Thorburn v Chief Executive, Department of Natural Resources
[1997] QLC 111
•25 July 1997
|
BRISBANE
25 July 1997
Re: Appeal against Annual Valuation -
Valuation of Land Act 1944 -
Valuation Roll No: 127/19255 -
Local Government: Logan City -
(AV96-763).
Catherine Thorburn
v.
Chief Executive, Department of Natural Resources
D E C I S I O N
Background:
This matter relates to a property at 62 Talinga Drive, Park Ridge, described as Lot 3 on RP 131003, Parish of Mackenzie. The key issues relate to the comparison of comparable sales, the impact of traffic, relativity with adjoining land uses, and the percentage increase in the valuation.
The lot is used as a rural homesite, and is located about 1 km south of the Park Ridge Post Office, and about 0.5 kms south of the Park Ridge State High and Primary Schools. There is good access onto Talinga Drive which is a cul-de-sac comprising a single bitumen strip with graded earth drains, and provides access to the Mt Lindsay Highway. Power, telephone, town water, garbage disposal and postal services are available but sewerage is not available.
The subject is a regular-shaped inside lot facing south and set on the crest of a small ridge and has an area of 4.09 hectares. About half of the area of the lot is level, and then it falls gently to the rear towards the north. The subject is mostly cleared and has a slight cross-slope. The eastern boundary is reasonably timbered with seedling regrowth. The subject is zoned "Rural" under the City of Logan Town Plan of 17 December 1988, and effective at the date of valuation of 1 January 1996. The land is designated "Rural Residential" under the Strategic Plan of the City of Logan of 19 December 1994, thus allowing for potential subdivision into 1 hectare lots.
The Chief Executive, Department of Natural Resources, on 19 February 1996, issued a valuation at $170,000. Following an objection the Chief Executive, on 20 November 1996, confirmed the valuation at $170,000. The appellant has now appealed to the Court claiming that the valuation should more properly be $125,000.
Mr Joseph P Thorburn appeared and gave evidence for his mother, the appellant; and Mr C Hurman, Senior Valuer, appeared for the respondent, calling evidence from Mr William J Crothers, the Departmental Valuer responsible for determining the valuation.
Evidence:
Mr Thorburn argues that in the current state of the property market, the subject, if offered for sale, would not provide a reasonable return on the purchase price of the land plus the value of the improvements subsequently erected upon the subject. This, he argues, mitigates against the substantial increase in the unimproved valuation ($40,000) since the 1995 valuation. He bases that conclusion on the real estate agent's estimated likely sale price for the improved property at between $245,000 and $265,000, and the value of the dwelling at $120,000 (based upon what it is insured for), and a large Colour Bond shed and a dam.
He seeks support for his estimate in the Departmental brochure circularised with the new valuation notices, which indicate that, in the absence of comparable sales of unimproved land, then the valuation should be based upon the sale of improved properties, less the added value of the improvements. Mr Thorburn notes that there has been no sales of unimproved land in his immediate vicinity, and he maintains that a comparison of the subject on an improved basis is justified.
Mr Thorburn also argues that the impact of surrounding properties has not been adequately allowed for in the current valuation. He notes in particular the construction of a commercial child care centre in Talinga Drive, a light industry cabinet making establishment adjoining the subject to the western side, and a chicken farm opposite the subject. All of these detract from the amenity of the subject, which was the second house built in Talinga Drive (1979), and settled for the quietness of the area.
Under examination Mr Thorburn conceded that the chicken farm may have been under construction in 1979, but he confirmed that it had not commenced operations at that time. The cabinet maker and the child care centre had both been constructed during the last three years. He acknowledged that under the current "Rural" zoning for Talinga Drive, the differing land uses are allowable.
In respect of the impact of the child care centre, Mr Thorburn noted that traffic associated with the centre provided a hazard in that some drivers exceeded the speed limit for the area, and caused dust and rubbish to stray onto the subject. The child care centre is located on Lot 31 on RP 221678, and is on the opposite side of Talinga Drive opposite the eastern side of the subject.
In respect of the chicken farm on Lot 11 on RP 131003 opposite the subject, Mr Thorburn argues that dust and smell, more noticeably at night, are generated and impact the property. The chicken farm is operated in conjunction with an Ingham's chicken processing plant to the rear of the subject on Lot 1 on RP 144541. This lot is a large parcel of 29.96 hectares, and the processing plant is located at the western end near the Mt Lindsay Highway. Effluent from the plant discharges to a lake to the rear of the plant, which is used as the water supply to irrigate pastures for cattle grazing on the eastern parts of Lot 1 on RP 144541. The grazing area is to the rear of the subject.
