Anderson v Chief Executive, Department of Natural Resources and Mines [2001] QLC 33

LAND COURT BRISBANE 26 APRIL 2001 Re: Appeal against Annual Valuation Valuation of Land Act 1944 Valuation Roll: 6250-5821 Local Government: Redland Shire (AV99-1262) Marilyn C Anderson v. Chief Executive, Department of Natural Resources and Mines D E C I S I O N Background: This matter relates to land at 61 Scotts Road, Macleay Island, and described as Lot 5 on RP 131380, Parish o f Russell. The subject land has an area of 544 m², and has good access to Scotts Road which is a formed earth carriageway. The land is regular in shape, of low elevation, and frontage is at road level. The subject land is zoned "Residential A" under the Town Planning Scheme of the Redland Shire Council (the Council) of 20 February 1988, effective at the date of valuation of 1 October 1998. The key issues are the impact of a drainage line, the use of the land and the comparison of sales. On 29 March 1999 the Chief Executive issued a valuation of the subject land at $500. Following an objection the Chief Executive confirmed that figure on 16 August 1999. The appellant has now appealed on 21 September 1999 claiming the unimproved value should more properly be $8,000. Marilyn C Anderson appeared and gave evidence on her own behalf. Mr R Vize, Counsel of Crown Law, appeared for the respondent, calling evidence from George Dudek, the departmental registered valuer responsible for determining the valuation. At the hearing Ms Anderson argued that the subject land should at least be equal in value to the two adjoining parcels in Scotts Road which are currently valued at $3,500. She notes that would reflect the previous valuation of the subject land at 1 October 1997 which was also $3,500. [2001] QLC 33 -- 1 of 9 -- 2 (i) The History of the Land - The appellant advises that she purchased the subject land about 10 years ago for approximately $7,000, after an inspection on her behalf by her mother. She also provides evidence that the unimproved value of the subject land at that time had been $5,400. That value was then increased incrementally over time until the valuation at 1 January 1996 and 1 October 1996 when the figures at both occasions had been $7,000. Miss Anderson provides successive rate notices from the Council showing unimproved values of $5,400 (1994); $5,900 (March 1996); $7,000 (August 1996 to August 1997); $3,500 (February to May 1999) and $500 (November 1999 to November 2000). Ms Anderson advises that the zoning of the land was "Residential" when she purchased the land, and has remained unchanged to the present. Inquiries through a professional conveyancer at the time of sale revealed no restrictions upon building upon the site. As an absentee owner living in Sydney the appellant had participated in a Council annual mowing scheme until its closing down by Council on 1 July 1999. Under that scheme the Council provided low-cost maintenance clearing of sites to minimise overgrown vegetation. Ms Anderson raised concerns that during all of that time there had been no indication from Council that the site was subject to major inundation and was unsuitable for building purposes. Mr Dudek advises that since 1996 Council had introduced a by-law that all residential approvals are subject to obtaining a town planning permit on the offshore islands, such as Macleay Island. He notes that there was little likelihood of gaining building approval on any site which has been classified as a "Drainage Problem Category 1" area, unless proof of incorrect classification of the land could be established. Mr Dudek notes that under the "Southern Moreton Bay Islands Planning and Land Use Strategy" the subject land is designated as a "Drainage Problem Category 1" area, which generally reflects lots with less than 450 m² above the Q100 limit of inundation, and access which is not free of Q2 inundation. The Q100 reference relates to rainfall inundation of a 100-year frequency, and Q2 to frequencies of two years' occurrence. Mr Dudek advises that there have been no recent sales of drainage problem parcels on Macleay Island, although some people have surrendered their drainage problem lands to the Council at no cost. Mr Dudek argues that the unimproved values of the subject land in 1996 and 1997 were in line with market evidence at those respective times, bearing in mind that -- 2 of 9 -- 3 there was no evidence available at those times that the land could not be built upon. A comparison with sales in 1998 was made with land where there was a similar drainage problem extant, and building approval was unlikely to be forthcoming. (2) Drainage Problems The major concern of the appellant is the designation of the subject land by the Council as a drainage problem area. Mr Dudek advises that prior to the new by-law regulation in 1996 it had been possible for owners of land designated as "Drainage Problem Area" to gain building approval by filling parts of the building area above the Q100 level. Since 1996 that is now much harder to obtain, due to Council's policy of preventing any filling of a "substantial" nature. Mr Dudek advises of one lot where 0.6 metres of filling was seen to be substantial in nature. The only reason for the fall in value of the subject land was the new constraint that building would not be permitted. Mr Dudek also advises that prior to the current general advice from the Council in 1999 of all properties subject to "Drainage Problem Area" classification, the respondent had individually changed the use of any parcel only upon advice from the owners that their land had been