Dennis v Department of Natural Resources and Mines [2003] QLC 30

LAND COURT OF QUEENSLAND CITATION: Dennis v Department of Natural Resources and Mines [2003] QLC 30 PARTIES: Russell Dennis (applicant) v Chief Executive, Department of Natural Resources and Mines (respondent) FILE NO: AV2002/0383 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 8 May 2003 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Dr NG Divett ORDER: The appeal is dismissed. The unimproved value of Lot 46 on RP 115711 as determined by the Chief Executive in the sum of Eighty-Four Thousand Dollars ($84,000) is affirmed. CATCHWORDS: Valuation – Changes in the unimproved value – Use of statistical indices rejected – Valuation of Land Act 1944 APPEARANCES: Mr R Dennis for the appellant Ms R Trigge for the respondent Background: [1] This matter relates to land at 21 Effra Street, Wishart and described as Lot 46 on RP 115711, Parish of Bulimba. The subject land has an area of 534 m², and is located on the corner of Effra Street and Dallin Street, about 11 kilometres radially south-east of the -- 1 of 12 -- 2 Brisbane GPO, and less than 2 kilometres north-east of the Garden City regional shopping centre. Both Effra Street and Dallin Street are bitumen sealed carriageways with concrete kerbing and channelling. All normal urban utility services are available, and overhead power lines service the parcel. 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, relativity, changes in the valuation, the method of valuation, impact of traffic and comparison of sales. [2] On 25 February 2002 the Chief Executive issued a valuation of the subject land at $84,000. Following an objection the Chief Executive confirmed that figure on 25 June 2002. The appellant has now appealed claiming the unimproved value should more properly be $79,000. [3] Mr Russell Dennis appeared and gave evidence on his own behalf. Ms R Trigge Senior Legal Officer appeared for the respondent, calling evidence from Ross Iain Wilson, the departmental registered senior valuer now accepting responsibility for the valuation, which was originally undertaken by another registered valuer no longer employed by the Department. Mr Wilson has checked the valuation and agrees with its conclusions. The Nature of the Land – [4] Mr Dennis argues that the respondent has effectively underestimated the steepness of the subject land, in that in his opinion the land does not have an easy fall from south-west to north-east. By Mr Dennis’ understanding the land is much steeper than the respondent’s description conveys. However it is agreed that the land has good elevation at about 49 metres Australian Height Datum (AHD), and is above the Dallin Street carriageway, and about level with the Effra Street carriageway. The contour map of the area (Exhibit 4) reveals that the subject land falls about two metres from south to north, and also about one metre from west to east. Mr Dennis notes that the subject land required some excavation earthworks when the existing dwelling was constructed about forty years ago. [5] Mr Dennis also challenges Mr Wilson’s opinion that views from the subject land towards the north-west and north-east provide any real outlook. He argues that the photographs supplied by Mr Wilson in his valuation report (Exhibit 3), confirm that views in those directions provide mainly trees, rooftops and overhead power lines. However Mr Wilson has placed little extra value on those views, which he notes represent merely an outlook perspective, compared to a more restricted aspect. There was no claim for any outstanding views from the subject land, although the existing dwelling has sought to maximize the available breezes from its reasonably elevated perspective. Because of its -- 2 of 12 -- 3 elevation above the street, there are no drainage problems. The contour map (Exhibit 4) confirms that the topography falls generally towards the east and the north-east. [6] Mr Wilson also confirms that the subject land is reasonably located in close proximity to public bus transport in Newnham Road to the west, and slightly further to public transport on Mount Gravatt-Capalaba Road to the south-east. There are two local schools near the subject land, with the Catholic St Catherine’s school about 200 metres to the north-west in Bellot Street and Morella Street; and the Wishart State Primary School in Morella Street about 250 metres to the north. Mr Dennis agrees with those facilities, but argues that traffic to and from both schools in the morning and afternoon provide traffic noise near the subject land. Mr Wilson agrees that the schools do provide some traffic noise and congestion, but argues that is more impacting upon the properties immediately adjoining or opposite the school sites. He argues that the traffic noise is more dissipated at the subject land. [7] In respect of the subject land being a corner site, Mr Wilson sees that situation providing more benefits than disabilities from the lack of privacy, and he has valued the parcel accordingly. It is agreed that the subject land currently has two physical driveways, one to Effra