Comiskey v Department of Natural Resources and Mines [2006] QLC 37

LAND COURT OF QUEENSLAND CITATION: Comiskey v Department of Natural Resources and Mines [2006] QLC 37 PARTIES: William S Comiskey & Carole S Comiskey (appellants) v. Chief Executive, Department of Natural Resources Mines and Water (respondent) FILE NO: AV2005/0357 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation of land pursuant to the Valuation of Land Act 1944. DELIVERED ON: 23 June 2006 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mr RS Jones ORDERS: 1. The appeal is allowed. 2. The unimproved value of Lot 1 on Registered Plan 610970, Parish of Eurimbula as at 1 October 2004 is $615,000. CATCHWORDS: Section 33 Valuation of Land Act 1944 – rebuttal of presumption of correctness of statutory valuation – onus of proof – reliability of sales evidence – relativity of unimproved values attributed to surrounding lands. APPEARANCES: Mr William Comiskey in person for the appellants Mr K Fisher of counsel for the respondent. [1] These proceedings concern an appeal by the appellants, Mr and Mrs Comiskey, against a decision made on behalf of the respondent concerning the unimproved value attributed to -- 1 of 7 -- 2 their land. The appeal is brought pursuant to Ss.55 and 56 of the Valuation of Land Act 1944 (VLA). [2] Mr Comiskey appeared in person to represent the appellants. The respondent was legally represented by Mr Fisher of counsel and relied on the evidence of Mr Schipper a registered real estate valuer employed by the respondent. Background [3] The subject land is described as Lot 1 on Registered Plan 610970, Parish of Eurimbula, is 610 square metres in area and is situated at 23 Elliot Street in the very attractive coastal township of Seventeen Seventy. The land is zoned "Urban" under the Town Plan for the Miriam Vale shire and, consistent with that designation, is being used for single residential dwelling purposes. Extensive ocean views are available from the land over Bustard Bay. [4] The appellants objected to the respondent's assessment of the unimproved value of their land which, on my understanding of the evidence of Mr Schipper, was originally determined as at 1 October 2004 (effective as at 30 June 2005) in the amount of $710,000. In circumstances which were not entirely clear but largely irrelevant to the matters to be resolved in this appeal, the assessment of the unimproved value was reduced pursuant to s.68 of the VLA to the value now contended for by the respondent, namely $690,000. It would appear that one of the main reasons for the reduction in value of $20,000 was to take account of the irregular shape of the land. More will be said about this feature of the land below. [5] Notwithstanding the reduction in the assessment of the unimproved value the appellants consider that the revised valuation is still excessive and contend that it ought not to exceed $500,000. [6] In dealing with the issues raised in this appeal I have had regard to the totality of the evidence, however, where I have considered some evidence to be of particular importance I have endeavoured to refer specifically to it. Issues in the Appeal [7] As the land is "improved land" for the purposes of the VLA s.3(1)(b) and s.3(2) of that Act are relevant and provide: 3(1) For the purposes of this Act – unimproved value of land means – (a)… (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. -- 2 of 7 -- 3 (2) However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act. [8] It was contended for on behalf of the appellants that the assessment of the unimproved value was based on unreliable sales evidence and lacked any meaningful relativity with the unimproved values attributed to other proximate land in Seventeen Seventy. In particular, it was contended that the respondent failed to adequately take into account the topography and the narrow and irregular shape of the land. [9] The land falls away quite steeply from its Elliot Street frontage and, according to Mr Comiskey whose evidence was largely unchallenged about this, it was required to be terraced to accommodate that topography. The land also has an irregular shape as a consequence of the subdivision of an original and much larger parcel of land which accommodated a substantial dwelling. As I understand this part of the evidence, the subject land was subdivided in such a way as to "carve out" the dwelling on the original block. The result of this is that the Elliot Street frontage is 15.084 metres in width narrowing to about 14 metres at or about the middle of the lot and then expanding again to about 17.5 metres at the rear or north-western boundary. For the sake of completeness I should add that the attempt to "carve out" the improvements on the original block were not entirely successful as there is a small encroachment on the subject land where a part of the kitchen of the original dwelling still intrudes over the south-western boundary. [10] The evidence of Mr Comiskey, which was again not seriously challenged, was also that the combined effect of shape and topography made any substantial building on the land difficult. In an attempt to resolve these problems the appellants sought to acquire a piece of the vacant Crown land adjoining their northern boundary but, for various reasons this was unsuccessful. The Sales Evidence [11] As both Mr Comiskey and Mr Schipper relied on what were