Chye v Department of Natural Resources and Mines [2003] QLC 61

LAND COURT OF QUEENSLAND CITATION: Chye v Department of Natural Resources and Mines [2003] QLC 61 PARTIES: Nyuk Sang and Kooi Im Chye (applicants) v. Chief Executive, Department of Natural Resources and Mines (respondent) FILE NO: AV2002/0227 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 4 September 2003 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER Dr NG Divett ORDER: The appeal is upheld, the valuation as determined by the Chief Executive is set aside, and the unimproved value of Lot 6 on RP 100702 is determined in the sum of Three Hundred Thousand Dollars ($300,000). CATCHWORDS: Valuation – Sales evidence – Impact of views – Potential link to risk to views – Conservative application APPEARANCES: Mr Chye for the appellants Mr A Cradick for the respondent Background: [1] This matter relates to land at 8 Garvary Street, Holland Park West, and is located about 8 kilometres radially south-east of the Brisbane Central Business District. The subject land has an area of 645 m² and is located in an established residential locality with pockets of -- 1 of 16 -- 2 prestige residential dwellings on elevated ridges offering City CBD views. The subject land has easy access to Garvary Street which is bitumen sealed with concrete kerbing and channelling. Normal urban utility services are available, but underground gas does not pass along Garvary Street. The subject land is zoned Low Density Residential under the Brisbane City Plan 2000, effective at the date of valuation of 1 October 2001. The key issues are the nature of the land, highest and best use of the land, relativity, impact of views and comparison of sales. [2] On 25 February 2002 the Chief Executive issued a valuation of the subject land at $325,000. Following an objection the Chief Executive confirmed that figure on 11 June 2002. The appellants then appealed to this Court claiming the unimproved value should more properly be $200,000. Following a further revision the Chief Executive revised the valuation under s.68 of the Act, reducing the unimproved value to $310,000 on 7 April 2003. At the hearing on 6 May 2003 the appellants led evidence to a revised unimproved value of $250,000. [3] Nyuk Sang Chye appeared and gave evidence for the appellants. Mr A Cradick, Senior Legal Officer appeared for the respondent, calling evidence from Mark Everitt William Denman, the departmental registered valuer now accepting responsibility for the valuation. Mr Denman advised that he was not the original valuer responsible for the valuation at $325,000, but that valuer had subsequently left the Department. Mr Denman now accepts responsibility for the current valuation at $310,000, which he determined on 7 April 2003. The Evidence: Nature of the Land - [4] The subject land is a rectangular shaped inside parcel, rising moderately above road level to an elevated building area. In its natural state the subject land falls about 2 metres from east to west, however the building area has been retained to accommodate the current dwelling. The land is well elevated to a height of about 99 metres Australian Height Datum (AHD), and has broad City views towards the north and north-west. The City Central Business District (CBD) is towards the north-west. There are also good suburban views towards Mt Gravatt to the south and south-west. The views of the CBD from the ground level have been impacted by adjoining residences; but the CBD views from the first floor level are panoramic. [5] The subject land is only two parcels removed from the highest parcel to the east in Garvary Street; and the land falls towards the west. The adjoining lot to the west of the -- 2 of 16 -- 3 subject land (6 Garvary Street) is developed by a block of six flats, and its midpoint is about 1 metre below the subject land. There are no formed footpaths in Garvary Street. It is agreed that tenants’ vehicles from the adjoining flats tend to park in front of the subject land. [6] The subject land is seen as well located to surrounding schools, lying between 500 metres and 800 metres from the two primary schools and a high school. The Garden City regional shopping centre is 3.8 kilometres south-east of the subject land. [7] Mr Denman advises that the immediate area near Garvary Street is currently undergoing extensive redevelopments. He notes that an adjoining owner at 67 Kneale Street recently spent in excess of $480,000 on a major refurbishment of that old dwelling site. Most of those redevelopments are maximising the sites by developing to three levels to a maximum height of 8.5 metres allowable under the building controls. Impact of Views – [8] A key feature of the current matter is the impact upon City CBD views as a result of the redevelopment activities along Kneale Street, immediately to the north of the subject land. Mr Chye explains that the developments of both 67 Kneale Street and 69 Kneale Street have now blocked what were formerly wide views of the City CBD, and also towards the Brisbane Airport. He advises that in