Thomas v Chief Executive, Department of Natural Resources

[1998] QLC 99

[1998] QLC 99

 

LAND COURT,

BRISBANE

11 September 1998

Re:     Determination of Unimproved Value -
  City of Brisbane - Division of Moggill.
  (AV97-341).

JB Thomas
v.
Chief Executive, Department of Natural Resources

D E C I S I O N

This is an appeal against the determination by the Chief Executive, Department of Natural Resources, of an unimproved value of $155,000 for a 3.252ha parcel of land described as Lots 11 to 13 on RP 95164, Parish of Moggill, and which is situated at 2 Stratford Street (cnr Livesay Road), Priors Pocket, in the suburb of Moggill. The land is zoned “Non-Urban” within the Town Planning Scheme for the City of Brisbane and is used by the appellant as a single unit rural homesite. The relevant date for the determination of the unimproved value is 1 October 1996. The appellant contends within the notice of appeal for an unimproved value of $130,000. While there are three separately surveyed lots in the parcel, the land has been valued by the Chief Executive under the provisions of section 17(1) of the Valuation of Land Act 1944 as land used for the purpose of a single dwelling house.
           Michael Joseph Slater, who is a practising Registered Valuer, was called by the appellant.  Mr Slater has valued the land in the sum contended for in the notice of appeal ($130,000).  He tells us through his tendered valuation document that the land is situated 24 kms from the City of Brisbane in a relatively discrete pocket of rural residential development.  It is about 4kms from local shopping at Bellbowrie, and 13 kms from Kenmore.  There is good road access to the land, which at the Stratford Street frontage is at grade with the road and then falls gently to the north-west for about 60 metres, after which it falls quite steeply to a broad gully which drains the lands to the west.  Mr Slater assesses that the steeper land on the parcel makes up for about half of its area and the gully about 25% of its area.  It is perhaps important to be noted here, as will become apparent later in this decision, that the subject land is not a Brisbane River frontage site.  Mr Slater says that while the land is included within the “Non-Urban” zone, the Strategic Plan of the Brisbane City Council designates it as Category A with it identified as “Natural or semi-rural areas having high value for habitat conservation, landscape protection or water quality protection”.  Mr Slater suggests that the Category A intent is that the lands within that classification are to be retained in their natural or semi-natural state.
           Mr Slater told the Court that there is little direct vacant sales evidence in the locality reflecting the value of a site of the size of the subject land.  He says that the bulk of the adjoining suburb of Anstead is zoned “Rural Residential” and any sales of relatively large sites in this area reflect prices with a potential for further subdivision.  Mr Slater stresses that it is unrealistic to attempt to draw sales evidence from suburbs further afield such as Pullenvale or Brookfield since he considers there is a clearly defined difference in the property markets within those areas and within the suburb of Moggill.
           Mr Slater schedules two sales of rural residential sites in Moggill as a basis for his valuation but points out that the sale price of both of these parcels are influenced by their proximity and adjacency to the Brisbane River.  Details of the sales are:

Sale A - A 4-hectare parcel situated in Cantwell Street, Anstead - Corbett to O’Toole on 18 April 1995 for $178,500 - Chief Executive's applied value $160,000.
Sale B - A 5.26 hectare parcel situated in Priors Pocket Road, Moggill - Sinnamon to Robinson Investments Pty Ltd on 11 December 1996 for $250,000 - Chief Executive’s applied value $235,000.