said to be relevant comparable sales as evidence of value I consider it appropriate to deal with that evidence now. [12] Mr Schipper relied on three lightly improved sales of land having the same land use designation located at 574 Captain Cook Drive, 11 Elliot Street and 10 Endeavour Street which occurred at or about the relevant date. Accordingly, at least at face value these sales could have been expected to provide reliable evidence of value. [13] However, in respect of Mr Schipper's first sale at 574 Captain Cook Drive, this was clearly not the case. The uncontested evidence was that this land was purchased by an adjoining owner anxious to preserve his/her views and that of the most certain way of -- 3 of 7 -- 4 ensuring that was to acquire the sale block. In my opinion adjoining owner sales should generally be treated with some caution. In the circumstances of this sale such caution is entirely warranted. Not only is the evidence clearly to the effect that this sale involved an anxious adjoining owner but there is also considerable doubt about whether or not the sale also involved a premium to take account of a development application which, according to Mr Comiskey, was associated with a development application over an adjoining parcel of land, Lot 5 on Plan S8562. Lot 5 accommodates a shop and some licensed premises. Having regard to the evidence surrounding this sale I do not consider that it offers any reliable evidence of value as at the relevant date. [14] Mr Schipper's second sale at 11 Elliot Street is 809 m² in area and sold on 20 September 2003 for $850,000. The only improvement carried out on the land was clearing. According to Mr Comiskey, this sale was also artificially inflated as it involved the then owner playing off, one against the other, two keenly interested buyers speculating on being able to achieve approval for some form of unit development. [15] Mr Schipper rejected the assertion that the price of $850,000 was an inflated one and, to an extent, relied on the re-sale of the block for $987,000 in April 2004 to support his view. [16] There was no independent evidence which gave any real support for Mr Comiskey's opinions about Mr Schipper's Sale 2. In my opinion, the sale is not out of line with Mr Schipper's Sale 3 and the sale price achieved in April 2004 tends to give some support for the view that the September 2003 sale price was not an overly inflated one. Also, in my opinion, the sale price of $850,000 was not seriously put into question by the sale of Lot 8 on Plan S85610 upon which Mr Comiskey relied. This lot sold in May 2005 for $560,000 and included what was described as an "old tin shack" of little or no value. Lot 8 is considerably smaller than Mr Schipper's Sale 2 and occurred at a time when the market in Seventeen Seventy had flattened or fallen slightly. I also accept Mr Schipper's evidence that Lot 8 is in a different and inferior location. [17] Having regard to the evidence surrounding this sale I have reached the conclusion that it is of some probative value in seeking to determine the value of the subject. However, not insignificant adjustments will have to be made to take account of the superior size, shape and topography of this block when compared to the subject. More will be said about these matters below. [18] Mr Schipper's third and last sale is located north of the subject land on Endeavour Street, is 607 m² in area and sold in June 2004 for $750,000. The evidence concerning this sale leads me to the conclusions that it is superior to the subject in shape and topography but -- 4 of 7 -- 5 has inferior ocean views. I also accept Mr Schipper's evidence to the effect that while this sale is somewhat removed from the residential development surrounding the subject, it is still within and part of the Seventeen Seventy township and that, all other things being equal, there is no material difference in the value of lots in one location when compared to the other. [19] Subject to the matters identified in paragraph 16, I also accept that the sale of Lot 8 in Barton Street is of some probative value but needs to be treated with caution. I do not consider the sale of Lot 3 on Plan S8562, relied on by Mr Comiskey, to be of any assistance. The evidence is that this sale involved a dwelling described by Mr Comiskey to be a "substantial residence". Neither witness attempted to carry out any meaningful analysis of this sale and the improvements thereon. Mr Comiskey in his statement also made reference to a "recent" vacant land sale adjacent to Mr Schipper's Sale 3 for $680,000. Unfortunately, I was not given any material details about this sale, including for example, exactly when it occurred, and what, if any, market changes had occurred between October 2004 and the date of the sale. In the circumstances, I place no reliance on this sale. [20] On balance I am of the view that, due mainly to shape and topography, the subject land is significantly inferior to Mr Schipper's Sale 2 and inferior to his Sale 3. Regardless of shape and topography I consider the subject to still be superior to Lot 8 in Barton Street but not significantly so. Relativity [21] Mr Comiskey also relied on the unimproved values attributed to other parcels of land in Seventeen Seventy by the respondent as being indicative of the fact that the appellants land was over valued. Put at its simplest, his