spite of broad community objection by local residents in Garvary Street, both of those developments have been allowed to proceed by the Brisbane City Council. He advises that because of possible legal costs, the local residents have decided not to appeal those decisions, but feel that the values of their properties have been adversely impacted. [9] In drawing comparisons with the views now available from 67 Kneale Street and 69 Kneale Street, Mr Chye argues that City CBD views are available from all three floors, plus the garage level of those dwellings. He argues that the City CBD views from the subject land are now significantly reduced from ground level, while the views from the first floor are only over ugly iron roofs which obstruct views of the immediate foreground to the north-west. [10] Mr Denman agrees with that observation, and argues that he has allowed for those intrusions in his valuation. Mr Denman argues however that as he must value the subject land under s.3(1) of the Valuation of Land Act 1944, as if it were vacant at the relevant date, then there remains the potential for the appellants to theoretically redevelop the site to maximise the extent of views available. It is on that basis that he determined the unimproved value at $310,000. -- 3 of 16 -- 4 [11] Mr Chye advises that he had engaged a professional surveyor whose report confirms that part of the front of 69 Kneale Street exceeds the maximum height of 8.5 metres. However he understands that as the buildings were refurbishments and not new dwellings, and because of the sloping nature of the topography of 67 and 69 Kneale Street, the buildings were not seen to exceed the maximum permissible heights. However he notes that matter was not further challenged in the courts. [12] In respect of the extent of views towards the north-west from the subject land, Mr Chye agrees that he can currently see the Freeway and the surrounding suburbs over two existing two-level buildings at 65 Kneale Street and 63 Kneale Street. He also agrees that if those two parcels were refurbished to a maximum height of 8.5 metres, then those suburban and Freeway views would be obstructed. However the distant tops of the surrounding hills would still be visible from the first floor of the subject dwelling. It is also agreed that views of the airport to the north-east are now obstructed by developments in Kneale Street. [13] However Mr Chye argues that it is not only the obstruction of the views which is also impacting the value of the subject land. He notes that the current rear façades of 67 Kneale Street and 69 Kneale Street are, in his opinion, unattractive and overbearing. Mr Denman does not disagree that the presence of the generally windowless rear walls of either residence on 67 and 69 Kneale Street are dominating by their presence, and he has allowed for that also in his valuation. However he notes that 69 Kneale Street is predominantly behind the adjoining land at 10 Garvary Street, and is also closer to the rear boundary than 67 Kneale Street, which tends to predominantly be behind the subject land as explained later in para [33]. [14] Mr Chye explains that the views of the City CBD towards the north-west were wonderful when he first purchased the subject land in 1997. While he admits that there are still panoramic views in that direction, over the tops of 67 and 69 Kneale Street, he argues those are much inferior to the former views available. His concern is also that other residents in Kneale Street are likely to either sell out or refurbish, and the extent of City CBD views will further diminish. [15] Mr Chye challenges whether it would be theoretically feasible to build a three-level dwelling upon the more level subject land. He notes that each floor level, including floor trusses, would require about 2.7 metres, plus the need for a roof structure. Mr Denman argues that by suitably benching the ground floor level at the midpoint, and also utilising a skillion roof structure, then three levels could be achievable. He cites the refurbished dwellings at 67 and 69 Kneale Street as supporting such an outcome. However Mr Chye -- 4 of 16 -- 5 advises that even the original design of 69 Kneale Street had to be reduced on the eastern side in order to avoid exceeding the maximum height allowable on that parcel. Mr Cradick notes that the midpoints of either 67 Kneale Street and 69 Kneale Street are about 4 to 5 metres below the midpoint of the subject land. (Exhibit 3 - contour map). Thus an 8.5 metre high structure on either parcel must be lower by that order than a similar structure on the subject land. Comparison of Sales – [16] In support of his estimate of the unimproved value, Mr Chye provides details of the sale of the subject land itself. He advises that he purchased the subject land for $450,000 in September 1997. He notes that prior to purchasing the property the previous owner had spent $100,000 on renovations during the previous 12 months. He notes that at that time the unimproved value had been $252,000. Mr Chye argues that the subject