Wilson v Department of Natural Resources, Mines and Energy
[2004] QLC 70
•30 July 2004
LAND COURT OF QUEENSLAND
CITATION: Wilson v Department of Natural Resources, Mines and Energy [2004] QLC 0070 PARTIES: Graeme G and Denise K Wilson
(applicants)v. Chief Executive, Department of Natural Resources, Mines and Energy
(respondent)FILE NO: AV2003/0554 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 30 July 2004 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Dr NG Divett ORDER: The appeal is dismissed, and the unimproved value of Lots 1 and 2 on RP 69989 as determined by the Chief Executive in the sum of One Million Dollars ($1,000,000) is affirmed. CATCHWORDS: Valuation – Sales – Comparable sales – Use of vacant land sales preferred. APPEARANCES: Mr GG Wilson for the appellants
Mr K Fisher Counsel of Crown Law for the respondent
Background:
This matter relates to land at 43 Stevens Street, Yeronga and described as Lots 1 and 2 on RP 69989, Parish of Yeerongpilly. The subject land has an area of 2,929 square metres, and is located on the Brisbane River about 6 kilometres south of the Brisbane CBD. Access to the subject land is good from Stevens Street, which is bitumen sealed with concrete kerbing and channelling. However in wet weather surface waters tend to pond in low lying areas at the frontage of the subject land, which is located in the lowest point of Stevens Street. The footpath is earth formed, and all normal urban utility services are available. The subject land is zoned as Low Medium Density Residential Area, under the Town Plan of the Brisbane City Council of 30 October 2000, and effective at the date of valuation of 1 October 2002. The key issues are the nature of the land, relativity and comparison of sales.
In early 2003 the Chief Executive issued a valuation of the subject land at $1,050,000. Following an objection the Chief Executive confirmed that figure on 8 July 2003. The appellants have now appealed claiming the unimproved value should be $670,000. There was a preliminary conference before the Judicial Registrar on 15 December 2003, following which the Chief Executive reduced his valuation under s.68 of the Act to $1,000,000. An original hearing date on 26 May 2004 was adjourned due to the absence of the appellant on business in western Queensland. The hearing occurred on 7 June 2004.
Mr Graeme G Wilson appeared and gave evidence for the appellants. Mr K Fisher, Counsel of Crown Law appeared for the respondent, calling evidence from Alwyn Charles Horne, the experienced departmental registered valuer now accepting responsibility for the valuation. The original valuer who determined the unimproved value at $1,050,000 was no longer available. At the request of both parties a joint site inspection was undertaken.
Nature of the Land –
Mr Horne explains that when he accepted responsibility for the valuations in that locality, his personal inspections revealed that there were considerable amounts of features which were previously not fully investigated by the previous valuer. When he further inspected the subject land he made an additional allowance for the apparent ground subsidence on the building site, which was revealed by cracking in the building walls and appeared to have increased in size since earlier inspections. On that basis Mr Horne reduced the unimproved value from $1,050,000 to $1,000,000 under s.68 of the Valuation of Land Act 1944. He believes that adjustment fully recognises the disabilities of the subject land, and that a site inspection would support his conclusions.
Mr Wilson by comparison argues that the disabilities of the subject land, in his opinion, have not been fully allowed for. Apart from movements in the soils, Mr Wilson notes that the river frontage itself is regularly subject to inundation by king tides. Mr Wilson notes that, while Mr Horne has made some allowance for the inundated area on the river frontage to an extent of about 278 square metres below high water mark on the subject land, Mr Wilson argues that the inundated area is much larger than that figure. Mr Wilson provides photographs of a king tide that coincided with some heavy rainfalls over a three to four day period. That inundated area backed up to about 20 to 25 metres from the riverbank, or nearly 500 square metres to 600 square metres. (See SmartMap - Exhibits 2 and 3). Mr Wilson advises that king tides to 2.6 metres at the Brisbane Bar can occur on three or four occasions annually, and major flooding would be more severe.
To support Mr Horne’s conclusion in respect of subsidence on the subject land, Mr Wilson advises that the building on the adjoining land to the south of the subject land (Lot 51 on RP 890634), has needed major underpinning to preserve that structure. Mr Wilson notes that his swimming pool to the rear of the dwelling has also demonstrated subsidence of the ground.
In addition to the above features, Mr Wilson notes that there are two sewer manholes on the front portion of the subject land, which would constrain development in that part of the site. Because of its low lying nature, Mr Wilson advises that the front part of the land to the east of the existing building area, which is on a low rise ridge, is covered by up to 0.3 metres of stormwater during heavy rains. Mr Horne advises that he has allowed for that problem.
