Cupo & Anor v Department of Natural Resources and Water [2009] QLC 16

LAND COURT OF QUEENSLAND CITATION: Cupo & Anor v Department of Natural Resources and Water [2009] QLC 16 PARTIES: Lino Cupo and Lino and Maria Cupo (appellants) v. Chief Executive, Department of Natural Resources and Water (respondent) FILE NO: AV2008/0286 and AV2008/0287 DIVISION: Land Court of Queensland PROCEEDING: Appeals against annual valuations of land under the Valuation of Land Act 1944 DELIVERED ON: 6 February 2009 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDER: 1. Appeals AV2008/0286 and AV2008/0287 are allowed. 2. The unimproved value of Lot 2 on Survey Plan 180826 as at 1 October 2006 is determined at Four Hundred and Five Thousand Dollars ($405,000). 3. The unimproved value of Lot 1 on Survey Plan 180826 as at 1 October 2007 is determined at Four Hundred and Twenty-five Thousand Dollars ($425,000). CATCHWORDS: Valuation of Land Act 1944 – s.33 VLA – presumption of correctness of statutory valuation – onus of proof – best evidence of unimproved value – reliability of sales evidence – flooding – admissibility of expert’s report when author not to be called APPEARANCES: Mr L Cupo, in person for the appellants Ms Johnson, principal lawyer for the Department of Natural Resources and Water for the respondent -- 1 of 8 -- 2 Background [1] Mr L and Mrs M Cupo, the appellants, have appealed against the assessment of the unimproved value assigned to their land by the respondent, the Chief Executive, Department of Natural Resources and Water. Mr L Cupo is the registered proprietor of land located at 71A Sydney Street, New Farm, more properly described as Lot 2 on Survey Plan 180826, Parish of North Brisbane. Mr L Cupo and Mrs Maria Cupo are the registered proprietors of land located at 30 Mark Street, New Farm, more properly described as Lot 1 on Survey Plan 180826, Parish of North Brisbane. The respective areas of Lots 2 and 1 are 293 m² and 314 m². The Lots share a common boundary and are both classified "Low-Medium Density Residential" and lie within a "Demolition Control Precinct" under the town plan for the City of Brisbane. Additionally, both Lots are subject to the "New Farm Local Area Plan" under the Brisbane City Plan 2000. [2] Notwithstanding the low/medium density designation under the town plan, pursuant to s.17 of the Valuation of Land Act 1944 (VLA) both Lots, consistent with their use at the date of valuation, were valued as single residential dwelling housesites. All of the usual urban services and amenities were available to both Lots. [3] The unimproved value determined by the respondent as at 1 October 2007 for Lot 2 is $450,000 and for Lot 1 $470,000. The appellants’ estimate of the unimproved value of each of these Lots is $370,000 and $390,000 respectively. [4] At the hearing of these appeals the appellants were represented by Mr L Cupo. Mr Cupo has no real estate valuation or legal qualifications. The respondent was legally represented by Ms Johnston, a principal lawyer employed by the respondent and relied on the evidence of Mr Scott Taylor, a registered valuer also employed by the respondent. [5] Given the level of common issues in these appeals - including ownership, location, land use, date of valuation and issues raised in the grounds of appeal, both appeals were heard together, the evidence in one being evidence in the other. Issues in the appeal [6] In both Notices of Appeal the grounds of appeal are: "the decrease in land valuation is insufficient compared to much larger 506 m² blocks with a lot less land value than (the subject land). The date of effect should be 1 October 2007 and not 30 June 2008. (I/We) also have overland flow flood issues." In the statement of evidence relied on by the appellants,1 the substantive issues raised were: i. traffic volumes and speed along Sydney Street 1 Exhibit 1. -- 2 of 8 -- 3 ii. flooding iii. that the unimproved values attributed to the subject blocks lack relativity when compared to the unimproved values attributed to other blocks in the area, particularly in respect of area [7] In appeals such as this it is necessary to bear in mind that pursuant to s.45(4) of the VLA the appellants are limited to the grounds stated in their Notice of Appeal and bear the burden of proving each and every ground relied on. Further, pursuant to s.33 of the Act the valuation appealed against is deemed to be correct until proven otherwise. In Brisbane City Council v The Valuer-General,2 the High Court considered that the statutory presumption in favour of the correctness of the valuation appealed against may be rebutted where it can be shown that it was based on a wrong principle and/or involve a significant area of fact and/or was made by a fundamentally erroneous method. The evidence and the specific issues raised