Mr Crothers acknowledged that the chicken farm on Lot 11 on RP 131003 had been assessed by the Department under section 17 of the Valuation of Land Act as a use for "farming" purposes. During his discussions with Mr Loxton (the current owner) Mr Crothers determined that chickens were processed on a 10-week cycle, involving 7 weeks growing the chickens, and 3 weeks cleaning up the sheds. The chickens are picked up in one day between 8a.m. and 12 mid-day. The noise from the chicken farm was assessed as being less than that generated by the adjoining 90 children in the day care centre. It was also noted that the chicken processing plant to the north-west of the subject, when visited, did not appear to be causing any small or intrusion to the subject.
In respect of the cabinet maker on Lot 4 on RP 210935 to the west of the subject, Mr Thorburn argues that rubbish from the industrial bins occasionally intrudes onto the subject, but the major problem is some perceived interference and power surges to the radios on the subject caused, in the appellant's opinion, by machinery of the cabinet maker. While SEQEB has been unable to isolate the cause, the problem of interference continues. Mr Crothers noted that the dwelling on the subject is located towards the middle of the lot, is surrounded by trees, and therefore shielded from much of the activities in Talinga Drive.
Mr Thorburn provided estimates of two recent sales in Hubner Road about 2 kms east of the subject. Mr Crothers was aware of these being Lot 7 (Sale A) and Lot 9 (Sale B) on RP 161785. Both have areas of 2.343 hectares, both are battle-axe lots, and both sold to the Logan City Council. Lot 9 adjoins sporting fields and sold in the range of $180,000 to $200,000, and had a dwelling upon it. Lot 7 sold for approximately $140,000 and had a lesser building upon it. Mr Crothers agreed that Hubner Road was similar in character to Talinga Drive, and had similar traffic impacts. From discussions with Logan Council, Mr Crothers understands that the Council placed little value on the existing dwelling on Lot 9 which it intended to remove at some future time. The value of Lot 9 to the Council was that it adjoins existing sporting club facilities. Mr Thorburn argues that the building on Lot 9 is brick, in good condition, and is being used by the Park Ridge Sporting Association. Mr Crothers argues that the lower prices for Sales A and B reflect their battle-axe shape and their size.
In support of his valuation, Mr Crothers provided the following sales evidence:
•Sale 1 - (Koplick Road, Park Ridge - Lot 16 on RP 135029).
This sale is located about 4 kms south-east of the subject, is a regular-shaped inside lot, located on the crest of a ridge. It rises easily from south to north, and has a slight fall both to the east and the west. There is an old dwelling in disrepair upon the land, which has an area of 4.837 hectares and is zoned as "Rural". The sale is seen as superior to the subject in respect of size, and similar in respect of access, services and amenities, but inferior in location. Overall it is slightly inferior to the subject.
The sale sold in January 1996 for $195,000, which after allowing for improvements, provided an analysed unimproved value of $175,000, and an applied value of $165,000.
•Sale 2 - (Green Road, Park Ridge - Lot 34 on RP 103382)
The sale is located about 1.3 kms north of the subject, is hatchet-shaped, and is situated on the crest of a ridge, rising easily from south to north. The sale is smaller in size to the subject, similar in aspect but superior in location. Overall it is seen as superior to the subject.
The sale sold in July 1995 for $227,000, which, after allowing for improvements, provided an analysed unimproved value of $226,000, and an applied value of $190,000. It has an area of 2.87 hectares and is zoned as "Rural".
•Sale 3 - (Green Road, Park Ridge - Lot 27 on RP 103382)
This sale is located about 1.4 kms north of the subject, and is a regular-shaped inside lot, about half-way up a rise. The land is level with the road and rises easily to the rear from north to south. The sale is superior in location, but inferior in size and aspect. Overall the sale is seen as inferior to the subject.
The sale sold in January 1995 for $165,000, which after allowing for improvements, provided an analysed unimproved value of $163,000, and an applied value of $150,000. The sale has an area of 1.7 hectares and is zoned as "Rural A".
Mr Thorburn argues that Green Road is a superior area than Talinga Drive, being nearer to facilities and schools. Mr Crothers agrees but also argues that Sales 1, 2 and 3 are all purchased as single housesites. Mr Crothers had valued the subject under Section 17 as a single homesite, and therefore chose comparisons of sales for a similar purpose. On this basis he had excluded land purchased in globo for potential subdivision. Sales which he had therefore discounted included in globo land in Chambers Flat Road (Lot 6 on RP 94215 and Lot 13 on RP 82892) which when analysed provided unimproved values of from $60,000 to $65,000 per hectare for subdivisional purposes. His comparisons were therefore restricted to single rural residential homesites.