Street and a second to Dallin Street. Mr Wilson sees that flexibility occurring as a result of its corner location, and more accessibility than an inside parcel. [8] Mr Dennis also feels that because of its relatively small size, the subject land has no potential for further development as a multiple dwelling site. Mr Wilson rejects that argument, as he notes that he has valued the subject land entirely on the basis of its use under s.17 of the Valuation of Land Act 1944. Under that direction of the legislation the subject land must be valued as a single residence site, and any higher potential for development is to be ignored. Mr Dennis also sees the quality of the environment of the subject land as diminishing because of the introduction of home businesses under the current planning code. However he provides no specific evidence to support why such local uses should decrease the value of the surrounding parcels. A large part of the appellant’s concern in this respect appears to rest with the apparent changing demography of the local community in that part of Wishart. [9] Another concern of the appellant is his understanding of the general locality of the subject land in an older area of Wishart, compared to the newer sectors being developed with more modern structures and services. Mr Wilson agrees that there are parts of Wishart which are more recent in development, but argues that those newer areas are scattered across the suburb. He notes that a relatively newer estate has been developed at Coventry -- 3 of 12 -- 4 Street and Norfolk Street about 900 metres east of the subject land. Mr Wilson sees no special disability for the subject land because of the impact of those new developments. Impact of Traffic and Noise [10] It is agreed by both parties that the Mount Gravatt-Capalaba Road is a major traffic arterial road connecting the Freeways to Garden City; and also to Kessels Road and to the major industrial areas of Beaudesert Road and Acacia Ridge. As such it is one of the busiest roads in Brisbane with traffic densities up to 32,500 vehicles per day to the south of the subject land. Newnham Road is also very busy carrying traffic to the industrial estate in Wecker Road to the north of the subject land. Traffic densities along Kessels Road from Garden City reflect traffic counts of 40,000 to 50,000 vehicles per day, with semi-trailers amounting to 2,500 vehicles per day. The impact of all of that heavy traffic is felt both visually, and from the need to enter those traffic flows, and also from noise from the vehicles. The only difference between the parties in respect of those intrusions is the relative disability experienced at the subject land, compared to the sales evidence adopted to establish market levels, which are also impacted by the noise of traffic. [11] In respect of the local impact of noise and congestion from school traffic mentioned in paragraph [6], Mr Wilson believes that the close proximity of the schools outweighs any disability suffered from the passing traffic to and from the schools. He notes also that the school traffic has several alternative routes available to the school other than along Effra Street. Mr Wilson also notes that properties immediately adjoining say the swimming pool complex at the corner of Morella Street and Avenell Street, are subject to much higher levels of intrusion than the subject land. He notes that the unimproved values of those parcels at about $81,000 reflect that greater impact than the $84,000 for the subject land. Mr Wilson argues that noise from the swimming pool is dissipated by residences between the pool area and the subject land. (See Exhibit 2, page C). However he agrees that the schools now reflect virtually community centres, with many out-of-hours activities, often at night and weekends. Changes in the Valuation – [12] Mr Dennis is also concerned with the apparently large increase in the unimproved value of the subject land during the last period. He notes that the subject land is one of the smallest parcels in that locality, yet it has been increased by 10.5%. He notes that is inconsistent with other community indicators such as the Consumer Price Index (CPI) at -- 4 of 12 -- 5 3.1%, and the Reserve Bank advice of inflation in the community at 2.8%. He notes further that the reported Brisbane median price index was 4.55%. [13] Mr Dennis also notes that several recent sales of improved properties at 5 Dallin Street and 10 Dallin Street, suggest that in fact the market for improved parcels with an old dwelling had in fact fallen over the last ten years. He notes that 5 Dallin Street had sold in 1993 for $125,000, and resold in 2000 for $123,500; while 12 Dallin Street sold in 1996 for $128,000 and 10 Dallin Street sold in 2001 for $125,000. He argues those sales demonstrate a declining market, not a rising market. He argues also that those two parcels at 10 Dallin Street (Lot 48) and 12 Dallin Street (Lot 47) are identical houses and land, yet Lot 47 is valued currently at $81,000 and Lot 48 at $83,000. Mr Wilson notes that Lot 40 has an elevation of 46 metres AHD, while