dwelling comprises 38 to 40 squares of building, with an inground swimming pool at the rear. On that basis, allowing for the value of the land, and the cost of renovation, he argues that the resulting value of the older dwelling at $98,000 would suggest that the land value at that time had been inaccurate. Mr Chye advises that the dwelling had been on the market for some time in 1997 at an asking price of $510,000. He notes that the property market had been relatively subdued at that period. [17] To support his valuation Mr Denman provides the following sales:  Sale 1 - (38 Kneale Street, Holland Park West – Lot 22 on RP 97070). This is a 587 m² Low Density Residential parcel located about 200 metres west of the subject land. The sale is a rectangular inside parcel, falling below Kneale Street towards the north. The sale is at an elevation of about 82 metres AHD, and was a cleared vacant site. Wide views of the City CBD are available from the upper level of a proposed dwelling now under construction. Views from the lower level are partially obstructed by trees, with the potential risk of being partially obstructed by any future redevelopment of the single level residence immediately to the north-west of the site. The sale is smaller in area, at a lower elevation, but is seen as superior in terms of aspect and views. Overall the sale is seen as superior to the subject land. The sale sold in December 2000 for $390,000, was analysed at $389,000, and applied at $380.000. [18]  Sale 2 – (124 Prior Street, Tarragindi – Lot 11 on RP 67637). This is a 809 m² Low Density residential parcel located about 2.4 kilometres west of the subject land, and about 7 kilometres south of the CBD. The sale is at an elevation of 86 metres AHD, and was improved with an old brick dwelling, which has subsequently been demolished and replaced with a two storey dwelling. During redevelopment some benefit was obtained by the existing footings and site works estimated to provide an added value of $10,000. The sale currently has good City CBD views from the second level of the new dwelling, over existing single level -- 5 of 16 -- 6 older dwellings on the northern side of Prior Street. However there is some risk that those views would be obstructed if those old single level dwellings are replaced by two-level houses. The sale is seen as superior in area, topography and elevation, but is seen as slightly inferior in terms of aspect. Overall the sale is seen as superior, and it sold in May 2001 for $465,000, was analysed at $435,000, and applied at $415,000. [19]  Sale 3 – (46 Kneale Street, Holland Park West – Lot 52 on RP 100702). This is a 597 m² Low Density residential parcel located about 150 metres west of the subject land at the corner of Harbut Street. The sale is at an elevation of 76 metres AHD, enjoying wide City CBD views to the north-west. The older existing two- level dwelling was demolished, and is currently being redeveloped with a multi level dwelling of two levels above garages, with access to Harbut Street. Views of the City will be unobstructed from the upper two levels, but views from the ground level are obstructed by surrounding developments to the north. There is also the risk of obstruction of views from the middle level if a single level dwelling immediately to the north, and only 1.5 metres from the rear boundary of that parcel, is redeveloped. The sale is seen as inferior to the subject land in size, elevation and width of views, but superior in respect of views from the lower levels. Overall the sale is comparable. The sale sold in August 2001 for $500,000, was analysed at $504,000, and applied at $310,000. [20]  Sale 4 – (38 Rees Avenue, Coorparoo – Lot 77 on RP 13046). This is a 665 m² character residential parcel located about 5 kilometres radially south-east of the City CBD, and about 3 kilometres north of the subject land. The sale is an irregularly shaped parcel previously developed with an old single level dwelling, and with limited City CBD views through adjoining vegetation. The old dwelling was gutted and part of the framework incorporated into the new dwelling. The sale is seen as superior in respect of location, but inferior in elevation, shape and views of the City CBD. The Character Housing zoning also restricts development. Overall the sale is seen as inferior. The sale sold in March 2001 for $342,000, was analysed at $300,500, and applied at $280,000. [21]  Sale 5 – (74 Sebring Street, Holland Park West – Lot 1 on SP 144192). This is a 451 m² Low Density residential parcel located about 300 metres west of the subject land. The sale has an elevation of 59 metres AHD, is above street level, and at the southern end of Sebring Street which is a cul-de-sac. The sale has an irregular shape and enjoys City views towards the north-west through adjoining vegetation. A three level dwelling has subsequently been built, which has views less obstructed from the higher level. The sale is seen as lower in elevation, similar in area, and inferior in shape and width of views. However City views to the