Berne No 20 Pty Ltd v Chief Executive, Department of Natural Resources; Patatoukas v Chief Executive, Department of Natural Resources; Patatoukas v Chief Executive, Department of Natural Resources [2001] QLC 12

LAND COURT, BRISBANE 9 March 2001 Re: Appeals against Annual Valuations - Valuation of Land Act 1944 - Valuation Roll Nos: 20755, 20732 and 20733. Local Government: Logan City. Berne No 20 Pty Ltd v. Chief Executive, Department of Natural Resources (AV98-257) Sammy Patatoukas v. Chief Executive, Department of Natural Resources (AV98-258) Sammy and Gemma M Patatoukas v. Chief Executive, Department of Natural Resources (AV98-259) D E C I S I O N Background: These three matters relate to lands at 17 Middle Road, Hillcrest (AV98-257), 56 Middle Road, Hillcrest (AV98-258), and 66 Middle Road, Hillcrest (AV98-259). The parcels are described respectively as Lots 15 and 16 on RP98938 (AV98-257); Lot 23 on RP54910 (AV98-258); and Lot 22 on RP54910 (AV98-259). The parcels have the following areas and zonings: Parcel Area Zoning 17 Middle Road 8296m² Park Residential 56 Middle Road 1.912ha Rural 66 Middle Road 2.061ha Rural [2001] QLC 12 -- 1 of 13 -- 2 The land use zonings were gazetted under the Logan City Council Town Planning Scheme of 17 December 1988, and effective at the date of valuation of 1 October 1997. The three matters were heard concurrently. The subject lands are located about 350 metres apart and 3km south of the Browns Plains Grand Plaza shopping centre, and 28km south of the Brisbane GPO. 56 and 66 Middle Road are adjoining parcels. Middle Road is a 4-lane bitumen sealed main road joining Hillcrest and the adjoining suburbs of Boronia Heights and Greenbank, to the Mt Lindsay Highway. The key issues are the impact of traffic, and comparison of sales, in particular the relevance of some sales. On 2 March 1998 the Chief Executive issued valuations of the subject lands at $128,000 (17 Middle Road), $98,000 (56 Middle Road) and $100,000 (66 Middle Road). Following objections the Chief Executive confirmed the figure for 17 Middle Road at $128,000, but reduced the other two unimproved values at 56 Middle Road ($96,000) and 66 Middle Road ($96,000). The appellants have appealed those amounts claiming the unimproved value should more properly be $60,000 in respect of each parcel. Sweden Jade Harley, a registered valuer, appeared and gave evidence for the appellants, also calling evidence from Sammy Patatoukas. Mr B Crothers appeared for the respondent, calling evidence from Chuen Ching Tsoi, the Departmental registered valuer responsible for the valuations. Mr Tsoi was only recently registered as a valuer in July 2000, and he undertook the valuations previously as a cadet valuer since 1995, under guidance of registered valuers. Mr Tsoi had a short period of three months of employment with a private valuer during 1997, and he rejoined the Department in September 1997. The Evidence: (1) The Nature of the Lands - The land at 17 Middle Road is vacant and falls from the road towards the rear, and has been selectively cleared. Mr Patatoukas argues that the subject land would require extensive filling in order to build a dwelling, a matter disputed by Mr Tsoi who notes that an adjoining residence with similar slopes did not require extensive earthworks. However Mr Tsoi concedes that some filling was likely to be necessary, particularly if the dwelling was located well removed from Middle Road. -- 2 of 13 -- 3 It is agreed by both parties that physical vehicular access and parking have been partially restricted by guard rails recently erected by the road authority as a traffic safety measure at a bend in Middle Road at that location. However access would be available to the subject land at either the western or eastern ends of the guardrail, which is at about the centre of the subject land. The access is across an open drain along the side of the footpath which has a concrete footway. Access to the adjoining property to the east of the subject land is via a pipe culvert. It is agreed that the preferred access point by Mr Patatoukas (for safety reasons) to the western side of the subject land (adjoining Lot 17) is fair. Mr Patatoukas argues that there is considerable run-off of water from across Middle Road, which is apparently discharged through a pipe from the location of a previous service station site opposite the subject land. Some of that water may overflow across the subject lands as they become soggy in wet weather. Mr Tsoi notes the presence of that former service station site, which he advises is still listed as a probable contaminated site. The respondent also agrees with the appellant that an old