Whitman v Chief Executive, Department of Natural Resources
[1999] QLC 56
•28 May 1999
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LAND COURT,
BRISBANE
28 May 1999
Re: Appeal against Annual Valuation –
Valuation of Land Act 1944 –
Valuation Roll No 6081
Local Government: BCC-Brisbane.
(AV98-929).
Rosita GA Whitman
v.
Chief Executive, Department of Natural Resources
Background:
This matter relates to a property at 4 Jordan Terrace, Bowen Hills, and described as Lot 2 on RP 10096, Parish of North Brisbane. The subject land has an area of 506 square metres and is located about 1.5kms north-east of the Brisbane General Post Office, and about 250 metres east of the Bowen Hills Railway Station. Access to the subject from Jordan Terrace is restricted because of the steepness of the subject land, which is on the low side of Jordan Terrace, falling steeply about 16 metres towards the north. There is also about a 3 metre drop from the rear of the subject land to Folkestone Street, which adjoins the northern boundary of the subject. The subject land is zoned as “Residential B – RDA4” under the Town Plan of the Brisbane City Council at 13 June 1987, and current at the date of valuation at 1 October 1997.
Jordan Terrace and Folkestone Street are both bitumen sealed with concrete kerbing and channelling. All general services are available. The key issues are the nature of the land, comparison of sales and the use of land.
The Chief Executive, Department of Natural Resources, issued a valuation of the subject on 9 March 1998 at $130,000. Following an objection the Chief Executive confirmed that figure on 17 November 1998. The appellant has appealed that figure claiming the unimproved value should more properly be $115,000.
Mr PF Whitman, solicitor, appeared and gave evidence for the appellant. Mr J O’Rourke, Legal Officer, appeared for the respondent, calling evidence from Mr DR McKinnon, the Departmental Registered Valuer responsible for determining the valuation.
The Evidence:
(1)The Nature of the Land –
Mr Whitman argues that the difficult nature of the land is a major disability causing significant problems for building upon the land, or for obtaining vehicular access to the site. He notes that the subject lot is only 10 metres in width, and about 50 metres in depth, and is located about 3 metres below the Jordan Terrace road pavement, which has two different levels of footpath as a result of the steepness of the land. He argues that it is virtually impossible, or very expensive, to gain vehicular access to the existing dwelling from Jordan Terrace, and he cites the appellant’s experience of having to physically carry all building materials by hand to the site. However, he concedes that a double garage has been excavated at the northern end of the subject land, providing direct access to Folkestone Street.
Another matter of major concern to the appellant is the level of seepage and surface water runoff that flows across the subject after extended periods of some 3 to 4 days of heavy rainfall. Initially the appellant was faced with a problem of mud which formed as a result of the seepage through the steep hillside. Following improvements to the current building the appellant now frequently gets periods, after three days of continuous rain, where about 1.5 cms of water covers the floors underneath the dwelling. Special tile floors have now been necessary in order to live with the ongoing intrusion of water. Because of the increased rainwater runoff it has also been necessary to seek approval to drain the rainwater across the adjoining parcel to the west of the subject. He argues that any move to create a moisture barrier to prevent seepage intrusion would add considerably to normal building costs.
As a consequence of the very narrow width of the subject it was noted that there is a minor encroachment by the eaves of the dwelling on the adjoining parcel to the west of the subject (Lot 1). The actual location of that dwelling is about one-quarter of a metre from the dwelling upon the subject land (Lot 2). It was noted that the property to the west of the subject is owned by a family trust of the appellant, which was acquired for $68,000 in 1987. The subject land was acquired for $58,000 in 1982.
Mr Whitman concedes that, while the subject land is very steep, its sloping nature does provide good views of Perry Park and the adjoining commercial areas from its higher end, where the current dwelling is located. However, he also argues that vehicular access to Folkestone Street requires caution as that street is near traffic lights at the intersection of Abbotsford Road and Folkestone Street, and Folkestone Street is now a very busy connector road, particularly in peak traffic.
Use of the Land –
Mr Whitman draws comparisons with properties along Jordan Terrace to the east, which he argues are either of a more prestigious single residence nature, with better access available, or are for commercial purposes, such as the Endeavour Foundation Complex. Both of those uses he argues provides no fair comparison with the subject.
