Cowie & Pearson v Chief Executive, Department of Natural Resources [2000] QLC 30

LAND COURT, BRISBANE 28 June 2000 Re: Appeal against General Valuation - Valuation of Land Act 1944 - Valuation Roll No: 2342 Local Government: Livingstone (V99-1308) Rae MH Cowie and Gwendoline I Pearson v. Chief Executive, Department of Natural Resources (Hearing at Rockhampton) D E C I S I O N Background: This matter relates to land at 50 The Esplanade, Lammermoor, and described as Lot 2 on RP 615103, Parish of Hewittville. The subject land has an area of 730 square metres, and is located about 3.5 kms south-east of Yeppoon. The Esplanade has a bitumen carriage-way with concrete kerbing and channelling, which extends to a cul-de-sac just north of the subject land. Town water, electricity, telephone, a garbage service, and septic services are connected to the subject land which is zoned as "Residential A" under the Town Plan of the Livingstone Shire Council current at the date of valuation of 1 October 1998. The key issues are comparison of sales, access to the beach, and the nature of the land. On 21 July 1999, the Chief Executive issued a valuation of the subject land at $93,000. Following an objection the Chief Executive confirmed that figure on 15 September 1999. The appellants have now appealed that valuation, claiming the unimproved value should more properly be $81,000. At the hearing on 8 May 2000, the appellants were granted leave to amend their estimate of the valuation to $75,000, which is the amount now relied upon. Mr Jack Cowie, a registered valuer, appeared and gave evidence for the appellants. Mr T Coe, Senior Valuer, appeared for the respondent, calling evidence from Scott Thomas Larking, the Departmental Registered Valuer now accepting [2000] QLC 30 -- 1 of 11 -- 2 responsibility for the valuation. The original valuation had been formerly undertaken by another valuer, who was no longer available to defend the valuation. The Evidence: The history of the valuation reveals that the subject land, together with certain other beachfront lands in the area, had been previously valued by another valuer at 1 October 1998. That valuer had inadvertently adopted relativity between beachfront lands at Lammermoor Beach, and other low-lying lands removed from the beach, the latter without views of the water. As a consequence of that error of judgment, the former valuer had reduced the beachfront lands by 5% from the previous valuations. The subject land therefore was incorrectly reduced from $85,000 to $81,000. All other beachfront lands in the area (other than the Lammamoor Beach lands) had been increased by 10%. Once the Chief Executive became aware of the error, he exercised his powers under section 28(1)(H) of the Valuation of Land Act to amend the incorrect valuations. He re-issued fresh valuations in order to maintain relativity between the Cooee Bay and Lammermore areas, increasing the unimproved value of the subject land from the previous $85,000 to $93,000 (10%). (1) The Nature of the Land - The subject land is sandy coastal she-oak country. The soft light sand is subject to movement unless maintained by vegetation, which in turn requires regular watering due to the very friable sandy soils. The subject land is used as a part-time beach house, and fronts The Esplanade, which is under the control of the Beach Protection Authority. There are views of the water, between trees on the eastern side of the carriageway. Access to the beach is across the sand dunes by an access pathway. The subject land has a gentle natural elevation above the street level and while there is no formal stormwater drainage, the surface waters flow from the property towards The Esplanade and towards the beach. The subject land has a narrow frontage (11 metres), and can accommodate dwellings of width up to 8.5 metres, thus restricting access to views of the water. The side boundaries are skewed to The Esplanade frontage, and there is a bend in the side boundaries, thus restricting the location of a dwelling. Because of the relatively large depth of the parcel, there are six neighbouring parcels adjoining the subject land. -- 2 of 11 -- 3 The subject land is one of only 8 or 10 parcels in that locality which are not sewered. Mr Cowie advises that the Livingstone Shire Council (the Council) has advised him that it has no plans to further sewer those remaining few parcels, due to the large expense of having to install another pumping station in order to service those few parcels. (2) Access to the Beach - The matter of direct access to the beach was agreed to be a significant factor in why purchasers selected certain lands in that locality. None of the lands used for comparison purposes had absolute title access to the high water