Wilson v Chief Executive, Department of Lands
[1994] QLAC 2
•17 February 1994
|
Re: Appeal against a decision of the Land Court
Determination of unimproved value
Valuation of Land Act 1944 (AV91-671)
Barry George Wilson and Annette Kathleen Wilson
v.
The Chief Executive, Department of Lands
(Delivered at Brisbane this Seventeenth day of February, 1994)
JUDGMENT
This is an appeal by Mr and Mrs Wilson (the owners) against a decision of the Land Court given on 14th August, 1992 which allowed an appeal by the owners against a determination of The Chief Executive, Department of Lands (the respondent) of the unimproved value for rating and taxing purposes of the owners' residential allotment situated at 45 Blackwood Avenue, Morningside.
The valuation was made under the provisions of the Valuation of Land Act 1944 (The Act). The date as at which the land was required to be valued is 31st March, 1990. The relevant valuation is an annual valuation and has force and effect for a period of twelve months commencing on 30th June next following its making (ss 16B and 16C - The Act). The valuation which issued pursuant to the provisions of s 16E of The Act was in the sum of $42,500. The owners objected against the valuation contending that the value should be determined in the sum of $25,000. The objection was allowed and the value determined at $35,000. The owners appealed that decision. The appeal to the Land Court was brought on the following grounds -(a)valuation is not in correct relativity with surrounding properties;
(b) valuation is not in line with recent sales evidence;
(c) valuation is excessive and unreasonable;
(d) valuation is wrong in law and contrary to law;(e)there are various factors which the appellants believe affect the valuation of the subject land.
Numerous factors were stated in and considered by the lower Court under the last ground including the effects of aircraft, rainwater runoff, fill and drainage.
The grounds of appeal which are pursued before this Court are -
(a) aircraft noise and safety;
(b) water and flooding problems;
(c) land improvements;
(d) relativity;
(e) accountability.
The last of these grounds is put as a consequence of the submissions made in respect of relativity.
The owners were successful in satisfying the lower Court that the respondent had not fully appreciated the nature and extent of the fill placed on the land by the owners for which a further allowance of $1,000 was made and the unimproved value determined at $34,000.
The subject land is described as Lot 1 on RP 113863, Parish of Bulimba. It has an area of 883 m2 with a frontage to Blackwood Avenue and rear access to Windemere Avenue. It is situated within 5.5 kilometres (radial distance) of the Brisbane GPO and is serviced with bitumen streets, concrete kerbing and channelling, reticulated water, sewerage, electricity, postal, telephone and rubbish collection. A Brisbane City Council bus service runs along Richmond Road which is one lot to the north of the allotment. The lot is zoned and used for single unit residential purposes and is of hatchet shape. It is situated at the bottom of a depression and in its natural state with land to the east and west contained a gully. The land was then held by the Brisbane City Council. Prior to the lot being sold by the Council a 1350 mm diameter concrete storm water pipe was placed underground generally in parallel with the northern boundary. Drainage inverts were placed in Blackwood Avenue in front of the lot.
The owners purchased the land not from Brisbane City Council but in the state in which it left Brisbane City Council. It was to be the site of their residence. They proceeded to fill and drain the land. They put a high set home on the site and laid concrete driveways, agricultural drains, concrete paths and so forth. Much time and effort went into the development of the lot in a manner they thought best with the limited resources available to them. In the course of time the city has continued to expand with the demands of increased population, technology and transport. Those demands have included the provision of the new Brisbane Airport. A major flight path passes about 370 metres to the west of the lot. Aircraft are noisy things. This became a new experience for the owners. It is a matter which has disturbed them and others in the southern suburbs. The flight path however is a fact. The question is the relevance and import this feature has upon the value of land affected by it.
Value in this context is unimproved value which is defined by The Act in relation to improved land (which is the subject land) as:
"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" (s 12 (1) b)
This provision was explained by the Full Court in Stubberfield v. The Valuer-General (1988-89) 12 QLCR 328 as follows:
"In Spencer v. The Commonwealth (1907) 5 C.L.R. the High Court propounded the proper test for the assessment of land value. It is the price which a willing purchaser would at the date in question have had to pay to a vendor not unwilling, but not anxious to sell. It seems to me that that test finds statutory expression in the Valuation of Lands Act. In defining "unimproved value" for the purposes of the Act, it recites that that value is 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. In simple terms it is synonymous with the market value of the land." - per Carter J at p330.
