I have before me. I do however accept that Mr Barton's evidence should be treated with considerable caution and in this regard I will proceed on the basis of using his estimates in a conservative way. I intend to do that by reducing his scenario 1 costs (adjusted for the retaining walls) of about $394,000 by 20% to bring into account price rises since the date of valuation and by a further 20% to allow for other variations. Allowing for those adjustments results in an estimate for Mr Barton's scenario 1 vehicular access alternative of about $252,160.
In my opinion, on the evidence before me, the prudent purchaser would proceed on the basis that if the existing encroachment area over the EPA land could not be regularised, alternate arrangements would involve costs of in the order of $250,000. It follows that I reject Mr Brown's[9] evidence to the effect that modern engineering and construction techniques could find a satisfactory solution to the access problems of the land "without the need to encroach onto the adjoining reserve".[10] Unless, by a "satisfactory solution" Mr Brown intended to include expenditure of a quarter of a million dollars or more.
[9] Mr Brown is the valuer called on behalf of the respondent.
[10] Ex 5, p6
I should say two further things about this evidence of Mr Brown. First, he is a valuer and not an engineer. He readily conceded that his views about these matters would have to give way to that of a qualified engineer. Second, no alternatives to the solutions proposed by Mr Barton were seriously advanced on behalf of the respondent.
The Encroachment and the Valuation of Land Act 1944
Mr Brown originally assessed the unimproved value of the land at $450,000. This was later reduced to $420,000. The amount of $420,000 was assessed on the basis that notwithstanding the encroachment onto the adjoining land, there were no difficulties associated with vehicular access to and from the subject land. Mr Brown acknowledged that if he was wrong about this it would be necessary to make some adjustment to his valuation but he did not offer any specific figure or level of reduction.
Mr Smith argued that Mr Brown's valuation approach was justified, essentially for two reasons. First, such an approach was consistent with, if not required, by s.3(4) of the VLA. Second, when regard is had to the history associated with the encroachment there was no real risk that the present access arrangements would not continue.
I do not accept the construction of s.3(4), which is set out in full in paragraph [7] above, contended for on behalf of the respondent. Pursuant to s.3(4)(a) the valuer is to proceed on the assumption that the land can be lawfully used and continue to be so used for the purpose it was in fact being used as at the date of valuation, notwithstanding the requirement under s.3(1)(b) of the VLA that the valuer is to assume that as at that date, the improvements on the land do not exist. Section 3(4)(b) permits the valuer to proceed on the assumption that the improvements "on the land" can continue to be used (or made) so as to permit the land to be used for the purpose it was in fact being used for as at the date of valuation.[11] As was observed by the then President of this Court in Logform Industries Pty Ltd v Department of Lands[12], in many cases s.3(4) permits improved land to be valued on the basis that its actual use is lawful when in fact such use would be prohibited or otherwise unlawful if the land was unimproved.
[11] Stubberfield v Valuer-General (1988-89) 12 QLCR 328 at 335-336 per Carter J
[12] 15 QLCR 141 at 147-148 (per Trickett P)
In this case we are not relevantly concerned with improvements on the land but with works which are located on adjoining land without permission. Accordingly, s.3(4)(b) is of no assistance to the respondent. Section 3(4)(a) is also, in my opinion, not relevant on the facts of this case. There is no suggestion that the existing use as a rural house site is other than a lawful use and could be used for that purpose as at the date of valuation. Further, it could not be said that the existing use was somehow dependent on the use of the encroachment area. The evidence is that alternate access can be constructed wholly on the subject land but it would be very expensive.
There is nothing in s.3(4) which permits the valuer to proceed on the basis that any difficulties associated with the encroachment are somehow to be assumed to be non-existent.
Before turning to Mr Smith's second point I should address the two cases he referred me to in support of his argument. They are Beckingham & Anor v Department of Natural Resources, Mines and Energy[13] and Olm v Department of Natural Resources and Water[14].
[13] [2004] QLC 0018 (unreported decision of the Land Court)
[14] [2008] QLC 0004 (unreported decision of the Land Court)
In Beckingham, as I understand it, access to the subject land was via a road constructed through a State reserve. A search of the relevant files revealed that from the 1930s the relevant State departments considered the road to be the legitimate access to the land being valued.[15] On that basis the valuer in that case valued the land as having "deemed" access. After referring to the history of the access to the land the learned Member at paragraphs [25] and [26] said:
"[25]In respect of whether such 'deemed access' should be seen to have any special adverse impact upon an annual valuation, I turn to the matter of Chief Executive, Department of Natural Resources v Body Corporate for Golden Sands Community Title (AV99-280), 15 December 2000, unreported. In that matter the Land Appeal Court considered whether any allowance should be made in a valuation of an existing 17 storey older building site, where town planning restrictions now limited the height of any replacement building to only three storeys. The Land Appeal Court said at 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. … That is, the provision is concerned not with a different manner or quality of use emerging in the event of a new building being constructed, but with a continuation of the type of use previously carried out on the land.'
[26]The analogy in the current matter is that the existing 'deemed access' is to be valued as it exists for the subject land. If, in the future, that 'deemed access' were to be changed, then any impact upon the value of the subject land would be a matter for consideration at that future time."