north-west along Sebring Street are unlikely to impeded. The sale sold in November 2001 for $320,000, was analysed at $318,500, and applied at $210,000. Overall the sale is inferior. -- 6 of 16 -- 7 [22]  Sale 6 – (67 Kneale Street, Holland Park West – Lot 15 on RP 100702). This is a 685 m² Low Density residential parcel immediately adjoining the subject land to the north-west. The sale is a rectangular parcel falling steeply from south to north, with its midpoint at about 93 metres AHD. Views of the City CBD to the north- west are wide and unobstructed at all levels from the new three level dwelling subsequently constructed. Subsequent to the sale the old two level dwelling was gutted, and the old footings and some external walls incorporated into the new dwelling. The sale is seen as superior in views and aspect, but inferior in terms of access. Overall the sale is seen as superior. The sale sold in June 2001 for $595,000, was analysed at $548,500, and applied at $350,000. [23]  Sale 7 – (18 Kneale Street, Holland Park West – Lot 38 on RP 97070). This is a 587 m² Low Density residential parcel located about 400 metres west of the subject land, at an elevation of 69 metres AHD. The sale is below street level and has views of the City CBD from the street level, but views from lower levels of the proposed new dwelling are partly obstructed by adjoining vegetation. There is also the risk of obstruction of views by any developments to higher levels immediately north of the sale. The sale was purchased with the intentions of demolition of the old dwelling, but it has been retained for the present time. The sale is seen as inferior in elevation, views and area, but with less risk to future views and the subject land. The sale sold in July 2001 for $475,000, was analysed at $413,500, and applied at $250,000. Overall the sale is inferior. [24]  Sale 8 – (9 Garvary Street, Holland Park West – Lot 84 on RP 100702). This is a 574 m² Low Density residential parcel located immediately opposite the subject land on the southern side of Garvary Street. The sale has an elevation of 94 metres AHD, and has wide suburban views to the south and west, and looks to Mt Gravatt to the south. There are no City CBD views to the north-west. The sale is improved with a two storey brick dwelling, which has been retained. The sale is seen as inferior in elevation, area and views. The sale sold in August 2001 for $385,000, was analysed at $303,500, and applied at $210,000. Overall the sale is inferior. [25] Mr Chye rejects any comparisons with sales in other inner localities such as Tarragindi (Sale 2) and Coorparoo (Sale 4); which he argues reflects a different market sector, being much closer to the City CBD. Mr Denman concedes that areas much closer to the City CBD may have different market levels; but he argues that an important factor for comparison purposes also relates to physical accessibility to the City centre. He notes that the closer proximity to the South-East Freeway of the subject land, and that direct route to the City CBD, balances any further radial distance compared to Sales 2 and 4. On that basis he sees those two sales as comparable; and they also provide an overall moderation on the integrity of local sales to ensure that there is no bias by particular local factors. -- 7 of 16 -- 8 [26] Mr Chye also questions whether some of the sales evidence might reflect less than prudent informed interstate buyers, who might be influenced by the relatively lower prices compared to southern centres. Mr Denman agrees that potential might exist, and for that reason he selects sales where local purchasers are involved. As a further precaution Mr Denman also selects a variety of sales at different elevations and locations in an attempt to ensure that any single attribute is not unduly influencing the market level. He also compares any vacant sales in the current heated market situation with sales of improved lands to ensure that any undue scarcity factor might be identified. He notes he has adopted that approach consistent with directions of the High Court in a recent decision on that aspect. [27] Mr Denman explains why he has allowed certain added values of improvements on some sales, where the old footprints of the former dwelling, and parts of its structure, are retained for the new dwelling. He advises that the recent Town Planning amendments have now increased setback requirements, and retention of the original footprints allows refurbished projects greater flexibility. For that reason he advises that there is an increasing occurrence of redevelopments of older buildings in the Residential A area. Mr Denman also advises that in using an added value of improvements approach, he is able to moderate any differences that might be occurring between vacant land sales, and sales of lightly improved parcels where refurbishment has occurred. He advises that he generally relies upon his experience in applying any added values for improvements, rather than applying a depreciation approach to unit building costs, as he sees the