warehouse/produce store across Middle Road on Lot 27 is also an eyesore. That building adjoins the old service station site at the corner of Middle Road and Mt Lindsay Highway. Both of those matters were considered by Mr Tsoi in his valuation. It is also agreed that the 17 Middle Road parcels are presently unsuitable for subdivision, and they have been valued as a single Park Residential site. However the site does have sewerage available, as well as reticulated town water, and it is Mr Tsoi's opinion that there may be some potential for rezoning in the future. However he has valued the land as a rural homesite only. The two adjoining parcels at 56 and 66 Middle Road are both developed as single residence sites. Those parcels both rise about 1 to 1.5 metres from Middle Road at the front of the parcel, then rise a further 1 metre to the middle of the parcel, and then fall to the rear. There is restricted parking on Middle Road at the front of either parcel, and the major traffic hazard is from the fast traffic flowing along that major roadway. However physical vehicular access is not difficult. The dwellings are set back 15 and 66 metres respectively from the road boundary. It is also agreed that surface waters discharge from the parcel towards lands fronting Coronation Road to the rear of the subject lands, connecting into a large Council stormwater drainage system, with a major culvert at the junction of Coronation Road and MacAuley Drive. -- 3 of 13 -- 4 Adjoining 66 Middle Road at its north-western corner there is an existing service station on Lot 100 on RP858162. Ms Harley notes that is also a probable contaminated site with some impact upon the subject lands. Mr Tsoi acknowledges the service station and has allowed for any impacts, although he was unable to quantify any allowances specifically for that purpose. Another matter of concern to the appellants is the disturbance to the subject land and rubbish from disorderly behaviour of patrons of a Returned Servicemen's League (RSL) Club which is located in Beaudesert Road about 1km to the north of 17 Middle Road. However the intrusions would appear to be no worse than other properties in the area, and the matter was not pursued further. (2) Comparison of Sales - It is agreed by both valuers that comparisons with sales of current comparable vacant or lightly improved lands are the preferred method of determining unimproved values. (PH Clough v. Valuer-General (1981-82) 8 QLCR 70, at 76; Fischer v. Valuer-General (1983) 9 QLCR 44, at 46; and Hans and Else Grahn v. Valuer- General (1992-93) 14 QLCR 327). However there is major difference between the parties in respect of the relevance of certain sales. Ms Harley queries certain sales of Mr Tsoi as occurring too far removed in time from the relevant date of 1 October 1997. Mr Tsoi argues that Ms Harley's sales are less relevant being further removed from the subject land, and therefore in a different sub-market locality. To support her valuations Ms Harley argues that there were no relevant sales of vacant comparable parcels in the Hillcrest and Boronia Heights areas, other than one State Government sale. Ms Harley therefore seeks direct comparisons with three sales in adjoining areas:  Sale 1 - (157 Third Avenue, Marsden - 1.6ha) This is a level lot about 6.3km north-east of the subject land, in a quieter position, which was seen as superior to the subject lands. The sale sold in March 1997 for $74,000.  Sale 2 - (563 Chambers Flat Road, Park Ridge - 1.24ha) This is a predominantly level battle-axe lot, which was seen as superior to the subject lands. The sale sold in March 1998 for $70,000. -- 4 of 13 -- 5  Sale 3 - (303 Chambers Flat Road, Park Ridge - 2.18ha) This is a level parcel with a gentle fall from the road. The sale is seen in a comparable locality and overall superior to the subject land. The sale sold in August 1998 for $85,000. Because of the paucity of directly comparable sales, Ms Harley relies upon her experience as a real estate agent and valuer in other localities in Brisbane, and draws support with the general trend for sales in the Greenbank locality. She provides comparisons with 19 sales all located about 5 to 6km further to the south along Middle Road and all in the Greenbank area, which is beyond Boronia Heights. Ms Harley argues that the Beaudesert Shire area is seen as a more attractive market than Logan City. It is Ms Harley's conclusion that collectively purchasers of rural residential lots seek quiet conditions, and do not place a high priority upon proximity to shopping centres and other urban type facilities such as child-minding centres. In her experience she argues that buyers pay