Mr Slater told us that Sale A land has views of the Brisbane River and is separated from the river by a strip of land in the ownership of the Brisbane City Council, while Sale B land has direct frontage to the river.  He suggests that a premium price is paid for river frontage property and that it is generally accepted that the premium price being paid for river frontage over non-river frontage land is increasing.  In support of this contention, Mr Slater has annexed to his valuation report a map upon which he shows a number of river frontage and non-river frontage sale site prices in Lather Road, Moggill, and on the southern side of the river in Curlew Place and in the suburb of Karalee.  I do not feel the need to tabulate this sales evidence here as I can say that the proposition that there is a premium price paid for river frontage land in comparison with non-river frontage land is widely accepted.  But what was tested in the case was Mr Slater’s suggestion that this evidence does lead him to conclude that it is reasonable in the process of the application of the sale prices to adopt unimproved value margins of 80% for Sale A land and 100% for Sale B land to allow for the non-river frontage factor in his valuation of the subject land.  It follows on these calculations that if Sale A land value margin is 80%, a non-river value would be $100,000 and as Mr Slater considers there is a superior house site on the subject land in comparison with that available on Sale A parcel, then he concludes that a value of $130,000 for the subject land is reasonable in relation to Sale A sale price. 
           Using a similar mode of comparison, and using a margin of 100% for the direct river frontage of Sale B land, Mr Slater suggests that a reasonable non-river unimproved value for Sale B land would be $117,500.  But Mr Slater points out that Sale B was to an adjoining owner, and is larger in area than is the subject land.  If the value of the additional area is offset against what Mr Slater considers is the superior access to the subject land, and leaving aside the likely margin paid by an adjoining owner, then Mr Slater believes an application of an unimproved value of $130,000 to the subject land again is reasonable.  Mr Slater quite properly concedes that this method of valuation has its problems, but stresses that the use of it was the best he could do in the circumstances with the lack of directly comparable sales evidence.
           Mr Slater submits that an unimproved value of $155,000 for the subject land is also excessive on the basis of unimproved value relativity.  He produced a map showing the unimproved values placed upon a number of parcels in the subject area, but in the absence of specific evidence as to the relative quality of these blocks in comparison with that of the subject land, I am unable to gain much assistance from this evidence.
           Mr Slater points out that the unimproved value of the subject land has increased incrementally since 1990 when it was valued at $90,500.  In 1992 it was valued at $95,000 and, since that time, incremental values have been $116,000 (1993), $133,000 (1994), $140,000 (1995) and now $155,000.  Now apart from such attributes as blocks with river frontages, proximity to facilities and better than average views, Mr Slater says the market for acreage blocks on the outskirts of Brisbane has been poor since 1991, with minimal improvement in prices.  In support of this proposition, Mr Slater refers in particular to the sale of Lot 2 on RP 813587 with an area of 1.113 ha situated in Lather Road in February 1992 for $120,000 and its resale in December 1997 for $127,000.  Accordingly, Mr Slater is of the opinion that there is no apparent reason why the valuation of the subject land should have been increased to the extent it was for the 1 October 1996 relevant date valuation since it appeared to him to be the only parcel in the Priors Pocket area to have been increased in value between the 1 January 1996 relevant date valuation and the 1 October 1996 relevant date valuation.
           Mr Slater also told us that he is concerned that the valuation of the subject land has over time been increased disproportionately with that of Lot 14 on RP 95164 which is situated in Stratford Street adjoining the subject parcel, and with that of Lot 1 on RP 863635 which is situated nearby in Priors Pocket Road.  Lot 14 is a much smaller block with an area of 1.017 hectares, while Lot 1 contains 4.002 hectares.  The valuations of Lot 1 over time have been $190,000 (1990), $240,000 (1992), $275,000 (1993), $210,000 (1995), and also $210,000 (1996).  Lot 14 has been valued at $70,000 (1990), $84,000 (1992), $97,000 (1993), $102,000 (1995) and also $102,000 (1996).
           The valuation under appeal was made by Departmental Registered Valuer Uday Singh who describes the nature of the subject land understandably similarly as did Mr Slater, having an elevation of about 34 metres AHD in the southern portion falling gently and moderately to the north into a dry watercourse with an elevation of about 12 metres AHD, about 160 metres from the south-east boundary.  Mr Singh suggests that the terrain then rises steeply to the northern boundary at an elevation of about 20 metres AHD.  Mr Singh says there is a well-drained house site in the southern portion of the land which provides a pleasant rural outlook to the north and south and that the land is situated in a rural residential locality with substantial quality homes.
           Mr Singh has made the valuation of the subject land on the following sales evidence, with the following elements of comparison with the subject land:

Sale 1 - Lot 14 on RP 817250 - 4.367 hectares - Australian Developments to Dalman, James on 21 August 1996 for $155,000 - analysed unimproved value $152,000 - applied unimproved value $150,000 - situation Gold Creek Road, Brookfield - zoning “Non-Urban”.

Mr Singh describes this sale land as being of medium elevation with a house site with a view to the east located centrally on the site from where the terrain falls steeply to the east and the west.  It is Mr Singh’s view that overall the sale land is inferior to the subject land and he points out that the whole of it is covered under a vegetation protection order.  Mr Singh says out that one of the problems with this sale land is that it has a very long access easement which winds through two or three properties.  From either side of the building site the land falls very, very steeply into a heavily timbered area and Mr Singh describes it as being a remote type of block particularly in respect of amenities.