reclassified. On each of those occasions the respondent had reduced the level of the unimproved value consistent with the market price for land where building approval was unlikely to be obtained. Generally those requests followed unsuccessful applications to Council for a town planning permit. Mr Dudek further advises that in August 1999 the Council had published the list of all parcels subject to a drainage problem on its internet web page, which was therefore available to those who were aware of that service. However, if any owner came to the public counter of the Council's offices, they would have been advised verbally of such constraints. Any request for confirmation in writing would then have been provided on payment of an application fee of $300. Mr Dudek became aware of the website page from another landowner prior to issuing the current valuation on 29 March 1999. Mr Dudek also confirms that the subject land is the only lot in Scotts Road that is classified as a "Drainage Problem Area", but the adjoining parcels to the north in Francis Road (Lots 88 and 89) are also both valued at $500. Lot 88 has a "Drainage Problem" classification, while Lot 89 is owned by the Council. It is the appellant's argument that the "Drainage Problem" classification relates to overland flows across the subject land from a 0.9 metre diameter pipe culvert across that road. A drainage plan was provided by the appellant which demonstrates -- 3 of 9 -- 4 the topography and drainage lines of the area from south of Scotts Road to the flat land north of Gordon Road. Those 0.5 metre contours disclose that surface waters follow the natural fall of the land from a 0.75 metre diameter pipe culvert across Camena Street to the south, through Lots 50 and 69 to the Scotts Road culvert, then across the subject land and Lots 88 and 89 to the north. The flows then pass under Francis Road via a 1.2 metre diameter pipe culvert discharging across Lots 52 to 58, 75 and 90 towards Gordon Road. The contour map also demonstrates that Scotts Road falls from more elevated lands to the west of the subject land along Scotts Road, and also from higher lands to the east from about Lot 10. A similar pattern exists in Francis Road. The logical conclusion from those contours is that the natural terrain of the area constrains the Council from seeking a cost-effective alternative drainage solution for the area. It is self-evident that surface waters always migrate to the lowest level of the terrain surface, and the subject land is the lowest point in that area of Scotts Road. Ms Anderson concedes that she has only visited the subject land on one occasion, but she understands that the 0.9 metre diameter pipe culvert in Scotts Road had been placed some time subsequent to her purchase of the land. The Council rejects the suggestion that it placed the pipe without reference to the appellant, thus channelling surface waters onto the subject land. Without evidence to the contrary, I believe the stormwater drainage lines evident on the maps supplied (Exhibit 2), would support that the 0.9 metre diameter pipe was part of the original development's drainage system. It would be difficult to understand that the Council would not have required that stormwater drainage under Scotts Road in order to preserve the integrity of the formed earth carriageway. However, Ms Anderson notes that there would appear to be inconsistency in the Council's records in respect of any drainage problems on subject land. The zoning map supplied (Exhibit 2) show some parcels to the north as "Drainage Problem", but shows no such disability for the subject land. Mr Dudek argues that zoning is not the issue here, but rather the stated nature of the land in the subsequent Council's "Southern Moreton Bay Islands Planning and Land Use Strategy". He notes that previously under a zoning constraint of "Drainage Problem" it had formerly been possible to build, subject to Council approving certain further requirements. That does not now exist. Ms Anderson has personal experience of living on flood-prone lands in Sydney, and concludes from that experience that it may be possible for some -- 4 of 9 -- 5 relaxation of certain local government constraints, which had occurred in Sydney. However, she concedes that she has no knowledge whether the Council in this matter was likely to be so persuaded. Mr Dudek has accepted the Council's advice of 12 April 2000 (Exhibit 4) that the subject land is classified as a "Drainage Problem Area". Ms Anderson was unaware of the "Southern Moreton Bay Islands Planning and Land Use Strategy", and agrees that on the basis of that classification it would be very difficult to get a building application approved. She also notes that she would be reluctant to initiate an application for fear of its being recorded as a rejection. The Council has no intention of purchasing the subject land at this time. Of course, should it later proceed to acquire lands under the "Southern Moreton Bay Islands Planning and Land Use Strategy", any compensation then due to owners would be determined at that time, either by negotiation or by appeal to this Court. (3) Comparison of Sales - Ms Anderson argues that indications of asking prices in local real estate papers suggest that lands on Macleay Island are currently in the range of $6,400 to $11,500. She notes also one lot of improved land with a dwelling which is for sale at $85,000. However, she has no specific details of those lands for sale, and concedes that does not reflect actual sales of lands. She argues that it is inappropriate to compare sales of lands on adjoining