Davidson v Chief Executive, Department of Natural Resources and Mines [2001] QLC 94

LAND COURT BRISBANE 21 SEPTEMBER 2001 Re: Appeal against Annual Valuation Valuation of Land Act 1944 Property ID: 9034049 Local Government: Brisbane-Belmont (AV00- 119) Carmen V and Robert A Davidson 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 30 Fursden Road, Carina, and described as Lot 1 on RP 201639, Parish of Bulimba. The subject land is located about 7.5 km radially east of Brisbane GPO, and has an area of 370 m². There is good access from Fursden Road, which is bitumen sealed with concrete kerbing and channelling. All normal utility services are available, and the subject land is in close proximity to shopping in Creek Road. The land is zoned "Residential A" under the Town Plan of the Brisbane City Council (the Council) of 13 June 1987, current at the date of valuation of 1 October 1999. The key issues are comparison of sales, relativity, the impact of flooding and changes in the valuation. (2) On 27 March 2000 the Chief Executive issued a valuation of the subject land at $41,500. On 4 April 2000 the Chief Executive then issued a revised valuation of the subject land at $40,500. Following an objection the Chief Executive confirmed that figure on 1 July 2000. The appellants have now appealed claiming the unimproved value should more properly be $35,000. (3) Robert Ashley Davidson appeared and gave evidence for the appellants. 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) Nature of the Land - (4) The subject land is a regular shaped parcel with a truncation at its north- western corner to accommodate a large concrete lined open drain passing through the area to the north-west. The land is practically level, of low elevation, and is subjected [2001] QLC 94 -- 1 of 8 -- 2 to periodic flooding, although the land and its surrounding parcels are above the Council's flood regulation line. There is a sewer line passing across the parcel towards the rear about 29 metres from Fursden Road. The truncated corner of the parcel (about 12 metres in length) adjoins the large drain. (5) The appellants advise that the open drainage area is regularly used by local residents as a right of way to the bus stop in Creek Road to the north. They argue that there is additional noise from children and dogs during extended periods, particularly at weekends. Because of problems of lack of privacy, the appellants advise that the preferred location for a dwelling upon the subject land would be further towards Fursden Road than the existing dwelling. It is agreed that all of the 370 m² of the subject land is usable, however any building would need to accommodate the known flooding problem. The existing sewer is not seen as a problem. (2) Changes in the Valuation - (6) The appellants acquired the subject land about eight years ago, during which period they argue that no significant changes have occurred in the amenity of the area to justify the current large increase (20%) in the unimproved value of the subject land. Mr Davidson notes that public speculation has occurred, that remedial works might be undertaken to alleviate the flooding problem, but those actions have not eventuated. (7) In seeking to understand the appellants' estimate of the unimproved value at $35,000, Mr Davidson advises that he had relied upon the previous history of the subject land. He notes that unimproved values for the subject land have risen since 1 October 1997, when it was $33,000. Mr Davidson advises that the subsequent revaluation at 1 October 1998 was reduced by agreement after an appeal from $34,500 to $34,000. Mr Davidson had participated in a preliminary conference before this Court in respect of the appeal against the valuation at 1 October 1998, which was subsequently then withdrawn. There was also a recent valuation at 1 October 2000 which is currently under objection. However, it is agreed that later issue is not a consideration in the current matter. (8) The details of the 1 October 2000 valuation are really for consideration in line with the property market at that time, and therefore are not relevant to the current matter. However, a recent response from the Chief Executive would suggest that the problems associated with the regular flooding of the subject land are being reconsidered. (9) In assessing his estimate of the unimproved value in the current matter Mr Davidson has noted that a 3% increase had occurred at the 1 October 1998 valuation. -- 2 of 8 -- 3 He then applies a further 3% increase to arrive at his figure of $35,000 in the current matter. (10) In respect of any difference between a 3% rise during 1998, and a 20% increase in 1999, Mr Cranstoun advises that the interpretation of the market in 1998 may have been on the low side. He notes that that may occur when