Mr McKinnon argues that he has valued the subject land as a single unit homesite, having considered its zoning for “Residential B – RDA4” purposes, and its small area of only 506 square metres. Under the Brisbane City Council Town Plan that zoning may be used for multi-unit purposes only if the land has a minimum area of 600 square metres, subject to the consent of Council or a minimum area of 800 square metres as of right. Because of the small size of the subject, Mr McKinnon has ignored any potential for higher use other than as a single residence site. Mr McKinnon also argues that the narrow 10-metre frontage of the subject land is typical for single subdivision lots in that area.
Mr Whitman argues that the area of the subject land is different to other nearby areas such as Newstead or New Farm. It is claimed that the area surrounding the subject comprises either large single residences or multiple lots (compared to more basic small single lots with a basic single house such as the subject), or for commercial uses. As such, he argues, it is not a fair comparison to relate the area to other areas which contain a wider mixture of residential types, and are better serviced by a “Hail and Ride” public bus service, and a better residential locality involving restaurants, shopping and supermarkets. Mr McKinnon argues that the lack of a public bus service such as at New Farm is counterbalanced by a railway station being only 250 metres from the subject land.
Comparison of sales
In support of his estimate of the unimproved value of the subject, Mr Whitman draws comparisons with the following improved sales:
· Sale 1 – (4 Jordan Terrace, Bowen Hills – Lot 2 on RP 10096)
This was the sale of the subject property for $58,000 in 1982. The sale of the subject involved a 1920’s style building.
· Sale 2 – (2 Jordan Terrace, Bowen Hills – Lot 1 on RP 10096)
This was the sale of the adjoining property to the west of the subject for $68,000 in 1987. The sale has an area of 506 square metres and is occupied by a similar aged dwelling which encroaches upon both Cintra Street and the subject land. The sale fronts Jordan Terrace, Cintra Street and Folkestone Street.
Mr Whitman was unable to provide any estimate of the added value of the improvements upon either Sale 1 or Sale 2, although he suggested that an estimate of the replacement cost of the dwelling would result in quite low estimates of the residual land component.
In support of his valuation, Mr McKinnon provided the following sales of vacant or near vacant land:
· Sale 1 – (528A Lower Bowen Terrace, New Farm – Lot 8 on RP 911372)
This is a 298 square metre lot zoned as “Medium Density Living – New Farm/Teneriffe Hill Development Control Plan”. The sale is located in New Farm about 1.4 kms south-east of the subject. Access is via Fuljames Lane which is a narrow (10 metre wide) lane. There is also pedestrian access to Bowen Terrace via an easement over Lot 7 on RP 911372. The sale is inferior to the subject due to size and area.
The sale sold in June 1997 for $110,000, which after allowing for improvements, was analysed at $108,500, and applied at $101,000.
· Sale 2 – (284 Harcourt Street, New Farm – Lot 56 on RP 9263)
This is a 445 square metre lot zoned similar to Sale 1, and located about 600 metres south-east of the subject. The sale is elevated with two-street frontages, falling from Harcourt Street to Small Street at the rear. The sale is seen as superior to the subject due to its location.
The sale sold in June 1997 for $176,000, which after allowing for improvements was analysed at $174,650 and applied at $158,000.
Mr Whitman acknowledges that he has no personal knowledge of Mr McKinnon’s sales, but relies upon his general knowledge of the New Farm area to conclude that both sales provide no real comparison with the subject land. He relies upon his Sales 1 and 2 and, while he acknowledges that those sales are out of date, he believes that the percentage change in the market has not increased to the level suggested by the respondent.
Mr Whitman also notes that both of Mr McKinnon’s sales are not as steep as the subject land, and both have easier access to those sales. It was noted that Sale 1 was in fact quite flat in topography, and is near to a bowling green. Sale 2 falls from east to west, and is not as steep as the subject, although it is more elevated. Access to Sale 1 is difficult because of the narrow nature of the Fuljames Lane, and the small area of the sale, which inhibits movement of a motor vehicle.
Decision:
(1)The Nature of the Land –
In considering the evidence I note first the nature of the land, and find that both parties agree that the land is very steep and provides very little opportunity for vehicular access from Jordan Terrace. There is however access available from Folkestone Street. There is also no challenge that the subject land is subjected to periodic surface seepage following prolonged rainfall, although those disabilities need to be balanced against the views that may be obtained because of the steeply sloping nature of the subject. The balancing of those features needs to be seen in the perspective of the comparison of sales provided.