latter as a less reliable approach for residential lands. [28] In summarising his overall opinion generally of unimproved values in the area of the subject land, Mr Denman argues that the applied values of several of those sales at levels compared to their analysed values reveal 61% (Sale 3), 66% (Sale 5), 64% (Sale 6), 60% (Sale 7) and 69% (Sale 8), all reflecting conservative applications. He notes that suggests that the current applied values in the Holland Park West area are very conservative, and below general market levels across the wider Brisbane area on a relativity basis. [29] In drawing comparable risk elements in the various sales, where future redevelopment of adjoining properties may obstruct views of the City CBD, Mr Denman compares those risks to the relative certainty inherent at the subject land. He argues those varying “risk” elements would be reflected in the market prices for the lands. -- 8 of 16 -- 9 Relativity – [30] Another issue of significance to Mr Chye is the matter of relativity, particularly with respect to the adjoining land at 10 Garvary Street (Lot 5). Mr Chye argues that the relativities between 10 Garvary Street, 67 Kneale Street and the subject land have been inconsistent over several years as follows (Exhibit 4): Valuation 10 Garvary Street 67 Kneale Street Subject land 1/1/96 $262,500 $190,000 $252,000 1/10/96 $262,500 $190,000 $252,000 1/10/97 $290,000 $210,000 $275,000 1/10/98 $360,000 $265,000 $320,000 1/10/99 $300,000 $265,000 $270,000 1/10/00 $260,000 $290,000 $270,000 1/10/01 $310,000 $350,000 $310,000 1/10/02 $435,000 $490,000 $455,000 [31] To explain his concerns Mr Chye notes that following objections by the appellants, the unimproved values of the subject land had been reduced from $345,000 to $320,000 in 1998; from $320,000 to $270,000 in 1999; and from $325,000 to $310,000 in 2001. He notes that 10 Garvary Street had also varied after objection from $360,000 to $300,000 in 1999. While not relevant to the current matter he notes that further change in relativity occurred in 2002. That lack of consistency in relativity suggests to Mr Chye that an error has again been made in determining the current valuation at $310,000. [32] In seeking to explain the background to those fluctuating relativities, Mr Denman explains that from departmental records he has concluded the following scenarios, as he was not then responsible for the valuations. He acknowledges that the reductions agreed after objections in 1998 and 1999 reflected recognition of the impact upon City CBD views at that time. He notes that 10 Garvary Street is agreed to be 1.5 metres to 2 metres higher than the subject land. (Exhibit 3 – contour map). [33] Mr Chye argues that the additional elevation of 10 Garvary Street should ensure that City CBD views at that parcel are less obstructed by the new buildings on 67 and 69 Kneale Street. However Mr Denman explains that the closer proximity of the building upon 69 Kneale Street to 10 Garvary Street, compared to the proximity of the building on 67 Kneale Street to the subject land, balances any benefit for 10 Garvary Street as a result of its higher elevation. (See para [13]. In determining a new relativity between 10 Garvary -- 9 of 16 -- 10 Street and the subject land at $310,000 in the current matter, Mr Denman has sought to balance relativities between the subject land ($310,000), 10 Garvary Street ($310,000) and a parcel at 4 Garvary Street ($310,000). It is agreed that the intervening parcel at 6 Garvary Street contains a block of six flats which adjoins the subject land to its west, and has an unimproved value as a multiple unit site which is understood to be $360,000 at the relevant date. [34] Mr Denman has sought to allow for the impact of the adjoining flats at 6 Garvary Street, and the tenants car parking near the subject land. He agrees such use for multiple units would impact the value of the adjoining parcels. However he notes that there is no scope for differentiating between the unimproved values of 4 Garvary Street ($310,000) and 10 Garvary Street ($310,000). The latter is more elevated, and further removed from the block of four flats. It is his conclusion that 10 Garvary Street was valued below its true value at $310,000, and he has sought to do the best he could while adopting those two existing current valuations. It is noted that there could be some scope to amend 10 Garvary Street compared to its adjoining parcel at 12 Garvary Street (Lot 24) at $350,000, although that parcel has a larger area of 733 m². (Exhibit 3 (SmartMap)). [35] Mr Denman explains that the variations between the unimproved values of 8 and 10 Garvary Street during the periods 1998 and 1999, reflected recognition of the impact upon City CBD views during those periods, and the different timescale of the redevelopments of 67 and 69 Kneale Street. He argues those new environments reflected differing relativities at those times. Mr Denman confirms that in his opinion, while the views from the first level of 10 Garvary Street is superior to the comparable views