[15] See at paras [4] to [6]
In Olm, access to the subject land was by way of a "private arrangement" with the adjoining owner. At paragraphs [47] to [50] the learned Member relevantly said in respect of that issue:
"[47]Specific reference needs to be made of one disability referred to by the appellants on one of the properties, that being the question of restricted access.
[48]The appellants have made the good point with respect to AV2005/0892, being the Grantham land, that access to the land is by way of private arrangement between the appellants and the adjoining owner to the east which allows access off Wells Road over about 30 metres of the neighbour’s adjoining farmland.
[49]Mr Isdale has referred me to the case of Logform Industries Pty Ltd v Chief Executive, Department of Lands. In Logform, Mr Trickett made valuable observations regarding s.3(4) of the VLA, which was previously known as s.12(1A) of the VLA. In Logform, Mr Trickett said:
'The legislative and judicial history of these provisions were explained by Carter J in Stubberfield v The Valuer-General (1988-89) 12 QLCR 328. At page 335 he said:-
"Section 12(1A) should be construed to mean that in assessing unimproved value the assumption may be made that the land may be lawfully used and continue to be lawfully used for the purpose for which it was in fact being used at the valuation date and the improvements thereon may continue to be used or may be made as required to enable the land to be continued to be so used."
In that case Carter J pointed out that section 12(1A) relates to the continued use of land and the continued use of improvements on land for the purpose of non-conforming users under a town planning scheme. It is usually in that context that this Court and the Land Appeal Court have applied this subsection. (For example, see Estate Leahy v The Valuer-General (1977) 4 QLCR 445 and Muir v The Valuer-General (1977) 4 QLCR 81). However, it has not been confined to such non-conforming uses and has been extended to analogous situations when land was controlled by the Beach Protection Authority (Ellis v The Valuer-General V80-13, 11 July 1980), flood prone land (Edwards v The Valuer-General V79-703, 31 July 1980) and undersized allotments (R.G.S. Properties v The Valuer-General V81-108, 10 March 1982). In each of those cases improved land could continue to be used for purposes which would be prohibited if the land was unimproved.'
[50]I agree with the submissions by Mr Isdale that the access issue for the Grantham land falls within the category of 'analogous situations' referred to by Mr Trickett in Logform. Accordingly, it is appropriate to value the Grantham land with the present access being used. Of course, should circumstances change in the future and the current access no longer be available, then that would be an appropriate fact to take into account at a future date. However, it is not appropriate for the Court to take into account the mere possibility that that situation may occur. The Court must deal with the situation with respect to the land as it existed at the date of valuation, that being 1 October 2004, and as at that date appropriate access to the Grantham land was in existence."
Each of these cases was of course decided on their own particular facts which are quite different to those now confronting me. At first blush the passages from the respective judgments set out above might offer some support for the construction of s.3(4) contended for by Mr Smith. However, I am more inclined to the view that the respective passages of the learned Members were directed specifically at what were the uncontroversial facts before them and were not meant to be statements of general principle. If however I am wrong about that, and the judgments should be construed as supporting the construction of s.3(4) of the VLA contended for by Mr Smith, I would respectfully disagree.In my opinion s.3(4) would not provide the answer to or override any proven difficulties or risks associated with the continuation of those access arrangements existing at the date of valuation.
I now turn to Mr Smith's second point concerning access. It is true that as at the date of the hearing of this appeal vehicular access to the land was gained via the encroachment. It is also true that up until more recently this access was largely uncontroversial. According to Mr Smith, this history strongly suggests that the prudent purchaser could proceed on the basis that the current access arrangements would continue uninterrupted into the future. I disagree.
The prudent purchaser would, on becoming aware of the encroachment situation, make due inquiries of the EPA and of the appellant. The evidence strongly suggests that if the prudent purchaser were to proceed on the basis suggested by Mr Smith that would have been a mistake.
Some time prior to November 2007 the appellant sought to regularise the access situation with the EPA. On 20 November 2007 that authority wrote to the appellant in the following terms:[16]
"Thank you for your letter dated 11 October 2007 regarding access to your property (Lot 4 RP 149677) through a section of Nicoll Scrub National Park in the Currumbin Valley.
Please note that the Nature Conservation Act 1992 does not provide for the grant of easements over national parks and therefore this option is not available.
If you wish to establish permanent legal access to Lot 4 RP 149677, I confirm the previous advice from the Queensland Parks and Wildlife Service (QPWS) that you should establish alternative legal access to your property as a matter of priority. In the interim, you may continue to use the road through Nicoll Scrub National Park to access Lot 4 RP 149677." (emphasis added)
[16] Ex 8
The offer concerning "interim" use of the encroachment area was not repeated in subsequent correspondence from the EPA. On 7 February 2008[17] the authority wrote to the appellant and advised:
"Irrespective of your views regarding the Land Act and/or Survey and Mapping Infrastructure Act, the provisions of the Nature Conservation Act 1992 prevail in regard to dealings with National Parks. Under those provisions, only Parliament has the power to alienate an area of National Park.
