Body Corporate for "Chesapeake" Community Titles Scheme v Department of Natural Resources and Mines [2005] QLC 4

LAND COURT OF QUEENSLAND CITATION: Body Corporate for "Chesapeake" Community Titles Scheme v Department of Natural Resources and Mines [2005] QLC 4 PARTIES: Body Corporate for "Chesapeake" Community Titles Scheme (applicant) Chief Executive, Department of Natural Resources and Mines AV2003/0389 (respondent) FILE NO.: AV2003/0389 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under Valuation of Land Act 1944 DELIVERED ON: 20 January 2005 DELIVERED AT: Brisbane HEARD AT: Proserpine MEMBER Dr NG DIVETT ORDER: The appeal is upheld, the valuation of the Chief Executive is set aside, and the unimproved values of Lots 1 to 4 and 6 on SP 106404 and Lot 10 on SP 129629 is determined in the sum of One Million Nine Hundred Thousand Dollars ($1,900,000). CATCHWORDS: Valuation – Use of Sales – Unique nature of land – Lack of direct comparability – Balance of opinion weighted. APPEARANCES: Mr BJ Conroy for the appellant. Mr A Cradick, Legal Officer, appeared for the respondent, Background: [1] This matter relates to land at Mandalay Point, Mandalay and described as Lots 1 to 4 and 6 on SP 106404 and Lot 10 on SP 129629, Parish of Conway. The subject land has an -- 1 of 17 -- 2 area of 76.379 hectares and is located about 7 kilometres north-east of Airlie Beach. The subject land has good access to Mandalay Road, which is a narrow double lane bitumen carriageway with gravel shoulders and earth channelling. Electricity, telephone and garbage services are available. There is no sewerage or reticulated town water. The subject land is zoned part Residential and part Rural under the town planning scheme of the Whitsunday Shire Council, effective at the date of valuation at 1 October 2002. The key issues are the nature of the land, impact of planning, relativity, comparison of sales and the use of the land. [2] On 27 February 2003 the Chief Executive issued a valuation of the subject land at $2,300,000. Following an objection the Chief Executive confirmed that figure on 15 July 2003. The appellant has now appealed claiming the unimproved value should more properly be $1,200,000. [3] Bevan John Conroy, an experienced registered valuer appeared and gave evidence for the appellant. Mr A Cradick, Legal Officer, appeared for the respondent, calling evidence from Ross Malcolm Bein, the senior departmental registered valuer now accepting responsibility for the valuation, which had previously been prepared by another registered valuer no longer available to defend the valuation. A joint inspection was undertaken by the Court and the parties. The nature of the land – [4] The subject land is an irregular shape parcel rising with moderate to steep slopes from its frontage to Mandalay Road, to a high range running north to south through the eastern part of the site, and then falling steeply to its eastern boundary. The land is partly cleared, but the balance is heavily timbered with subtropical rainforest. Much of the steeper land is virtually unusable without major earthwork development costs. Only the two Lots 1 and 2 near the entrance gates to Mandalay Road are fairly easy sloping, and potentially capable of further development as smaller lots. There are good ocean views from all existing six parcels to the north and west. Views to the east and north are available from the high areas of Lots 3 and 10, but the majority of views are towards the west. Accordingly the views are seen as inferior to ocean views from Airlie Beach, which has predominantly a north and north-easterly aspect. [5] While there is no town water available, there is a private reticulated water supply to each of the six parcels from bores within the property. Water from those bores is held in storage tanks and reticulated from the tanks to the lots. [6] Mr Conroy argues that in his opinion Mr Bein has been unduly influenced by the presence of the existing internal access road, electricity and private water supply, which has been -- 2 of 17 -- 3 constructed by the appellant. He argues that those features should be excluded from any valuation assessment for unimproved value purposes, as noted by s.3(1) of the Act. Mr Bein confirms that he had valued the property as vacant lands without any internal road, but with the potential of obtaining an internal water supply, as evidenced by the current water system. However Mr Bein notes that it was likely that a future development of about 9 parcels could be achieved by further subdivision of the current six lots. That factor was known to the appellant when it acquired the six lots. On that basis Lot 1 could be further developed as three lots and Lot 2 as two lots, giving an extra three lots to the original six parcels. [7] Because the best ocean views are obtainable from the steepest and highest parts of the subject land, Mr Bein argues that it is not appropriate to then make further adjustments for the steep topography of the land. In assessing the amount of usable building area upon the subject land, Mr Conroy estimates that about 90% of Lots 1 and 2 (5.13 hectares), 100% of Lot 6 (1.69 hectares), and 20% of Lots 3, 4 and 10 (12.22 hectares), providing an overall building area of about 19.03 hectares or 25% of the total area of the subject land. [8] While Mr Bein concedes that the subject lands do not have direct access to high watermark along its western boundary, he sees the direct access to