Wyre v Department of Natural Resources and Mines
[2007] QLC 64
•7 September 2007
LAND COURT OF QUEENSLAND
CITATION: Wyre & Anor v Department of Natural Resources and Mines [2007] QLC 0064 PARTIES: Michael Wyre and Monica Lai Fong Leong
(appellants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO.: AV2005/1116 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 7 September 2007 DELIVERED AT: Brisbane HEARD AT: Caloundra MEMBER Mrs CAC MacDonald ORDER: 1. The appeal is dismissed.
2. The unimproved value of Lot 63 on RP 880467 in the County of Canning, Parish of Bribie at One Hundred and Sixty Thousand Dollars ($160,000) as at 1 October 2004 is affirmed.
CATCHWORDS: Valuation – unimproved value – Act requires assumption improvements did not exist – impermissible to deduct value of improvements from estimated improved value of subject. APPEARANCES: Mr W Wyre for the appellants
Mr W Isdale, Crown Law, for the respondent
Michael Wyre and Monica Lai Fong Leong are the owners of a residential property situated at 11 Birch Street, Caloundra. They have appealed against the determination by the respondent, the Chief Executive, Department of Natural Resources and Water of the unimproved value of the land at $160,000 as at 1 October 2004 under the provisions of the Valuation of Land Act 1944. The appellants contend that the unimproved value of the land as at that date was $72,000.
The property is located on the eastern side of Birch Street which is a cul-de-sac at Caloundra West, approximately 3 kilometres north-west of the Caloundra CBD. Birch Street is a two-way carriageway with concrete curbing and channelling. All town services are available to the property. The land has an area of 650 m² and is triangular shaped with the base forming the boundary with the footpath. In its unimproved state the land sloped upwards from the road towards the apex of the triangle. The property has some elevation and views towards the south-east.
The land is zoned low density residential within the Caloundra West Planning Area Precinct under the Caloundra City Plan 2004. As at the relevant date, it was improved with a residential dwelling and a substantial retaining wall approximately 25 metres in length at the front of the property. The land had also been filled to enable a level house site to be created.
The appellants pointed to a number of matters which they said adversely affected the value of their land. These included the recent completion of a number of low cost dwellings in Birch Street which had reduced the selling potential of their property. There were resultant increases in the amount of traffic in the area which endangered the safety of children playing in the area. In addition, further development of the factory estate to the south of the appellant's property had added to the industrialisation of the area. There are plans also for further industrial development in that estate which would lead to increased noise and smells. There are no shops or public transport in the suburb which lies under the Caloundra airport flight paths so that aircraft noise is at times excessive.
At the hearing, one of the appellants, Mr Michael Wyre, conducted the appellants' case and gave evidence in support of the appeal. Mr Wyre pointed out that the unimproved value of the property at the previous date of valuation, 1 October 2002, was $53,000 which was an increase of $5,000 from the valuation as at 1 October 2001. The valuation under appeal at $160,000, therefore, represented an increase of $107,000 since the valuation at 1 October 2002 and $112,000 since 1 October 2001. While Mr Wyre conceded that there had been spectacular increases in land values in parts of Caloundra over the last four years, he said that such substantial increases did not apply to all suburbs. In particular, in the area where the subject property is located, the increases had been much more conservative.
Mr Wyre submitted that the unimproved value of the property at $160,000 could not be reconciled with its improved value of the property and, therefore, the unimproved value as determined by the respondent must be excessive. The exercises undertaken by Mr Wyre were as follows -
· He had obtained an opinion in July 2006 from Remax Property Associates that the improved value of the subject property was $315,000. He had also obtained information about nine sales, in 2005 and 2006, of comparable improved residential properties in the immediate area of the subject land in which the prices ranged from $285,000 to $348,000. Consequently, he said, the average cost of an improved single unit residential property in the area could be assessed at around $316,000 at current market rates. He had estimated, using Rawlinsons, that construction of a dwelling of similar quality to those in the immediate neighbourhood of the subject would cost about $1100/m². The cost of rebuilding his house was, therefore, somewhere in the region of $203,500. In addition, he estimated that the cost of the infrastructure on his property, including the rock faced retaining wall would be in the region of $40,000. Thus the total cost of the improvements was about $243,500. If the costs of the improvements were added to the respondent's valuation of $160,000, the total value of the property would be approximately $403,500. This was significantly more than the estimated market value of the improved property at $315,000.
