Dewey v Chief Executive, Department of Natural Resources and Mines [2001] QLC 98

LAND COURT BRISBANE 21 September 2001 Re: Appeal against Annual Valuation Valuation of Land Act 1944 Property ID No: 1127722 Local Government: BCC - Ithaca (AV00-289) Arthur C and Ann Dewey v. Chief Executive, Department of Natural Resources and Mines J U D G M E N T (1) Background: (1) This matter relates to land at 68 Dunsmore Street, Kelvin Grove, and described as Lot 8 on Plan B 123438, Parish of North Brisbane, and has an area of 1,037 m2. The subject land is located about 3 kilometres north-west of the Brisbane GPO, and about 1.3 kilometres west of the Royal Brisbane Hospital. Local shops, schools, churches and the Kelvin Grove Campus of the Queensland University of Technology are within about 1 kilometre radius of the property. Dunsmore Street is bitumen sealed with concrete kerbing and channelling, generally along both sides of the carriageway. All normal utility services are available. (2) The subject land is zoned as Residential BR3 under the Town Plan of the Brisbane City Council of 15 June 1987, effective at the date of valuation of 1 October 1999. The subject land was valued as a single dwelling house under section 17 of the Valuation of Land Act 1944. The key issues are the nature of the land, impacts of noise and traffic, lack of privacy and comparison of sales. (3) On 27 March 2000, the Chief Executive issued a valuation of the subject land at $167,500. Following an objection the Chief Executive confirmed that figure on 27 June 2000. The appellants have now appealed claiming the unimproved value should more properly be $100,000. Ann Dewey appeared and gave evidence for the appellants. Mr D Grealy, counsel of Crown Law appeared for the respondent, calling evidence from David Robert McKinnon, the departmental registered valuer responsible for determining the valuation. [2001] QLC 98 -- 1 of 10 -- 2 The Evidence: (1) The nature of the land - (4) Mrs Dewey argues that the land is currently subjected to localised flooding during wet weather from surface water overflows, particularly from the adjoining units (66 Dunsmore Street) immediately to the east. Those units, she argues, are at a higher elevation than the subject land, and surface water overflows the current retaining wall, flooding through under the dwelling on the subject land. Mrs Dewey also explains that water from tenants washing their vehicles, and also from the units’ swimming pool also adds to the problem. Dunsmore Street falls to the west and east from the highest elevation at its intersection with Ballymore Street. The subject land falls from east to west, and also from north to south. (5) A key part of Mrs Dewey’s concern relates to the widening of the bitumen carriageway of Dunsmore Street in front of the units at 66 Dunsmore Street. The units were built about 20 years ago, and the carriageway was widened by about 6 to 8 metres by relocating the kerbing and channelling closer to the boundary of 66 Dunsmore Street. As a consequence of those extra road works the old line of the kerb and channelling has been displaced, and surface run-off down Dunsmore Street now tends to flood across the north-eastern corner of the subject land. (6) Mrs Dewey argues that the alteration to the kerb and channelling has resulted in surface waters further uphill of the units also causing problems to the subject land, whereas previously those waters ran down the channelling past the subject land. The appellants have repeatedly reported the surface water problems to the Council, without any remedial solution being forthcoming. Mrs Dewey also notes that due to the sloping nature of Dunsmore Street carriageway, the washing of cars and pets on the footpath across the road, also concentrates surface waters onto the subject land. (7) Mrs Dewey also argues that the units at 66 Dunsmore Street cause intrusion into the appellants’ privacy by overlooking their dwelling, and also from noise and rubbish discarded by the tenants. There is also glare from security lights on another residence across the street. In addition to the above problems Mrs Dewey argues that local services and amenities in the area have not increased to any extent that would justify the large increase in the unimproved value now proposed by the respondent. (2) Impact of traffic - (8) Mrs Dewey further contends that traffic movements along Dunsmore Street have increased to the extent that a traffic calming arrangement has been constructed outside the subject land. As a consequence of that device, cars are regularly stopping -- 2 of 10 -- 3 for other cars to pass, and causing noise from passing traffic. Dunsmore Street connects directly with Butterfield Street, and is a major thoroughfare joining Herston Road and Bowen Bridge Road. (9) Another traffic impact on the subject land is the parking by patrons from the Ballymore Park Rugby Union Football ground in Clyde Road. While the subject land is some distance removed from that sports ground, during major football matches patrons virtually park out