mark, and all parcels fronted an esplanade area, which is generally under the control of the Beach Protection Authority. However there is a difference between the parties in respect of what impact any carriageway might have upon a prudent purchaser of lands fronting the esplanade areas. Mr Cowie has sought comparisons between parcels which are separated from the beach by a busy major roadway connecting Yeppoon to Emu Park. That roadway is the only road between those centres near the beachfront, and is heavily used. Mr Larking therefore sees a significant difference in access across the roadway, compared to the quieter "no through" carriageway opposite the subject land. For that reason Mr Larking draws his comparisons with other beachfront lands, where there is no bitumen carriage-way between the parcel and the beach, and where the esplanade has not yet been developed as road. Mr Larking seeks comparability with the subject land where, in his opinion, the lesser used carriageway provides less of a barrier to the beachfront access. (3) Comparison of Sales - To support his estimate of the unimproved value, Mr Cowie provides the following sales of vacant lands:  Sale 1 - (342 Scenic Highway - Lot 8 on RP 607316) This is a 635 square metre parcel of Residential A land, about 3km south of the subject land, and 6.5km from Yeppoon. The sale is triangular in shape, and has similar services available, but is connected to sewerage. The sale falls gently from the street frontage, but has more stable soils. The sale has comparable views of the water -- 3 of 11 -- 4 of Keppel Bay, but is seen as inferior due to location. The wider frontage of the sale is balanced by its triangular shape. The sale sold on 19 February 1999 for $58,000, which was analysed at $58,000.  Sale 2 - (142 Scenic Highway - Lot 1 on RP 609110) This is a 673 square metre Residential B1 regularly shaped parcel, about 1km south of the subject land, and 4.5km to Yeppoon. The sale is near level, slightly elevated with good sandy loam soils. All services including sewerage are available, and there are comparable views of the water. The sale is seen as superior. The sale sold in September 1997 for $95,000 which, after allowing for improvements, was analysed at $94,000. To support his valuation Mr Larking supplies the following sales of vacant lands:  Sale 1 - (71 Todd Avenue - Lot 18 on RP 907074) This is a 1,168 square metre Residential B parcel located about 1km north of Yeppoon. While zoned as Residential B, the sale was purchased for the construction of a single residence, which has subsequently been built. Services and access by road are comparable, and the sale has sewerage connected. The sale is level with sea views and direct beach access, and is seen as superior. While technically not an adjoining owner sale, the sale was purchased by a doctor from a friend, who purchased the land and then subdivided it, to arrange the sale to the doctor. There is a general paucity of vacant direct beachfront lands in Yeppoon, and sales of them are relatively scarce. The sale sold in May 1998 for $165,000, which was analysed at $164,000, and applied at $162,000.  Sale 2 - (6 Ray Street - Lot 12 on RP 910144) This is an 842 square metre Residential A parcel located about 0.2km north of the subject land. All services are comparable, but there is sewerage connected. Access is by a dirt access track, and the sale is well elevated with good unrestricted sea views. The sale is seen as superior to the subject land, but is regarded as a high sale, and was not used in direct comparisons to establish the value of the subject land. The sale was also formerly incorrectly assessed in the 1 October 1998 valuation at $138,000, but had now been amended to an applied value of $160,000. Before the -- 4 of 11 -- 5 error occurred, the previous valuation was $145,000. The sale was seen as one of the highest sales of beachfront land in the Yeppoon area. The sale sold in October 1997 for $230,000 which was analysed at $225,750, but only applied at $159,500.  Sale 3 - (31 Prospect Street, Rosslyn - Lot 3 on LN 1023) This is a 1,110 square metre Residential A parcel located about 2.3km south- east of the subject land. The sale is elevated with very good views, and comparable services including sewerage. The sale is seen as superior to the subject land, and has direct access to the beach, which is currently not planted with trees by the Beach Protection Authority. Mr Larking saw the sale as very high, and did not use it in his direct comparisons with the subject land. The sale sold in August 1998 for $165,000, which was analysed at $164,000, but only applied at $110,000.  