· Conversely, if the respondent's valuation of $160,000 were deducted from the estimated improved value of the property at $315,000, the balance of $115,000 for the house would represent an amount of $620/m² which was $480/m² below the estimated costs of replacement of the house.
· Alternatively, if the cost of the improvements, $203,500, were deducted from the improved value of $315,000, the balance would be $71,500. That figure, he submitted, was the correct valuation for the unimproved subject land.
One difficulty with Mr Wyre's evidence is that his costings and estimates are those which pertained at or about the date of hearing, that is in 2007. In the absence of any evidence as to the costings as at 1 October 2004, or the changes in costs between October 2004 and 2007, this is not evidence that I could rely on for a valuation as at 1 October 2004.
However, there is an even more fundamental problem with Mr Wyre's exercises. Section 13 of the Valuation of Land Act requires the Chief Executive to decide the unimproved value of the land to be valued for the Acts under which local authorities are established. Section 3(1) provides a definition of unimproved value and, relevantly for the purposes of this appeal, s.3(1) (b) provides that unimproved value means 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."
The effect of s.3(1)(b) is that the unimproved value of the subject land is to be ascertained by assuming that the improvements did not exist as at the date of valuation. Thus the costs of the house, retaining wall, fill and other improvements on the property are not to be deducted from the improved value. Rather those improvements are simply assumed not to be on the subject property as at the relevant date. It follows that Mr Wyre's evidence as to the improved value of the subject property and the costs of the improvements are not relevant to the valuation that is required to be made under the legislation.
Another effect of s.3(1)(b) is that it is the market value of the unimproved land which is to be established as at the date of valuation (Stubberfield v The Valuer-General [1991] 1 QdR 278 at 279). It is well established that the best method of determining the market value of unimproved land is by comparison with sales of similar or comparable property which at the time of the sale was either unimproved or lightly improved (Grahn v Valuer-General (1992) 14 QLCR 327 at 328).
Evidence in support of the respondent's valuation was given by Ms JA Watts who is a registered valuer employed by the Chief Executive, Department of Natural Resources and Water. Although Ms Watts had not carried out the original valuation of the property, she said that she had made a detailed inspection of the sales and the subject property and that she agreed with the amount of the valuation.
Ms Watts relied on the sales of three lightly improved properties in support of the valuation. She also carried out, as a check, a comparison with the analysed sale price of an improved property.
Sale No. 1 is a hatchet shaped block located in a cul-de-sac 300 metres north of the subject property at Mallee Court, Caloundra West. The property has an area of 1013 m² and is zoned low density residential. Ms Watts described the land as gently sloping from the northern rear boundary down to the southern side boundary of the property and also moderately rising from the street access to the rear eastern boundary. She considered that the sale was slightly inferior to the subject in shape but, overall, that the sale was slightly superior to the subject because of the size of the block as compared with the subject.
The property sold on 15 January 2004 for $212,500. Ms Watts deducted $2,000 for the value of clearing leaving an analysed sale price of $210,500. An unimproved value of $175,000 was applied to the property which represented approximately 80% of the analysed sale price. This was because, Ms Watts said, conservative application was departmental policy, particularly in a rising market.
Sale No. 2 is located in a cul-de-sac, Saturn Wood Court, approximately 100 metres north of the subject property. It has an area of 657 m² and is zoned low density residential. Ms Watts said this property was the most comparable with the subject because of the general topography of the sale land. The sale had a moderate slope rising from the road and levelling to a home site located close to the rear boundary of the sale property. She considered Sale No. 2 to be very comparable in all respects with the subject.
The property sold on 16 July 2004 for $210,000. Mr Watts deducted $2,000 for the value of clearing to reach an analysed sale price of $208,000. An unimproved value of $160,000 was applied which, again, Ms Watts described as conservative. Ms Watts also advised that the sale property had resold on 14 March 2005, for $225,000, indicating that the property market was still rising after the date of valuation.
Sale No. 3 is located approximately 300 metres north of the subject in a cul-de-sac, Beechwood Court. The property has an area of 650 m² and is zoned low density residential. Ms Watts described the sale as having a moderate to steep slope rising from road level to the rear boundary. She considered the property to be very comparable with the sale in all attributes but did not rely primarily on this sale because of the date when it had occurred.