Russell and Lamb Islands, rather than on Macleay Island. Ms Anderson notes the previous unsatisfactory history of flooded lands on Russell Island which she argues could be reflected in current land prices on that island. Mr Dudek concedes that he has only used sales on Russell and Lamb Islands, because there were no other sales of drainage problem lands on Macleay Island. Indeed, the five sales used by Mr Dudek were the only sales of Bay Islands lands classified as "Drainage Problem" in the period 1997 to 1999. Each of those sales were similar to the subject land in respect of size and town planning restrictions. The sales reflected sale prices varying from $415 (White - December 1999), $1,000 for two lots (Stammers - September 1998), to $750 (Vermeer - October 1999). All of the sales were to private purchasers. Mr Dudek sees the only likely market value for such parcels as a possible extension of a yard to an adjoining owner who has approval for a building. He notes that there may also be some speculative value where it was hoped that Council may later lift the current classification. However, he has no sound basis to support the -- 5 of 9 -- 6 latter conclusion, or even suggest that Council may at some future time change its view. The evidence would suggest that Council was unlikely to change its view. Decision: The key issue in this matter is the legality of the "Drainage Problem" classification, and its impact upon the value of the land. I note that the appellant argues that the zoning of the land has no stated disability recorded against the subject land for drainage problem purposes. However, the zoning of the land is only one statutory restriction upon the land, which must be taken into consideration by the Council in determining the land's suitability for building purposes. I note that the Council established a regulatory by-law in 1996 which directs that any building application must be preceded with an application for a town planning permit on the Bay Islands. That by-law has taken effect only after approval by the Governor-in-Council for the State, and has the force of law, and must be taken on notice by landowners. The question then confronting any prudent purchaser of the subject land, was likely to be how the Council would interpret its current legislative guidance as it affects the subject land. The evidence is that subsequent to 1996 the Council has completed and published a further study of a proposed planning and land use strategy for certain lands on the Southern Moreton Bay Islands. It was Mr Dudek's conclusion that any ongoing implementation of that strategy was likely to be subject to funding constraints. The advice from Council to Mr Dudek of 12 April 2000 was that an acquisition strategy in respect of certain lands would apply, if finally adopted by the State Government. At the date of the valuation, clearly the strategy had not then been officially sanctioned by the State Government, but it was a published intention of the Council for the area. The matter of whether it was appropriate for Mr Dudek to then apply those stated intentions of Council, when he determined his valuation of the subject land, is fundamental to the final valuation. The evidence reveals that the Chief Executive had knowledge that the subject land had been classified as a "Drainage Problem Area" prior to the date of issue of the valuation on 29 March 1999. It would therefore seem appropriate for Mr Dudek to have noted that fact and included it in his determination. The matter of general reliance upon advice from the Council was addressed by the High Court in Pyrenees Shire Council v. Day [1997-98] 192 CLR 330. In that matter the concept of "general reliance" was raised as a matter of a duty of care owed -- 6 of 9 -- 7 by a public authority. A majority decision rejected "general reliance" as a basis of liability, and Brennan CJ noted at p.344: "If the 'general expectations of the community' were to be the touchstone of liability, the proof of that fact would present considerable difficulty. The test seems to invite consideration of a general expectation of the exercise of a statutory power rather than an expectation referable to particular circumstances which might invite consideration of an exercise of the power. If community expectation that a statutory power will be exercised were to be adopted as a criterion of a duty to exercise the power, it would displace the criterion of legislative intention. In my respectful opinion, if the public law duty of a public authority to exercise a power is relevant to its liability in damages for a failure to exercise that power, the appropriate criterion is legislative intention." However, in my opinion, that can be distinguished in the current matter as the actions of the Council were appropriately guided by the legislative intentions of its regulatory by-laws of 1996. Those by-laws establish the need for an initial town planning permit, the issuing of which was likely to be subject to the known physical disabilities of the subject land as it then existed. The question then needing to be addressed is what legislative legal standing the "Southern Moreton Bay Islands Planning and Land Use Strategy" had at the relevant date. However, while the evidence does not disclose whether the strategy had been formally agreed to by the State Government, the strategy was then the formal policy of the Council. Indeed its publication on its Council's official web page would suggest that status. The question then impacting Mr Dudek's mind was likely to involve the likely impact upon a prudent purchaser then