from the first level of the subject land, the views from ground level on 10 Garvary Street are inferior to ground level views on the subject land. While there was discussion about the relative vistas between the dwellings on 67 and 69 Kneale Street (from the subject land), and 69 and 71 Kneale Street (from 10 Garvary Street), those opinions add little to the direct comparisons for relativity purposes. [36] In seeking comparisons with 4 Garvary Street (Lot 8) Mr Denman agrees that parcel currently has superior wide City CBD views from the ground floor near the swimming pool, and also westward to the Freeway. However he notes that parcel has the risk of those views being obstructed by new developments on adjoining lots to the north-west in Kneale Street. His major comparison with the subject land is that 4 Garvary Street is lower in elevation, and with a greater risk in its current views of the City CBD. He argues that the current unimproved value of $310,000 for 4 Garvary Street reflects the existing views at present. Mr Chye advises that the owners of 4 Garvary Street have -- 10 of 16 -- 11 apparently also appealed the current valuation, although he is not aware of the outcome of that appeal. Decision: [37] I turn first to the legislation and note that in seeking to understand the meaning of unimproved value as it relates to the subject land, I find that is described in s.3(1)(b) of the Valuation of Land Act 1944 which states: “3.(1) For the purposes of this Act – ‘unimproved value’ of land means – (b) in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.” [38] In seeking further clarification of the meaning of “unimproved value” as it applies to the subject land under the Act, I note also the findings of the Privy Council in Tetzner v. Colonial Sugar Refining Company Limited (1958) AC 50 where Their Lordships said at p.57: “What in Their Lordships’ opinion is required in the present case is that the physical improvements, with any value which they attach to the land on which they are situated, be excluded from the valuer’s computation. The land will then be valued as land devoid of buildings but situated in the community with the amenities and facilities which have grown up around it.” In simple terms the land is to be treated as if all improvements had not occurred, while all the existing surrounding developments at the time of the valuation are to be considered extant. [39] In understanding the meaning of the value of land, I turn to the decision of the High Court of Australia in Spencer v The Commonwealth of Australia (1907) 5 CLR 418where Griffith CJ said at 432: “In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie whether there was in fact on that day a willing buyer, but by inquiring ‘What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?’ It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and -- 11 of 16 -- 12 from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together.” [40] If I look then at Mr Denman’s method of valuing the subject land, I find that he has placed major emphasis upon comparisons with sales of similar comparable vacant or lightly improved lands. That approach has been favourably approved by the Courts at all levels when determining the unimproved value of land, and was noted by the Land Appeal Court in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44 at p.46: “… the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels.” [41] That principle was also clearly defined by the Land Appeal Court in PH Clough v Valuer- General (1981-82) 8 QLCR 70 at p.76: “It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements.” [42] In seeking to understand the impact of s.3(1), I note that it is the highest and best use of the subject land in its unimproved state which has to be determined. That was clarified in the matter of Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410, where in the Supreme Court of South Australia Jacobs J considered the level of compensation due as a result of compulsory acquisition of land resumed for a psychiatric hospital. The appellant argued for compensation based upon multiple residential use, while the respondent argued for compensation based upon development for commercial purposes. [43] The Court rejected any general approach based only upon a comparison of the notional market value for commercial developments compared to residential developments. Jacobs J said at p.415: “In the first place, it is in my view, wrong in principle to determine the highest and best use by comparison of the notional market value for commercial development on the one hand, and residential development on the other. Common experience shows that land ideally suited for commercial development will fetch a higher price per unit of area than residential land, but it does not follow that the highest and best use of all land is a commercial use, for the highest and best use means exactly what it says – the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential. The first task of the valuer is to determine what that use is and -- 12 of 16 -- 