The property sold on 12 March 2003 for $157,000 from which Ms Watts deducted $2,000 for clearing to reach an analysed sale price of $155,000. The applied unimproved value is $160,000. Ms Watts noted that the applied value in this case was slightly higher than the analysed sale price and said that the reason for this was that the sale had taken place some 12 months before the date of valuation and that the market had continued to increase in 2004, subsequent to the date of sale.
The fourth sale relied on by Ms Watts was the sale of an improved property located in Beechwood Court, approximately 300 m north of the subject property. This property has an area of 650 m² and is zoned low density residential.
The property was sold on 7 February 2004 for $330,000. Ms Watts calculated the value of the improvements as follows – house $117,600, garage $27,000, total $144,600. She depreciated the improvements by 5% to reach a value for the improvements of $137,370 as at the date of sale. The analysed sale price was, therefore, $192,630. An unimproved value of $160,000 was applied.
Ms Watts described this property as sloping moderately from the northern side boundary to the southern side boundary with a generally level home site. She considered that the property was comparable with the sale in all attributes other than that the dwelling and garage on the sale were newer than those on the subject property.
Mr Wyre submitted that the respondent's sales evidence should not be used for the valuation because -
· Sale 1 was close to Sugarbag Road which was an elevated area with 180° views to the coast. The sale was not at all representative of Birch Street.
· Although Sale 2 was very similar to the subject land, the site had not been developed as at the date of the hearing. This demonstrated that the price paid meant that it was not feasible, economically, to develop the sale property.
· Although he was not familiar with Sale 3, he considered that it too was overpriced because economic development was not feasible.
Mr Wyre submitted that some recently advertised land sales were more relevant to the valuation than the respondent's sales evidence. He referred to two properties at Cicada Close, Buderim as well as various lots at Bellvista, Caloundra and at Kawana Forest. Apart from difficulties caused by the fact that the advertisements appeared in February 2006, some eighteen months after the date of valuation, I consider that the evidence cannot be relied on for the purpose of this valuation. There were no details of the description of the properties at Bellvista or Kawana Forest and very limited information as to the two properties at Cicada Close. As a result there was insufficient information to enable a valid comparison to be made between these properties and the subject.
The result is that the only remaining evidence as to the unimproved value of the subject land as at the relevant date is the respondent's sales evidence.
All of the sales properties are located within 300 metres of the subject and in the same housing estate as the subject. Although Mr Wyre considered that Sale 1 was not comparable with the subject, it is, I consider, sufficiently comparable to be used in the valuation. The sale is larger and more elevated than the subject with superior views. Ms Watts has allowed for the superiority of the sale site in her valuation of the subject at $160,000 as compared with the applied unimproved value of Sale 1 at $175,000. Ms Wyre said that Sales 2 and 3 had been sold at over value. However, the sales prices are consistent with one another and with those achieved in Sales 1 and 4. Taken together, the four sales show the market value of land in the vicinity of the subject. In the face of that evidence, I do not accept that Sales 2 and 3 were sold at over value. Mr Wyre acknowledged that Sale 2 was very similar to the subject. Both blocks slope up from the road, and are located close together and have a similar area. An unimproved value of $160,000 has been attributed to both lots by the respondent. My conclusion is that I consider that the respondent's sales evidence supports the valuation under appeal.
The appellants identified a number of matters adversely affecting their property as set out at [4] above. Some of these factors, such as the flight path and the lack of shops and transport in the area affect all of the sales as well as the subject. Similarly the increased industrial development to the south and the increased traffic caused by the construction of multi-unit dwellings in the area would appear to impact on all the properties although the appellants' land is closer to the multi-unit developments than the sales and may therefore be more disadvantaged by those developments. However, there is no persuasive evidence as to the extent of that detriment, if any, and how it may have affected the value of the appellants' land.
Section 33 of the Act provides that every valuation of land made under the Act shall be deemed to be correct until proved otherwise upon objection or appeal. The effect of the section is that the appellants have the onus of proving that the amount of the valuation is incorrect (Brisbane City Council v The Valuer-General (1977-78) 140 CLR 41). As the sales evidence supports the respondent's valuation and the appellants have not established that the valuation is wrong, the appeal must be dismissed.
Orders
1. The appeal is dismissed.
2.The unimproved value of Lot 63 on RP 880467 in the County of Canning, Parish of Bribie at One Hundred and Sixty Thousand Dollars ($160,000) as at 1 October 2004 is affirmed.
CAC MacDONALD
MEMBER OF THE LAND COURT
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