In respect of the significant rise in the valuation of the subject since the 1995 valuation ($40,000), Mr Crothers advised that Park Ridge had been a special area in the 1995 valuation, and had been valued lower than comparable large rural homesites elsewhere in the Logan City area. When the 1 January 1996 valuation was compared with sales evidence in the area, this had resulted in a large increase in order to retain correct relativity with surrounding areas.
The matter of relativity between other parcels in Talinga Drive was also raised by Mr Crothers who provided evidence of relativity (Exhibit 7) of Lot 3 on RP 221676, a 1.234 hectare battle-axe lot east of the subject, which sold for $110,000 about 1994 as a vacant site. Mr Crothers noted that Lot 3 on RP 221676 was also close by the chicken farm on Lot 11 on RP 131003, albeit it not as close as the subject. The unimproved values of Lot 11 on RP 131003 (chicken farm) at $87,000, and Lot 7 on RP 131003 (turf farm) at $87,000, were based on their uses being defined under Section 17(2) of the Act as "farming" activities, and therefore compared to rural sales.
In comparing surrounding properties near Sales 1 and 2, Mr Crothers noted that both sales had adjoining properties which were used for purposes similar to those adjoining the subject. Near to Sale 1 there was a small crop farm (Lot 14), and also a school (Lot 17). Adjoining Sale 2 there is a horse training facility and stables (Lot 11 on RP 216059). For these additional reasons, the sales are seen as comparable to the subject. He had also made allowance for all the disabilities of the subject in his determinations of the valuations.
In comparing other parcels on the "relativity map" (Exhibit 7), it is noted that relativities, allowing for special concessional section 17 values for certain parcels, indicate that the subject is fairly valued at $170,000, mainly because of its superior shape, size and location on the crest of a ridge.
Decision:
In considering the matter of the large percentage increase in the valuation since 1995 ($40,000), I note the evidence of Mr Hurman that the Park Ridge area had been afforded selected treatment in the 1995 valuation, which had now been brought into line with other areas in the Logan City area. While I can understand the concern of the appellant with such a significant rise in the valuation, I note also from precedent in other courts, that a large increase in itself is not evidence of some error in the valuation. I note for example in the decision of the Land Appeal Court in NR and PG Tow v. The Valuer-General (1978)(LAC) 5 QLCR 378, where the Court found 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. "
Clearly what is important is to ensure that any comparison of sales of comparable parcels is appropriate. In this matter, I note that Mr Thorburn has sought to compare the property on an improved basis, following his conclusion that sales of vacant land were not available in Talinga Drive. In this I note that he seeks support from the brochure supplied by the Department. However, it has long been established by the courts that where possible, sales of comparable vacant or near-vacant sites are preferred. I note for instance in PH Clough v. The Valuer-General - (1981-82) 8 QLCR 70 (LAC) at p.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. "
In respect of the use of appropriate sales, it is also important to ensure that the sales are soundly based. See R and NM Barnwell v. The Valuer-General (1989) 13 QLCR at p.16:
"It is desirable that valuations made for the purposes of the Valuation of Land Act of comparable lands should bear proper relativity, one to the other, if the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis. "
In examining Mr Thorburn's estimate by comparison with improved properties, I note that he has adopted an overall estimated sale price of $245,000 to $265,000 for the subject, from which he then seeks to subtract his estimated value of the dwelling at $120,000, which is the current insurance value of the improvement. While I am aware that Mr Thorburn is conscious to not confuse "replacement cost" with "added value", I believe he has over-relied upon the insurance estimate of the value of the dwelling. In seeking to ascertain improved value by such a method it is easy to conclude that most, if not all, of the change in value, either up or down, is attributed to changes in the value of the land and not also to the improvements. This was identified in O'Brien Nominee Pty Ltd v. The Valuer-General (1979)(LAC) 6 QLCR 280, where the Land Appeal Court found at p.284:
"In such circumstances it is unrealistic to conclude that land, the commodity basic to the enterprise, has a minus or nominal value. It is logical to assume that in times of adversity and depression, when purchasers pay less for properties as a going concern, that the lesser price attaches not only to the land component but also to the improvements. The question facing valuers in analysing improved sales in these circumstances is what value is fairly to be attributed to the improvements?