in the appeal Traffic [8] Traffic issues were not, in my opinion, either expressly or by reasonable implication raised in the appellants' notices of appeal. Therefore, because of the operation of s.45(4) of the VLA the appellants are not able to rely on this issue to upset the valuations appealed against. Notwithstanding this, it is tolerably clear that when carrying out his valuations Mr Taylor had sufficient regard to the traffic volumes and associated issues concerning Sydney Street and Mark Street. Therefore, on the evidence before me, even if the appellants had been able to rely on traffic issues in support of their appeal, they would have failed to show that the valuations appealed against should be adjusted to take account of them. Flooding [9] In their notices of appeal it is asserted by the appellants that both blocks of land are affected by "overland flow flood issues". This is disputed by the respondent. Mr Taylor in his valuations3 says that both blocks are free from flooding and overland water flows but are occasionally subject to more localised inundation towards the rear of the blocks after heavy rainfall. Both the appellants and Mr Taylor rely on flood search data provided by the Brisbane City Council which says in respect of Lot 2 that: i. the ground level lies between 2.7 m AHD and 3.7 m AHD ii. the highest defined flood level (DFL) was 2.5 m AHD iii. the minimum habitable floor level is 3 m AHD 2 (1977-78) 140 CLR 41 at 56 – 57. 3 Exhibits 2 and 3 at page 2. -- 3 of 8 -- 4 iv. the highest flooding source was from storm tide and flooding also occurs from the Brisbane River. In respect of Lot 1 the data reveals that: i. the ground level lies between 2.9 m AHD and 3.9 m AHD ii. the highest defined flood level is 2.5 m AHD. iii. the minimum habitable floor level is 3 m AHD iv. and the highest flooding source was from storm tides and no other flooding source information was available. The flood information reports provided by the Brisbane City Council expressly state that all figures used in the calculations are approximate only and that for accurate results a registered professional engineer should be consulted. 4 [10] Most of the terms used in the Council flood level information are defined. For example the defined flood level (DFL) means "the flood event adopted by a local authority for management of development". The DFL is used for determining the development level for various types of development including houses and subdivisions. The DFL does not indicate the full extent of flood prone land. Overland flow is defined to mean “The stormwater runoff which exceeds the capacity of the underground drainage system (if present) and which concentrates in surface depressions, yards and gullies as it flows down a given catchment …” It is noted that such flooding may result from a severe thunderstorm or periods of prolonged rain. The phrase minimal habitable floor level speaks for itself. [11] While the Council flood information reports relied on by the parties do not identify the extent of overland flow, the Council also produces a document described as an Overland Flow Map. This document indicates that neither of the Lots the subject of these appeals are affected by "overland flow".5 It is this document which really forms the basis of Mr Taylor's opinion that these blocks are not affected by flooding and overland flow. Notwithstanding this, Mr Taylor concedes that on occasions these lands may suffer "water issues" to the rear of the blocks after heavy rain. Whether or not this water was the result of stormwater runoff resulting from the capacity of the underground drainage system being exceeded was never explained. [12] When appeals concerning these parcels of land were last before me I accepted that, amongst other things, the maximum Q50 flood event overland flow level across Lot 1 was 3.25 m AHD and that the minimum habitable floor level should be 3.75 m AHD. 4 See generally Exhibit 3, Annexure 4 and Exhibit 1, pp. 15 – 16. 5 See for example, Exhibit 3, Annexure 7. -- 4 of 8 -- 5 These findings were based on a water assessment report prepared by Storm Water Consulting. 