Sale 2 - Lot 10 on RP 806843 - 4 hectares - Corbett to O’Toole on 18 April 1995 for $178,500 - analysed unimproved value $173,500 - applied unimproved value $160,000 - situation Cantwell Street, Anstead - zoning “Non-Urban”.

Mr Singh descibes this sale site as being of medium elevation in the northern portion where it is suitable for a house site, from where the terrain falls moderately and steeply towards the south and the west.  He says there are several deep gullies on the site running from west to east.  He considers this sale land to be superior to the subject land and again points out that the whole of it is under a vegetation protection order.  Mr Singh says that this sale land has a superior view to that available from the subject land but it also has deeper gullies and steeper slopes and is more remotely situated from amenities than is the subject land.

Sale 3 - Lot 2 on RP 121347 - 4.439 hectares - Lisala Pty Ltd to Kemp, Mohr on 05 July 1996 for $145,000 - analysed unimproved value $143,000 - applied unimproved value $130,000 - situation Upper Brookfield Road, Upper Brookfield - zoning “Non-Urban”.

Mr Singh describes this sale site as rising steeply from the road to the rear boundary and with difficult access.  Mr Singh says that to access the building site on the block, a creek has to be crossed.  He says the view available from the site is extremely limited because on the other side of the road the terrain rises, and due to steepness the building site itself is fairly difficult.  Mr Singh regards this sale land to be inferior to the subject land.  It is also subject to a vegetation protection order.
           Now before proceeding any further with this decision it is to be observed that Mr Singh’s Sale 2 is the same sale as one of the sales relied upon by Mr Slater (Sale A).  It is Mr Singh’s opinion that his Sale 2 is the most comparable of the sales relied upon by him.
           Mr Singh expressed the opinion that Mr Slater’s application of a valuation of $130,000 to the subject land is far too low in comparison with his analysed unimproved value of $160,000 from his Sale 2.  He is of the view that Mr Slater’s method of allowing a margin of 80% for a non-riverfront valuation factor for the application of the sale to the subject land involves a practice that is fraught with hypotheticals, and he says that the best method of comparison is to apply the sale directly without discounting.  Mr Singh also says that the river frontage and non-river frontage sales evidence produced by Mr Slater to reflect value margins of 80% and 100% has to be properly examined, as he suggests the river frontage sale blocks in Lather Road do not only have river frontage advantage, but have the advantage of better terrain with a ridge running across them affording a far superior view than that which is available from the non river frontage lots which run into a gully.
           Mr Singh does not believe that any reliance can be placed upon Mr Slater’s Sale B as it is simply not comparable with the subject land since it has a direct river frontage.
           Mr Singh does not agree with  of Mr Slater’s opinion about the differing land markets in Brookfield as compared with those in Moggill.  He sees them as being fairly similar for blocks with similar advantages and disadvantages.
           Mr Singh told us that the computer print-out of the valuations put in evidence of Lot 1 on RP 863635 in Priors Pocket Road do not reveal that the land was subdivided between 1993 and 1995 when the valuation dropped from $275,000 to $210,000.  Until subdivided, the area of the parcel was a little over 8 hectares.  Mr Singh was the valuer who adjusted the valuation consequent upon the subdivision of it. 
           Mr Singh acknowledges that the value of the subject land had increased since 1995, but he pointed out in evidence that during the process of revaluation as at 1 October 1996, he noticed that the larger sites in the area had certain levels of value and it became clear to him that the subject 3-hectare site had somehow been left behind in valuation either by error or lack of time to go through the process of valuation thoroughly, and on the basis of the sales which were available, and in relativity with the valuation of other larger sites, he felt it was necessary to bring the unimproved value of the subject land into line with other 3 and 4-hectare sites.  This, he says, is the reason for the change in unimproved value relativity between that for the subject land and for other sites in the area.  Mr Singh told us that the valuation of the subject land was not the only one in which he changed the relativity, and cited in evidence several examples where he changed the valuation relativity by making valuation increases.
           Mr Singh told us that almost all of the subject property is subject to a Brisbane City Council vegetation protection order.  Areas excluded are the housesite area and a flat area along a creek.  Mr Singh does not see the vegetation protection order as affecting the unimproved value of the subject land as a rural residential housesite, but in any event, any effect the vegetation protection order may have on the unimproved value of the subject land would be reflected by his sales evidence, as all three sale sites are also subject to vegetation protection orders.
           In the light of the evidence before the Court, I cannot see how the appellant can be successful in discharging the onus resting upon him in accordance with the provisions of section 45(4) of the Valuation of Land Act 1994. Firstly, I might comment that I acknowledge and am in agreement with Mr Singh’s criticism of the method of the application of sales evidence used by Mr Slater. Certainly there are always difficulties with this method where allowances or discount adjustments are made to sale prices before their application as basic evidence of the value of a subject site. Although Mr Slater relied upon river frontage sales viz-a-viz non-river frontage sales to support his discounting (or margin) factors of 80% and 100%, I am not satisfied these factors are supported by the evidence, particularly that of the sales in Lather Road in view of Mr Singh’s remarks about the topographical features of the river frontage sites (with better views) in comparison with those available from the non-river frontage blocks. It any case, it is well established that a valuation exercise based on discounting of sales evidence is a hazardous one. The preferable method is the direct application of analysed unimproved values derived from sales of comparable parcels.

