Claybourn v Department of Natural Resources and Mines [2002] QLC 97

LAND COURT OF QUEENSLAND CITATION: Claybourn v Department of Natural Resources and Mines [2002] QLC 97 PARTIES: Raymond John Claybourn (appellant) v Chief Executive, Department of Natural Resources and Mines (respondent) FILE NO: AV2002/0118 DIVISION: Land Court of Queensland PROCEEDING: Appeal against annual valuation under the Valuation of Land Act 1944 DELIVERED ON: 11 December 2002 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Dr NG Divett ORDER: The appeal is dismissed, and the unimproved value of Lots 77 and 78 as now argued by the Chief Executive in the sum of $101,000 is determined to be correct. CATCHWORDS: Valuation – Valuation of Land Act 1944 – use of sales APPEARANCES: Mr Claybourn for the appellant Mr G Dunn for the respondent Background: [1] This matter relates to land at 26 Farnell Street, Chermside and described as Lots 77 and 78 on RP 42747, Parish of Kedron. The subject land has an area of 812 m² and is located about 8.5 kilometres radially north-west of the Brisbane GPO. The land is nearby to Prince Charles Hospital and the Chermside Shopping Centre and has good access to -- 1 of 9 -- 2 Farnell Street, which is bitumen sealed with concrete kerbing and channelling. All normal urban utility services are available, and the land is regularly shaped, sloping gently from south-west to north. The subject land is designated as Low-Medium Residential, under the Brisbane City Plan 2000, effective at the date of valuation of 1 October 2001. The key issues are the impact of drainage problems, relativity and comparison of sales. [2] On 25 February 2002 the Chief Executive issued a valuation of the subject land at $104,000. 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 $80,000, that being his estimate of the value of the land. At the hearing on 18 September 2002 Mr Brown for the respondent led evidence to an unimproved value of the subject land at $101,000. [3] Raymond John Claybourn appeared and gave evidence on his own behalf. Mr G Dunn, Senior Valuer, appeared for the respondent, calling evidence from Andrew Trevor Brown the departmental registered valuer now accepting responsibility for determining the valuation. The original valuation was undertaken by another valuer, who was no longer available to defend that figure. History of the Valuation – [4] Mr Claybourn was initially partly confused about the disparity between the valuation of the subject land at $104,000, issued on 25 February 2002, and an advice from the Chief Executive of 8 March 2002 confirming that the unimproved value had been reduced to $88,000. However, the evidence disclosed that the letter of 8 March 2002 related to the previous valuation determined at 1 October 2000. That matter had been the subject of an appeal to this Court (AV2001/0275) in respect of a valuation of $90,000. Following a preliminary conference before the Judicial Registrar of this Court on 10 December 2001, the Chief Executive had amended the unimproved value under s.68 of the Act to $88,000, and the matter had been subsequently withdrawn. The Nature of the Land – [5] Mr Claybourn has been a long-time resident at the subject land, first settling there after World War II army service in 1946. The land is a rectangular shaped parcel of frontage 23.5 metres to Farnell Street, and is developed as a single dwelling site with a cavity brick dwelling. However for purposes of the valuation the land is deemed to be vacant land, but for use as a single dwelling site under s.17 of the Valuation of Land Act 1944 (the -- 2 of 9 -- 3 Act). Mr Claybourn argues that the subject land has no special views of mountains or the sea, and is a normal residential parcel in an average working class suburb of Chermside. [6] Mr Claybourn also argues that Farnell Street is subject to regular heavy traffic flows from “ratrunner” drivers during morning and evening hours, seeking an alternative traffic route between Hamilton Road and Rode Road. He argues that visitors to the nearby hospital complex also use the street for parking purposes, causing heavier traffic flows. Mr Claybourn confirms that the Prince Charles Hospital and the Holy Spirit Northside Hospital are to the north-west and west of the subject land, just one block removed from Farnell Street. [7] Mr Brown has no personal experience of the level of peak-hour traffic that use Farnell Street, but argues that during the several occasions he visited the area, he was not conscious of parking problems in the street. However Mr Brown concedes that the strategic location of the subject land would generate traffic movement in the area, although he feels that Hilltop Avenue to the west was likely to be more effected than Farnell Street. [8] Mr Brown also argues that the strategic location of Farnell Street nearby to the hospital complexes, and the major shopping centre at Chermside, is demonstrated by the considerable movement in the property market, principally for multi-unit developments. In his valuation of properties in Farnell Street, Mr Brown has made allowances for the presence of multi-unit developments, as they impact single residence sites. [9] For that reason he has allowed a reduction of $4,000 in the unimproved value of the subject land to allow for the presence of general units in the area, and also on the parcel immediately adjoining the subject land to the west (Group Title Plan 103378). Mr Brown advises that the presence of the multi-units (including Queensland Housing Commission Units) in the area near View Street, has also been allowed for on all other residential properties in Farnell Street. Mr Brown advises that because of its convenient location from the City, there are now multi-units being developed throughout the area. He argues that if the subject land was to be valued other than as a single dwelling site under s.17 of the Act, then it would have a much higher