about the same price for smaller rural residential lots with town water as they would for larger rural residential sites without town water. In her research of the Greenbank sales she reveals that most sales were in the $54,000 to $70,000 range for areas up to 2 hectares in size, some were level and some were sloping, and none had town water available. Ms Harley saw each of those parcels as superior to the subject land due to the impact of the heavy traffic movement along Middle Road. Ms Harley sought confirmation of her conclusion in respect of the above impact of noise in discussions with purchasers of one of her selected sales, and in discussions with other real estate agents in the area. It was on that basis, and considering her Sales 1 to 3, that Ms Harley concludes an unimproved value of $60,000 for each of the subject parcels. Mr Tsoi rejects the use of sales in the Greenbank area as providing a fair comparison. He argued that Greenbank is different in as much as it is a different local government, with a different planning regime, and a different demographic structure in the newer areas of Greenbank where Ms Harley's sales were located. Mr Tsoi sees the subject land's location in the Logan Local Government Area as having more an urban bias in its demographics, where urban facilities receive a higher priority in owners' perceptions. -- 5 of 13 -- 6 For that reason Mr Tsoi sees nearer proximity to facilities such as schools, shops and child care centres as adding value to the subject lands compared to lots in Greenbank. Mr Tsoi relies upon his opinion as a valuer and evidence from sales that he has analysed. He also sees the availability of town water as a positive attribute for the subject lands. However he concurs with Ms Harley that the underground power on the Greenbank lands was preferable to the overhead power supply on the subject lands. To support his valuations Mr Tsoi provides the following sales, all Park Residential, and all with concrete kerbing and channelling, town water, telephone and electricity, and all with good access available:  Sale 1 - (Coolbart Court, Greenbank - Lot 94 on RP184969) This is a 5,051 square metre corner parcel located 3.7km south of 17 Middle Road. The sale is comparable in respect of services, and superior in location. Overall the sale is superior to each of Lots 15 and 16 at 17 Middle Road. The sale sold in April 1997 for $82,000, and was analysed at $80,000.  Sale 2 - (Kanteena Street, Park Ridge - Lot 10 on RP197546) This is a 5,000 square metre irregular shaped inside lot in a cul-de-sac, located 2.5km south-east of 17 Middle Road. The sale is elevated and falls slightly to the rear. The sale is seen as comparable for services, superior in location, and overall superior to each of Lots 15 and 16 of 17 Middle Road. The sale sold in September 1996 for $85,000, and was analysed at $83,000.  Sale 3 - (1 Crest Road, Greenbank - Lot 35 on RP171383) This is a 4,435 square metre Park Residential corner lot located 3km south of 17 Middle Road. The sale is subjected to noise from traffic along both Middle Road and Crest Road, which is a connecting road to the Mt Lindsay Highway connecting to Beaudesert. The sale is slightly elevated, is seen as comparable in services, slightly superior in topography, and overall slightly superior to each of Lots 15 and 16 of 17 Middle Road. The sale sold in March 1995 for $80,000, and was analysed at $78,000.  Sale 4 - (Middle Road, Greenbank - Lot 2 on RP881756) This is a 1.002 hectare rural residential parcel located about 5.4km south-west of 56 and 66 Middle Road. The sale is a hatched-shaped lot with level topography, and town water, telephone and electricity services. The sale has comparable services -- 6 of 13 -- 7 but is inferior in size and shape. Overall the sale is inferior to both 56 and 66 Middle Road. The sale sold in March 1995 for $80,000, which was analysed at $78,000.  Sale 5 - (Stoney Camp Road, Greenbank - Lot 3 on RP856965) This is a 1.149 hectare rural residential parcel located about 5.5km south-west of 56 and 66 Middle Road. The sale has similar services, and comparability to Sale 4, and is seen overall as inferior to both 56 and 66 Middle Road. The sale sold in August 1994 for $90,000, which was analysed at $88,000.  