all of the narrow local streets in the area. In spite of a special No Parking sign outside the subject land, patrons regularly ignore the sign and park across the entrance to the property, and on the footpath. A police presence has so far failed to stop the illegal parking. (10) Mrs Dewey notes also the overflying of aircraft directly above the subject land in the early hours of the morning, and argues that further contributes to noise intrusions. She argues that the above problems, together with four burglaries of the subject land, have placed extreme pressure upon the appellants, and reflect the problems encountered which should, in her opinion, be reflected in the unimproved value. (3) Comparison of sales - (11) In concluding their estimate of the unimproved value at $100,000 the appellants provide no sales to support that figure. However they believe that the unimproved value has declined from its former level due to the decline in amenities and services in the area. In support of his determination of $167,500 Mr McKinnon argues that he has sought comparisons with parcels of vacant lands where the lands have been purchased for use only as a single dwelling site. Mr McKinnon advises that as he has valued the subject land under section 17 as a single dwelling site only, he has rejected any comparisons of larger lots in the Kelvin Grove, where some future potential for subdivision has existed. (12) Mr McKinnon notes that there is a steady trend in that locality for larger parcels to be subdivided into much smaller parcels for separate development as house sites. Mr McKinnon advises that parcels of comparable area as the subject land, and where further subdivision is possible, tend to sell in the price range of $400,000 to $450,000. Mr McKinnon has rejected those dearer sales for this valuation, as those sites are used for either subdivision or redevelopment as units. (13) To support his valuation Mr McKinnon provides sales of three smaller parcels in Kelvin Grove, and two larger parcels in the adjoining suburb of Red Hill. While not providing specific details of sales of smaller parcels more comparable in size in -- 3 of 10 -- 4 Red Hill, Mr McKinnon advises that those smaller parcels in Red Hill tend to sell for comparable prices as similar lands in Kelvin Grove. Mr McKinnon then selected the following sales:  Sale 1 – (18 Picot Street, Kelvin Grove - Lot 31 on SP 110978). This is a 401 m2 Residential BR3 parcel located about 80 metres west of the subject land. The sale is located opposite the intersection of Picot and Dunsmore Streets, and 206 square metres of that sale is covered by an easement for overland drainage flows in favour of the Brisbane City Council. Overall the sale is seen as inferior due to its smaller area, lower elevation, poor country, situation at the intersection, and the overland flow restrictions upon buildings. The sale sold in October 1998 for $95,500, was analysed at $94,900 and applied at $85,000.  Sale 2 – (24 Camona Street, Kelvin Grove - Lot 2 on RP 151142). This is a 546 m2 Residential A parcel located about 140 metres north of the subject land. The sale is elevated, and falls towards the north to the rear to a reserve along Enoggera Creek. The sale has no direct road frontage and is accessed by a 40 metre long easement. Overall the sale is seen as inferior due to its smaller area and inferior access, and suffers similar water surface flows down a concrete access driveway. The sale sold in December 1999 for $107,000, was analysed at $106,300, and applied at $110,000. The sale has subsequently resold on 27 March 2001 for $130,000.  Sale 3 – (34 Franklin Street, Kelvin Grove - Lot 2 on SP 125841). This is a 312 m2 Residential BR3 parcel located about 300 metres south-east of the subject land. The sale is gently sloping in a gully which runs along Franklin Street towards the north-west. The sale falls to the east towards Franklin Street. Overall the sale is seen as inferior to the subject land due to its much smaller size. The sale sold in February 2000 for $145,000, was analysed at $144,500, and applied at $123,000.  Sale 4– (43 Primrose Terrace, Red Hill - Lot 4 on RP 46439). This is a 893 m2 Residential A parcel located about 2 kilometres to the west of the subject land. The sale is narrower (only 16 metres compared to 19.5 metres), and was developed with a lowset brick home which was later demolished for a new residence. The sale is elevated, with a gentle fall across the lot to the north. Primrose Street has traffic calming facilities. The sale is in a superior position, and is smaller, but overall is seen as superior. The sale sold in August 1998 for $222,500, was analysed at $226,500 (after allowing for the demolition of the old dwelling), and applied at $225,000.  