argument was that if the other unimproved values were right, then the valuation appealed against must be wrong given the shape and topography problems associated with the subject land. [22] I agree with Mr Comiskey that if the unimproved values attributed to Lot 8 on Plan S8561 (Sale 2) and Lot 32 on Plan S85613 (Sale 3) in the amounts of $705,000 and $700,000 respectively are correct, then the subject land must have a value of less than $690,000. [23] When confronted with Mr Comiskey's argument about relativity, Mr Schipper conceded there did appear to be inconsistencies. However, according to Mr Schipper the problem did not lie with the subject land and those lots surrounded by Barton and Gaden Streets. According to Mr Schipper, any rectification of inconsistencies in relativity ought be resolved not by decreasing the unimproved value of any lots, including the subject, but -- 5 of 7 -- 6 by increasing the unimproved value of those lots on the northern side of Elliot Street from Lot 2 on Registered Plan 610970 to Lot 8 on Plan S8561 inclusive. There was no clear evidence of how any such adjustments might affect, if at all, the unimproved value of $700,000 attributed to Mr Schipper's Sale 3. [24] Overall I did not find Mr Schipper's evidence on the issue of "relativity" particularly convincing. To a large extent it struck me as being more the product of afterthought and reaction to Mr Comiskey's questioning than the product of critical analysis and consideration. The evidence given by Mr Schipper about this issue certainly was not, in my view, sufficient to cast doubt on the presumption of correctness afforded the statutory valuations pursuant to s.33 of the VLA. Conclusions [25] The best basis for the assessment of the unimproved value of land is the use of sales of vacant or lightly improved comparable land. And, while the maintenance of correct relativity between the unimproved values attributed to land is important for rating and taxation valuations, relativity should, generally speaking, be subordinate evidence to that of reliable sales evidence.1 However, in this case the combined evidence about the sales and relativity points, quite convincingly in my opinion, to the conclusion that the unimproved value under appeal is excessive and that the discount of $20,000 referred to in paragraph [4] above is insufficient having regard to the shape and topography of the subject land. Accordingly, the presumption of correctness given to the valuation under appeal pursuant to s.33 of the VLA is rebutted. [26] The evidence of Mr Schipper was clearly to the effect that while ocean views was the main characteristic or attribute driving land prices in Seventeen Seventy, regular shape and topography were also important characteristics which affected price. At page 33 line 45 of the transcript Mr Schipper, when comparing his Sale 2 to the subject land said: "Sale 2 is a larger block. It has less slope, better views and in my opinion was quite superior." I accept this evidence and Mr Schipper's evidence that his Sale 3 was "slightly" superior to the subject. [27] On balance, I consider that the sales evidence would support a market value for the subject in the order of $720,000 as at the relevant date. I also consider that a difference of $15,000, the difference between the unimproved value attributed to the Sale 2 land when compared to that attributed to the subject land, does not adequately take into account the significant advantages the Sale 2 land has in comparison to the subject. In 1 Fischer v Valuer General (1983) 9 QLCR 44 246 (LAC); Grahn v Valuer General (unreported decision of LAC, AV90-472 and AV90-473). -- 6 of 7 -- 7 my opinion, a discount of between 10% and 15% of the unimproved value attributed to the Sale 2 land would be justified having regard to those matters. For the purposes of this appeal I will adopt the mid point of that range. The application of a 12½% discount to the unimproved value of Sale 2 ($705,000) results in an amount of $617,000 in round figures. [28] In all the circumstances, adopting the respondent's approach of rounding to the nearest five or ten thousand dollars, I intend to adopt the figure of $615,000 as the unimproved value of the subject land as at 1 October 2004. This figure, in my view, sits quite comfortably with those sales which I have found provide some probative evidence of value and with the relativity with the unimproved values attributed to the Lots on the northern side of Elliot Street between the subject and the intersection with Captain Cook Drive and with the unimproved value attributed to Mr Schipper's Sale 3. In this context I also note that the figure of $615,000, when compared to my assessment of the market value of the subject land in the amount of $720,000, sits reasonably comfortably with the evidence of Mr Schipper concerning the 85% "rule of thumb" application rate sometimes adopted by the respondent. Adopting this "rule of thumb" and applying it to the market value of land as determined by me, would result in an unimproved value in the order of $612,000. [29] For all of the above reasons I find that the unimproved value of the subject land as at 1 October 2004 is $615,000. Orders 1. The appeal is allowed. 2. The unimproved value of Lot 1 on Registered Plan 610970, Parish of Eurimbula as at 1 October 2004 is $615,000. R S JONES MEMBER OF THE LAND COURT -- 7 of 7 --