Sale 6 - (303 Chambers Flat Road, Crestmead - Lot 6 on RP126042) This is a 2.18 hectare rural parcel located about 3.7km east of 56 and 66 Middle Road. The sale is an inside lot with similar services as Sales 4 and 5. Approximately 50% of the rear of the sale is subject to flooding. The sale has comparable services and size to the subject lands, but overall is seen as inferior due to the low-lying topography and associated flooding. The sale is a common sale with Ms Harley. The sale sold in August 1998 for $85,000, and after allowing for improvements of clearing and a dam ($3,000) was analysed at $82,000. Ms Harley accepts Mr Tsoi's analysis and comparisons with his Sale 1 (Coolhart Court), which she agrees is superior to Lots 15 and 16 of 17 Middle Road. Mr Tsoi advises that he saw his Sale 1 as superior due to the presence of the busy Middle Road and the noise it generated, and the presence of the old service station site. Had those not been evident, he believes the subject lots would be superior to that sale. Ms Harley has a common sale at 303 Chambers Flat Road (Mr Tsoi's Sale 6). However, Ms Harley rejects Mr Tsoi's other sales, which she argues are too far removed in time to reflect the market level at the date of valuation. Ms Harley has used a nominal period of 6 months before and after that date to define her level of reliability of the relevant market trend at 1 October 1997. She argues that without proof of market movements, or otherwise, it is unwise to project back too far to analyse old sales. Mr Tsoi rejects that his sales are too old, arguing that regular monitoring of market trends over a wide range of that locality, has disclosed no appreciable movement in the market since 1995. Mr Tsoi has resided in Boronia Heights for five years, and has no personal evidence of any appreciable movement in the market -- 7 of 13 -- 8 during that period. Mr Tsoi further advises that the Departmental study of movements in the market reflect similar patterns during the annual revaluations of the area in 1995, 1996, 1997 and 1998. The area is being currently revalued at 1 October 2000. (3) The Method of Valuation - Both parties agree on the basis of direct comparisons for 56 and 66 Middle Road. However in comparing 17 Middle Road, Ms Harley has seen those two parcels as a single rural residential site and valued it as one parcel. Mr Tsoi has assessed the land as a rural residential site, but comprising an in globo value as two sites, to which he then applies a "bulk allowance" for common ownership. Mr Crothers advises that the land was valued under s.34 as two adjoining vacant lots under the one owner. He notes the different method which would have to be taken had the land been occupied with a single dwelling, which would then have required action under s.17 of the Act. In applying a "bulk" allowance of 10% to Lots 15 and 16 of 17 Middle Road, Mr Tsoi followed recommended guidelines prepared by the Department after careful analysis of sales. Ms Harley argues the 10% adopted is insufficient to reflect discounts normally negotiated in the marketplace, where items of profit and risk, advertising and legal charges tend to reflect at least 15% plus costs. However Ms Harley would appear to be referring to lands where the developer purchases the larger lot with a view to achieving further subdivision into smaller parcels. By comparison Mr Tsoi is referring merely to where several lots are purchased by a single owner, who then seeks a reduction in price for the bulk purchase. On that understanding, I accept Mr Tsoi's bulk purchase figures of the s.34 approach as the appropriate method. Decision: On balance I see little difference between the parties in respect of their understanding of the nature of the land, and the disabilities and attributes it has. The real difference between the valuers lies in the respective sales they have used with which to compare the three subject lands. In respect of Ms Harley's argument that some of Mr Tsoi's are too old to be relevant, I can accept that conclusion to be sound in the absence of evidence to the contrary. However, Mr Tsoi has relied upon extensive major analyses of the area over four successive revaluations by the Department. It is agreed that resales of the same, -- 8 of 13 -- 9 or similar properties over a period of time, are the best reflection of market trends. However, while he has not provided detailed specific evidence of such resales, Mr Tsoi has used his experience as a valuer to condition his opinion that the market has remained static. Ms Harley has queried whether Mr Tsoi's understanding as a resident in Boronia Heights since 1995 could be accepted as reliable, in view of his not being registered as a valuer until 2000. However, in my opinion, Mr Tsoi, as a cadet valuer in training, would have sought the guidance of his master valuers who were registered, and has in fact relied upon an analysis of sales over the period of four years, which were not only his own opinions. All of that experience I believe is now being expressed in his considered opinion as a