Sale 4 - (33 Kiama Avenue, Bangalee - Lot 18 on RP 609351) This is a 524 square metre Residential A parcel located about 6km north of Yeppoon. The sale is in a pristine area, is level and cleared, but with inferior services including no sewerage available. Access is by bitumen road to the west of the sale. There is no town water, and water is pumped from the sands, nearby to where the septic disposals discharge. The sale is seen to have an inferior location, but has direct access to the beach. The sale is seen as slightly superior to the subject land. The sale is used for comparison as it is one of the few (5) beachfront sales available in the relevant period. The sale sold in November 1997 for $125,000, and was analysed at $124,250, and applied at $103,000.  Sale 5 - (27 Kiama Avenue, Bangalee - Lot 21 on RP 609351) This is similar to Sale 5, and is also seen as slightly superior to the subject land. The sale sold in May 1998 for $122,000, and was analysed at $121,500, and applied at $103,800. (4) Relativity - To support his conclusion that the respondent has made inappropriate allowance for relativities in the Lammermoor Beach and Statue Bay areas, Mr Cowie compares his Sales 1 and 2 with Mr Larking's Sales 2 and 3. Mr Cowie notes that his -- 5 of 11 -- 6 Sales 1 and 2 have been applied relatively consistently with the analysed sale prices; while Mr Larking's Sales 2 and 3 have major variations between their applied figures and their analysed figures. Mr Larking rejects any inference from those variations, and he explained that was the reason why he saw those two sales as high sales, and not reflective of the general market trend in the locality. (5) Changes in the Market - Mr Cowie also relies upon a range of five sales in the locality, which have resold during the relevant period indicating, in his opinion, that the market was stable between February 1997 and February 1999. (Schedule 2). One of those sales was Mr Larking's Sale 3 (31 Prospect Street), which increased from February 1997 to July 1998 from $162,000 to only $165,000. The other four sales show either no increase, or only a marginal increase in value. However only the 31 Prospect Street sale is a beachfront property, and the other four sales are well inland from the water, with no water views. Mr Larking disagrees with that conclusion, noting that a wider range of sales in the locality supported an overall 10% rise in values during that period. Mr Larking also sought some support from a later sale in 1999 (about one year after the relevant period), which, in his opinion, demonstrates the premium that direct beachfront lands bring. That land, close by to Mr Cowie's Sale 1, sold for $125,000. However Mr Larking was unable to demonstrate whether the market had remained stable from the relevant period until the date of that later sale. Support for the use of subsequent sales is to be found in McCathie and Ors v. Federal Commissioner of Taxation (1944) 69 CLR 1, at page 16; and also Federal Commissioner of Taxation v. Harris (1980) 30 ALR 10 at 18. However in Harris, Fisher J noted at page 25 that the subsequent event cannot create an expectation which was not in existence at the relevant date. Mr Larking further notes that Lammermoor Beach is a very popular beach location, and the subject land is located in a quiet "no through road" in that area. Mr Larking also disagrees with Mr Cowie as to whether the Residential B1 zoning of Mr Larking's Sale 1 (71 Todd Avenue), would bring any further added value to that parcel, beyond its use as a single residential homesite. Mr Larking notes that the Council's minimum area for use for multi-unit purposes is 700 square metres; there must also be a minimal frontage to the land of 20 metres; and the road carriage-way -- 6 of 11 -- 7 must be at least 8 metres wide. Mr Larking's Sale 1 fails on all three points. Mr Larking also sees the lack of sewerage as not important to the subject land, as he has valued it as a single residence site anyhow. Decision: I consider first the method of comparing vacant lands adopted by both the experienced valuers, and agree that it is the most appropriate approach to determining unimproved value. (See PH Clough v. Valuer-General (1981-82) 8 QLCR 70, at page 76; WM and TJ Fischer v. Valuer-General (1983) 9 QLCR 44 at 46; and R and MM Barnwell v. Valuer-General (1990-91) 13 QLCR 13 at 17. (i) The Nature of the Land - In respect of the type of soil, the natural topography, access to the site, and the general level of services, I believe the valuers are in agreement. I see little in the evidence in respect of views of the water that would change the assessment of those views upon the subject land. The views of water from Sale 2 (6 Ray Street) is clearly superior, and has been noted as such by Mr Larking. However as Sale 2 (6 Ray Street) was seen as a high sale, and no weight