Another matter of concern to Mr Wilson is the development of a block of two units on land at 31 to 35 Stevens Street, about 20 metres north of the subject land. There are two units on the two river front parcels (Lots 2 and 3 on SP 107796), and a further four units on the land between those and Stevens Street (SP 149080). Mr Wilson notes that the owner of the two river front parcels has built up to the 20 metre setback from the river alignment, such that from the existing building on the subject land, views of the river are restricted by the large building structures on 31 to 35 Stevens Street. Mr Wilson speculates that the three storey units may have exceeded the maximum building height, but he concedes that filling and piling on that area may have made the units within allowable height restrictions. However he notes that the structures provide a visual obstruction of parts of the river scenery, and is also higher than the subject land.
It is also agreed that the subject land has a western aspect to the river, compared to the northern aspect of Mr Horne’s Sale 2, and the southern aspect of his Sale 1. Mr Horne also agrees that the river front lands at the Brisbane Corso (Sale 2) and Instow Street (Sale 1) do not suffer from similar subsidence problems as the subject land. Mr Horne advises that his analysis of many river front lands in Yeronga to Hawthorne and Bulimba, reveal that where that topography tends to drop away more steeply to the river edge, and where that elevation provides more expansive views, then land values have increased more significantly. He notes that elevation is an important factor in river front lands.
In respect of the zoning of the subject land as old RB3 lands, Mr Horne has made no allowance for that higher use, as he notes that the subject land was valued under s.17 of the Act as a single dwelling site. However he agrees that the unit developments approved under the RB3 zoning in Stevens Street, even though the developments were tastefully constructed, do provide a lesser quality residential environment, compared to the Brisbane Corso and Instow Street, and he has allowed for that in his valuation.
In his analysis of the comparisons between the subject land and his sales evidence, Mr Horne notes that the subject land could provide some flexibility for a tennis court site, because of its much larger size. He notes that would not be possible on the much smaller sales. However Mr Wilson advises that the existing 80 year old very large Jacaranda tree on the eastern part of the subject land would inhibit the location of any tennis court upon the subject land, due to existing Council restrictions on removing such large trees. While there was no evidence provided of such Council restrictions, there is a general level of public understanding of vegetation restrictions, particularly in older established areas.
Mr Horne does not challenge that some restrictions might occur on that old Jacaranda tree, but argues that he has not made any significant allowance for a possible tennis court in his comparisons with his sales. Mr Wilson advises that he had not raised the issue of the Jacaranda tree, as the developments upon 31 to 35 Stevens Street had appeared to overcome the presence of five large Camphor Laurel trees, which were subsequently removed, either with or without formal Council approval. Mr Horne was not aware whether a Vegetation Preservation Order (VPO) existed over the Jacaranda tree on the subject land.
Mr Wilson seeks relativity with the adjoining parcels to the north at 37 and 39 Stevens Street (Lots 1 and 2 on RP 85704), which he argues are at about the same elevation, although the subject land falls away more towards the river. Mr Wilson notes that those two sites each developed with existing dwellings, sold for $995,000 in 2001. It is agreed that 37 Stevens Street, a hatchet shaped river front parcel of area 2,135 square metres, sold on 22 June 2001 for $795,000, and 39 Stevens Street, a non-river front parcel of area 711 square metres, sold on 2 June 2001 for $200,000. Mr Wilson had understood that those sales had occurred in 2002, but now accepts that those sales reflected an earlier period than the relevant date of 1 October 2002, in a rapidly rising market. It is noted that at the relevant date in October 2002, 37 Stevens Street was valued as an unimproved parcel at $1,200,000, and 39 Stevens Street at $200,000. (See Exhibit 2 – SmartMap).
Mr Wilson also seeks relativity with a river front parcel at 21 Stevens Street (Plan SP 12798) of area 1,568 square metres. He notes that similar styled duplex units were built on that parcel by the same builder who purchased and built units at 43 Instow Street. Mr Wilson notes that the units resold in Instow Street for $1,200,000, while the similar units at 21 Stevens Street sold for $1,100,000. He argues that demonstrates that Instow Street is a superior area.
Mr Horne has not analysed those improved sales, but argues that Instow Street is a superior area to Stevens Street. In respect of the 21 Stevens Street property, Mr Horne advises that departmental records show that 21 Stevens Street sold on 7 December 2000 for $900,000, and resold again in December 2002 for $1,100,000. Mr Horne further advises that 43 Instow Street sold on 3 August 2000 for $680,000, which was then applied at $600,000. The property was again resold on 7 December 2002 for $1,330,000. Mr Horne was not aware if the improvements had been extended prior to the resale in 2002. While he has not analysed the added value of improvements upon the sales, Mr Horne believes those two sales support the large increase in the value of the land in that period.