registered valuer. However in considering the weight that I should place upon a valuer's opinion, I am directed to Santos Limited v. Valuer-General (1988-89) 12 QLCR 231, where the Land Appeal Court said at page 235: "The learned Member preferred the valuation of Mr Glancy as it was based upon sales which is 'to be preferred to a valuation based on opinion'. " In doing so, the learned Member acted in accordance with well-settled principles - see Reading v. The Valuer-General - Land Valuation Court - (NSW) (1923) 6 LGR 13L; Alison v. The Valuer-General - Land Valuation Court - (NSW) (1922) 6 LGR 25; and Land Valuation and Compensation in Australia - Rost & Collins (3rd Edition) (1984) page 22 - where it said: "A registered or licensed valuer is regarded as a person who possessed special training. He is entitled to express opinions as to value or other matters appertaining to his vocation, but these cannot be more valid than the information and reasoning upon which they are founded. In general, opinion evidence is not admissible unless it is given by a witness called as an expert. Court judgments have emphasised that the weight of an expert's opinion concerning the value of land depends upon the foundations upon which it rests." In the current matters Mr Tsoi has explained his process of reasoning that the market was static, and has demonstrated, in my opinion, that the evidence over a period of four years supports his conclusion. Ms Harley has queried the lack of demonstrable proof of resales, but has provided no conclusive evidence to the contrary. The principles of Brisbane City Council v. Valuer-General (1977-78) 140 CLR 41 at 56 per Gibbs J dictates that the onus is upon Ms Harley to have done so. -- 9 of 13 -- 10 However I note that Mr Tsoi has extrapolated a trend for "Residential A" small homesites in the area, and concluded such a trend would also be found in larger rural residential homesites. Mr Tsoi's logic for that conclusion is that both market segments represented a "homesite" irrespective of size, a conclusion with which Ms Harley disagrees without proof. However in order to allow any benefit of doubt in the appellants' favour I will constrain my comparisons in this matter to those sales which have been used for direct comparison purposes, and only those within a more recent time perspective. In respect of Ms Harley's broad comparisons with the 19 sales in Greenbank, I am persuaded that the difference in locality and apparent demographics should also be afforded a similar weighting as the older sales of Mr Tsoi. I am then left for comparison purposes with: Ms Harley Sale Analysed Value Comparison 1 $74,000 Superior 2 $70,000 Superior 3 (common sale) $85,000 Superior Mr Tsoi Sale Analysed Value Comparison 1 $80,000 Superior to each of lots 15 and 16 6 (common sale) $82,000 Inferior to 56 and 66 Middle Road I note that Ms Harley agrees with Mr Tsoi's analysis and comparisons for his Sale 1. However Mr Tsoi applies that sale only to the separate parcels at 17 Middle Road. If I then compared the common sale (303 Chambers Flat Road, Crestwood) I find Mr Tsoi agrees that is the most relevant sale for comparisons of shape. The differences between the valuers appears to lie in Ms Harley's reliance upon the sale's level topography, gentle fall from the road, and better access compared to the subject land. The impact of traffic along Chambers Flat Road is seen as comparable to Middle Road at the subject lands. Ms Harley sees little difference in the value of the -- 10 of 13 -- 11 land as a consequence of its flooding to 50% of its area, and being listed as a "flooded site" by the Logan City Council. Ms Harley argues that in her experience in selling rural residential sites the difference between flooded and non-flooded lands reflects at a maximum only $5,000 in the sale price. She argues that while 50% of the land is subject to flooding, the remaining 50% is above flood level. On a 2.18 hectare site that means greater than 1 hectare is above the floods. Mr Tsoi argues that the regular nature of the flooding, and the presence of retention water lying upon the sale would, in his opinion, detract from the attractiveness of that parcel. In considering the impact of flooding upon Ms Harley's Sale 1 (157 Third Avenue, Marsden), I note it is agreed that about 10% of that parcel also floods at the front. Ms Harley sees that locality as quieter and therefore superior, in spite of the sale being smaller than either of the subject lands. In his allowance for the impact of flooding, Mr Tsoi has considered Logan City Town Planning guidelines in respect of building upon a flood area, which depends upon the velocity and depth