has been applied to it, I see the impact of views as not in contention. The matter of the lack of sewerage to the subject land is an issue which tends, in my opinion, to separate the subject land slightly from the compared sales. While Mr Larking has sought comparisons with his Sales 4 and 5, both of which also have no sewerage, I believe the lack of a sewerage disposal system is a matter that would be considered by a purchaser. However I have the opinion of Mr Larking that previous valuations would have allowed for the lack of sewerage, when establishing relativity with the ocean-front properties in that locality. While that is only an opinion from Mr Larking, I believe the extent of sewer lines would be well known to the respondent, and any additional allowance for sewerage in the current matter would merely be a slight weighting factor in order to resolve any other uncertainties in favour of the appellant. In the matter of the shape of the subject land, and its skewed side boundaries to the esplanade frontage, I believe those would also be weighting factors which could influence a purchaser. However it would also be reasonable to conclude that those factors were also known when the original relativities were established in that area. -- 7 of 11 -- 8 (ii) Relativity and Market Changes - While the application of the four sales supplied by Mr Cowie do represent some variance, I believe Mr Larking's non-use of his Sales 2 and 3 as being high sales, explains the reason for the large difference between the analysed and applied figures. Those sales do not, in my opinion, demonstrate inconsistency in the relativities. In comparing the five re-sales in Schedule 2, I believe the relative stability of four of those re-sales might represent a difference between beachfront properties and those removed from the water with no water views. In that respect it would not be comparing like with like. In analysing the re-sale of 31 Prospect Street, I note that resale in 1998 actually appears to support that the sale was either, not a high sale, or that it reflects the particular outstanding characteristics of that property. In any case, Mr Larking has not relied upon 31 Prospect Street, and Schedule 2 provides no conclusive evidence to dispute Mr Larking's evidence that beachfront lands have increased by 10%. In the comparison of Sale 1 (71 Todd Avenue), I believed the Council's current policy in respect of approval of multi-unit developments, would indicate that the highest and best use of that parcel would be for single residence purposes. In that respect it is noted that the zoning of land does not of itself define its highest and best use, although it generally has a major impact. That opinion was reported by D Brown in his text "Land Acquisition" 4th Edition, where the author says at page 106: "The zoning of land pursuant to a town or country plan will always affect the highest and best use of land at a particular date. But the zoning does not create that highest and best use. The zoning may facilitate the immediate realisation of that highest and best use, or, at the other end of the scale, it may totally prevent such realisation. In between these two, zoning may work to postpone, or defer, full or any realisation of the value of the highest and best use, until some intermediate action is taken and completed. The highest and best use remains throughout, and, on the basis that the highest and best use on the resumption date is different from the permitted use as of right of the land under the zoning on that date, the dispossessed owner is entitled to receive the present value of that highest and best use of the land on the resumption date, so long as such present value exceeds the permitted use as of right value on that date, where the zoning provisions prevent the immediate realisation of the highest and best use value. " That follows the direction of the Land Appeal Court in AK and SS Gallagher v. Brisbane City Council (1975) 2 QLCR 368, at page 381. -- 8 of 11 -- 9 Some guidance on the likely effect of the Council's policy to not approve any higher use for 71 Todd Avenue, in view of its failure to meet the Council's policy in respect of multi-unit buildings, is also to be found in The Minister v. Petroccia (1982) 30 SASR 333. In that matter the likelihood of a "consent use" was considered where, under existing Council policy, a permitted use did not exist. In the current matter it is Council's policy to not approve any higher use beyond a single residence, where certain criteria about minimum areas and widths are not met. In Petroccia, Wells J noted at page 344: "When zoning has been imposed, all that has happened is that, when identifying the area of demand, the valuer (and the court) must consider, not