Sale 5 – (53 Primrose Street, Red Hill - Lot 2 on SP 125049). This is a 713 m2 hatchet shaped parcel, with an access easement to Primrose Street of area 108 m2, giving a resulting building area of 605 m2. The sale is located nearby to -- 4 of 10 -- 5 Sale 4, and also has traffic calming along Primrose Street.. There are also parking problems during the day and night due to a restaurant and a hairdresser shop at the intersection of Primrose Street and Kennedy Terrace. Overall the sale is seen as superior, as while smaller in area, and near the restaurant, it is in a superior location. The sale sold in October 1999 for $216,000, which was analysed at $215,200, and applied at $195,000. (14) As an indication of the nature of the market in Kelvin Grove, Mr McKinnon notes that the parcel across Dunsmore Street from the subject land (area about 405 m2) sold as vacant land in 1997 for about $98,000. That parcel has since been developed with a new dwelling and resold again. That earlier sale had been used in the valuation of the area at 1 October 1997. Mr McKinnon advises that each succeeding valuation at 1 October 1997, 1 October 1998 and 1 October 1999 had demonstrated increases in each year. (15) In drawing comparisons with Mr McKinnon’s Sale 1, Mrs Dewey notes that the sale does not have the intrusions of the units beside it, and would not, in her opinion, have the problem with cars parked outside it during the Ballymore football matches. Mrs Dewey also argues that there are views of the Mt Coot-tha TV aerials from the existing two-storey dwelling now existing on Sale 1, a view not available from the current subject residence. (16) Mrs Dewey is also familiar with Sale 3 (34 Franklin Street), and argues that there are also views of the Royal Brisbane Hospital from the double-storey dwelling now erected upon that parcel. Mr McKinnon rejects that such views are available from Sale 3, noting that higher lands along Scott Road would prevent such views. Mrs Dewey also notes that traffic in Franklin Street is much lighter than in Dunsmore Street, which is a by-pass road around the Royal Brisbane Hospital. Mr McKinnon agrees that the traffic at Sale 3 is lighter, but argues his Sale 1 suffers from the traffic problems as the subject land, but has the added disability of the Stop sign at Picot Street, and the headlights of cars as they move west along Dunsmore Street. (17) Mr McKinnon also notes that traffic along Primrose Street at his Sales 4 and 5 are heavy due to proximity to the Ithaca TAFE College and also the Broncos League Club off Arthur Terrace. The resulting traffic calming of speed bumps and crossovers is similar to Dunsmore Street near the subject land. The residents near his Sale 5 also have recently complained of late night trading noises and unacceptable parking problems. -- 5 of 10 -- 6 (18) In his assessment of the subject land Mr McKinnon advises that he has allowed for the surface water problems, the traffic and noise intrusions, and the overall impact of the adjoining units both to the east and to the south at the rear of the subject land. Mr McKinnon advises that had those units not existed adjoining the subject land, its unimproved value would have been in excess of $200,000 as a single resident site of that size. (19) Mr McKinnon was aware of the impacts of the units now complained by Mrs Dewey as he had discussed those problems with other residents in the area who adjoin units. He has based his valuation of the subject land upon his wide experience of those problems, and his wide knowledge of the area (20) In arriving at his valuation of $167,5000 Mr McKinnon has maintained the former relativities between surrounding single resident parcels in that locality. He advises that the unit lands are all valued and compared as a separate sub-market area, and, depending upon market movements in the unit developments, there may have been some variations between the relative levels for unit lands and single dwelling lands. Decision: (i) The method of valuation - (21) In adopting his valuation Mr McKinnon has relied upon the approach long preferred by Courts at all levels when assessing the unimproved value of land. The principle was clearly enunciated by the Land Appeal Court in PH Clough v Valuer General (1981-82) 18 QLCR 70, where it said at 76: “It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved values, 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 an unimproved value. The reason is obvious. In applying such sales there is no room for error in analysing the value of the improvements.” (22) That principle was also followed in R and MM Barnwell v Valuer-General (1990-91) 13 QLCR 13, at 17; and later in Hans and Else Grahn v Valuer-General (1992-93) 14 QLCR 327, at 328. (23) In considering the subject land in the current matter, Mr McKinnon was directed by s. 17 of the Valuation of Land Act which 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 subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, -- 6 of 10 -- 7 in case of potential use as aforesaid, that potential use is lawful when the valuation is made.” (24) However in defining the unimproved value of the subject land, I am also drawn to the meaning of “unimproved value” which is defined in s 3 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.” (25) In seeking to understand that direction, I note