Duncombe v Chief Executive, Department of Natural Resources and Mines [2001] QLC 111

LAND COURT BRISBANE 12 October 2001 Re: Appeal against annual valuation Valuation of Land Act 1944 Property ID No: 9019638 Local Government: BCC-Belmont (AV2000-0136) Joan Duncombe v. Chief Executive, Department of Natural Resources and Mines J U D G M E N T Background: (1) This matter relates to land at 25 Gotha Street, Camp Hill and described as Lot 93 on RP 41987, Parish of Bulimba. The subject land is located about 6 kilometres radially east of the Brisbane GPO, and has an area of 607 m2. There is good access to Gotha Street which is bitumen sealed with concrete kerbing and guttering. All normal utility services are available. The subject land is zoned Residential A under the Town Plan of the Brisbane City Council of 13 June 1987, effective at the date of valuation of 1 October 1999. The key issues are the nature of land, the impact of local flooding, comparison of sales and relativity. (2) On 27 March 2000 the Chief Executive issued a valuation of the subject land at $83,000. Following an objection the Chief Executive confirmed that figure on 1 July 2000. The appellant has appealed claiming the unimproved value should more properly be $69,000. Mr K Allen-Ankins appeared and gave evidence for the appellant. Ms R Trigge, Senior Legal Officer, appeared for the respondent, calling evidence from Ross Brian Cranstoun, the departmental registered valuer responsible for determining the valuation. The Evidence: (1) The history of the property – (3) Mr Allen-Ankins advises that the subject land has been the subject of extensive discussions with departmental officers, who had previously accepted that the subject land is subject to periodic local flooding. It is located in part of a natural old watercourse, and when the existing dwelling was built in 1954, an old creek had traversed the site. Subsequently that was replaced with a twin 1,350 millimetre pipe [2001] QLC 111 -- 1 of 9 -- 2 stormwater line. However the subject land continues to receive surface flows from all surrounding parcels, and regular flooding occurs. (4) Mr Allen-Ankins submits that following discussions with departmental officers, the respondent had maintained a consistent unimproved value of $56,000 for the subject land between 1988 and 1998. Mr Cranstoun offers no comment as to why that same unimproved value had continued for so long, but speculates that perhaps there had been insufficient market evidence during that period to justify raising the unimproved value. Ms Trigge notes that there is no authority in the Valuation of Land Act to authorise any waiving of the directions of the Act in respect of any potential capping of a valuation. (5) Mr Allen-Ankins submits that over a period of years the surrounding parcels have been filled, thus further diverting surface waters onto the subject land. He provides photographs that a stormwater manhole in Lot 77 to the south-west has been filled over, and that filling upon Lot 92 to the north also now diverts water onto the subject land. All other adjoining parcels to the north and west also divert surface waters along their rear boundaries towards the subject land. (6) Mr Allen-Ankins further advises that recent increases in the unimproved values of the subject land have occurred in 1998 ($75,000), 1999 ($83,000), and most recently 2000 ($91,000). Following an objection the unimproved value in 1998 was reduced to $69,000. Mr Allen-Ankins submits that the current valuation appealed against ($83,000) represents an increase of 48 percent over 2 years, which is well out of line with overall property value increases during that period. However he concedes that some of that large increase may reflect that the former unimproved value had remained at $56,000 for so long. (2) The nature of the land - (7) It is agreed that the subject land currently receives waters from the adjoining Lot 92 to the north, mainly due to filling (about 0.6 metres) and construction of a new dwelling to the rear of that parcel. Lot 92 has been filled by 0.2 metres at its frontage to Gotha Street. Those surface waters are now discharged directly into the stormwater line passing across the subject land, at its intersection with the boundary of Lots 92 and 93. (8) The subject land is traversed by both the stormwater line and also a sewer line, which pass diagonally from south-west to north-east across the rear of the parcel towards Gotha Street. A second sewer line enters the subject land near its north- western corner from Lot 78, connecting into the main sewer line at an inspection -- 2 of 9 -- 3 access point towards the middle of the subject land. The sewer line and the stormwater line both discharge into manholes to the north-east in Gotha Street, fronting Lot 91 (stormwater) and