Mandalay Road as meeting the criteria of waterfront lands. Mr Bein explains that his definition of waterfront lands includes the elements of absolute waterfrontage (similar to his Sale 2), esplanade fronting lands, and lands between the esplanade and the roadway. He notes that the subject lands extend from the Mandalay Road esplanade at its north-west to the Shute Harbour Road to its south-east, and therefore meets the criteria of the third type of waterfront lands. Mr Conroy does not reject that understanding. Impact of planning – [9] Mr Conroy advises that the low density residential zoning of Lots 1 and 2 in the Whitsunday Town Plan, effectively allows for a minimum lot size of 4,000 square metres. However he argues that in that area, parcels are being approved at one lot per hectare of area. He notes that further development of the rural parts of the subject land would involve a material change of use, with conditions of approval representing significant development costs. For those reasons he believes that a maximum future development to nine overall lots is reasonable in assessing its value. While he agrees that planning schemes are not static by nature, he argues that it is appropriate then to consider the relevant planning regime at 1 October 2002 in the current matter. Mr Bein does not challenge that assessment. -- 3 of 17 -- 4 Relativity – [10] As part of his argument, Mr Conroy seeks relativity with the vacant land (Lot 17) adjoining to the north of the subject land. He notes that parcel is also relatively steep terrain, with similar western views across the waters of Boat Haven. Mr Conroy concedes that there are no comparable northern ocean views as found on the subject land, but he argues that as Lot 17 is smaller in area than the subject land, then any allowance for size would be in favour of the larger subject land. He also notes that Lot 17 currently has planning approval for 17 new lots at the relevant date, and subsequent development of those new lots has already commenced. He compares that to the maximum of nine lots that could be realised on the subject land. Mr Conroy notes that while the subject land is valued overall at $30,000 per hectare, the adjoining smaller Lot 17 is valued at about $20,000 per hectare. He argues that is inconsistent. [11] While Mr Bein does not agree with the determined unimproved value rate of the adjoining Lot 17 at the relevant date, he advises that departmental records reveal that Lot 17 on RP 72625 was valued at $660,000, or about $21,640 per hectare. He advises further that as a result of a subsequent amendment following the registration of a body corporate plan upon that property, an area of about 8 hectares of the body corporate land had been valued at $1,650,000 at 1 October 2002. The date of issue of that revaluation was June 2004. The balance area of about 24 hectares of the original Lot 17 (total area 30.57 hectares) was allocated back to the State. Mr Bein agrees that the approval of that subsequent subdivision of Lot 17 was included in the sale of that property. However he argues that the 17 lots in Lot 17 would not be as exclusive as the nine lots on the subject land. He also argues that the ocean views from the subject land are closer to the water than on Lot 17. I would agree with Mr Bein's comparisons in respect of ocean views and the more exclusive nature of the subject land compared to Lot 17. However allowing for the smaller size of Lot 17, I believe Lot 17 is marginally inferior to the subject land on a rate per hectare basis. Comparison of sales – [12] Both valuers agree that the subject land is fairly unique in that area, and direct comparable sales are difficult to obtain. Both valuers agree that the determination of this matter was one of the most difficult in that locality. Mr Conroy notes that the subject land had been previously sold in June 1997 for $2,500,000, as an improved property. The substantial existing dwelling had a living area of about 653 square metres, with a further 247 square metres of deck. There were also four outbuildings, the internal road, which was built to Main Roads standard, and the internal water supply, electricity, and telephone -- 4 of 17 -- 5 systems. While he believes that there are no directly similar sales, Mr Conroy provides the following sales: [13]  Sale 1 – (Cavendish Road, Jubilee Pocket – Lot 2 on SP 107683). This is the only sale without development approvals in place, which is also zoned as Rural Land. The sale has an area of 51.29 hectares, and is located on the eastern side of Airlie Beach, about 1.5 kilometres radially south-west of the subject land across Boat Haven. The sale rises with moderate to steep slopes from its north-eastern boundary, across a series of ridges and spurs to its rear boundary. The sale is mostly heavily timbered with subtropical rainforests, and is generally unusable. There are attractive ocean and island views to the north. There are no services available, and no formed access to the site. The site is zoned Rural, and is presently unable to be developed. The sale is seen as overall inferior to the subject land. The sale sold in October 2001 for $650,000, and was analysed at $12,670 per hectare. This is a common sale with Mr Bein's Sale 6. [14]  Sale 2 – (Valley Drive, Cannonvale – Lot 80 on SP 142578). This is a sale of 46.9864 hectares located radially about 5.7 kilometres south-west of the subject land, and west of Airlie Beach. The sale is 10 