Before the lower Court, evidence of the physical state and condition of the subject land, unimproved, was imprecise. It was known that Brisbane City Council (the Council) had installed the drainage pipe and had backfilled prior to sale. The owners say that hard fill had to be dug out with a backhoe from the front yard and footpath to be able to construct driveways to the Council's height requirements and that rock, gravel and road base was removed before the lot was filled and topdressed to level the lot and prevent ponding. It was said that the builder went through about two metres of "fill" in order to find hard ground. The evidence led the lower Court to conclude that:
"It seems that, before its disposal, extensive filling works were carried out on the land by Brisbane City Council. That filling would not constitute an improvement to be taken into account in determining the unimproved value of the land [see Valuation of Land Act section 12 (2) (c)]."
A Council contour map compiled in 1964 (exhibit 11 before the lower Court) shows that the frontage of the lot falls from Blackwood Avenue and then levels out apart from the line of the gully (in which the pipe was placed). With the pipe and backfill in place the lot is described as possessing an easy fall from the north east to the south west. The evidence before this Court given by Mr BC Skinner, registered valuer in the employ of the Department of Lands, and derived from enquiries made with the Council is that the contours as shown on the map compiled in 1964 were no different from those which were apparent from studies made of aerial photographs taken in 1946, 1951, 1960 and 1964. A later photograph taken in 1972 appeared to show that some fill had been placed on the lot subsequent to purchase. The owners placed an average of 450mm of fill over the land in addition to other ground works. Whilst these later works are improvements within the meaning of the Act and must be assumed not to exist for the purpose of ascertaining unimproved value, it appears to us (leaving aside the works involved in the installation of the pipe) that the physical state and condition of the lot as described by the 1964 contour map may be accepted as the physical state and condition of the lot for valuation purposes. That state and condition however is complemented by the works effected by the Council in laying the pipe and backfilling. The property in these works (piping and filling) remains in the Council and it has the power to enter for the purpose of inspection, repair, etc. - see s. 32 (12) Local Government Act 1936 and s. 36 City of Brisbane Act 1924. We see these rights as imposing an encumbrance upon the land in the nature of a statutory easement, the existence and effect of which must be taken into account in ascertaining market value unimproved (see s 11 (4) - The Act). But that does not restrain the valuer or the Court from including within the considerations in ascertaining unimproved value, any convenience the drain provides to the subject lot or any benefit the owners may obtain from use of the surface of the area above the drain, passive though it may be. In the circumstances and in giving effect to s 12 (2) (c) of the Act in so far as the section applies to works retained in the ownership of the Council, the physical state and condition of the land for the purpose of the assessment of unimproved value is the state and condition of the land as depicted on the 1964 contour map with the Council works in place, subject however, to the effects which the rights reserved the Council have upon value.
We turn now to the evidence dealing with the grounds of the appeal. Mr Wilson conducted the appeal before the lower Court and he conducted the appeal before this Court. Counsel for the respondent called Mr Skinner. He was responsible for the valuation which issued. He has been responsible for valuing this division of the city (Balmoral) since 1989. On the request of Mr Wilson leave was given to Mr L Tighe (a resident of Yeronga) to address the Court. Mr Tighe has appeared before the Land Court on his own behalf and as agent for owners of residential lots in the suburb of Yeronga (valuation division of Stephens). He was given leave to make general submissions dealing with relativity and accountability.
The evidence given by Mr Wilson was related primarily to the remaining grounds of the appeal, namely matters of - aircraft noise and safety,
- water and flooding problems,
- land improvements.