Lot 90 (sewerage). Mr Allen-Ankins concedes that in its unimproved states, Lots 92 and 91 would be slightly lower than the subject land. (9) Mr Cranstoun provides a bimap showing contours of the surrounding area, confirming the low nature of the subject land, and also Lots 92 and 91 towards their frontages. The lowest point for discharge into Gotha Street would appear to be in front of Lot 91, to the north of the subject land. Mr Allen-Ankins concedes that Mr Cranstoun has made some allowance for the local flooding, but argues that insufficient consideration has been taken of those problems. He notes that the location of the sewer and stormwater pipes would present construction problems for any building located towards the rear of the subject land. However he concedes that the preferred location would be more towards Gotha Street, approximately where the current dwelling is located. (3) Relativity - (10) In seeking relativity with adjoining parcels Mr Allen-Ankins provides comparisons on a per square metre basis, dividing the unimproved value of each parcel by its area in square metres. He notes for example that Lot 77 (24 Thomas Street) to the south-west of the subject land, and Lot 108 to the south-east (49 Samuel Street) both have lower rates per square metre. Yet both are higher in elevation than the subject land, and neither have the flooding problems inherent at the subject land. Mr Allen-Ankins agrees that he did not seek comparisons on a site basis for Lots 77 and 108, but only compared on a rate per square metre basis. (11) Mr Cranstoun agrees that Lot 77 is on the same water course as the subject land, but argues that Lot 108 actually fronts Samuel Street which is heavily trafficked. However he rejects the use of comparisons on a rate per square metre basis, as he argues that residential lands are purchased on an overall site basis as a home site. (12) Mr Cranstoun argues that relativity comparisons with Lot 92 to the north would be more appropriate, as Lot 92 has the same stormwater and sewer pipes passing across it. Mr Cranstoun notes that Lot 92 has an unimproved value of $83,000, as also does Lot 91 to its north. The unimproved values then increase as you rise up Gotha Street starting at Lot 90 ($104,000). Mr Cranstoun notes that, while Lot 92 would currently have a slightly higher value in its filled state, if the filling is notional removed, then its unimproved value would be similar to the subject land as -- 3 of 9 -- 4 both parcels receive floodwaters. Mr Cranstoun also advises that Lot 94 to the south of the subject land has an unimproved value of $119,000. (13) Mr Cranstoun notes that both the subject land and Lot 77 have been afforded some additional allowance in their valuations to reflect their low points in the natural watercourse. He argues that at $83,000 the subject land is fairly treated compared to the surrounding parcels. Mr Cranstoun agrees that the additional allowances were justified for those two parcels. (4) Comparison of sales - (14) Mr Allen-Ankins provides evidence of the sale of an improved parcel at 27 Gotha Street (Lot 94). That parcel immediately adjoining the subject land to the south, sold in May 1999 for $100,000. Mr Cranstoun had not adopted that sale as he notes it was an improved sale with an existing dwelling. (15) Mr Allen-Ankins uses that sale as a test of the reliability of the determined unimproved value of $83,000 for the subject land, noting that a residual value of $17,000 for the existing dwelling is unreasonable. However Mr Allen-Ankins was uncertain of the unimproved value of Lot 94, and assumed it was similar to the adjoining subject land at $83,000. He argues that it would be very hard to build a dwelling for $17,000 at the relevant date, suggesting perhaps a minimum cost of $45,000. However he concedes that if he subtracted $45,000 from the sale price, then the residential value of $55,000 might not represent the unimproved value of the land. Mr Allen-Ankins had depreciated the old dwelling to an amount he agreed supports his estimate of $69,000 for the land. (16) To support his valuation Mr Cranstoun provides the following sales of vacant residential lands:  Sale 1 – (80 Boundary Road, Camp Hill - Lot 2 on SP 117661). This is a battle axe lot located about 400 metres north-west of the subject land. The sale has an overall area of 861 m2, and a net area free of the access easement of 760 m2. While Sale 1 does not have a similar problem with flooding, it does have problems with heavy traffic noise along Boundary Road. In addition access onto Boundary Road has restricted site distances as the sale is located in a depression on Boundary Road. Entry and exit to the sale must be undertaken carefully. The sale is seen as superior to the subject land. The sale sold in May 1999 for $110,000, was analysed at $104,000, and applied at $95,000.  