13 then to value the land on that basis. It is not appropriate to determine the highest and best use by reference only to value.” [44] In the current matter it is agreed that the highest and best use of the subject land is for the purpose of a single residence. That could be developed to several storeys, conditional only upon the existing planning constraints of a maximum height of the structure to 8.5 metres, and existing minimum ceiling heights. Whether that could accommodate three levels on the subject land would depend upon the design of the new building. [45] In seeking comparisons with sales of comparable lands, I note those comparisons are made upon a site basis, and not upon any basis of a unit area comparison. (Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 330.) Comparison of Sales – [46] In seeking first to understand the appellants’ analysis of the sale of the subject land, I note that such an approach was favourably considered by the High Court in Jowett v Federal Commissioner of Land Tax (1926) 38 CLR 325, where Rich J said at p.329: “A sale of the subject land, or of comparable land, affords the best means of arriving at the fee simple value of any land … .” [47] The Land Appeal Court also considered the matter of the sale of a property itself in The Chief Executive, Department of Lands v J and L Lorenzen (AV93-22) 1 June 1994, unreported, where the Land Appeal Court said at p.4: “Whilst we agree that a sale of the subject land should always be considered in assessing its value we hasten to stress that such a sale is only prima facie evidence of its value. The weight which must be given to the sale is dependent upon a number of factors, the most important of which is whether the sale is in reasonable conformity with the market as demonstrated by other sales of comparable land.” [48] The matter was also examined by this Court in Determination of Rents and unimproved values for Conversion Purposes – Perpetual Lease Selections and Grazing Selections – Goondiwindi District (1974) 1 QLCR 45, where the President of this Court said at p.48: “Whilst the sale of a subject property around the relevant date in normal circumstances is cogent evidence of its value, it is always necessary to check the analysed value against the standard reflected by other sales of comparable properties to ensure it conforms to the ‘norm’ of the market. If the sale does not so conform caution must be used in its application and it may even be proper to reject it if it is shown to be a sale out of line with the market ‘norm’. This check becomes vital in my opinion, in times of a varying market be it rising or falling or in times of an erratic market. One cannot assume, ipso facto, that the analysed sale figure equates fair market value for the subject purposes.” -- 13 of 16 -- 14 [49] In seeking support for the use of the sale of the subject land I note the findings of Inez Investments Pty Ltd v JL Dodd (1979) 26 The Valuer No. 6, and also Land Valuation and Compensation in Australia, Rost and Collins (3rd edition) at p.87. In that matter Carmichael J said at p.505: “… where a valuation of a piece of real estate is sought as at a particular date, the most relevant information for analysis is the sale of the very property, if there be one, at or close to that date. … a prime matter for investigation when a valuation is sought is to ascertain whether there is a current a contract for sale of the property and, if so, to make an analysis of that sale to see how it complies with the test of value as laid down in Spencer’s case. Failure to carry out these functions is to risk ignoring the best evidence of value.” [50] It is important to note that Carmichael J was saying that the sale should be analysed and not merely adopted. In analysing the sale of a property the actual price of the land and improvements must be accepted and not adjusted by the valuer to bring it into line with a price which in his opinion that property should have realised. If the sale appears to be out of line with the market, then the correct approach in the analysis is to reject the sale for comparison purposes. (Collins v The Minister (1922-24) 6 LGR 84). [51] The problem for the appellant in this matter is that in analysing the sale of the subject land, Mr Chye has adopted the costs of renovations undertaking by the previous owner ($100,000), as a true reflection of the added value that those renovations brought to the property at that time. Now it is generally understood that in such matters “cost” is not always equal to “added value”. In that regard I note the findings in O’Brien Nominee Pty Ltd v Valuer-General (1979) 6 QLCR 280, where the Land Appeal Court said at p.284 “The basic properties have sold at prices considerably below the value of the improvements assessed on the traditional method of replacement cost less accrued depreciation. In such circumstances it is unrealistic to conclude that land, the commodity basic to the enterprise has a minus or nominal value. It is logical to assume that in times of adversity and depression, when