Now in this respect, it is obvious that the best sales evidence before the Court is Mr Slater’s Sale A and Mr Singh’s Sale 2 (the same sale) situated in Cantwell Street, Anstead.  Although it is separated from the river only by a Brisbane City Council owned access restriction strip, the evidence satisfies me that there are no extensive views of the river available from the best housesite on the land - Mr Singh calls it “glimpses of the river through the trees”.  It follows that I do not regard the sale land as having a river aspect warranting the adoption of a margin of 80%  (equivalent to a discount factor of 40%) adopted by Mr Slater before its application to the valuation of the subject land.  Further, the sale land on the evidence is broken by gullies as is the subject land and this adds to its comparability.  I have no doubt that Mr Slater’s application of an unimproved value of $130,000 derived from this sale is too low.  I prefer both Mr Singh’s method of application and his derived unimproved value for the subject land.  Additionally, although Mr Slater says that sales evidence extracted from the Brookfield area is not fairly applicable to the subject Moggill area, prima facie Mr Singh’s Sales 1 and 3, particularly taking into consideration such factors as location in respect of amenities, difficulties of access and topography, do not support Mr Slater’s valuation of $130,000 for the subject land.  It is too low.

I agree with Mr Singh in that Mr Slater’s Sale B, being a direct Brisbane River frontage block, is simply not comparable with the subject land and does not constitute any reliable evidence as to the value of the subject land.

I now consider the submission made on behalf of the appellant that the valuation of the subject land is excessive since looked at as a whole, the only properties in the area for which the values have been increased are properties with a larger area than 1 hectare.  As Mr Singh has explained, during the course of the revaluation of the area, it became apparent to him that previous valuations of the subject land were lacking in relativity with the unimproved values of other 3 to 4 hectare sites in the locality.  As a result, and based on the sales evidence, he decided to change relativities by increasing the value of the subject land, and of other sites in the general locality so as to provide better relativity in the valuations.  Now no criticism can be made of him for so doing.  This is so because authorities have established that valuation relativities do change over time. 
           In Re: WM and TJ Fischer v. The Valuer-General, (1983) 9 QLCR 44, the Land Appeal Court at p.46 said:

“Whilst maintenance of correct relativity is of considerable importance for rating or revenue type valuations, .we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence.  ”

Further in Re: R and MM Barnwell v. The Valuer-General (1990-91) 13 QLCR, the Land Appeal Court, at pages 17 had this to say:-

“It has been well recognised over the years that previously established relativity in unimproved values can and does change from valuation to valuation.  If there was no justification for a change in relativity, the valuer’s task would be very simple in that all that would be required to establish value would be accomplished by the use of an adjusting formula.  This, of course, is undesirable.  ”

The remaining contention by the appellant is that the subject valuation is excessive as it has been increased over time at a greater rate (or percentage) than neighbouring or nearby parcels.  Now what has to be determined in cases of this nature is the unimproved value of the subject land as at a specific relevant date - in this case 1 October 1996.  It has often been said in this jurisdiction that references to percentage increases in valuation upon the revaluation of lands within a local authority area does not constitute a valid basis of appeal.  It is the value of the subject parcel which has to be determined and this is best done in relation to comparable basic sales evidence.  I have already reviewed the sales evidence in this case, and I am not influenced in this decision by the submissions based on unimproved value increases.

For the aforementioned reasons, I cannot support the appeal.  It is dismissed, and the unimproved value of Lots 11 - 13 on RP 95164, Parish of Moggill, as determined by the respondent Chief Executive in the sum of $155,000, is affirmed.

(CH Carter)
Member of the Land Court