Davies v Chief Executive, Department of Natural Resources [2000] QLC 20

LAND COURT, BRISBANE 6 April 2000 Re: Appeal against Annual Valuation - Valuation of Land Act 1944 - Valuation Roll No: 206-2118 - Local Government: Jondaryan Shire. (AV99-1186). Jack B and Doris A Davies v. Chief Executive, Department of Natural Resources (Hearing at Toowoomba) D E C I S I O N Background: This matter relates to a property located at 22 Cooper Road, Toowoomba, and described as Lot 30 on RP 140417, Parish of Gowrie. The subject land has an area of 2.225 hectares, and is located on the corner of Hursley Road and Cooper Road, in the rural residential locality of Glenvale, which adjoins the Toowoomba City's western boundary. The subject land is zoned "Rural Residential B" under the Town Plan of the Shire of Jondaryan of 26 November 1993, and effective at the date of valuation of 1 October 1998. The key issues are the nature of the land, the use of the land, and comparison of sales. On 22 March 1999, the Chief Executive issued a valuation of the subject land at $83,000. Following an objection the Chief Executive confirmed that figure on 28 July 1999. The appellants have now appealed claiming that the unimproved value should more properly be $75,000. Mr JB Davies appeared and gave evidence for the appellants. Mr B Tannock, Senior Valuer, appeared for the respondent, calling evidence from Bruce Rodney Krause, the Departmental Registered Valuer responsible for determining the valuation. [2000] QLC 20 -- 1 of 8 -- 2 The Evidence: (1) The Nature of the Land - Mr Davies argues that the nature of the land is such that a large gully along the northern boundary of the subject land impedes any practical use of the land fronting Hursley Road. The topography of the site is demonstrated by a preliminary sketch plan of a possible subdivision, prepared by consulting surveyors for the appellants in April 1999 (Exhibit 3). The purpose of Exhibit 3 is merely to demonstrate the topography, but it also documents the current dwelling, tennis court, and outbuildings upon the site. There is agreement between the parties that the gully does impact the subject land, and access to Hursley Road would only be practical at the north-western corner of the site. It is conceded by Mr Davies that the current building site towards the centre of the subject land, is generally level and has easy access to Cooper Road. Cooper Road is a bitumen sealed double carriageway, but has only concrete kerbing and channelling along the eastern side of the carriageway. The southern part of the subject land falls gently towards the south-west, and there are good rural views to the south-west, towards the Toowoomba Showground. Electricity, telephone, town water and a mail service are all available. Hursley Road is a bitumen sealed major arterial road carrying light traffic numbers to the west and rural areas. (2) The Use of the Land - The subject land is used primarily for rural residential purposes, and the owners run limited stock numbers for domestic purposes upon the site. The land is regarded as a good rural residential site by the respondent, and has been valued accordingly, only on that basis. There was no additional premium applied to the land as a consequence of any potential higher use, or for subdivisional purposes. The land was treated as a single homesite under section 17 of the Valuation of Land Act. The subject land is part of an old (30 years) subdivision, comprising mostly similar size lots (2 hectares). The subject land is surrounded by more recent 4,000 square metre lots, generally developed with good quality residences. The appellants are long-term residents of the locality, and are now concerned that intruding Rural Residential A developments are forcing land values up, and the resulting rates due. Attempts by Mr Davies to seek to fill the northern gully across the subject land, have been thwarted by the Jondaryan Shire Council (the Council), without a formal application to rezone the land. Apparently any application to rezone -- 2 of 8 -- 3 the land, would result in a major dedication of land fronting Hursley Road as a condition of such rezoning. The potential subdivisional yield of five new lots, was demonstrated by Exhibit 3, although Mr Davies advises that his professional advisers have queried the economic viability of such a rezoning, in view of the contributions required by Council. Mr Davies also agrees that the subject land is well located in the locality, the surrounding land of which is now developing as rural homesites, generally zoned as Rural Residential A, and of minimum areas of 4,000 square metres. Mr Davies also advises that the proposed two possible new lots south of the current dwelling site, would require special consent of Council, if their current proposed widths were to be reduced to less than the minimum width allowed. If such a concession were not approved by the Council, the proposal on Exhibit 3 would result in a loss of a driveway and ornamental trees to the existing dwelling site. For the above reasons the appellants have no current plans to proceed with the rezoning of the land. (3) Comparison of Sales - To support his valuation Mr Krause relies upon the following sales, which he argues are representative of other sales of vacant lands in the locality, with similar services and access available:  Sale 1 - (Corner of Colonial and Estate Streets - Lot 1 on RP 179264). This is a 1.002 hectare Rural Residential A parcel, located about 2 kms north of the subject land. The sale falls generally towards the west, and has a limited outlook, and is seen as inferior to the subject land due to its smaller size, and inferior location and outlook. The sale sold in May 1998 for $86,000, which after allowing for improvements was analysed at $83,000, and applied at $73,000 (88%).  Sale 2 - (Glenmorgan Court, Glenvale - Lot 31 on SP 110782). This is a 4,010 square metre Rural Residential A parcel located 150 metres south-west of the subject land. The sale has a moderate cross-slope from one front corner to the rear. The sale is seen as inferior due to its smaller size, and lesser quality land and aspect. The sale sold in October 1998 for $53,000, which after allowing for improvements was analysed at $52,000, and applied at $47,000 (90%). -- 3 of 8 -- 4 In summarising his assessment of the subject land, Mr Krause sees it as one of the better rural residential lots in the locality. In spite of the difference in zoning of the two sales, and the subject land, Mr Krause argues that he has compared the parcels as rural homesites, and with no potential for any subdivision or higher use. Mr Krause sees his Sale 2 as demonstrating a basic minimum value for a rural homesite in that locality. Because of its lesser views and lower elevation, Mr Krause argues that the applied value of $47,000 (Sale 2), and $83,000 (the subject land), represent correct relativity between those parcels. In comparing the subject land with his Sale 1, Mr Krause notes