unimproved value. [10] There is agreement between the parties that the subject land suffers from overland surface water flows from the adjoining lands to the south (Lot 79) and to the west (GTP 103378). Mr Brown has made an allowance of $1,000 for that purpose in his unimproved value of $101,000. He notes that there is a drainage pipeline inside the subject land along its southern boundary discharging surface waters to the road channelling in Farnell Street. -- 3 of 9 -- 4 [11] There is also a drainage line within the subject land along its boundary with Lot 6 to the north. While that pipeline generally discharges surface waters from the subject land to Farnell Street, it occasionally overflows causing some inconvenience to the subject property. However as that pipeline is an improvement, and is designed to discharge surface waters from the subject land, it has not been assessed as a disability, as the land falls generally from south to north. Any backup of storm waters as a consequence of the inadequacy of the open spoon drain to discharge the water, is really a matter within the control of the appellant. In the absence of that open spoon drain any surface waters from the subject land would pass across to the adjoining Lot 6 down-slope from the subject land. [12] Mr Claybourn argues that the subject land is in an area prone to theft, requiring the presence of security screening on the dwelling. He advises that he was personally subjected to theft entry, but cannot confirm whether the presence of theft is any more a problem than in other areas of the City. [13] Finally Mr Claybourn argues that the amenity of the area is being reduced by the presence and demand for increasing numbers of multi-units. He argues that the area is a “developer’s paradise”, reflecting constant demand from real estate agents seeking owners to sell their properties. Mr Brown agrees with that description, but argues that demand from the market place is the reason why land values have increased dramatically in the area. He argues that if the subject land was to be considered as a potential unit development site, the demolishing of the existing brick building was unlikely to deter developers, and the subject land would have a high value for that purpose. However, he advises that under s.17 of the Act, he has ignored any extra value for such a purpose in his valuation of $101,000. Relativity – [14] In seeking relativity with adjoining properties, I note that Lots 79 and 80 (area 860 m) to the south has an unimproved value of $107,000 (Exhibit 2); and Lot 6 (812 m²) to the north has an unimproved value of $102,000. I note that Lots 79 and 80 is higher than the subject land, and is larger, while Lot 6 has the same area, but is lower in elevation than the subject land, and also adjoins multi-units to the north on Building Unit Plan 2973. Lot 6 is also partly protected by the drainage line along its southern boundary with the subject land, but does not have units behind it, as does the subject land. Both Lot 6 and the subject land would suffer similar traffic light glare from vehicles in View Street across Farnell Street. On that basis there is no inconsistency from a relativity perspective. -- 4 of 9 -- 5 Comparison of Sales – [15] Mr Claybourn provides no sales evidence to support his estimate of the unimproved value of the subject land. Mr Brown provides the following sales of comparable properties, as there were no sales of vacant lands in the immediate locality:  Sale 1 – (1 Maggs Street, Kedron – Lot 2 on SP 143824). This is a 395 m² Low- Medium Residential parcel, located on a corner, adjoining a light industrial area, and about 1.1 kilometres south-east of the subject land. While having better access than the subject land, the sale is seen as far inferior, due to its location in the low part of Kedron which is an inferior locality. The sale sold in September 2001 for $90,000, and was analysed at $88,500. [6]  Sale 2 – (236 Shaw Road, Wavell Heights – Lot 15 on RP 25032). This is a 405 m² Low Density Residential parcel located about 2.3 kilometres south-east of the subject land, on busy Shaw Road, near traffic lights at the intersection with Edinburgh Castle Road. During peak hours traffic congestion at the traffic lights makes parking at the sale very difficult. The sale is seen as being far inferior in access, and requires some filling for development purposes. Overall the sale is seen as far inferior to the subject land. The sale sold in August 2001 for $95,000, and was analysed at $92,000. [17]  Sale 3 – (29 Imbros Street, Wavell Heights – Lot 29 on RP 58718). This is a 609 m² Low Density Residential site, in a slightly elevated position, without any particular views of the City, but with an outlook down Lemnos Street. The sale is located about 2.7 kilometres south-east of the subject land, in a superior location, more elevated, with similar services and access, but is smaller in size. Overall the sale is superior to the subject land. The sale sold in February 2001 for $177,000, was analysed at $171,000, after allowing for the removal of an existing old dwelling sold for $6,000. [18] Mr Brown argues that while his sales are removed from the immediate area of the subject land, they are located in an area of newly developing units, and older Defence Service homes or Queensland Housing Commission houses. Mr Claybourn was not familiar with the sales, but argues that Kedron and Wavell Heights are now more upmarket than Chermside. Mr Brown rejects that conclusion, arguing that the current demand for properties near the subject land reflects its strategic location. -- 5 of 9 -- 6 Decision: The Nature of the Land - [19] I turn first to the nature of the land and note that there is agreement that the subject land suffers some impacts from both direct proximity to the adjoining multi-units to the rear, with some impact upon privacy, and also the agreed drainage problems