Lot 46 has an elevation of 49 metres AHD. He argues that difference in elevation reflects its slightly higher valuation. [14] Mr Wilson also rejects Mr Dennis’ claim that the market has fallen recently. He notes that there has been a significant increase in the residential land values, particularly in areas within 10 to 11 kilometres of the CBD, during the last year at the relevant date of 1 October 2001. He notes that trend has continued, and he forecasts increases in many southern suburb areas varying from 20% to 30%, and up to 150% in parts of Wynnum near the sea front. Mr Wilson rejects any reliance upon percentage changes in an area, noting that precedents of the Courts have demonstrated that principle. Ms Trigge refers me to the decision of Tow v Valuer-General (1978) 5 QLCR 378. Mr Wilson argues that the true comparison of value is to be found from a comparison of sales in the market place. Relativity – [15] A major concern for Mr Dennis lies in the direct relativities he seeks with surrounding parcels. He provides a plan showing areas and unimproved values for all surrounding streets near the subject land. (Exhibit 2 – page C). On that map he notes that most surrounding parcels have larger areas than the subject land, yet all have unimproved values less than the subject land. Mr Dennis bases those comparisons on a per square metre comparison, which he argues is a more direct method of assessing the value of a parcel of land. He draws specific attention to three parcels at 16, 18 and 20 Elmfield Street which have areas of 723 m² and unimproved values of $80,000 ($111 per square metre). He also notes that the corner parcel immediately opposite the subject land at 5 Dallin Street (Lot 78) has a higher elevation. Mr Wilson advises that Lot 78 has an area of 526 m² and is valued at $86,000. -- 5 of 12 -- 6 [16] In respect of why certain identified parcels south of the subject land in Effra Street, Peterglen Street, Malmrose Street and Kinkuna Street all have values less than the subject land, Mr Wilson advises that reflects their lower elevations and their closer proximity to busy Mount Gravatt-Capabala Road. He notes also that 1 Effra Street (Lot 38) currently has an unimproved value of only $79,000, which also reflects its position near a traffic stop sign, which would cause additional traffic noise due to braking and acceleration at that location. [17] Mr Dennis also notes that a parcel at 9 Pettigrew Street (Lot 69) had no increase in value applied during the same period. Mr Wilson advises that 9 Pettigrew Street is located in another submarket area about 2 kilometres north-west of the subject land near Broadwater Road. Mr Wilson confirms that there had been no sales evidence available in that submarket area at the relevant date, and it had been decided to conservatively leave those unimproved values unaltered. He advises that all other submarket areas in that general locality had risen by about 10% for residential lands. [18] In respect of lower values on parcels at 15 to 21 Bellot Street, about 110 metres north- west of the subject land, being less than the subject land, Mr Wilson advises that those lower values reflect their elevation below street level, and their location immediately opposite St Catherine’s school. Method of Valuation – [19] Mr Dennis argues that the respondent is inconsistent with general community trends, by not applying a direct pro rata rate per square metre in its comparisons. However Mr Wilson advises that market forces dictate that residential parcels are not purchased on a pro rata basis, except in very high demand areas such as river front lands or sites with particular features such as City views. Mr Wilson advises that residential lands are purchased on a site basis, unlike commercial or industrial lands which tend to be purchased on a rate per square metre basis. He notes that it is the market place which dictates those values, and that has been upheld by court precedents. He advises that it is not for the respondent department to establish how land is to be valued, but the respondent just interrupts the market place. Comparison of Sales – [20] Mr Dennis provides no sales evidence to support his estimate of the valuation. Mr Wilson provides the following sales of vacant lands:  Sale 1 – (112 Newnham Road, Mount Gravatt East – Lot 111 on SP 110023). This is a 416 m² low density residential land located about 2 kilometres north of the -- 6 of 12 -- 7 subject land. Access is directly on to busy Newnham Road, and is difficult in peak hour traffic. The sale is below Newnham Road and falls steeply from front to rear. The sale is inferior to the subject land due to its access, noise and topography factors. The sale sold in August 2001 for $68,000, was analyzed at $65,400, and applied at $63,000. [21]  Sale 2 – (55A Garie Street, Wishart – Lot 6 on SP 145655). This is a 1,112 m² low density residential parcel located about 500 metres south-east of the subject land, and backing directly on to busy Mount Gravatt-Capabala Road. Access is via a shared easement (Easement A) to Garie Street. There is no formal access