Sale 2 – (41 Hill Crescent, Carina Heights - Lot 11 on SP 123905). This is a parcel of Residential BR3 land of area 576 m2, of which 447 m2 is free of an Easement A along its northern boundary. The sale is seen as superior to the subject land, and is located about 1.1 kilometres east of the subject land. -- 4 of 9 -- 5 The sale sold in September 1999 for $105,000, was analysed at $103,300, and applied at $93,000.  Sale 3 – (4 Risley Street, Carina - Lot 2 on SP 118409). This is a 377 m2 Residential A site located about 1.6 kilometres north-east of the subject land. The sale is seen as inferior to the subject land, and sold in January 1999 for $80,000, was analysed at $78,800, and applied at $76,000. (17) Mr Cranstoun agrees that the area has limited sales of vacant lands, but argues that there are increasing numbers of old houses which are then removed or demolished to make way for a new dwelling. Mr Cranstoun agrees that problems with flooding are a more consistent disability for house sites, but argues that noise and traffic problems are also matters considered as disabilities. Mr Allen-Ankins rejects Mr Cranstoun’s Sales 2 and 3 which he submits are both of higher elevation, and consequently provide no comparison of water problems associated with the subject land. Decision: (i) The method of valuation - (18) I note first that the appellant was unsure of the most appropriate method of comparing residential land parcels, and has sought comparisons initially on a rate per square metre basis. While that has a certain level of logic for the appellant, the facts are that residential land parcels are not sold on such a basis. That was clearly defined by the Land Appeal Court in Hans and Else Grahn v. Valuer-General (1992-93) 14 QLCR 327 where it said at page 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 decision on the appellants’ previous appeal (H & E Grahns v. 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.’” (19) In respect of the use of comparing relativity of adjoining parcels I note that has been consistently supported by the courts as a useful method of comparisons. Indeed -- 5 of 9 -- 6 the desirability of maintaining appropriate relativity with parcels was addressed in R and MM Barnwell v Valuer General (1989) 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.” 20. That then leads to Mr Cranstoun’s method of using sales of vacant lands, which has long been supported by the Courts at all levels as the preferred method of determining unimproved values. Indeed the Land Appeal Court succinctly enunciated such a method in PH Clough v Valuer General (1981-82) 8 QLCR 70, where it 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.” That principle was also followed in WM and TJ Fischer v Valuer-General (1983) 9 QLCR 44, at 46. (ii) The nature of the land - (21) While it is agreed by both parties that the subject land is impacted by regular local flooding, the disability of that flooding upon the valuation is disputed. Mr Cranstoun agrees that filling upon Lots 77 and 92 now divert waters onto the subject land, and that restrictions in the capacity to discharge those waters to the underground stormwater pipe causes back-up flooding under the dwelling on the subject land. (22) From the contour mapping it is clear that the subject land lies along the lowest levels of the terrain in that area, as demonstrated also by the location of the stormwater lines across the land. Mr Cranstoun has made allowance for those problems in his valuation. (iii) Changes in the valuation - (23) While Mr Allen-Ankins sees the large rise in the unimproved value of the subject land of 48 percent over two years as inconsistent with general property increases in the area, it is not the percentage increase in the valuation which is significant. This matter has been considered many times by the Courts, and I note from precedence that a large increase in itself is not evident of some error in the -- 6 of 9 -- 7 valuation. I note, for example, in the decision of NR and PG Tow v Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said at page 378: “It follows that a large increase over and above the previous valuation is itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation.” That matter was also considered in CH and BD Henricks v Valuer-General (1983) 9 QLCR 59, where in the Full Court of Queensland, Macrossan J (CJ) said at page 63: “The appellants also relied upon a schedule, exhibit 4 in the Land Appeal Court, which showed 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 case 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 in different rates over a period of five years.” (24) As the Full Court said, there could be many reasons why parcels of land can increase in