that parcel was formerly zoned as "Rural Residential A" under the former Town Plan, subsequently reviewed in 1993. Prior to 1993 the minimum size parcel under Rural Residential A was 6,000 square metres, which has since been reduced to 4,000 square metres. Mr Krause notes that, because of the likely contributions to the Council as part of any further subdivision of Sale 1 into two new lots, Mr Krause believes that would be uneconomic to proceed. On that basis Mr Krause sees the current use as a 1.002 hectare rural homesite as its highest and best use. Decision: (i) The Nature of the Land - I turn first to the nature of the land and note that both parties agree that the subject land provides a good rural residential site, with good access, and some rural views to the south-west. It is also agreed that the large gully along the northern boundary fronting Hursley Road, is a major impediment to access to Hursley Road. Compared to surrounding Rural Residential Parcels, the only disability of the subject land, other than the gully, is the lack of concrete kerbing and channelling along the western side of Cooper Road. However, as a single rural residential site, clearly most of the subject land provides amenities sought after by owners for that purpose (Exhibit 3). (ii) The Use of the Land - The method of valuation based upon comparisons as single rural residential parcels, was effected adopting section 17(1) of the Valuation of Land Act which states: "17(1) In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes -- 4 of 8 -- 5 of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use is lawful when the valuation is made. " While the zoning of both Sales 1 and 2 are for Rural Residential A purposes, and the subject land is zoned as Rural Residential B, it is noted that it is the highest and best use of the land which has to be determined under the Act. The impact of zoning does not of itself determine highest and best use, although zoning does have a significant impact upon highest and best use. Precedent for that principle is found in AK and SS Gallagher v. Brisbane City Council (1975) 2 QLCR 368, where the Land Appeal Court said at page 381: "Now, while the zoning of land pursuant to a town plan will always affect the highest and best use of land at a particular date, and to that extent the value, it does not create that highest and best use. It 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. But, in our view, the highest and best use remains the same throughout, --- ." In that matter the Land Appeal Court was considering a matter of compensation for land lost, but the principle has application also in valuation matters. (iii) Comparison of Sales - When determining unimproved value, courts at all levels have consistently preferred the use of sales of comparable vacant lands, where they are available. That was best explained by the Land Appeal Court in PH Clough v. Valuer-General (1981- 82) 8 QLCR 70, where the Land Appeal Court said at page 76: "It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value. The reason is obvious. In applying such sales there is no room for error in analyzing the value of improvements. Because there is less room for difference of opinion as to value of the various items of improvement and comparison is thus simpler, it has been held that highly improved sales should be avoided in preference to sales comprising a lesser degree of improvement. " -- 5 of 8 -- 6 That was also followed by the Land Appeal Court in R and MM Barnwell v. Valuer-General (1990-91) 13 QLCR 13, at page 17; and also in WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44, at 46. On the basis of Mr Krause's comparison, the only evidence I have is that the subject land is superior to both Sale 1 (applied at $73,000), and Sale 2 (applied at $47,000). While Mr Davies gets no comfort from those comparisons, claiming that the value of the subject land has a lesser value to the owners, he provides no hard evidence to justify his conclusion. In seeking to understand the unimproved value to be determined, I turn to section 3(1)(b) of the Valuation of Land Act, which says: "3(1) For the purposes of this Act - 'unimproved value' of land means - (b) in relation to improved land - the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist. " The expression "capital sum which the fee simple of the land (ownership) might be expected to realise if offered for sale" introduces the concept of a market value for the land. To understand what a fair value might be in such circumstances, I believe the words of the High Court of Australia in Spencer v. The Commonwealth (1907) 5 CLR 418, best clarifies what is meant, where Griffith CJ said at 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 what point a desirous purchaser and a not unwilling vendor would come together." In the current matter Mr Krause has sought guidance of value, based upon what prudent vendors and owners have offered, and accepted, for comparable parcels. Using those sales as guides, Mr Krause has then used his knowledge and experience -- 6 of 8 -- 7 as a valuer to assess the value of the subject land. In adopting such an approach, I find that Mr Krause has used a method referred to by the Land Appeal Court in King Ranch Pastoral Company Pty Ltd v. The Valuer-General (1968) 35 CLLR 255, at 259, where the Land Appeal Court found: "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." That was further clarified in the wording of the minority decision of that case, where the learned Member noted at page 262: "In Bingham v. Cumberland County Council (1954) 20 LGR 1 at pages 18 and 19, Sugerman J says: '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 pages 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 for the land.' The valuer in arriving at his opinion in these difficult matters may have to draw upon his general knowledge and experience, including perhaps experience and 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. " In the absence of any sales from Mr Davies, I can only do the best I can with Mr Krause's sales. I note that the onus to prove that Mr Krause has used a wrong principle, or made a serious error of fact, rests with the appellant under section 45(4) of the Act, which, when referring to a notice of appeal, states: "45.(4) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner." That direction was enshrined in the Act following the decision of the High Court of Australia in Brisbane City Council v. Valuer-General (1977-78) 140 CLR 41, at page 56, per Gibbs J. (Also reported in (1978) 5 QLCR 283, at page 303). -- 7 of 8 -- 8 Summary: On the evidence before me I find that the appellants have failed to demonstrate that an error has been made, and in the absence of persuasive evidence to the contrary, I must accept Mr Krause's conclusions. 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 as determined by the Chief Executive in the sum of $83,000 is affirmed. (NG Divett) Member of the Land Court -- 8 of 8 --