6 As far as I am aware these findings were not challenged on appeal. [13] However, in these appeals the only relevant non-anecdotal evidence concerning flooding is that contained in the various council records included in the reports and statements of evidence relied on by the parties. That is, the evidence referred to in paragraphs 9, 10 and 11 above. That evidence indicates that the minimum ground level of both blocks is above the council's defined flood levels. It is not clear from a reading of my decision concerning the previous appeals whether or not the Council flooding data now before me was then presented as evidence. [14] During the course of his cross-examination Mr Cupo sought to rely on and tender a copy of the aforementioned report by Storm Water Consulting. Ms Johnson objected to its admission essentially on three grounds. First, as a report by an expert it should have been filed and served 14 days prior to the hearing date in accordance with the Court notice dated 12 December 2008. It was not. Second, the report, at the very least, should have been made available to the respondent sometime prior to the commencement of the hearing. It was not. Third, it was not possible to test the veracity of the report unless its author was made available for cross-examination. [15] Mr Cupo in response said that as the report had been tendered and dealt with in the earlier appeals he did not think it would be necessary to have to tender and rely on it again. [16] While I have some sympathy for Mr Cupo’s position it is clear that to admit the report at such a late stage would materially prejudice the respondent. Ms Johnson said that she had not seen the report before and prepared her case on the basis of the evidence contained in Mr Cupo’s witness statement. At page one of that statement (exhibit 1) Mr Cupo asserts “Both of these properties are according to Council records flood affected (see pages 15 and 16)”. When one goes to pages 15 and 16 of exhibit 1, the same Council flood data is identified as that relied on by Mr Taylor in his valuations.7 [17] The prospect of adjourning the hearing of these appeals to allow Mr Cupo to call the author of the subject report was canvassed. However, Mr Cupo elected to proceed as things were.8 [18] For the reasons advanced by Ms Johnson I refused the admission of the report. In reaching this decision I was particularly persuaded by the fact that Mr Cupo did not intend to call the author of the report. To admit and give material weight to a report by 6 [2007] QLC 0022 at para 14. 7 Exhibit 2, Anx 4; Exhibit 3, Anx 4. 8 T23-T24. -- 5 of 8 -- 6 an expert while denying a party the right or ability to test its bases, opinions and conclusions is, more often than not, likely to favour one party at the expense of the other. As Jagot J said in Ray Fitzpatrick Pty Ltd v Minister for Planning9: “… Inscrutable expert opinions that cannot be meaningfully tested are inherently productive of unfairness”. In this context the Land Appeal Court has observed that valuation reports, in the absence of their authors being called, are unlikely to be of much assistance.10 [19] It seems that in the previous appeals the report was accepted as part of the appellants’ case without objection. That was not the case in these appeals. [20] Returning then to the evidence before me, I accept that Mr Taylor has had regard to appropriate sales evidence which, save for one matter discussed below, he has properly analysed and applied to the subject lots. The appellants, in my opinion, produced no probative sales evidence to support their estimates of value. [21] On balance however, I have concluded that Mr Taylor has not had sufficient regard to all the evidence concerning flooding. [22] Mr Taylor proceeded on the basis that while the blocks lay in an area which would be described as being “low lying” they were only affected by relatively minor “water issues” to the rear of the blocks after heavy rain.11 [23] Neither block is affected by overland flow and the minimum ground level of each block exceeded the highest defined flood level for the area according to the Council data. However, the prudent purchaser and vendor would proceed cautiously and conservatively with that data. As Mr Taylor points out the locality is generally described as low lying as demonstrated by widespread flooding in New Farm during the 1974 floods. This fact alone would put a prudent person on notice and cause him/her to make due enquiries with the relevant authorities. And, while the data provided by the Council would no doubt give some comfort it is far from being definitive. The Council extracts relied on by the parties have numerous disclaimers. For example, the flood information does not represent the highest probable flood level that could occur (albeit rarely) on the property. The data is meant to be a guide only and should not be used or relied on for development purposes and the Council makes no warranty or representation regarding the accuracy or completeness of the data.12 Further, while the actual flood study report referred to above was not admitted into evidence, there was evidence that before Mr Cupo could subdivide 9 [2007] NSWLEC 791 at part [19]. 10 PT Limited v Department of Natural Resources and Mines (2008) 162 LGERA 106 at part [81]; See also Department of Natural Resources and Mines v QNI Metals Ltd (2002) 23 QLCR 261 at [22]. 11 Exs 2 and 3 at p 2; See also at T27. 