to Mount Gravatt-Capalaba Road, where a high sound acoustic wall has been constructed to mitigate the heavy traffic noise. The sale is hatchet shaped, and after excavation for a building site, now has a 6 to 8 metre embankment rising to Mount Gravatt- Capabala Road. The sale is inferior due to its location and irregular shape, and while larger in overall area, much of that is lost due to Easement A areas (359 m²), and also the steep embankment (200 m²), leaving a useable building area of about 550 m². The sale sold in December 2001 for $90,000, was analyzed at $79,500, and applied at $78,000. [22]  Sale 3 – (1 Nev Close, Wishart – Lot 8 on SP 131097). This is a 546 m² low density residential parcel located about 1.3 kilometres north-east of the subject land. The sale has superior services to the subject land, is near a round-about connecting Nev Close and Shillington Place, and can access busy Mount Gravatt-Capalaba Road at traffic lights at the Shillington Place intersection. There is a twelve unit complex to the south of the subject land in Nev Close. The sale is seen as slightly larger, in a superior position, handy to local shops, and in a newer development area of Wishart, and is superior to the subject land. The sale sold in October 2000 for $108,000, was analyzed at $106,500, and applied at $96,000. [23] Mr Dennis agrees that Sale 1 is inferior to the subject land, but argues that its greater depth allows for a dwelling to be located further removed from Newnham Road, than a dwelling can be located on the subject land. However he agrees that Newnham Road is a much busier route than Effra or Dallin Streets. There was some confusion by Mr Dennis about the nature of Sale 2, as he had considered that parcel prior to the subdivision that led to the creation of Sale 2 (Lot 6). Lot 6 had been sold prior to the registration of the plan of survey in April 2002 (Exhibit 6). [24] Mr Dennis argues however that any noise from Mount Gravatt-Capalaba Road is reduced by the sound acoustic wall which was evident at the date of sale. He argues that much of the traffic sound passes over the top of Sale 2, and the noise is heard more directly at the subject land. Mr Wilson rejects that argument as he notes that even traffic vibrations are almost evident upon Sale 2. Mr Wilson confirms that the market place clearly shows that -- 7 of 12 -- 8 values directly upon a major road, are less than those more removed from the traffic impacts. Mr Wilson argues that the long rear boundary of Sale 2 to Mount Gravatt- Capalaba Road was also a disability for that parcel. Decision: Changes in the Valuation – [25] I turn first to the appellant’s concern that changes in the unimproved value of the subject land are inconsistent with certain statistical community indicators. In this matter I note that precedent in the courts has cast doubt upon the wisdom of adopting a percentage change between valuations as evidence of unimproved value. I note for instance in NR and PG Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court said at page 381: “It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.” [26] That was also followed by the Full Court of Queensland in C and BD Henricks v The Valuer-General (1983) 9 QLCR 59, where in the Full Court of Queensland, Macrossan J (later CJ) said at page 63: “The appellants also relied upon a schedule, exhibit 4 in the Land Appeal Court, which shows percentage increases in the value applied by the Valuer-General to a number of selected parcels of land from the date of the preceding valuation up to the March 1979 valuation date. The percentage increase shown in the selected cases was in each instance considerably less than the increase applied to the subject land as between the two valuation dates. The weakness in such a selective comparison is obvious as there could be any number of reasons why blocks in the same valuation area should increase at different rates over a period of five years.” Clearly there could be many reasons why parcels of land could increase or decrease over a period of time, one of which is that, because of the lands having different characteristics they might attract a different type of purchaser. The real test is to compare the subject with sales of comparable properties. [27] If I consider also the reference to the CPI’s statistical indicator, and whether such broad indicators are a reliable estimate of changes in unimproved value, I note that the use of such indicators was considered in Cheng Chin Wang v Chief Executive, Department of Natural Resources and Mines (AV2001-0170) 28 February 2002, unreported. When considering the connection between the Consumer Price Index and the value of land the Member found at page 11: -- 8 of 12 -- 9 “There is a common misconception that the Consumer Price Index (CPI) provides a reliable measure of increases in the market value of lands. However the CPI figure, which is widely publicised throughout the community, is no more than a statistical representation of the quarterly changes in the price of a basket of goods and services available. That basket includes eleven main