Far too much time and expense, in our opinion, was wasted by the appellants, and as a result the respondent, on the issue of aircraft and resultant noise effects. We would be foolish to attempt to confine the effects within specific rather than general boundaries. The detailed evidence put before this Court by the respondent through Mr Skinner, identifies the centre line of the relevant flight path as being a few hundred metres to the west of the subject lot. It is submitted, and there is no dispute, that noise effects are greater directly under the aircraft and that a distinction may be drawn between lands of different elevation. In applying the test required under the Act, and as expanded upon in Stubberfield v. The Valuer-General supra, we are of the opinion that in the market place the subject lot in common with many others, would be identified by the potential prudent purchaser, to use a common expression, as being under a flight path. We find no reasons to depart from the finding of the learned Member below that the effects have been taken into account sufficiently by Mr Skinner in making the valuation.
The owners in developing the lot said that some 280-330 cubic metres of fill has been placed on the lot. The home underneath has been concreted at ground level and paths and drainage lines installed. The frontage of the lot slopes away from the street. It takes water from lots to the south. It has a sewer manhole in the rear which was raised 450 mm following filling and levelling. The line comes from the south through the rear of lots between the subject lot and Brittania Avenue. The drainage inverts in the front in Blackwood Avenue overflow on occasions of heavy rain with the result that overflow surges down the driveway, overflows a cross drain installed by the owners, and floods the area underneath the home. These matters are not factually in dispute. Mr Skinner would say, correctly in our opinion, that a development of the lot as at March, 1990 for single unit residential purposes from its unimproved state may be different from that which has been made by the appellants. He is of the opinion that were the land to be developed as at 1990, problems with flooding could be alleviated, were a comparable type of development made upon the land, by raising the level of the concreted area under the dwelling to a level above ground level and by redesigning driveways. He is also of the opinion that a purchaser would see the strip of land containing the pipe as having value in affording rear access, notwithstanding that the area may have required filling and needs to be maintained. These flooding factors shape and the existence of the statutory easement have all had their effect on the development and use of the lot. They are matters which a potential purchaser would ascertain on inspection and on making reasonable enquiry. The consideration which may be given to them, (including aircraft noise) are best appreciated by a valuer who is trained in the skills of interpreting the market. Mr Skinner has that training and background. The person in the position of Mr Wilson who by comparison is a layman is at a disadvantage. Whilst he may readily identify problems, the transposition of such problems into the market place and their resolution in a market sense can easily become oblique. This is evident in his reply to a question from the bench as to his opinion of value based on the test of value required by the law.
"That's not the end result though is it? You still haven't answered my question. What is your opinion of its unimproved value as at the 31st March 1990 if it was put up for sale on the open market?--With or without improvements Sir?
Without the improvements. That's the test, you've got to imagine that the land has no filling on it, situated where it is, with all the amenities around it as they existed as at the 31st March 1990 and try to ascertain what it would fetch on the market?--I am not a valuer, I do not know, but as I stated I'd be happy if it was set at $25,000."
Mr Skinner valued this division for the purposes of the annual valuation of the area as at 31st March, 1989. This was the year following Expo. Increases in value of a substantial nature were applied. He again valued the division for the purposes of this annual valuation. He said that he was responsible for about 10,000 valuations. The value applied to lots (some 60 lots) in the immediate locality are shown in evidence on maps produced by both Mr Wilson and Mr Skinner. We have observed that there is no uniform increase. Apart from an error in transcription, it came out in evidence before the lower Court that Lots 11 and 12 on Plan 62723 in Windemere Avenue shown as having been valued as one site for the respective years (1989 and 1990) at $33,000 and $40,000 was incorrect and that the value which should have applied for the purposes of the 1990 revaluation is $42,500. An application of that value makes sense when compared with the values applied to the adjoining lots for the same valuation of $44,000 (higher elevation) and $42,000 (lower elevation). It is a matter which can be corrected under the provisions of s 13 (2) (g) of the Act which enables alterations to be made in the period in which a valuation is in force, if "circumstances affecting the valuation of the land are such as to render an alteration necessary or desirable for preserving or attaining uniformity in values between that valuation and subsisting valuations of other comparable parcels of lands".