12 Eg. See Ex 2, Anx 4 at p 1 of 4. -- 6 of 8 -- 7 the subject land and build on Lot 2, he was required to have a flood study report undertaken by the Council.13 [24] Having regard to the totality of the evidence, I have concluded that the prudent purchaser and vendor would proceed on a slightly more cautious and conservative basis concerning the risk of flooding than that adopted by Mr Taylor. The evidence, in my opinion, justifies some discounting of Mr Taylor’s valuation but not too significant a discount. Accordingly, I propose to reduce the value of both blocks by about 10% and adopt a figure of $405,000 for Lot 2 and $425,000 for Lot 1. [25] In reaching this conclusion, I am mindful of Mr Taylor’s evidence about my findings of fact concerning flooding in the previous appeals. Mr Taylor was aware of those findings and when they were brought to his attention his evidence was, in effect, that even if those findings were correct and inconsistent with the Council data, his valuations would still be correct.14 While Mr Taylor’s evidence about this was not seriously challenged by Mr Cupo I did not find it entirely convincing. However, I should point out here that my decision to reduce the unimproved values to the abovementioned figures was not influenced one way or the other by Mr Taylor’s evidence on this topic. Relativity [26] Mr Cupo points to a number of examples of where, in his opinion, there are material inconsistencies between the unimproved values assigned to other blocks in New Farm when compared to those assigned to the subject blocks. In particular, in respect of Lot 2 he refers to the unimproved values attributed to two similar sized blocks in Lloyd Street. These values range from $415,000 to $420,000. The thrust of Mr Cupo’s case is that Lot 1 must be worth less than the Lloyd Street blocks as they are flood free and located in a “quiet street”. On the evidence before me Mr Cupo has tended to overstate the flooding issues associated with the subject land and understate the traffic problems associated with Lloyd Street. I also accept Mr Taylor’s evidence that Lloyd Street is situated in a generally inferior location within the New Farm area than Lot 2. [27] Turning to Lot 1, the appellants place some emphasis on a comparison between the unimproved value of $390,000 assigned to a similar sized block located at 74 Villiers Street. According to the appellants this block is “almost identical” to Lot 1. [28] The Council flood data indicates that the Villiers Street block is slightly lower in elevation than Lot 1. However, more importantly the uncontradicted evidence of Mr Taylor was that the Villiers Street block was totally inundated by overland flow according to the Council flooding information. Notwithstanding the caveats attached to 13 See at T21. 14 T34-T35. -- 7 of 8 -- 8 this information referred to above, it would be a relevant negative factor in the determination of the price which the prudent person would pay for the land in its notionally unimproved state. I also accept that this land is likely to be more susceptible to traffic noise than Lot 1. [29] With the exception of a parcel of land located at 1 Welsby Street, I am reasonably satisfied with Mr Taylor’s explanation for any apparent discrepancies and inconsistencies in the unimproved values applied to the blocks to which his attention was drawn when compared to the unimproved value applied to the subject blocks. In respect of the land located at 1 Welsby Street, Mr Taylor conceded that the present unimproved value was too low and ought be revised upwards. [30] In any event it is now well accepted that, generally speaking, the best evidence for determining a basis for the assessment of unimproved value of land is the evidence of sales of comparable vacant or lightly improved land which occurred at or about the relevant date of valuation.15 With the exception of his sale 5, Mr Taylor’s sales evidence falls into that category. As I have already said, I am satisfied that Mr Taylor has had regard to, analysed and applied reliable sales evidence. When regard is had to all of the evidence there is no basis for concluding that the valuations appealed against ought be reduced any further than has already been allowed for when dealing with the issue of flooding. [31] For the reasons expressed above the order of the Court is that: 1. Appeals AV2008/0286 and AV2008/0287 are allowed. 2. The unimproved value of Lot 2 on Survey Plan 180826 as at 1 October 2006 is determined at Four Hundred and Five Thousand Dollars ($405,000). 3. The unimproved value of Lot 1 on Survey Plan 180826 as at 1 October 2007 is determined at Four Hundred and Twenty-five Thousand Dollars ($425,000). RS JONES MEMBER OF THE LAND COURT 15 See for example Clough v Valuer-General (1981) 8 QLCR 70 at 76; Barnwell v Valuer-General (1990) 13 QLCR 13 at 17. -- 8 of 8 --