from the higher adjoining lands. Mr Brown has allowed a reduction of $4,000 for the near units at the rear, and $1,000 for the drainage. I note that in the previous valuation an amount of $93,000 had initially been allocated to the subject land, later reduced to the $90,000 on objection, and subsequently, after a court supervised preliminary conference, reduced to $88,000. That reduction of $5,000 would appear to allow for similar disabilities as now applied to achieve the value of $101,000 as argued by Mr Brown. Had that reduction of $5,000 not been applied to the subject land for those disabilities, then it would have had an unimproved value of $106,000, compared to the slightly higher in elevation value of $107,000 for Lots 78 and 79. That is not inconsistent. [20] If I then compare the value of Lot 6 to the north at $102,000, without any drainage problem as a result of Mr Claybourn’s drain to the street on that side, but with the adjoining unit on BUP 2973, that would have a value of $106,000 without the presence of the adjoining multi-units. I note also that Lots 79 and 80, Lot 6 and the subject land all have similar impacts of traffic congestion and location, and the general presence of other units in the locality. I believe Mr Brown has adequately allowed for those factors in his valuation. Comparison of Sales – [21] I turn then to the comparative sales, and I find the following comparisons: Sale Area Analysed Value Comparison Sale 1 Sale 2 Sale 3 Subject land 395 m² 405 m² 609 m² 812 m² $88,500 $92,000 $171,000 $101,000 Far inferior Far inferior Superior - On those comparisons there is nothing to conclude that Mr Brown has made a serious error of fact, or that he has followed a wrong principle in his valuation. [22] In seeking to determine the unimproved value of the subject land I am reminded that s.3(1) of the Valuation of Land Act 1944 states: -- 6 of 9 -- 7 “3.(1) For the purposes of this Act – ‘unimproved value’ of lands 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.” [23] While such a theoretical approach may be difficult for the appellant to understand, it nevertheless is the law to which we must all conform. 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 Ccmpany Limited General (1958) AC 50, where Their Lordships said at page 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.” [24] That also followed the findings of the Privy Council in Tooheys Limited v. The Valuer- General (1925) AC 439, where Their Lordships said at page 443: “Now, what he has to consider is what the land would fetch as at the date of valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed. It is, therefore, to approach the question from a completely wrong point of view to begin with a valuation which takes in the improvements and then proceed by means of subtraction of a sum arrived at by an independent valuation in order to find the required figure. What the Act requires is really quite simple. Here is a plot of land; assume that there is nothing on it in the way of improvements; what would it fetch in the market? It will be observed that the value is not what has been sometimes designated by the expression ‘prairie value’. The land must be taken as it exists at the date of valuation.” 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. [25] In the matter of the subject land being valued as a single parcel, I turn to s.17 of the Act which relevantly states: “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 -- 7 of 9 -- 8 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;” The impact upon the subject land of its being afforded a concessional valuation under s.17 is that the two parcels of the subject land (Lots 77 and 78) are valued as if they are only a single housing site. [26] While Mr Claybourn may have some misgiving about the nature of Mr Brown’s sales, he provides no evidence to challenge their credibility as bona fide sales between unrelated parties. In seeking further to understand the nature of a bona fide sale between a seller and a purchaser, I note that the High Court of Australia has provided guidance in Spencer v The Commonwealth of Australia (1907) 5 CLR 418, where Griffiths CJ said at page 432: “In my judgment the test of value of land is to be determined, not by enquiring 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 enquiring ‘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 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.” That definition of what constitutes a bona fide sale has long been adopted by the Courts, and is a matter which must weigh heavily in the minds of a valuer when he seeks to analyse sales for comparison purposes. [27] In applying comparisons with sales of vacant or lightly improved lands, I note that Mr Brown has followed guidance long favoured by the Courts. That was clearly expressed in 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 -- 8 of 9 -- 9 prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence.” [28] That principle was also followed in R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17; and also clearly defined in PH Clough v Valuer-General (1981-82) 8 QLCR 70, where the Land Appeal Court said at page 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.” [29] Unless the Chief Executive has acted on a wrong principle or made a serious error of fact, then the valuation is deemed to be correct. (Brisbane City Council v Valuer-General (1977-78) 140 CLR 41, per Gibbs J at page 56 in the High Court of Australia). However Mr Brown now argues for a lower value of $101,000 to replace the previously determined figure of $104,000. Conclusion: [30] Having considered the whole of the evidence I am not persuaded that the appellant has proved his case. The appeal is dismissed, and the unimproved value of Lots 77 and 78 as now argued by the Chief Executive in the sum of $101,000 is determined to be correct. MEMBER OF THE LAND COURT -- 9 of 9 --