sales evidence is less than fully persuasive, and any benefit of doubt is resolved towards the owner's benefit, and the valuations are then very conservatively increased. As a consequence of such a policy, when seeking to adjust unimproved values at subsequent valuations, the next increase in a rising market may be greater than would normally otherwise have occurred. Mr Cranstoun notes that it is the change in the interpretation of the market that can then eventuate, not merely in the market itself. (3) Impact of Flooding - (11) Mr Davidson argues that regular flooding of the area occurs every five or six years. He notes that the land was flooded badly most recently in March 2001, when water rose to about 1 metre. Mr Davidson notes that flooding is well recognised by the Council, which recently in October 2000 resumed two properties at 66 Fursden Road and 77 Gray Street for an emergency wet-weather link for safety purposes. That all-weather access is to the east of the subject land at a higher elevation. The appellants have been flooded twice during the last eight years, and supplied photographs of the extent of the most recent flooding. (12) Mr Cranstoun concedes that flooding occurs periodically in the area, and notes that Council records show flood levels at 1 in 10-year frequency to 3.7 metres, and 1 in 5-year frequency to 3.5 metres at the site. The reduced level of the subject land is 3.5 metres at Fursden Road, falling to 3.1 metres at the rear. The flood level in March 2001 was to 3.7 metres. Mr Cranstoun advises that an allowance for flooding had been allowed in previous valuations, however that had been increased following the objections from the appellants. Mr Cranstoun notes that the presence of the large concrete open drain was a factor that draws attention to the flooding problems in the area. (13) In respect of the extent of flooding on the subject land compared to the adjoining Lots 141 and 142, Mr Cranston relies upon contour mapping supplied by the Council (Exhibits 4 and 5). He notes that there is little difference in elevation between the two parcels. (4) Relativity - (14) Mr Davidson draws comparisons with two parcels at 29 Gray Street (Lots 141 and 142 - 810 m²), and 35 Gray Street (Lot 145 - 405 m²). He notes that 29 Gray -- 3 of 8 -- 4 Street has an unimproved value of $29,000, while 35 Gray Street has an unimproved value of $37,000. Mr Cranstoun confirms that 29 Gray Street is valued as a single valuation for both Lots 141 and 142 as those lots are used as a single homesite of area 810 m². (15) However, Mr Cranstoun confirms that parcel has been valued on the basis of its usable area of 280 m² free of two drainage easements (Easements A and B). Mr Cranstoun notes that based upon that usable area 29 Gray Street is seen as inferior to the usable area of the subject land at 370 m². He notes also that 29 Gray Street has a much longer direct frontage to the open drain (about 34 metres to both the rear and side), compared to only 12 metres frontage to the drain at the rear only for the subject land. (16) In respect of the usable area of 35 Gray Street (Lot 145) there were no details provided of the usable area of that parcel. Because of the slightly rising elevation to the east of the drain, and Lot 145 being one lot removed from the open drain, it may be accepted that the usable area of Lot 145 is 405 m². However, Mr Cranstoun notes that a sewer line passes parallel to the western boundary of that parcel, which he feels may provide some building restriction on such a narrow parcel of width 10 metres. However, he concedes that sewer line also passes across the subject land, and he agrees that he has sought to maintain the former relativities between surrounding parcels. (17) Mr Cranstoun notes that there is a dwelling upon 33 Gray Street which would partly block views of the open drain from 35 Gray Street. However, he feels that the open drain would also be visible as it crosses Gray Street to the north. The unimproved value of 33 Gray Street is $33,500, and of 37 Gray Street (Lot 146) is $41,500. Mr Cranstoun was unable to explain why Lot 145 is $4,500 less than Lot 146, suggesting that the value of Lot 145 may be slightly low, without fully understanding all of the features of that parcel. (5) Comparison of Sales - (18) Mr Davidson provides no sales to support his estimate of the valuation. Mr Cranstoun provides the following sales of vacant or lightly improved "Residential A" lands:  Sale 1 (19 Bethel Street, Carina - Lot 10 on RP 898751). This is a 526 m² parcel located about 0.9 km south-east of the subject land. The sale is three lots removed from an open drain running west to east, then turning north. The sale is far less affected by flooding, but is the closest sale of land nearby to major drains. The sale is seen as superior to the subject land, as are also the other two sales. The sale sold in December 1998 for $80,000, was analysed at $74,200, and applied at $73,000. -- 4 of 8 -- 5  Sale 2 (6 Koree Street, Carina - Lot 2 on SP107747). This is a 556 m² parcel located about 0.9 km south of the subject land. The sale sold in November 1998 for $83,500, was analysed at $82,000 and applied at $79,000.  