presented with the Council's intentions. The evidence also discloses an interesting interpretation of the general understanding of the Spencer test, as it has been applied to the value of land for almost 100 years. That principle was established by the High Court in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418, where Griffiths 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 for it on a given day, 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 such a willing vendor to sell it, or, in other words, to inquire at -- 7 of 9 -- 8 what point a desirous purchaser and a not unwilling vendor would come together." The evidence in the current matter places an interesting modernisation of the understanding of the prudent purchaser in relation to establishing the value of the land. The use of the Council's web page extends the concept of a prudent person, conversant with the subject land. However, even if that latest technology was unfamiliar to the person, a personal inquiry to the Council would have disclosed the presence of the existence of the planning and land use strategy. In deciding what notice Mr Dudek should have placed upon the advice from the Council, I am directed to the findings of the Full Court of Queensland in JR & DM Stubberfield v. The Valuer-General (1988-89) 12 QLCR 328. In that matter the Valuer-General had applied a value to the land having regard to its then zoning, ignoring a Council proposal to amend the Town Planning Scheme, which would have changed the zoning of the subject land. Carter J noted at p.331: " It is also a well recognised principle that land be valued for its highest and best use. What it can best be used for will be reflected in its true market value which takes account of any detriment the land possesses relevant to its use as well as any potential it has for its present or other use. Again the relationship between value and land use is immediately apparent. The hypothetical purchaser and vendor referred to by the High Court in Spencer will therefore take full account of the inherent characteristics of the land as well as the restrictions or otherwise upon its present or future use when deciding what sum of money the one will pay to the other to acquire it. … It seems to me that the proposal to rezone land in a way which will impact unfavourably upon its use should prima facie be seen to detrimentally affect its value. Whether it will do so in a particular case is a question of fact and it is therefore unnecessary to address that question here even were it competent for this Court to do so." In that matter the Full Court found that the Land Appeal Court should have considered what effect the prospective rezoning might have upon the mind of the hypothetical purchaser and the effect it might have on a sale price. Mr Dudek could do no less in the current matter. The second issue in the current matter is the likelihood that the existing classification of the subject land might be displaced, or misinterpreted by the Council. On the evidence supplied I accept the Council's advice that the subject land is adversely impacted by surface flooding over its entire area. The Q100 flood intensity in Scotts Road upstream of the subject land reveals expected volumes of 1.75 m³ per second, above the current road capacity of 1.5 m³ per second. Such predictions -- 8 of 9 -- 9 forecast the need for increased road capacity, thus indicating that the current pipe culvert was likely to overflow during Q100 precipitation. The increased diameter of the downstream pipe culvert (1.2 metres) in Francis Road supports the prediction of large water flows across the land. I see no evidence to discredit Council's conclusion that the land would be unsuitable for building purposes. Any likely cost of piping the water flows across the subject land would appear to greatly exceed the value of the land. If I then consider the evidence of the only sales of lands where classification of drainage problems have been involved, I believe the sales of Mr Dudek reflect the level of value that the marketplace sees in such lands. There is nothing in those sales to discredit Mr Dudek's valuation of the subject land at $500. Ms Anderson's market evidence contains no sales, and relies only upon current asking prices on the islands. There were no direct comparisons of the nature of those lands compared to the subject land, and I am not aware whether any of those parcels are also subject to a "Drainage Problem" classification. In respect of the use of asking prices for land as a true reflection of their market value, I find such evidence only reflects the wishes of the vendor. Indeed, the use of an "offer" by a prospective buyer was also rejected by the Land Appeal Court in Heavey Lex No. 64 Pty Ltd & S Paino v. Chief Executive, Department of Transport (A97-43), 22 February 2001, unreported. On the evidence in the current matter I get no assistance from the appellant's evidence of the market value of the subject land. Summary In considering this matter I am reminded that under s.33 of the Act the valuation of the subject land as determined by the Chief Executive is deemed to be correct unless proved to the contrary. I am also reminded that in respect of an appeal against a valuation under s.45(4) of the Act the onus is upon the appellant to prove her grounds of appeal. In the current matter that has not occurred. Conclusion: 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 5 on RP 131380 as determined by the Chief Executive in the sum of Five Hundred Dollars ($500) is affirmed. NG DIVETT MEMBER OF THE LAND COURT -- 9 of 9 --