There is also some impact upon the value of the subject land as a result of the encroachment across the western boundary by the residence on Lot 1 to the west of the subject. Mr McKinnon concedes that he was unaware of that encroachment and had not provided for any such impact in his valuation.
(2) The Use of the Land –
Both parties agree that the value of the land is to be determined on its basis as a single residence site. Mr McKinnon has adopted the appropriate assessment for that purpose, in view of the small area of the parcel.
(3) The Method of Valuation –
In assessing his valuation by comparisons with comparable sales of vacant parcels, Mr McKinnon has followed the method generally favoured by the courts. I note for instance in the matter of PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, the Land Appeal Court said 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. ”
Such an approach was also followed by the Land Appeal Court in NR and PG Tow v. The Valuer-General (1978) 5 QLCR 378 where it said at page 381:
“Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties. ”
(Also in R and MM Barnwell v. The Valuer-General (1990-91) 13 QLCR 13 at page 17.)
In seeking comparisons on the basis of improved sales, I note that Mr Whitman has only sought to analyse his sales to ascertain the added value of the improvements, by some reference to the replacement cost of those buildings. However the use of replacement value, less some component for depreciation of those improvements, can often lead to an incorrect conclusion, particularly in a changing market situation. I note for instance the findings of the President of this Court in O’Brien Nominee Pty Ltd v. The Valuer-General (1979) 6 QLCR 280 at page 284:
“The basic properties have sold at prices considerably below the value of the improvements assessed on the traditional method of replacement cost less accrued depreciation.
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. ”
The difficulty for Mr Whitman in this matter is to determine the “added value” of the improvements. The appropriate method of determining the value of improvements would be to compare the value of the land with other sales of vacant land, and to deduct that figure from the total value. Because of these uncertainties, where sales of vacant land exist, they are preferred in determining unimproved value.
I note also that Mr Whitman seeks support from his sales in 1982 and 1987 claiming that the percentage change in the market has been considerably less than the figure currently concluded by the respondent. However I am reminded that the Land Appeal Court also found in NR and PG Tow v. The Valuer-General (1978) 5 QLCR 378, at page 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 key to this matter therefore lies not in the nature of the change in the valuation, but rather whether the sales adopted have been reasonably analysed by the respondent.
(4)Comparison of Sales -
On balance I find that Mr McKinnon has used the most appropriate method of comparing sales of vacant lands, and has concluded that the subject land, with its distinctive features, has a value between the applied values of Sale 1 ($101,000) and Sale 2 ($158,000). I find that Mr McKinnon has considered all of the disabilities of the subject, with the exception of the impact of the encroachment along the western boundary.
I note also that section 33 of the Act dictates that the unimproved value is determined to be correct unless proved to the contrary. I note further that the onus to prove the grounds of the appeal fall upon the appellant under section 45(4) of the Act. The need to demonstrate that the Chief Executive has made some error in method or calculation was established in Brisbane City Council v. The Valuer-General (1977-78) 140 CLR 41, where Gibbs J said at page 56:
“In my opinion once it is shown that in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact, the presumption created by s.13(7) is rebutted.” (now section 33).
I am also conscious that any uncertainty in applying the analysed sales should lean towards the appellant’s benefit in revenue cases, as directed by the High Court of Australia in Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of South Australia Limited and Others (1946-47) 74 CLR 358, where Dixon J said at page 373:
“I have had the advantage of reading the judgment prepared by Williams J and agree in it. I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate. ”
However in coming to any conclusion I am reminded that it is not within the powers of this Court to probe the fairness or correctness of the respondent’s unimproved values. Indeed section 33 of the Valuation of Land Act specifically dictates to the contrary. That principle was followed in BT Dillon v. Valuer-General (1986-87) 11 QLCR 231, where the Land Appeal Court said at page 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 the value.”
Summary:
In the end, while I believe that there is room for some fresh evaluation of the impact of the encroachment upon the subject land, the appellant has not adequately proved that the respondent has applied a wrong principle, or made a serious error.
Conclusion:
Having considered the whole of the evidence, I am not persuaded that the appellant has proved her case. The appeal is dismissed, and the unimproved value of Lot 2 on RP 10096 as determined by the Chief Executive in the sum of $130,000 is affirmed.
Member of the Land Court
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