The position of this Agency in relation to this matter was outlined in the letter to you dated 20 November 2007, and this position has not changed.
Please advise the timeframe you propose to remove the encroachment from the National Park as a matter of priority." (emphasis added)
[17] Ex 4, p.20
On 2 May 2008 the position of the EPA was reaffirmed. On that date it wrote to the appellant in the following terms:[18]
"The position of this Agency in relation to the encroachment, as outlined in the Director-General's letter to you of 20 November 2007, is not changed by your latest correspondence.
Please advise the timeframe in which you propose to remove the encroachment from Nicoll Scrub National Park as a matter of priority." (emphasis added)
[18] Ex 4, p.59
I recognise that this correspondence post dates the relevant date of valuation here, being 1 October 2006. However, it is my opinion that this evidence can be relied on as being indicative of what the attitude of the EPA would have been as at the relevant date. A matter about which Mr Smith agreed.[19] In this context I should also note that the appellant, either through his own research or on advice from lawyers, had concluded that the usual legal remedies which might be relied on in such circumstances were not available in this case because the land was "State" land or "Government" land.[20] Mr Smith made no submissions contrary to the conclusions reached by the appellant in this regard.
[19] T113.
[20] for example, "statutory right of user" and relief in respect of encroachments (s.180 and S.182 of the Property Law Act 1974) and the doctrine of adverse possession
During his final address, Mr Smith submitted that the EPA would be likely to fail in any legal proceedings to have the encroachment removed. There might be some merit in this submission however, I do not consider that the prudent purchaser would proceed on that basis. He would have regard to the attitude of the EPA and proceed cautiously. Indeed there is evidence that some potential purchasers were not prepared to proceed with the purchase of the subject land and improvements until the encroachment issue had been resolved.[21]
[21] Ex 4, pp.29 and 30 - see also evidence of Mr McMiles at T 66
Conclusions
On balance it is my opinion that the prudent purchaser would proceed on the basis that if the encroachment issue could not be resolved alternate vehicular access could cost in the order of $250,000. The prudent purchaser would also adopt a conservative and cautious approach when considering the attitude of the EPA. In this context I accept the evidence of Mr McMiles to the effect that people are reluctant to purchase other people’s problems. In deciding what price to pay for the land the risks and costs associated with legal proceedings would also have to be factored in. However, the prudent purchaser would also be aware of the possibility that the matter may be capable of resolution without recourse to litigation. For example, some form of land exchange to provide for a better conservation outcome[22] might resolve the matter. However, even here the prudent purchaser would be cautious in the face of an apparent determined will on the part of the EPA to have the encroachment removed. And, he would also be aware that any land exchange would involve not only loss of land or monetary compensation but also professional fees such as legal and surveying fees. The EPA's "revocation" policy suggests that all costs associated with a land exchange would be borne by the appellant.[23] In this regard there is some evidence, albeit not entirely clear evidence, that the EPA might have indicated that it would be prepared to surrender 100 m² of its land for road purposes in return for 8,500 m² of the appellant's land.[24] There is no evidence one way or the other as to whether such an apparently disproportionate exchange rate could be justified, if in fact it was proposed or even seriously considered by the EPA.
[22] See Ex 10 at p.1 - Overview of EPA's "revocation" procedures.
[23] Ex 10, p.2 "Issues to be negotiated and resolved"
[24] T93
The evidence before me leads me to conclude that the prudent purchaser would not be prepared to pay anywhere near the valuation amount of $420,000 calculated by Mr Brown. As I have already said, that amount was arrived at on the basis that there are no difficulties associated with vehicular access of the land. That is far from the true situation.
However, the prudent bona fide seller contemplated in s.3(1)(b) of the VLA would not, in my opinion, accept a price based on the worst case scenario concerning access. In my opinion that scenario would involve a discount to offset the cost of alternate access, namely about $250,000. That eventuality, it seems to me, is the most unlikely result. On the material before me the removal of the encroachment would appear to be the worst result for all concerned. The EPA would be left with 53 m² of barren land and, in addition to the costs involved in rerouting access on the subject land, those works would lead to the destruction of thousands of square metres of heavily vegetated forest.[25] On the face of it, such consequences would hardly seem to be desirable conservation outcomes.
[25] evidence of Mr Barton, T31
In the circumstances of this appeal, the evidence and the conclusions I have reached based on that evidence, lead me to decide that a prudent vendor and prudent purchaser would settle on a price of $230,000. That involves a discount of about forty five percent of the valuation of Mr Brown. In my opinion, such a discount would be a fair compromise between the prudent purchaser seeking to minimise his risk of exposure on the purchase and the prudent vendor seeking to maximise his price, while having to recognise the very real problems associated with the existing access arrangements. In this context I do not accept Mr McMiles' evidence to the effect that land without legal vehicular access would be impossible to sell at any price.
Orders
1.The appeal is allowed.
2.The unimproved value of Lot 4 on registered Plan 149677, Parish of Tallebudgera, County of Ward, as at 1 October 2006 is determined in the amount of Two Hundred and Thirty Thousand Dollars ($230,000).
R S JONES
MEMBER OF THE LAND COURT
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