guidance was provided by 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 amenities and facilities which have grow up around it. Their Lordships see no objection in the process of valuation to regarding the land as land situated in a sugar town. The valuer need not shut his eyes to the fact there is a sugar manufacturing industry in existence, though he is not entitled to value the sugar mill and its accessory situated on the subject land. Their Lordships find themselves in agreement with an illustration given by the Learned Magistrate in this judgment. ‘If the undeveloped capital value of a city powerhouse is being assessed one does not assume a city without electricity and all the consequences of the lack of such an amenity.’” That also followed the findings of the Privy Council in Tooheys Limited v. The Valuer General (1925) AC 439 where their Lordships said at p. 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 define the required figure. What the Act requires is really quite simple. Here is a -- 7 of 10 -- 8 plot of land; assume that there is nothing on it in the way of improvements; what would it fetch at 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 the improvement had not occurred, while all the existing surrounding developments at the time of then valuation are to be considered extant. (26) In seeking 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 Griffith CJ said at p. 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 on a given date, i.e. 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 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 a willing vendor to sell it, or, in other words, to enquire 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) On the above direction I note that Mr McKinnon has adopted a correct principle, and what then must need be addressed is whether he has made any serious error of fact in his analyses. (ii) Comparison of sales - (28) In his comparisons Mr McKinnon has determined the following relationships: Sale Unimproved value Comparison 1. 2. 3. 4. 5. $85,000 $110,000 $123,000 $225,000 $195,000 Inferior Inferior Inferior Superior Superior -- 8 of 10 -- 9 (29) In his analysis of the subject land, Mr McKinnon has made allowance for the intrusions from the adjoining units, and the impact of the illegal parking and traffic noise extant at the subject land. Indeed it is his opinion that had those disabilities not existed then the unimproved value of the parcel of the size the subject land, valued as a single dwelling site, would have been more than $200,000. (30) The one area that may be subject to some conjecture is the possible impact of the road widening of Dunsmore Street in front of the adjoining units at 66 Dunsmore Street. Because of its location downhill of that road widening, it would appear that abnormal discharge of stormwater intrudes across the north-eastern corner of the subject land. While Mr McKinnon has apparently allowed for uphill surface water discharge, the evidence was not fully clear as to whether the existing arrangements of the kerb and channelling was adequate to convey normal surface waters beyond the property. In respect of the security lights on the house across Dunsmore Street, I find that was likely to occur in many situations, and does not demonstrate any unusual disability for noting in the value of the land. (31) The appellants do not explain how they assess the unimproved value of the subject land at $100,000, merely noting that in their opinion the amenity of the area has gone backwards. However Mr McKinnon advises that sales of vacant lands in the area have demonstrated a steady rise in values since 1997. The sale of the 405 m2 parcel opposite the subject land in Dunsmore Street at $98,000 in 1997, would indicate a value well in excess of that figure for the much larger subject land some three years later. On balance I believe that Mr McKinnon has adopted a reasonable value for the subject land at his figure of $167,500. (32) In explaining how he arrived at that figure, Mr McKinnon explains that he has assessed the value using a mass appraisal approach for the area. In such a method he has analysed an appropriate percentage increase in value for the sub-market area in which the subject land is located. He then consistently applies that increase to all of the single dwelling parcels in that sub-market area, maintaining the former relativities between the parcels. That is a consistent method adopted by the Chief Executive, and reflects no error in omissions in approach. (33) In the end I am reminded that in respect of the notice of appeal, s 45(4) of the Act 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.” -- 9 of 10 -- 10 (34) On the evidence supplied I am not convinced that the appellants have discharged that responsibility. Conclusion: (35) Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeal is dismissed, and the unimproved value of Lot 8 on B 123438 as determined by the Chief Executive in the sum of $167,500 is affirmed. NG DIVETT MEMBER OF THE LAND COURT -- 10 of 10 --