groups including food, alcohol and tobacco, clothing and footwear, housing, household furnishings, health, transport, communication, recreation, education and miscellaneous items. There is no direct links to movements in the value of land. While CPI changes are used to measure trends in inflation in the community, it has no direct correlation with the market for land.” [28] The problem with such broad indicators is that their relevance to the actual market place appreciation in a particular locality may have tenuous relationships. However, as noted by the High Court in Spencer v The Commonwealth of Australia (1907) 5 CLR 418 at p.432, the final definition of the market’s appreciation of market value is reflected in a bona fide sale where both parties are fully informed of market expectations, and are then willing to negotiate a sale price. That is reflected in the sales adopted by Mr Wilson. Method of Valuation – [29] In concluding the appropriate method of comparisons, I note first that s.17(1) of the Valuation of Land Act 1924 says in respect of the valuation of residential lands: “17.(1) In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made. ‘single dwelling house’ means - (a) a dwelling used solely for habitation by a single household;” On that basis I agree with Mr Wilson that he must ignore any potential for the comparative lands in this matter to be used for other than a single residential site. Mr Wilson has therefore restricted his comparisons to uses for that purpose. [30] I turn then to how residential sites should be valued, and I note guidance to be found in the decision of the Land Appeal Court in Hans and Else Grahn v Valuer-General (1992- 93) 14 QLCR 327, where it said at p.330: “The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes. As the Land Appeal Court said in its -- 9 of 12 -- 10 decision on the appellants’ previous appeal (H and E Grahn v. The Valuer-General, AV89-246 and 247, 13 December 1990): ‘for the purpose of valuing residential sites, the preferable method of comparison is on a site to site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size of the lots, the situation of and access to the lots, the shape and topography of the lots etc. and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features.’” Relativity – [31] In considering the matter of relativity I note that guidance can be found in R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, where the Land Appeal Court said at page 16: “We are conscious that it is desirable that valuations made for the purposes of the Valuation of Land Act of comparable lands should bear proper relativity, one to the other, if the valuations are soundly based. It is, however, untenable to adopt a value for one parcel on relativity with another which has no sound basis.” [32] However in seeking to maintain relativity, I note the findings of WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, where the Land Appeal Court said at page 46: “It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence.” [33] If I look then at the relativity with surrounding parcels I find no inconsistency with the subject land. The lower values of the lands to the south of the subject land reflect their lower elevation and greater exposure to noise from traffic. The parcels to the north in Morella Street and Avenell Street reflect their closer proximity to the noise of the school swimming pool. I see no inconsistencies in those comparisons. Comparison of Sales – [34] If I turn then to the sales comparisons I note that it has been held by the courts that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels of land. That was directed in the matter of PH Clough v Valuer- General (1981-82) 8 QLCR 70 where the Land Appeal Court said 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 -- 10 of 12 -- 11 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. Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement.” [35] If I turn then to Mr Wilson’s sales I note the following comparisons: Sale Applied Value Comparison 1 2 3 Subject land $63,000 $78,000 $96,000 $84,000 Inferior Inferior Superior - Mr Dennis has provided no sales evidence to dispute those comparisons, and I find nothing in their conclusions that would suggest that an error has occurred. Summary: [36] In summarizing this matter I note that s.33 of the Act directs: “33. Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered.” [37] I note also that in respect of a notice of appeal to this Court the onus of proof is directed to lie with the appellant. That is clarified in respect of a Notice of Appeal where s.45(4) directs: “45.(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner. That responsibility has not been expunged by the appellant in this matter. -- 11 of 12 -- 12 Conclusion: [38] Having considered the whole of the evidence I am not persuaded that the appellant has proved his case. The appeal is dismissed. The unimproved value of Lot 46 on RP 115711 as determined by the Chief Executive in the sum of Eighty-Four Thousand Dollars ($84,000) is affirmed. NG DIVETT MEMBER OF THE LAND COURT -- 12 of 12 --