kilometres by road from the subject land. The sale comprises gentle undulating land, mostly cleared, and featuring views of surrounding urban development and rural views. There is good bitumen sealed access, and electricity, telephone, reticulated town water and sewerage and garbage services are available. The land is proposed for development as single unit houses. The sale is seen as marginally inferior to the subject land. The sale sold in April 2002 for $1,075,000, and was analysed at $22,900 per hectare. [15]  Sale 3 – (Macona Crescent, Cannonvale – Lot 1 on RP 752514). This is a 18.9143 hectare site located radially about 3.7 kilometres south-west of the subject land, and to the west of Airlie Beach. The sale comprises moderate to steep land at its northern end road frontage, rising to a series of ridges and spurs at its rear to the south. The site is timbered with subtropical rainforest, and there are ocean views to the north. Access is via a bitumen sealed road, and similar utility services to Sale 2 are available. The sale was subject to a development approval for 109 multiple units, although that has since been reduced 97 multiple units, and is seen as superior to the subject land. The sale sold in October 2002 for $2,100,000, and was analysed at $111,000 per hectare. The sale is a common sale with Mr Bein's Sale 4. [16]  Sale 4 – (Kara Crescent, Airlie Beach – Lot 9 on SP 142544). This is a sale of a 32.3 hectares of similar topography and vegetation as Sale 3, and is located radially about 2.5 kilometres west of the subject land. There are good ocean and island views to the north. Access and services are similar to Sale 3. The land is proposed for 300 multiple and single dwelling units. The sale sold in December 2002 for $4,430,000, and was analysed at $137,000 per hectare. The sale is seen as superior to the subject land. This is a common sale with Mr Bein's Sale 5. [17] Mr Conroy further advises that his Sale 2 was the sale of the Cannonvale Gold Course, which is now proposed for development into 300 residential lots, and a few commercial -- 5 of 17 -- 6 lots. There are some water problems to the rear of that site. While the views from Sale 2 are inferior to the subject land, because of its greater development potential, it is seen as superior to the subject land. [18] To support his valuation Mr Bein provides the following sales:  Sale 1 – (corner Shute Harbour and Jubilee Pocket Roads – Lot 3 on RP 746300). This is a 4.021 hectare sale located about 1 kilometre radially south-west of the subject land, and has very good access to both Shute Harbour and Jubilee Pocket Roads, both of which are bitumen sealed double-lane carriageways with concrete kerbing and channelling. The sale is generally a level redevelopment site with limited, if any, sea views. Electricity, sewerage and water are available. The sale sold in June 2001 for $1,150,000, and was analysed at $1,100,000, and applied at $1,100,000 ($275,000 per hectare). The sale is seen as a smaller redevelopment site compared to the much larger subject land. Overall on total analysed values the sale is seen as significantly inferior to the subject land, due to the superior views of the subject land. The sale has subsequently resold. [19]  Sale 2 – (Mandalay Road, Mandalay Point – Lot 192 on HR 884 and Lot 322 on HR 1733). This is the sale of direct waterfront lands of area 1.849 hectares, located about 1.5 kilometres north of the subject land. The sale is an elevated site with direct access to the beach, and excellent sea views. Utility services are similar to the subject land. Access is via bitumen sealed Mandalay Road until about 500 metres from the sale. Access is therefore inferior to the subject land. The sale was developed with a dwelling and a small commercial business. The land has subsequently been rezoned from Industrial/Commercial to Residential, and the land developed as five prestigious home sites, two of which are retained by the purchaser. The sale sold in March 2001 for $1,760,000, was analysed at $1,500,000, and applied at $1,500,000 ($830,000 per hectare). Because of its much larger size, the subject land is seen as overall superior at the applied values. The sale involved a long settlement period. [20] As further support Mr Bein has compared six inglobo parcels in the areas as follows: Sale Area Date Price Analysed rate Comparison per hectare 1 (Lot 53) 9.5065 ha 8/2001 $4,510,000 $475,000 - Shute Harbour Road 2 (Lot 54) 5.417 ha 8/2002 $863,500 $160,000 Inferior/smaller Stewart Drive 3 (Lot 52) 5.938 ha 5/2002 $950,000 $160,000 Inferior/smaller Shute Harbour Road 4 (Lot 1) 18.9143 ha 10/2002 $2,100,000 $110,000 Superior/similar Macona Crescent, Cape Conway terrain 5 (Lot 9) 32.3 ha 12/2002 $4,430,000 $137,000 Vastly superior Seaview Drive, Cape Conway 6 (Lot 2) 51.29 ha 10/2001 $650,000 $12,500 Low sale/vastly Hermitage Drive inferior -- 6 of 17 -- 7 [21] Mr Bein argues that while there are no directly comparable sales to the subject land, he draws support from guidance provided in the above schedule. He notes that the inglobo sales reveal that there was a demand for larger parcels in the overall Whitsunday locality, but he argues that the subject land is much superior to any of those inglobo sales. Mr Bein agrees that over a three year period, the market had increased by 20% to 30%, with special properties rising slightly more. While he agrees that further rezoning might be a possibility for the subject land, Mr