It appears to us that the only tenable approach is to abandon the traditional method of replacement cost as at sale date less depreciation and to adopt an 'added value' concept. "
While that case dealt with a major rural property in an unstable property market, the principle of variations in both the land and the improvements also applies to this case.
While Mr Thorburn sees some dissimilarities in the sales evidence supplied by Mr Crothers, he has not discredited them. Accordingly, I am more persuaded by the sales of vacant land than for any comparison of improvements.
In the matter of the impacts by surrounding land uses, I note that the chicken farm has been in existence since about 1979, and that the chicken processing plant has not been specifically raised as a problem by the appellant. I note also that Mr Crothers is well aware of the level of activities associated with both properties, and has in his opinion, provided for these impacts in the valuation. In view of the rural nature of the zoning and land uses, I believe there is no specific disabilities that have not been acknowledged and allowed for effectively.
In the matter of the child care centre, I note that this is an establishment of some size (90 children) and would generate significant traffic as parents drop off and pick up children. I have no doubt that some drivers would transgress the traffic rules, and discard rubbish from their vehicles. Parking in the street outside the subject, although not mentioned by the parties, is also likely to occur. However, Mr Thorburn made little reference to problems arising from the centre and, because of the open nature of Talinga Drive, and the setback of the dwelling and screening by timber on the subject, I do not see any reason for not accepting Mr Hurman's advice that the matter had been adequately covered.
In the matter of the cabinet maker, I note from the aerial photography (Exhibit 5), that both the dwelling on the subject, and the cabinet maker building, are well back from Talinga Drive, and are separated by timber on the subject. As SEQEB could come to no conclusion in respect of the radio interference and power surges, I also am unable to draw any conclusions of possible adverse impact upon the subject by the cabinet making business.
In the matter of the comparison of Sales A and B in Hubner Road by Mr Thorburn, I note that Mr Crothers was advised by Council officers that the sites were in effect purchased by Council because of their proximity to the adjoining sportsgrounds. If in fact the brick building on Lot 9 is to be demolished, and also if the Hardiplank building on Lot 7 is to be relocated for removal, the resulting unimproved values of Sales A and B, as battle-axe lots, may well be in line with the unimproved value of the subject. Because the details of Sales A and B were no more specific, I find they do not assist me much in this matter.
I turn then to the comparison of sales by Mr Crothers. It is agreed by both parties that Green Road is a superior locality because of its proximity to a shopping centre. While sewerage is available in the residential areas to the north of Green Road, it is not available for Sales 2 and 3. I also note that Mr Crothers has sought to compare Sales 1, 2 and 3 as single rural residential sites, which is his agreed method of valuing the subject under section 17(1) of the Act. The key comparison is really Sale 1 which is seen as slightly inferior to the subject at $165,000.
In this regard I turn to the Act and note:"17.(1). In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made. "
(2) In sub-section (1) -
"A single dwelling house" means -
(a)a dwelling used solely for habitation by not more than 1 family;"
I note also that the three sales and the subject have all been valued on a site basis, and not upon a per hectare basis, in accordance with AT Dewar v. The Valuer-General (1980-81)(LAC) 7 QLCR 112, at page 115:
"The market for rural homesites demonstrates that they are purchased on a site basis and not on a pro rata per hectare basis."
This was also established in R and MM Barnwell v. The Valuer-General 13 QLCR 13, where the Land Appeal Court found at page 18:
"It again is well established that when valuing homesites, then the best method of comparison is on a site to site basis. "
In the matter of relativities within Talinga Drive, I note that, other than where properties have been afforded special concessions under section 17(2) of the Act, all properties appear to have consistent relativity with the subject.
Summary:
On the evidence I find that, while there has been a significant rise in the valuations since the 1995 valuation, this is explained by the Departmental decision to hold back the values in Park Ridge in 1995. That the current valuations are now in line with recent sales evidence provided has not been discredited by the appellants.
Under section 33 of the Act, the onus of proof to discredit the determination by the Chief Executive rests squarely upon the appellant:
Section 33 of the Valuation of Land Act 1944:
"Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered. "
In summary, I believe the appellant has failed to prove her case that the Chief Executive has not taken into consideration all relevant factors affecting the valuation of the subject.
Conclusion:
After having considered the whole of the evidence, the appeal is dismissed and the unimproved value of Lot 3 on RP 131003, as determined by the Chief Executive, Department of Natural Resources, in the sum of $170,000 is affirmed.
(NG Divett)
Member of the Land Court
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