different percentage rates over a period of time. The real test is not the percentage increase in the unimproved values, but a comparison of the subject land with sales of comparable sites in the vicinity of the subject land at the time of the valuation. (iv) Comparison of sales - (25) In seeking to demonstrate the disabilities upon the value of the land in the market place, Mr Cranstoun has sought his main comparison with his Sale 1. He does not draw exact comparisons between the impact of flooding and the impact of traffic noise and hazardous entry to his Sale 1, however he seeks to consider how the market place might weigh the price to be paid where such disabilities exist. (26) In his other sales, he also compares smaller building areas on his Sales 2 and 3, and uses his Sale 3 as an inferior property to establish a benchmark below the value of the subject land. In the context of those sales there is nothing to discredit Mr Cranstoun’s comparisons. (27) If I turn then to the appellant’s use of the sale of 27 Gotha Street (Lot 94), I note that was an improved property. Now while there is no precedent to reject such a sale, the difficulty for the appellant is to determine the added value that the old -- 7 of 9 -- 8 dwelling brings to the land. I note also that Mr Cranstoun has rejected using that sale because it was an improved sale for the same reason. (28) The use of improved sales in cases where there is a paucity of other comparable vacant sales evidence was addressed in Bingham v Cumberland County Council (1954) 20 LGR 1 (NSW) where Sugarman J said at page 18: “In the absence of sufficient guidance to be had from sales, the valuer may find himself in a position resembling that to which Lord Romer referred in the Raja’s Case (1939) AC at pages 312, 313, in which he ‘will have no market value to guide him, and he will have to ascertain as best he may from the materials before him what a willing vendor might reasonably expect to obtain from a willing purchaser for the land.’ In these cases that would not be because the land possessed, in terms of Lord Romer’s judgment, ‘some unusual, and it may be unique, features as regards its position or its potentialities’ but because it derived a certain uniqueness from the character of the provisions and restrictions affecting it and the consequences of the affection, which would take a sale of it outside the ordinary run of transactions in otherwise comparable lands and thus preclude direct comparisons. … The valuer, in arriving at his opinion in these difficult matters may have to drawn upon his general knowledge and experience, including perhaps experience in other situations which, although lacking in complete comparability, may yet provide an experienced valuer with guidance and suggestions as to the general approach which may be made and as to considerations which may become relevant. And whether the sales are available or not, these appear to be cases in which a ‘merely mechanical adherence to calculations’ (Moreton Club v The Commonwealth) (1948) 77 CLR 253, at page 259, unattended by careful study, analysis, and comparison, and reasoning based thereon, may lead to error.’” (29) On the evidence I understand that sales have occurred in the area where subsequently old dwellings have been removed or demolished, suggesting very little added value in the dwellings in such circumstances. I also note that while 27 Gotha Street (Lot 94) sold in May 1999 for $100,000, its unimproved value at 1 October 1999 was $119,000. Those inconsistencies would require further detailed analysis of that sale, before its credibility as a bona fide sale in line with market trends could be determined. On that basis I place no reliance upon 27 Gotha Street in this matter. (v) Relativity - (30) If I then consider relativity with the adjoining parcel at 23 Gotha Street (Lot 92), I believe in its unimproved state it would have a comparable unimproved value to the subject land. The evidence is that both parcels are valued at $83,000, as is also Lot 91 to the north. Those are consistent with the natural topography of the area, and I see no errors in that regard. -- 8 of 9 -- 9 Summary: (31) In summarising this matter, I am reminded that in arguing her appeal the onus is upon the appellant to prove her grounds of appeal under s.45(4), which states in respect of the notice of appeal: “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.” On the evidence before me I find that the appellant has not satisfied that responsibility. Conclusion: (32) Having considered the whole of the evidence I am not persuaded that the appellant has proved her case. The appeal is dismissed, and the unimproved value of Lot 93 on RP 41987 as determined by the Chief Executive in the sum of $83,000 is affirmed. MEMBER OF THE LAND COURT -- 9 of 9 --