Bein believes that the current use of the land may well be its most appropriate use. [22] While he does not directly rely upon any of sales of parts of the subject land, Mr Bein provides a schedule of sales of parts of the subject land to demonstrate the prestigious nature of the subject development. It is noted that Lot 1 sold in November 1999 for $450,000, and was subsequently resold in 2001 for $600,000, and again in 2002 for $725,000. The remaining five lots sold for $342,000 (Lot 2), $350,000 (Lot 3), $420,000 (Lot 4), $650,000 (Lot 6) and $1,000,000 (Lot 10). Only Lot 6 had been an improved sale. [23] Mr Conroy notes that Mr Bein's Sale 1 (Shute Harbour and Jubilee Pocket Roads), has an approval in place for the development of 118 units, which are currently being sold off the plan for between $395,000 to $550,000. Because of its greater development potential, Mr Conroy feels that Sale 1 is a superior site to the subject land. Mr Conroy also rejects Mr Bein's Sale 2 (Mandalay Pocket), as any reasonable comparison, as it is absolute beach frontage land, and far superior to the subject land. He notes that two of the subsequent new lots from the development of Sale 2 had sold for about $430,000 and $820,000, and that the new zoning for Sale 2 as Residential is its highest use. Mr Conroy advises that Mr Bein's inglobo Sale 3 (Lot 52) currently has approval for 26 residential sites and 16 multiple unit sites, while his Sale 2 (Lot 54) has approval for 32 residential sites and 20 multiple unit sites. [24] Mr Conroy also notes that Mr Bein's inglobo Sale 1 (Shute Harbour Road) was the sale of the existing Reef Oceanic Resort, which included about 80 accommodation units, plus resort facilities, swimming pool, shops etc. He argues such a highly improved sale, bearing in mind the difficulties of comparisons anyhow with the subject land, is really not relevant in this matter. However Mr Conroy does not question the analysis of Mr Bein's Sale 1, but he disagrees that the subject land has a much higher potential than Sale 1. Mr Bein agrees, but advises that his Sale 1 was included merely to demonstrate the first sale in that area. Mr Conroy notes also that Mr Bein's Sale 3 was a mortgagee sale of part of -- 7 of 17 -- 8 Sale 1. However Mr Conroy agrees that the extended marketing period leading up to Sale 3 probably overcome any stigma that may be associated with that sale because of the mortgagee arrangement. Mr Conroy also concedes that his Sale 1 was also a mortgagee sale, but he argues that his Sale 1 also had an extensive marketing program prior to the sale, and he believes that it fairly represents the market level at that time. [25] Mr Conroy argues that his basic sales are really his Sale 1 and his Sale 2. He notes that Sale 1 was the only relevant sale that he was aware of that involved no subdivisional potential at that stage. Mr Conroy agrees that while Mr Bein's Sale 2 was absolute water frontage, Mr Bein's Sale 1 was separated from the water by Shute Harbour Road and a sports park. Mr Conroy concedes that his sales are all removed from the water, and generally tend to be elevated in the hills, but he notes, so also is the subject land. [26] In respect of any appreciation of the potential for development upon the subject lands, Mr Conroy argues that the subject land is restricted to only nine residential sites, compared to the other lands with significantly greater potential. Mr Bein agrees that the potential development is more restricted in the market upon the subject land. However he notes that those nine new lots are all very expensive prestige parcels. Mr Bein argues that he sees the subject land as superior to his Sale 1 (Shute Harbour Road) because of its greater potential, better location, much superior sea views, and closer to the water. [27] Mr Bein also rejects Mr Conroy's comparison with Mr Conroy's Sale 1, which he sees as inferior due to the longer timeframe and greater uncertainty for future developments upon Sale 1 at Cannonvale. Mr Bein sees the subject land as vastly superior to Mr Conroy's Sale 1, which he feels is an older sale and therefore low in nature at the relevant date. Mr Bein also sees Mr Conroy's Sale 4 (his common Sale 5) as much superior to the subject land, due to its location near Airlie Beach and its overall market place potential. However, while both valuers agree that ocean views are likely from the higher timbered rear areas of that common sale, neither valuer had personally visited those higher rear areas. In respect of Mr Conroy's Sale 3 (his common Sale 4), Mr Bein sees that as slightly inferior to the subject land, due to the bigger returns on the limited number of lots (9) on the subject land, balanced against the development costs. Mr Bein argues that the subject land would demonstrate a higher potential profit return on development. [28] In respect of Mr Bein's inglobo Sale 6 (Hermitage Drive), Mr Bein advises that the sale had been initially applied at a higher value than the sale price. Mr Cradick later advised that the application had been reduced to $750,000, following an objection by the owners, after clarification of the zoning of that land. -- 8 of 17 -- 9 [29] In summarising their comparisons, Mr Conroy argues that developers in that area purchase lands where they can realise future development potential over a shorter, rather than a long term timeframe. For that reason he argues that the existing zoning restrictions are matters