Another parcel to which Mr Wilson seeks relativity is at 52 Ortive Drive (Lot 4 on RP 37939), a river front parcel of large area, which is currently valued at $1,500,000. The original unimproved value at the relevant date had been $1,900,000. Following an objection conference, including documented proof supplied by the developer/owner, which included thousands of cubic metres of fill and frankipiles for the dwelling to 30 metres depth, Mr Horne had reduced that unimproved value under s.68 of the Act. That parcel adjoins the Animal Research Institute. Mr Wilson had no knowledge of the major development or improvements existing on that parcel.
In respect of the adjoining parcel to the south of the subject land at 51 Stevens Street (Lot 51 on RP 890364), of area 7,326 square metres, Mr Wilson notes that parcel was recently decreased by $400,000 to its current unimproved value of $2,600,000. Mr Horne was unaware of the reason for the reduction applied under s.68, but speculates that it possibly related to the presence of the drainage easements evident on the SmartMap (Exhibit 2). Mr Wilson does not pursue that matter, but now understands that the residential sites are compared upon a site basis, and not upon a per square metre comparison. (Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 330).
Comparison of Sales –
While Mr Wilson provides only his comparisons discussed on a relativity basis in paragraphs [13] to [15], he is familiar with Mr Horne’s sales. Mr Horne provides the following sales of vacant lands both with similar services available:
· Sale 1 – (35 Instow Street, Yeronga – Lot 22 on RP 90761). This is a 1,189 square metre river front parcel located about 0.7 kilometres radially north-west of the subject land. The sale has a southerly aspect to the river, and has a fall from Instow Street to the river at the rear. The sale has good access and is slightly below street level, and also has a fair cross fall from west to east. The sale is seen as marginally superior to the subject due to its better river views. All of the sale is usable land compared to the subject land which has a large area of at least 278 square metres below high water mark. The sale sold in November 2001 for $1,150,000, and was analysed, after allowing for a pontoon and retaining wall, at $1,100,000, and was applied also at $1,100,000, because of the older date of the sale in the rising market.
· Sale 2 – (375 Brisbane Corso, Yeronga – Lot 41 on SL 5753). This is a 1,222 square river front parcel with a northerly aspect to the river, located about 1.8 kilometres radially north-west of the subject land. The sale has good access to Brisbane Corso, and is slightly above street level, and falls steeper to the river at its rear. The house pad is fairly level, and there are no known site problems. The sale is seen as superior to the subject land due to its better location, topography and aspect to the river. The subject land has a western aspect to the river. The sale sold in January 2002 for $1,450,000, and was analysed, after allowing for demolition costs and clearing, at $1,451,000, and applied at $1,300,000.
It is agreed that because of their higher elevation from the river, the views at Sales 1 and 2 are both superior to those of the subject land, although Sale 1 and the subject land both look across to the golf course. It is also agreed that while there is some comparability between river front parcels in that area, each parcel needs to be assessed on their individual benefits and risks. Mr Wilson advises he has no evidence of market levels in Stevens Street, but notes that several properties have been unsuccessfully advertised for sale in recent times. However, he agrees that there has been a rising market for river front lands, but argues that the increase was greater along the Brisbane Corso area. Mr Wilson argues that as a river front site, the larger area of the subject land compared to Mr Horne’s sales would add little extra value. Mr Horne advises that while the presence of some units has impacted Stevens Street, that precinct has always been seen as a prestige area.
Decision:
Before examining the evidence, I turn to the legislation and note that the unimproved value of the subject land is defined by s.3(1)(b) of the Act which states:
“3.(1) For the purposes of this Act –
‘unimproved value’ of land means –
(b) in relation to improved land – 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.”
In seeking further clarification of the meaning of “unimproved value” as it applies to the subject land under the Act, I note also the findings of the Privy Council in Tetzner v. Colonial Sugar Refining Company Limited (1958) AC 50, where Their Lordships said at 57:
“What in Their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation. The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it.”
That also followed the findings of the Privy Council in Tooheys Limited v. The Valuer-General (1925) AC 439 where Their Lordships said at 443:
“Now, what he has to consider is what the land would fetch as at the date of valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed.”
In simple terms the land is to be considered as if all the improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant.
The Nature of the Land –
In respect of ground movement on the soils, it is agreed that subsidence on the building site is an ongoing disability. Mr Horne has allowed for an increased reduction in the valuation for that purpose. Following the site inspection, I would agree with his conclusion.