Sale 3 (4 Risley Street, Carina - Lot 2 on SP118409). This is a 377 m² parcel located about 1.2 km south-west of the subject land. The sale sold in January 1999 for $80,000, was analysed at $78,800, and applied at $76,000. (19) Mr Cranstoun agrees that because his three sales are all very much superior to the subject land, he has had to rely upon his professional judgment as an experienced valuer to establish the general level of value of the subject land. He concedes that his sales are in new estates, with better utility services than the subject land. Decision: (i) Nature of the Land - (20) It is agreed that the subject land is low and flood prone, and has been the subject of extensive discussions between the parties in respect of unimproved values over the last three years. Correspondence from the local political representatives support that the extent of local flooding is well documented, and widely known in the community. Following the very large flooding in March 2001, the Council provided funding under a Natural Disasters Program to assist people affected, such as the appellants. (21) The evidence reveals that, while the respondent is fully aware of the nature of flooding in that area, he has seen the need to reassess its relative impact upon the subject land on three occasions. While the events of the 1 in 100 year flooding in March 2001 occurred well after the relevant period in the current matter, the impact of that subsequent inundation further heightens any assessment of flooding impacts upon the land and the surrounding parcels. (ii) Changes in the Valuation - (22) In considering whether the percentage change in the valuation has some relevance in this matter, I note that Mr Davidson is concerned with the current large increase (20%) compared to the previous increase of only 3%. While I am aware that such percentage rises in values are often of concern to appellants in seeking to have confidence that their personal property has been fairly treated in any valuation, they in fact do not prove conclusively that any error has been made in the valuation process. Such rises may, at best, be an indicator to owners that they should further investigate the valuation, but there may be many reasons why a valuation has changed at what would appear to be a rate out of line with some overall statistical percentage. -- 5 of 8 -- 6 (22) This matter has been considered many times by the Courts, and I note from precedents that a large increase in itself is not evidence of some error in the valuation. I note, for example, in the decision of NR & PG Tow v. The Valuer-General (1978) 5 QLCR 378, where the Land Appeal Court said at p.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." That matter was also considered in CH and BD Henricks v. The Valuer- General (1983) 9 QLCR 59 where, in the Full Court of Queensland, Macrossan J (CJ) said at p.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 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 at different rates over a period of five years." (23) As the Full Court said, there could be many reasons why parcels of land can increase at different percentage rates over a period time. The real test is not the percentage increase in the unimproved values, but a comparison of the subject with sales of comparable sites in the vicinity of the subject at the time of the valuation. (iii) Relativity - (24) Mr Davidson has relied upon relativity mainly with two adjoining parcels at 29 Gray Street and 35 Gray Street. Mr Davidson, however, was not aware that 29 Gray Street had been valued as a single dwelling homesite covering both Lots 141 and 142, under s.17 of the Act. The usable area of that parcel was only 280 m², which is less than the usable area of the subject land at 370 m². In addition to that smaller usable area, Mr Davidson concedes that 29 Gray Street has a much larger direct exposure to the adjacent adjoining open drain. On that evidence I agree with Mr Cranstoun that the subject land is superior to 29 Gray Street ($29,000). (25) The relativity with 35 Gray Street ($37,000) was also relied upon. That parcel is very low flood-prone land, but slightly further removed from the open drain. However, 35 Gray Street also has a slightly larger usable area (405 m²) and for some not fully explained reason would appear to have an unimproved value between 33 Gray Street to its west ($33,500) and 37 Gray Street to its