Mr Skinner said that for the purposes of the subject annual valuation he "walked the streets". A perusal of the relativity maps put in evidence indicates that value is, among other things, affected by size and by elevation. As an exercise in relativity the maps display qualities which only a valuer could put into valuation sense. The subject lot (as one of some 60 lots shown on the maps) has received some detailed consideration but that may be readily understood having regard to the disabilities affecting it and the doubts the parties had on its natural state and condition.
Mr Skinner, in forming his opinions of value of the subject lot and lots in the vicinity, gave direct consideration to a sale of land situated in Bennetts Road. The sale land consists of an area of 405 m2. The land was sold in a vacant, cleared condition in May, 1989 for $45,000. The sale lot is a long narrow lot rising from the north-east (road frontage) to the south-west with restricted outlook to park land to the north-east. It is accepted that Bennetts Road carries a large volume of traffic. The lot is not under a flight path. The lot was valued at $45,500 for the purposes of the current annual valuation. It is considered to be a superior lot overall to the subject lot. Mr Skinner said that there is filtering through his mind at all times vacant land sales and in working the area "we note where houses are being moved so we investigate those situations. Sales are analysed. We get a pattern of movements of the value of the properties." "Charts" are prepared and values fed into a computer. From there comes a printout of predicted valuations which is then checked as best it may be done for correctness. The results of such an exercise are reflected on the relativity maps tendered in evidence. We see no merit in the inferences sought to be drawn by Mr Wilson that if an error is found in relativity the whole of the valuation process is put in doubt. It has been said on many occasions that valuation is not an exact science. It rests upon the opinion of those in the market place who will prefer one aspect to another, one suburb to another and so forth. It is the duty of the valuer to interpret and apply that market on principles which require comparisons to be made of "like with like" wherever possible. The process of annual valuations which was introduced by legislation in 1985 was designed to avoid the penalty of an owner being cemented to a value for rating purposes for up to five years and possibly 8 years. The scheme of annual valuation enables values to follow the market on an annual basis. The scheme would not work without the aid of computers. Nor could it work, if as Mr Wilson would appear to submit, that each allotment should be individually inspected annually and a valuation produced in a form detailing every aspect of the relevant lot, the value placed on it and the basis for the valuation.
The making of a valuation in the context of the Act was considered by the High Court in Kilcoy Shire Council v. Brisbane City Council (1970-71) 124 CLR 60. Barwick C.J. discussed the matter on p.67. He said"I have come to think that the key to the meaning of Pt VI in relation to the ambit of objection and appeal is to be found in the assignment of precise meaning to the words `the valuation' there used. As often occurs in the statutes, the definition of `valuation' in the definition section of the Valuation Acts adds nothing to knowledge or understanding. Valuation is there said to mean, subject to context, `Valuation under this Act'. One could not hope for less enlightenment. The Valuer-General is required to `make a valuation of the unimproved value of' parcels of land. See s. 11 (1). Here the word `valuation' covers both the activity of assessing value and the reduction of that assessment to written form. That operation is expressed as a valuation: but it is not at that stage the valuation of the land for the purposes of the Valuation Acts or those of the Local Government Acts. Only after a date on or after which the assessment may be acted upon does the activity of the Valuer-General become the valuation. The Governor-in-Council is to proclaim a date on or after which the Valuer-General's quinquennial valuation shall be the valuation of the lands in the valuation district. Section 11 (2) (iii) of the Valuation Acts requires the Valuer-General to fix the operative date of his amendment where it is not otherwise fixed by or under the Act so that on or after that date the amended value will be `the valuation'. When in either case an operative date has been fixed what the Valuer-General has done becomes the valuation for the purposes of the Acts to which I have referred."