In respect of the level of inundation by king tides, I accept that the area of the subject land so affected would be greater than the 278 square metres acknowledged by Mr Horne. However the determination of a site value of the subject land is to be seen on an overall comparative basis, and not by some accumulative procedure which progressively marks separate allowances for disabilities. Treated as a house site upon the river, I believe the additional area which is inundated by spring tides would require no further allowance as the subject land is a large parcel of area 2,929 square metres. I also note that the low lying nature of the eastern or front part of the subject land has been allowed for by Mr Horne.
I turn then to the partial visual obstruction of the width of the river views by the large units to the north of the subject land. In that respect I note that those units, which are near to the river, are built to the allowable setback clearance of 20 metres from the high water mark on that parcel. As that is not a “non-conforming development” within the Council’s planning regime, it would be reasonable to assume that they would be allowed for by any prudent purchaser who might seek to purchase the subject land under the Spencer test. Had they been a “non-conforming development”, then Mr Horne was likely to have made some allowance for that disability.
In respect of the Spencer test of the market value of land, that refers to the decision of the High Court of Australia in Spencer v The Commonwealth of Australia (1907) 5 CLR 418, where Griffith CJ said at 432:
“In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’ It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.”
That definition of what constitutes a bona fide sale has long been adopted by the courts, and is a matter which must weigh heavily in the minds of a valuer when he seeks to analyse sales for comparison parcels.
In the matter of the use and zoning of the subject land, I note that Mr Horne has valued the land under s.17 of the Act, which relevantly directs:
“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 subsection (1) –
‘single dwelling house’ means –
(a) a dwelling used solely for habitation by a single household”.
In respect of whether the large old Jacaranda tree might have some impact upon the value of the subject land, I note that there is no evidence of whether there is any vegetation preservation order existing on that tree. While it may be possible for a preservation order to impact the value of a parcel of land, that value must be considered in line with market evidence of similar situations. There are, for example, circumstances where the market place may see such old trees as a benefit on a site, particularly where the site might be large enough for the tree to provide a pleasant environment for development works. However on other occasions the preservation restrictions may be so onerous as to severely impact the future use of the land. (Bone v Mothershaw [2003] 2 QdR 600, from 603 onwards). However, as there is no evidence of any preservation requirements, I make no comments in that regard.
Relativity -
I turn then to the relativity comparisons, and find that relativity is seen by the courts to also be an important feature, particularly in respect of rating valuations. That was noted in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at 46:
“It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also 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.”
If I look then at Mr Wilson’s comparisons of river front lands:
ParcelArea Unimproved Value Comparison
37 Stevens Street 2135 m² $1,200,000 More elevated
21 Stevens Street 1568 m² - Improved for
$1,100,000
51 Stevens Street 7326 m² $2,600,000 Superior
Subject land 2929 m² $1,000,000 -
Without knowing the added value of improvements upon 21 Stevens Street, the above relativities appear reasonable.
Comparison of Sales –
In adopting a method of comparison of sales of vacant or lightly improved lands, Mr Horne has followed precedent long held by courts at all levels throughout Australia. By using such sales Mr Horne is able to compare the sales without any need to make adjustments for the added value of any improvements upon the land. The notion of added value was addressed by the High Court of Australia in Morrison & Ors v Federal Commissioner of Land Tax (1914) 17 CLR 498, where Griffith CJ said at 503:
“… the term ‘value of improvements’ is defined to mean ‘the added value which the improvements give to the land at the date of valuation irrespective of the cost of the improvements.’ … Any operation of man on land which has the effect of enhancing its value comes with the definition of ‘improvement’.”
The difficulties with adopting sales of improved properties was highlighted in the decision of PH Clough v Valuer-General (1981-82) 8 QLCR 70, where the Land Appeal Court said at 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.
Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement.”
That principle was also followed in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, at 46; R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17; and Hans and Else Grahn v Valuer-General (supra).
If I look then at Mr Horne’s sales I find:
SaleArea Unimproved Value Comparison
11189 m² $1,100,000 Marginally superior
(35 Instow Street)
21222 m² $1,300,000 Superior
(375 Brisbane Corso)
Subject land 2929 m² $1,000,000 -
Based upon a site value approach, those figures with comparisons appear reasonable.
Summary:
In concluding this matter I am reminded that s.33 of the Act directs:
“33. 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.”
I am also aware that unless the Chief Executive has been shown to have made a serious error of fact or has acted on a wrong principle, then the valuation is not disturbed. (Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41 at 56.) That has not occurred in this matter. I am also aware that the onus to prove their case rests upon the appellants under s.45(4) of the Act.
Conclusion:
Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lots 1 and 2 on RP 69989 as determined by the Chief Executive in the sum of One Million Dollars ($1,000,000) is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
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