purchasers pay less for properties as a going concern, that the lesser price attaches not only to the land component but also to the improvements. The question facing valuers in analysing improved sales in these circumstances is what value is fairly to be attributed to the improvements. It appears to us that the only tenable approach is to abandon the traditional method of replacement cost as at the sale date less the depreciation and to adopt ‘an added value concept’.” I note also that the sale of the subject land in September 1997 reflects an older sale prior to the changes in market levels. -- 14 of 16 -- 15 [52] In comparing Mr Denman’s sales I accept his advice that his key sales are those in closer proximity to the subject land; and that his more remote sales at Tarragindi (Sale 2) and Coorparoo (Sale 4) are mainly to moderate any local bias that might attach to the Holland Park West area. I note Mr Denman’s advice that overall unimproved values in Holland Park West are very conservative, but that is a matter for future attention by the Chief Executive. It is not a matter for selective readjustment in the current matter. [53] In seeking direct comparisons in the current matter I find the following: Sale Area Applied Value Comparison (1) 38 Kneale Street 587 m² $380,000 Superior (3) 46 Kneale Street 597 m² $310,000 Comparable (5) 74 Sebring Street 451 m² $210,000 Inferior (6) 67 Kneale Street 685 m² $350,000 Superior (7) 18 Kneale Street 587 m² $250,000 Inferior (8) 9 Garvary Street 574 m² $210,000 Inferior Subject land 645 m² $310,000 - On those comparisons there is nothing to suggest that Mr Denman has made an error in his valuation. [54] However what is clearly a major factor in those analyses is the relative impacts of extensive views of the City CBD. Where such views do not exist, such as at 9 Garvary Street, or are more restricted, such as at 74 Sebring Street and 18 Kneale Street, then the parcels are seen to have much lower unimproved values. Where the City CBD views are totally unobstructed and wide in aspect, such as 38, 67 and 69 Kneale Street, then the values are much higher. The more comparable sale at 46 Kneale Street is also seen to have an element of risk of losing part of its views in the future. However it is agreed that the value of 46 Kneale Street at $310,000 currently reflects its existing unobstructed views from the upper levels. Relativity – [55] If I look then at relativities with surrounding parcels, I find that it is agreed that 67 and 69 Kneale Street are both superior because of their unobstructed views. It is also agreed that the adjoining parcel east of the subject land at 10 Garvary Street, is higher in elevation, and further removed from the six multi-units at 6 Garvary Street. However its unimproved value is $310,000, similar to the subject land. Mr Denman explains that apparent inconsistency by arguing that the views from ground level at 10 Garvary Street are less open than the views from the subject land at that same level. -- 15 of 16 -- 16 [56] But the evidence would suggest that is likely to be less relevant, than the current accepted relativity between the subject land and 4 Garvary Street (Lot 8), which also has an unimproved value of $310,000. Whether the appeal on that parcel has been further resolved is unclear on the evidence before me. However 4 Garvary Street also adjoins the six multi-units between it and the subject land, and is lower in elevation than the subject land. It is noted that while there is a potential risk to the wide views of the City CBD views from ground level at 4 Garvary Street, the existing unimproved value of $310,000 allows for the presence of those expansive views. Presumably, if at some future time those views are obstructed, then the unimproved value of 4 Garvary Street will be relatively reduced at that time. [57] If I consider Mr Denman’s opinion that the unimproved value of 10 Garvary Street might be slightly too low, I note there is a difference of $40,000 between Lot 5 and the adjoining parcel to its east at Lot 24. However as noted Lot 24 is not only a much larger parcel in area, but is also at the very top of the ridge. It is therefore both wider and higher than 10 Garvary Street (Lot 5). On balance I believe that the inconsistency between 4 Garvary Street, 10 Garvary Street and the subject land is best rationalised by reducing the subject land slightly. If I allow for an unimproved value of $300,000 for the subject land, that would be consistent with 10 Garvary Street at $310,000, and also with any reduced unimproved value for 4 Garvary Street should its wide unobstructed views later be impacted by future developments in Kneale Street. Conclusion: [58] Having considered the whole of the evidence I am partly persuaded that the appellants have proved their case. The appeal is upheld, the valuation as determined by the Chief Executive is set aside, and the unimproved value of Lot 6 on RP 100702 is determined in the sum of Three Hundred Thousand Dollars ($300,000). NG DIVETT MEMBER OF THE LAND COURT -- 16 of 16 --