In the context of an annual valuation, the process involves the activity described previously including the "charts" and the collation of that material from the charts by the computer processors through to the public display of the printouts containing the respective valuations and relevant dates. The process in our opinion does not offend the statute. A perusal of the relativity maps put in evidence demonstrates to us that a process of thought and consideration was exercised by Mr Skinner. The system was attacked further by Mr Wilson by going outside the immediate area in an attempt to prove that lots at Murarrie in the vicinity of the works of AJ Bush from which emanate odours found to be offensive when they drift as far away (3 km in a direct line) as the subject land are out of relativity with values applied in the subject area. We have already said that we see no relevance in pursuing this particular issue. The function of the Court in the subject case is limited to matters going to the correctness of the subject valuation. In this respect, we adopt the words of The Land Appeal Court in Qualischefski v. The Valuer-General (1979) 6 QLCR 167 p.172:
"The reasonableness of the allowances that have been made is always open to challenge on objection or appeal. However upon appeal a statutory onus of proof is cast upon the appellant and he has to accept, within the confines of the grounds set out in his Notice of Appeal to the Land Court, the burden of proving the Valuer-General incorrect. 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 contradistinction to jurisdiction conferred under the Land Act."
We may add to this by repeating some principles on the question of relativity which were restated by the Land Appeal Court in Grahn v. The Valuer-General (20.11.92) - to be reported. At p.9 of the judgment the Land Appeal Court said:
"The decision of the High Court of Australia in Brisbane City Council v. The Valuer-General ((1978) 140 CLR 41, 5 QLCR 283) and the decisions of the Land Appeal Court in cases such as WM and TJ Fischer v. The Valuer-General ((1983) 9 QLCR 44) and R and MM Barnwell v. The Valuer-General ((1989) 13 QLCR 13) are authority for the following propositions:
(a)It is desirable that valuations made for the purposes of the Valuation of Land Act 1944 of comparable lands should bear proper relativity, one to the other, so long as 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. (R and MM Barnwell v. The Valuer-General (1989) 13 QLCR 13, at p.16 and cases cited in it.)
(b)The best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land (WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, at p.46; R and MM Barnwell v. The Valuer-General (1989) 13 QLCR 13, at p.17).
(c)Section 13(7) of the Valuation of Land Act 1944 creates a presumption that the value in money terms shown by the Valuer-General in his notice of valuation is correct. (Brisbane City Council v. The Valuer-General (1978) 140 CLR 41, at p.56).
(d)Once it is shown that:
1)in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact; or
2)the valuation was made by a method fundamentally erroneous.
the presumption created by section 13(7) is rebutted (Brisbane City Council v. The Valuer-General (1978) 140 CLR 41, at pp.56-7).
(e)Whilst maintenance of correct relativity is of considerable importance for rating valuation, the use of the principle of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales evidence (WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, at p.46).
(f)If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type, but should do so (preferable by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error (R and MM Barnwell v. The Valuer-General (1989) 13 QLCR 13, at pp.16-17 and cases cited in it)."
The direction in which Mr Wilson was proceeding is aligned with the direction of the submissions made by Mr Tighe. Mr Tighe directed his submissions towards accountability and relativity in the administration of the Act. He has appealed to the Land Court against a valuation applied to his lot in Yeronga and he has represented many other appellants in the same division before the Land Court. The area was not a happy one. It is evident in perusing the decisions of the learned Member who heard the cases that values applied to lots in the area and between parcels, more so in the immediate area of the lot of Mr Tighe, on opposite sides of the same street were inconsistent and that corrections were being made during the processing of the appeals over a period of some twelve months. The learned Member gave his reasons in each case and he published general comments and observations in June 1992. He added to those observations and comments in a later decision given on 4 September, 1992. The records of the Registry reveal that the Member heard and determined some 37 cases of which one appeal was allowed and the remainder dismissed. We note that two appellants in the area have appealed to this Court (V92-64,V92-65). The merits of these appeals are not the concern of this Court nor in fairness did Mr Tighe attempt to bring them within the purview of this Court for consideration. We are only concerned with the submission which is of general application that the Chief Executive of the Department in applying the provisions of the Act has lost sight of the principles of relativity which Mr Tighe covered with the words "fair and equitable" meaning that the respective valuations must not only be fair in relation to the market but equitable (in relativity) each to each. He speaks of the "area" of the City of Brisbane. In his investigations as to relativity in the division of Stephens, he came across errors which he said were found to exist in other suburbs including Balmoral. He took a constant radius from the Brisbane GPO and compared values applied to 800 m2 lots in the southern suburbs. He found that there was a marked difference, for example, between the values applied to such lots on the boundary between the valuation divisions of Balmoral and South Brisbane. The boundary is Norman Creek. He says that differences occurred elsewhere between the divisions. He does not go against the basic principles of valuation as stated in the Stubberfield case supra. His submission is one going to relativity. His research brought up a decision of the Land Court in 1952 dealing with appeals by owners of land at Indooroopilly against decisions of the Valuer-General given under the provisions of the Act as it then existed (1952-53) 24 CLLR 70. The Court which was constituted by the President, the late Sir William Payne, was concerned with an aspect which is of no direct relevance under the legislation as it is today. The matter which agitated the Court is found at p. 72:
"In valuing the City of Brisbane, the work of valuation was commenced in May, 1950, more than two years before `the time as at which the value is required to be ascertained.' On the subject lands the valuations were made in November and October, 1951, respectively. A proclamation was issued by the Governor in Council on 31st January, 1952, proclaiming the valuations to take effect as from 30th June, 1952.