that would influence a prudent purchaser. Mr Conroy agrees however if a developer was to consider a longer holding period before development, then considerations for the purchaser would include some component for risk and also interest foregone. Mr Cradick for the respondent notes that the two basic sales of Mr Conroy, being his Sales 1 and 2, were both tainted sales. Mr Conroy also notes that while Mr Bein has provided evidence of the six sales of part of the subject land as support, the Act requires that those sales must be ignored under s.3(1) of the Act. [30] Mr Conroy also questions Mr Bein's comparisons, which he notes relate only to the final relationship of the determined analysed unimproved values. He argues that such comparisons do not actually describe how the properties relate to each other, such as how the types of country relate, or the views etcetera. Decision: [31] I note first that both experienced valuers agree that, because of the uniqueness of the subject land, in an area where other unique properties also exist, it is difficult to get truly comparable evidence of sales. Those arrangements were recognised in the matter of Brewarrana Pty Ltd v Commissioner of Highways (SA) (1973) 25 The Valuer 4, where Wells J said at 179: "It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects; … there is no hard and fast rule by the application of which a valuer may, whatever the circumstances, draw the line that clearly separates the sales that are comparable from those that are not. It is, in my view, all a matter of degree: some adjustment is always necessary; too much adjustment will render it unsafe to use a sale, subject to such a degree of adjustment, for the purpose of the reasoning process in the comparable sales method. Just where the line is to be drawn is, it seems to me, the very sort of question that is fit for the expert valuer to determine; the assessment of the risks of adjustment is peculiarly within his (the valuer's) sphere of skill." [32] In respect of the nature of the subject land, I note also that there is general agreement between the valuers, except that Mr Conroy feels that in making any comparisons Mr Bein has been influenced by the presence of the existing private infrastructures, including the internal roads. As Mr Conroy notes such internal improvements must be ignored under s.3(1)(b). Mr Bein rejects that he has considered those improvements, as he notes that he has sought comparisons on the basis of the subject land being vacant land. On that -- 9 of 17 -- 10 basis I accept that there has been no consideration of the added value of site improvements upon the subject land, and that is not an issue for consideration. However the potential for a private water supply from internal bores upon the land, would be a matter that a prudent potential purchaser was likely to consider. [33] I also accept Mr Bein's opinion that any disability that might occur as a result of the steep terrain to the rear of the subject land, must be weighed against the excellent ocean views that are obtained as a result of that terrain. Any consequential disability that arises from that steep terrain is likely to be balanced by the fact that only a small number of parcels are able to be developed in that large part of the subject land as a consequence of the steep terrain. [34] In the matter of the future potential for development of the subject land under the existing planning constraints of the town plan, I accept, as do both valuers, that a likely development of nine lots would be the most likely development objective of the land. While any consideration of the highest and best use of the land is to be allowed when determining the unimproved value, it must also give "due weight to its potential utility and to the probability of consent being given for such potential use". (Land Valuation and Compensation in Australia" 3rd edition by Rost and Collins, p.91. The principle of highest and best use finds its genesis in the decision of the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418, per Isaacs J at 440, where he noted: "The facts existing on 1 January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the advantageous purchase for which it was adapted." [35] In deciding the impact of the existing planning scheme of the Whitsunday Shire Council, I note that guidance was given by the High Court in Royal Sydney Golf Club v Federal Commissioner of Taxation [1954-55] 91 CLR 610, where the Court said at 625: "The first question in the case stated should therefore be answered that in arriving at the unimproved value under the Land Tax Assessment Act of the land the subject of the appeal the land should not be valued without regard to the provisions and effect of the County of Cumberland Planning Scheme." The Court had noted when speaking of the land shown to be within a restricted area at 624: "But it is nevertheless a restriction which arises from the law affecting an area in which the land lies, and not something altering the hypothesis upon which the Federal statute requires the land to be assessed. It must be taken into account in ascertaining the unimproved value of the land." -- 10 of 17 -- 11 [36] I also acknowledge guidance in the decision of Gallagher v Brisbane City Council (1975) 2 QLCR 368, in respect of the determination of highest and best use of the land. In that matter the Land Appeal Court found in determining compensation for the land resumed, that the existing