east ($41,500). -- 6 of 8 -- 7 (26) The presence of a sewer main along the western boundary of 35 Gray Street (Lot 145) was likely to have had some impact upon the unimproved value of that parcel, as Lot 145 has only a width of 10 metres. On balance I note that Mr Cranstoun has maintained the former relativity between those parcels in Gray Street, and I see no reason not to accept that relationship. On that understanding I believe that 35 Gray Street may be slightly inferior to the subject land. (iv) Comparison of Sales - (27) In matters involving the determination of unimproved value it has long been held by courts of all persuasion that the most direct approach is to seek comparisons with sales of comparable vacant or lightly improved lands, if they are available. That principle has been applied by the Land Appeal Court on many occasions, noting in particular PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, at p.76; WM & TJ Fischer v. The Valuer-General (1983) 9 QLCR 44 at 46; and more recently Hans and Else Grahn v. Valuer-General (1992-93) 14 QLCR 327, at 329. (28) In the current matter the appellant provides no sales to dispute Mr Cranstoun's approach, and relies only upon relativity with two parcels. Now while the maintenance of relativity is important, the use of relativity should not be preferred to the exclusion of relevant (even if not ideal) sales. That was clarified by the Land Appeal Court in Fischer v. The Valuer-General (supra), at p.46. (29) In the current matter Mr Cranstoun has supplied three sales all of which are superior to the subject land. The question is by how much are those sales superior? In using his wide experience as a valuer to assess those comparisons, Mr Cranstoun follows guidance to be found in Bingham v. Cumberland County Council (1954) 20 LGR 1, where Sugerman 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 case (1939) AC at pp. 312 and 313, in which he 'will have no market value to guide him, and he will have to ascertain as best he may from the material before him what a willing vendor might reasonably expect to obtain from a willing purchaser of the land'." (30) The use of experience was also favourably noted in King Ranch Pastoral Company Pty Ltd v The Valuer General (1968) 35 CLLR 255, where the Land Appeal Court said at p.259: "In not attempting to do this, Mr Walker adopted a method of valuing based on knowledge and experience rather than one lacking precedent and authority." (31) The Land Appeal Court then went on to say at p.262: -- 7 of 8 -- 8 "The valuer in arriving at his opinion in these difficult matters may have to draw 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." (v) Summary - (32) In summarising this matter I find that there is no evidence to discredit Mr Cranston's overall general quantum of value for the parcels affected by the flooding. While the impact of regular flooding is a disability which was likely to cause the unimproved value of the subject land to be at the lower end of the valuation spectrum in that area, there is no evidence provided that even those flooded lands have not experienced some increase in value over the relevant period. (33) If I then compare the relativities between adjoining parcels, I find that the subject land would have an unimproved value greater than 29 Gray Street ($29,000), and also 35 Gray Street ($37,000), but less than the higher values to the east of the subject land at Lot 226 ($41,500). Mr Cranstoun's determination at $40,500 fits those criteria. However if I consider the apparent later reconsideration of the impact of flooding following the March 2001 floods, I believe perhaps an even more conservative application to $40,000 may be appropriate at the relevant date. (34) I am aware that in respect of their appeal the onus is upon the appellants to prove their case. (Section 45(4)). I am also aware that unless the appellants prove that the Chief Executive has followed a wrong principle, or made a serious error of fact, then the appeal should not be allowed (Brisbane City Council v. The Valuer- General (1977-78) 140 CLR 42, at 56). However, I am also directed that while the appellants have the burden of proving their grounds of appeal, they do not have the burden of proving that the amount which in their opinion should be the valuation is correct. (Brisbane City Council v. The Valuer-General (supra) at p.57.) On the evidence I believe some further minor reduction to $40,000 would be appropriate. Conclusion: (35) Having considered the whole of the evidence I am persuaded that the appellants have partly proved their case. The valuation as determined by the Chief Executive is set aside, and the unimproved value of Lot 1 on RP 201639 is determined at Forty Thousand Dollars ($40,000). NG DIVETT MEMBER OF THE LAND COURT -- 8 of 8 --