of the flood waters. In his opinion, he sees the flood problem in the Chambers Flat area as serious due to the velocity noted in that area. For that reason he has made a fair allowance for flooding, as well as for clearing ($2,000) and the added value of an old dam ($1,000). In concluding such allowances Mr Tsoi has relied upon Departmental guidelines (a cost book) prepared after analysis of sales and discussions with industry people about clearing and dam costs. In seeking some quantification of Mr Tsoi's allowances made for the impact of flooding upon the 303 Chambers Flat Road sale, it is clear that Mr Tsoi has not sought to identify each separate component of the attributes and disabilities of that sale as a percentage of value, in comparison to the subject lands. He argues that in assessing the relative quality of that sale, and then comparing it as a parcel with the subject lands, he has concluded only that the sale is inferior to the subject lands considering all of the factors. Mr Tsoi sees the parcel as "comparable" but does not conclude that they are exactly the same except for flooding. If I consider the major thrust of Ms Harley's argument for rural residential parcels, it is clearly that privacy and quietness are the key features sought by purchasers. As the sale is agreed to be located on a busy road comparable to Middle Road, then the location of the dwelling at a position well removed from the noise of that road, would be important to such purchasers. -- 11 of 13 -- 12 However it is the rear 50% of that sale which is regularly flooded and inundated by retention waters, and therefore building was likely to be excluded from the rear portion. Such restrictions are likely to be a matter that a purchaser seeking quietness would consider. On Ms Harley's evidence some difference may be considered in the price for the known flooding problem (up to $5,000 in certain circumstances). On that basis along, all else being equal between the lots, then I have some difficulty accepting that the sale is superior to Lots 22 and 23 of the subject land, while I note that those two subject lots also have the impact of the adjoining service station to be considered. However as noted by Mr Crothers, the adjoining service station is not listed as a probable contaminated site, even though it is a working service station. Applying a further check then on the reliability of Mr Tsoi's determinations of $96,000 for each parcel, I note relativities with the adjoining lots to the rear and fronting Coronation Road. Lot 14 ($94,000) and Lot 15 ($96,000) support the current unimproved values, with Lot 14 reflecting some allowance for the stormwater discharge noted earlier. On those figures there is nothing to discredit Mr Tsoi's conclusions. On balance I believe the more appropriate comparison of sales should reflect the differing zoning, size, and nature of the lands at 17 Middle Road compared to 56 and 66 Middle Road. That leads to the method of valuing 17 Middle Road, and whether it should be seen as one large parcel of total area 8,296 square metres (Ms Harley's approach), or as in globo lands of that area (Mr Tsoi's approach). I note that s.34 is directed at adjoining parcels in common ownership, or lands which are worked as one holding. Where separate dwellings are erected upon each separate lot then separate valuations are to apply (s.34(2)). However, I also note that discretion is afforded the Chief Executive under s.34(1). In exercising that discretion the Chief Executive is also directed by the legislation in s.17 which provides for situations where a single dwelling is used upon multiple parcels (or the potential development of multiple parcels). Under s.17 a single concessional valuation is to occur. Under those circumstances I accept Mr Crothers' advice that s.34 was the correct method of valuing 17 Middle Road. Summary: -- 12 of 13 -- 13 On the evidence, even restricting comparisons to the few sales of recent occurrence, I am not persuaded that the appellants have demonstrated that the respondent has followed a wrong principle or made a serious error of fact (Brisbane City Council v. Valuer-General (supra)). In accordance then with s.45(4) and s.33 of the Act, I find that the determinations by the respondent should stand. Conclusion: Having considered the whole of the evidence I am not persuaded that the appellants have proved their case. The appeals are dismissed and the unimproved values of Lots 15 and 16 on RP98938 (AV98-257), Lot 23 on RP54910 (AV98-258), and Lot 22 on RP54910 (AV98-259) in the amounts of $128,000, $96,000 and $96,000 respectively are affirmed. (NG Divett) Member of the Land Court -- 13 of 13 --