This procedure means that the valuations were made under economic circumstances and market tendencies different from those in existence on the proclaimed date.
No valuer can, at any time, accurately foretell the future. Still less can he do so in times of economic instability and of changing financial conditions."
The Court concluded that the matter might receive the consideration of the administration and of Parliament. Shortly thereafter, the Review of Valuations Act 1952 was passed and an Inquiry held.
We have perused the report of the Inquiry. It is unnecessary to recite the contents. We merely note that the matter which instigated the Inquiry was the assumption made by the Valuer-General and the Court that the Valuer-General was required to value land in advance, assuming that the date of valuation must be co-incident with the date at which it was proclaimed to come into force. In the circumstances, we are not surprised to find as the Inquiry found that a number of inconsistencies existed in attempting to forecast the future - including evidence that sales which occurred subsequent to the making of the valuations had demonstrated that the prophesies made were not in accordance with the facts. The Act however has been amended and dates fixed in advance for both the valuation and the day on and from which it takes effect. The statute now requires that valuations be reviewed annually. The weight which Mr Tighe places on this historical evidence, is that on the identification of inconsistencies in relativity sufficient reason exists for this Court to recommend to Government that the valuations for the whole of the "area" of the City of Brisbane be declared void and the process of the 1990 annual valuations began de novo. The thrust of Mr Wilson's final submission was on similar lines although he had nothing to support his submission. The history of his valuation has demonstrated that an error was made in issuing the valuation in the sum in which it was issued. This has been corrected by the process of objection and appeal. Another error had been found in the application of a value to a lot in Windemere Avenue. This is a matter which can be corrected under s 13 (2) (g) of the Act.
The case cited previously of Kilcoy Shire Council v. Brisbane City Council is authority for the proposition that it is not open to a landholder to challenge the validity of a valuation otherwise than by objection and appeal under the provisions of the Act. The principles stated by the Land Appeal Court on relativity stress that relativity is a matter which is subservient to sales evidence. In this latter respect we may observe that topographical features (rivers and creeks) and man-made features (for example, railways) can separate higher valued land from lower valued land. The only relevant means of proof to the contrary lies in an appreciation of the market for the particular area. For a landholder this may be achieved by engaging the services of a valuer and thereby afford the Court another professional opinion on both value and relativity should a matter proceed to Court. In the subject case, no grounds exist which would warrant any comment from the Court on the application of the provisions of the Act in making the subject valuation. Returning now to the evidence particular to the subject case we are satisfied that Mr Skinner, besides having an appreciation of the effects of the location of the land to the flight path, had an appreciation of the water and flooding problems. Notwithstanding that he expressed the view that the value determined by the lower Court may be conservative in the light of the evidence put before this Court on the physical state and condition of the land unimproved, we do not propose to depart from the determination. Accordingly the appeal is dismissed and the value of the subject lot as determined by the Land Court in the sum of $34,000 is affirmed.
(signed Lee J)
Justice of the Supreme Court
(signed DM White)
President of the Land Court
(signed RE Wenck)
Member of the Land Court
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