zoning will always affect the highest and best use, but it does not create it. The Land Appeal Court found that, while the highest and best use was different from the permitted use under the zoning, the claimant was entitled to receive the present value of the highest and best use. However I believe that matter can be distinguished as it involved a matter of resumption of land, where the owner was entitled to receive compensation for his loss. The current matter deals with an annual valuation for revenue rating purposes, and the zoning only has the impact of preventing the highest and best use at the time of the valuation at 1 October 2002. [37] Now I know that a local authority may vary its policy from time to time. That was noted in Wort v Whitsunday Shire Council [2001] 116 LGERA 179, where in the Queensland Court of Appeal, Williams JA noted at183: "There can, to my mind, be no doubting the proposition that it is in the public interest that a local authority vary its planning policy from time to time (as the duly elected authority having legislative power in that regard) to ensure that planning requirements of the locality meet changing circumstances as time goes by." However the current valuation is a matter which should be determined in the knowledge of the current planning constraints upon the land. [38] On the evidence in the current matter, I accept that, although the minimum size parcel in a low density residential zone may be 4,000 square metres, it is most likely that development of the subject land into only nine Lots is the most likely development potential of that land. Comparison of sales – [39] I turn then to the sales evidence, and note that Mr Bein's Sale 2 (Mandalay Point) had been the subject of an extended delayed settlement period. In respect of delayed settlements, or negotiated purchases, I am reminded that such arrangements should not necessarily be excluded. As noted in Woollams v The Minister (1957) 2 LGRA 338, where in considering sales of lands to the Board in the area which had occurred prior to the resumption of the subject land for the development of the Warragamba Storage Dam, and where those other sales were also part of the resumption for the dam project, Hardy J said at 347: "I am satisfied that there is no principle of law which requires me to reject completely the sales to the Board of comparable properties in the valley made shortly before and shortly after the relevant date. However, they -- 11 of 17 -- 12 should be used with considerable caution, bearing in mind that the Board had a statutory power of resumption and that it is reasonable to infer that all the vendors knew of that power and that they would also know that the Board would exercise it and resume their properties if a negotiated sale was not made." [40] However I note that in a later matter, where prices paid as part of compulsory acquisition were rejected by the Court in Beard v The Director of Housing [1964] 9 LGRA 74, Crisp J said at 79: "I do not think I am bound to admit evidence of sales which would have to be used with considerable caution, as is agreed on all hands, and which would need so much careful inquiry into the surrounding circumstances where I have no such evidence and so much more foreshadowed of other sales in the locality which are not vitiated by the same element. I therefore rule against that." [41] The need for caution in accepting sales where certain negotiated settlements had occurred, was further considered by Hardy J in Jovist Pty Ltd v Campbelltown City Council (1968- 70) 19 LGRA 134. In considering other sales associated with the development for which that subject land had been acquired by the Council, Hardy J said at 138: "In view of the proposed ultimate zoning of the subject land under which the plaintiff's land would be zoned in part for roadway widening and or extension and as to the balance for a bus terminal (in all probability in public ownership) the sales to the defendant council in the subject area are of special importance. Their use, however, presents substantial difficulties in the valuation exercise." [42] However in the matter of Caltic Agencies Pty Ltd v South Australian Land Commission (1978-81) 40 LGRA 172, Jacobs J also noted at 175: "There is ample authority, which I need not cite, for the proposition that other transactions with the acquired authority must be viewed with great caution if they are sought to be used as a measure of market value, but they are not inadmissible as evidence. Particularly is that so where, as here, there is virtually no other evidence of value in the locality at the relevant time, since the advent of the Commission seems to have driven private developers from the market. However where the acquiring authority has itself bought in the open market, or the land has been offered to the authority at a figure about which there is no query, such transactions are relevant: Beard v Director of Housing (1961) 9 LGRA 74." [43] Similar rejection of prior sales to a resuming authority were noted in Marshall v The Commissioner of Irrigation and Water Supply (1972) CLLR 214. In that matter the valuer for the claimant had sought to apply sales where the purchasers had negotiated agreements with the Commissioner to ensure a future realised potential for the sales. The learned Member rejected those sales as he noted that in each relevant case the purchaser had been assured by the Irrigation Department that the land would be