only the intrinsic appeal of the land, but also such limitations as have, by the zoning, been placed upon the naturally occurring demand. A permitted use or a prohibited use of a given parcel within a given zone may be accommodated, readily enough, by the valuation process. A consent use, however, requires more careful appraisal. What is called for is the sort of approach, mutatis mutandis, as I endeavoured to expound in 'Wattle Park Pty Ltd v. Commissioner of Highways' (1973) 6 SASR 69, at pages 93 to 95. The valuer (and the court) must, in such a case, determine what effect the probability or improbability that consent will be granted would be likely to have upon the potential purchaser who would not be interested in the land if the consent use were a prohibited use." (See also 55 LGRA 244 at p.254.) The impact of zoning was also addressed in Royal Sydney Golf Club v. Federal Commissioner of Taxation [1954-55] 91 CLR 610. On the basis of those directions, I agree that the highest and best use of 71 Todd Avenue is as a single residential site. (iii) Access to the Beach - The evidence supports that sales, where there is no physical road carriage-way between the property and the dune areas of the beach, tend to reflect a higher perception of direct beach access for prospective purchasers. As all sales compared only had access to an esplanade area, the potential for a future development of a road carriage-way always exists. However, the development of a physical road carriage- way is always subject to availability of funds by the Council, and its level of priority compared to other public facilities. While there is some local resistance to such a roadway, the creation of community pressure is likely to be deferred. I believe the -- 9 of 11 -- 10 conclusion that the roadway may not be developed for some time, is likely to influence purchasers to pay extra for what they perceive as unobstructed direct access to the beach. Bearing in mind such a scenario, the sales suggest two quite distinctive comparisons. Mr Cowie's Sales 1 and 2 have an obvious busy roadway separating those parcels from the beach. Mr Larking's Sales 1, 4 and 5 have no roadway. However while the subject land does have a bitumen carriage-way along its eastern frontage, that is a "no through" quieter road, ending in a cul-de-sac just north of the subject land. The lesser traffic volumes place the influence of beach access upon the subject land as somewhere between the sales of both valuers. On balance I believe such direct beach access for the subject land is likely to more closely reflect the advantages sought by purchasers in Mr Larking's sales, and I would weight the influence of beach access accordingly. (iv) Comparison of Sales - Firstly I get little assistance from Mr Larking's Sales 2 and 3, which he himself declares as not representative of the general level in the market. If I then compare the remaining sales I find the following comparisons: Sale Applied Value Comparison 342 Scenic Highway $ 58,000 Inferior 142 Scenic Highway $ 94,000 Superior 71 Todd Avenue $162,000 Superior 33 Kiama Avenue $103,000 Superior 27 Kiama Avenue $103,800 Superior I believe the smaller size of the Bangalee sales (Sales 4 and 5), and their more remote location from the Yeppoon area, would tend to support that those sales provide a lesser direct comparison with the subject land, other than for their greater perceived access to the beach. The triangular shape of 342 Scenic Highway and its greater impact by the busy connector road to Emu Park, makes that sale, in my opinion, considerably inferior to the subject land. I believe that the subject land is best compared to 142 Scenic Highway, and that it has better direct access to the beach, but suffers some disability because of the lack of connection to the public sewerage system. -- 10 of 11 -- 11 However, even allowing for any benefit in the appellants' favour (Commissioner of Succession Duties (SA) v. Executor Trustee and Agency Company of SA Limited (1947) 74 CLR 358, at 374), I find that all of the sales support Mr Larking's conclusion. On balance I believe that the appellants have not demonstrated that the respondent has made a serious error, or adopted a wrong principle. (See Brisbane City Council v. Valuer-General (1977-78) 140 CLR 41, at page 56.) I am also aware that under section 45(4) of the Act that the onus is upon the appellant to prove their case; and that unless that occurs, then section 33 dictates that the valuation by the Chief Executive is deemed to be correct unless proved otherwise. Conclusion: 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 2 on RP 615103 as determined by the Chief Executive at $93,000 is affirmed. (NG Divett) Member of the Land Court -- 11 of 11 --