included in the -- 12 of 17 -- 13 scheme. That decision was later upheld by the Land Appeal Court in (1973) 40 CLLR 71, where the Land Appeal Court said at 82: "In other words, on the probabilities, the prices reflected by these sales include an element representing the parties appreciation at the respective sale dates – some of which are three to four years after the declaration of the irrigation area, of the value of a retention area, irrigated by the scheme. This value represents enhancement brought about by the scheme and we consider the learned Member properly rejected those sales." [44] Now while the above precedents can be distinguished in the subject matter, as there was no connection between the purchaser and any known overriding reason for the sale of the Mandalay Point land, the message is clearly that caution should be exercised in deciding whether Sale 2 (Mandalay Point) represented a prudent independent buyer and seller relationship, and such caution must influence the weight that can be applied to Sale 2. [45] If I turn then to Mr Bein's Sale 1, I note that is a much smaller site than the subject land, with virtually no ocean views available. The topography of Sale 1 is flat, and there are all normal utility services available, unlike the limited services on the subject land. It would be a reasonable conclusion to suggest that, other than location in the locality of the subject land, Sale 1 is hardly a "like with like" comparison. I accept that it is within the expertise of Mr Bein to draw some professional conclusions about his comparisons, but those disabilities must influence the weight that can be applied to that sale. [46] That then leads to some understanding of the different methods of comparisons applied by the two valuers. Mr Bein has tended to draw his comparisons based upon the concluded final unimproved values of the separate parcels. Mr Conroy has made his comparisons more upon the general nature and characteristics of each parcel. As noted in paragraph [31] any useful comparison should weigh all of the features of a parcel, in drawing any comparisons. Indeed in Brewarrana Pty Ltd v Commissioner of Highways (SA) (supra), Wells J also noted, when explaining the process undertaken in sales analysis, at 331: "For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape, slope, view, land use (actual and potential), scope for, and difficulties of, development, services and amenities; and in relation to the transaction of sale, the valuer must weigh such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special consideration that induce or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or affected." -- 13 of 17 -- 14 I believe that guidance indicates the complex nature of comparing sales evidence, rather than merely relying upon the final concluded value to determine whether a sale is inferior, comparable or superior to the subject land. [47] I also note that, while both Mr Conroy and Mr Bein have provided a range of sales to seek guidance in respect of appropriate comparability with the subject land, they have also sought to provide some measure of their opinions about the comparability of those sales. That approach is important, as it is not appropriate to merely provide a resulting opinion from their considerations of those sales. That was noted in Flotilla Nominees Pty Ltd v Western Australia Land Authority & Anor (2003) 129 LGERA 65, where Pullin J in the Western Australian Supreme Court said 89: "In my opinion, it is not enough for a valuer to select a basket of sales said to be comparable, showing a large range of prices, and then settle on a figure within the range, without explaining how it is derived from the basket of sales information relied upon." [48] If I turn then to Mr Conroy's Sale 2 (Valley Drive), I believe that a similar concern could be raised in respect of any direct comparability of that sale as a development site to the development potential of the subject land. Mr Conroy's Sale 2 has no ocean views, has all utility services available, and is proposed for development of 300 residential parcels, and is gently undulating with consequential relatively much less development cost rates than the subject land. The subject land has ocean views, is very steep, has limited services available, and will be developed into only nine residential parcels. I suggest that the only directly comparable features are the general location of the lands near Airlie Beach, and the potential to make money from them by some type of residential development. The weight that can be placed upon that sale must also be impacted. [49] On the basis of those concerns I agree with both valuers that there are really no directly comparable sales, and only a general guide as to overall value of the subject land can be gleaned from the individual sales evidence. I accept both valuers' opinion that there was a demand for development land in that area at the relevant date (paragraph [21]). I also accept Mr Bein's advice that, while the sales of the separate parcels of the subject land should not be relied upon, the level of total value of those six sales at $2,762,000 between 1999 and 2002, indicates that the market place saw the subject land as an upmarket development. Indeed, as Mr Conroy advises, the subject land sold as an entity which was developed with significant improvements in June 1997 for $2,500,000 (paragraph [12]), which also supports that conclusion. -- 14 of 17 -- 15 [50] I look then to Mr Bein's inglobo Sales 1, 2 and 3 and I find that Sale 1 (Shute Harbour – Lot 53), was a highly improved sale of an existing resort with 80 accommodation units (paragraph [24]). Now it is generally held that vacant or lightly improved sales are preferred when determining unimproved value, compared to highly improved sales. (PH Clough v Valuer-General (1981-82) 8 QLCR 70 at 76. On that basis I agree with Mr Conroy that Mr Bein's inglobo Sale 1 should also be treated with some caution. In respect of any concerns about the mortgagee nature of Mr Bein's inglobo Sale 3, I accept the valuer's advice that the extended marketing period leading up to that sale provides some measure of the reliability of that sale. [51] That then leaves what are the most likely reasonable comparisons, being the common inglobo sales as follows: Common Sale Area Analysed Rate Analysed Value Comparison Mr Conroy Mr Bein 1 - Lot 1 – Macona Crescent (Conroy's Sale3 – Bein's Sale 4) 18.9143 ha $110,000 per ha $2,100,000 Superior Superior 2 – Lot 9 – Kara Crescent/Seaview Drive (Conroy's Sale 4 – Bein's Sale 5) 32.3 ha $137,000 per ha $4,430,000 Superior Superior 3 – Lot 2 – Hermitage Drive (Conroy's Sale 1 – Bein's Sale 6) 51.29 ha $12,670 per ha $650,000 Inferior Vastly inferior Subject land 76.379 ha $30,113 per ha $2,300,000 - - On those comparisons there is nothing to suggest that either valuer has made a fundamental error of fact. The only difference really is the weight given to the other sales by each valuer. Relativity – [52] In seeking further assistance in respect of how the weight of opinion might apply on the subject lands, I note the relativities sought by Mr Conroy with the adjoining Lot 17 to the north (see paragraph [10]). That adjoining parcel has a potential for development of 17 new lots compared to the nine on the subject land. But while both parcels have similar steep vegetated terrain, and also ocean views, I agree with Mr Bein that the nine parcels on the subject land would all be superior to the new lots on Lot 17. While Lot 17 was originally analysed at $21,640 per hectare, once the land was developed into a body corporate structure, the retained eight hectares had an analysed rate of $206,250 per -- 15 of 17 -- 16 hectare. Clearly the new road improvements that allow the new 17 lots on Lot 17 to realise the potential ocean views have a major added value to that parcel. [53] Now if I consider the improved sale of the subject land in June 1997 for $2,500,000 (paragraph [12]), and applied to that the 30% increase that the values in the locality had increased during the relevant period, I could conclude a total value of the subject land, including the road, dwelling and services, at about $3,250,000 at the relevant date. While I have no evidence of the added value of the improvements in 1997, it would seem reasonable that an unimproved value of about $1,200,000 is too small to allow effectively for the added value of the improvements upon the site. On that basis the unimproved value should be something greater than $1,200,000 as proposed by Mr Conroy. [54] Now while I have already concluded that several of the sales should be treated with some caution, like both Mr Conroy and Mr Bein, I am driven to seek further support from those very sales. If I look first to Mr Conroy's additional sales, I find that his Sale 2 (Lot 80), which was analysed at $1,075,000, has no ocean views, and is well removed from the waterfront. Because ocean views are accepted as a major attraction in that locality, I believe that Sale 2 (Lot 80) is not a reasonable comparison. Further, because of that lack of ocean views, I feel Sale 2 (Lot 80) is considerably inferior to the subject land. [55] If I look then at Mr Bein's additional sales, I feel that his Sale 2 (Mandalay Point) has the presence of ocean views and proximity to the water, and on that basis, does provide some indication of the market's appreciations of those features. While the delayed settlement period may have had an influence upon the agreed purchase price, the sale for $1,760,000 in March 2002, is not inconsistent with the resale of part of the subject land (Lot 1) for $600,000 in January 2001, bearing in mind the further development potential of Sale 2 (Mandalay Point). While Sale 2 (Mandalay Point) has direct water frontage, and therefore close proximity to safe anchorage, its ocean views would be more restricted than the elevated ocean views of the subject land, which is also much larger in area. On balance I agree with Mr Bein that the subject land is superior to Sale 2 (Mandalay Point), but I believe it is only marginally superior than the analysed figure of $1,500,000. [56] Considering all of the evidence, and the unique nature of the subject land, and some of the sales evidence, I am led to the conclusion that, allowing the weighting considered above, an applied value of $1,900,000 ($25,000 per hectare) would be appropriate for the subject land. That is also consistent with the relativity noted in paragraph [11]. Conclusion: [57] Having considered the whole of the evidence I am persuaded that the appellant has partly proved his case. The appeal is upheld, the valuation of the Chief Executive is set aside, -- 16 of 17 -- 17 and the unimproved values of Lots 1 to 4 and 6 on SP 106404 and Lot 10 on SP 129629 is determined in the sum of One Million Nine Hundred Thousand Dollars ($1,900,000). NG DIVETT MEMBER OF LAND COURT -- 17 of 17 --