Cherrett v Chief Executive, Department of Natural Resources [2000] QLC 2

LAND COURT, BRISBANE 7 January 2000 Re: Appeal against Annual Valuation – Valuation of Land Act 1944 – Shire of Livingstone. (AV99-704). Glen T Cherrett v. Chief Executive, Department of Natural Resources (Hearing at Rockhampton) D E C I S I O N This is an appeal by a landowner against the unimproved value applied to his land as at 1 October 1998, under the provisions of the Valuation of Land Act 1944 (the Act) by the Chief Executive, Department of Natural Resources. Background: Mr Cherrett is the owner of land described as Lot 32 on Plan E15616 and Lots 1 and 2 on Registered Plan 619297, Parish of Hewittville, containing an area of 4,047 square metres. As at 1 October 1998, under the provisions of s.37 of the Act, the respondent determined the unimproved value of that land at $123,000. Mr Cherrett unsuccessfully objected against that valuation. Following receipt of the respondent's decision upon his objection, he appealed to the Land Court advising that in his opinion the unimproved value of the land should be $112,000. The Subject Land: The subject land is situated at 50 Hill Street, Emu Park, about 1.2 kilometres west of the Emu Park Business District. Lot 2 is situated at the intersection of Hill Street and Fountain Street, with Lot 1 fronting Hill Street and Lot 32 fronting Fountain Street. Lot 1 and Lot 32 are the site of the Emu Park Motel, while Lot 2 on the corner is vacant. The surrounding locality is predominantly a residential area. [2000] QLC 2 -- 1 of 6 -- 2 Hill Street is the main road into Emu Park from Rockhampton. It consists of a two-lane bitumen sealed carriageway, without kerbing and channelling. Access to the subject land is from Hill Street by means of a bitumen sealed service lane. Reticulated town water and sewerage, overhead electricity and telephone services are connected to the property. A daily mail delivery service and a weekly garbage collection service are also provided to the property. Bus services travelling to Yeppoon and Rockhampton stop at Pattison Street, approximately 400 metres east of the property. The subject land is rectangular in shape and although level, appeared to have good natural drainage. There are no sea views from the subject land. The property is zoned "Residential B" under the Livingstone Shire Council Town Planning Scheme and has consent use for development of a motel. A seven unit motel and a manager's residence have been developed on Lot 1 and Lot 32. It is common ground that the highest and best use of the land is for continuation of the present use. Grounds of Appeal: Mr Cherrett's grounds of appeal were essentially as follows:  He purchased the motel property in 1990 for $270,000; since then there has been no substantial movement in real estate values in the area;  Enquiries of real estate agents in Emu Park have not produced sales of properties similar to the subject land which would justify any increase in the value of that land;  There have been some sales of similar properties in Yeppoon at the other end of the Capricorn Coast, but the use of such sales would be unfair, as Yeppoon is a much better business centre and has experienced considerable growth over the last several years;  There have been sales of land in recent subdivisions at Emu Park for prices considerably higher than those for other lands in the Emu Park area, but they are sales of residential land on high quality subdivisions, with generous and enviable sea views; the use of such sales to value the subject land would be unjust. The Hearing: -- 2 of 6 -- 3 Mr Cherrett appeared and gave evidence on his own behalf. The respondent was represented by Mr BT Coe, a Senior Valuer in the Department of Natural Resources, while valuation evidence for the respondent was given by Mr ST Larking, a Registered Valuer employed by the Department of Natural Resources. Mr Cherrett tendered a statement elaborating on his grounds of appeal and also gave oral evidence. He explained that he purchased the motel in 1990 for $270,000. A subsequent valuation for $300,000 was made on 20 January 1998 by Mr Wayne Litherland of the firm Herron Todd White for mortgage purposes on behalf of the ANZ Bank. This indicated an increase of approximately 11% since 1990. Mr Cherrett was at a loss to understand how the respondent could increase the unimproved value of the subject land by a considerably greater percentage since that time. The latest valuation represented an increase of 10% in one year. Mr Cherrett also produced trading figures which showed that the motel had not been particularly profitable in the last few years. He explained that there were other motels in the area and that times had been "pretty tough" for moteliers in the Emu Park area for the last two or three years. He thought that Yeppoon at the northern end of the Capricorn Coast, where there had been substantial development, had received the benefit of the tourist trade. Although Emu Park was a most attractive area, he thought that tourists had not yet discovered it. His enquiries had revealed that there had been little movement in the real estate market in the Emu Park area except for sales in two major subdivisions which could in no way be compared with the subject land. Mr Larking was not the valuer originally responsible for the valuation. However, he had investigated the valuation and accepted that it was accurate. In support of the respondent's valuation of $123,000, Mr Larking relied upon three sales in the Town of Emu Park. Sale 1 is situated at 25 John Street, has an area of 1,003 square metres and sold in August 1998 for $55,000. The sale was lightly improved and analysed to show an unimproved value of $35,000. As at the date of valuation an unimproved value of $29,500 had been applied by the respondent to that property. That land is zoned "Residential B", is located on a corner and has similar services to the subject land. It does not have sea views. That allotment is only slightly smaller than Lots 1 and 2 of the subject land, each of which Mr Larking considered to be superior to the sale, because of their exposure to passing traffic which made them -- 3 of 6 -- 4 much more suitable for motel development. However, Mr Larking thought that Sale 1 would suit unit development of some sort, perhaps duplexes or townhouses. Sale 2 is situated in Thomas Street, has an area of 798 square metres and sold in April 1998 for $28,000. That sale analysed to show an unimproved value of $27,250 and, as at the date of valuation, an unimproved value of $26,500 was applied by the respondent to that property. Mr Larking described the sale property as being a level cleared residential allotment, with bitumen road access and similar services to the subject land. It does not have sea views. The land is zoned "Residential A", making it suitable only for development as a single dwelling house. Mr Larking considered that its position was inferior to that of the subject land and it is smaller than any of the three subject allotments. Sale 3 is situated at 50-54 John Street, has an area of 2,023 square metres and sold in November 1997 for $67,000. That sale analysed to show an unimproved value of $65,750 and, as at the date of valuation, an unimproved value of $44,000 was applied by the respondent to that property. Mr Larking described that property as a level, cleared, residential allotment, with similar services to the subject land. It is zoned "Residential A", but is large enough to be subdivided. He explained that it has been subdivided since the sale. He considered it to be superior to Lots 1 and 2 of the subject land. However, he regarded it as being a high sale. On reflection, Mr Larking thought that the valuation applied to that sale property of $44,000 did not reflect its potential for subdivision, whereas the sale price did. The respondent valued each of the allotments comprising the subject lands separately and then allowed a percentage discount for multiple holding. Item 18 of Mr Larking's report contains the method of valuation: "Three separate 'Residential B' zoned sites with an allowance of 7.5%. Lot 2 on RP619297 (1012m²) $ 39,000 Lot 1 on RP619297 (1012m²) $ 38,000 Lot 32 on E15616 (2023m²) $ 56,000 $133,000 Less 2.5% per block (7.5%) $ 9,975 $123,025 Adopt $123,000" The Issues: -- 4 of 6 -- 5 When it became clear that the respondent did not base the valuation on sales at Yeppoon or sales in recent subdivisions at Emu Park, there were few issues between the parties. The appellant had contended for an unimproved value of $112,000. He explained that this was the previous valuation and he thought there had been no increase since that time. He had no real issue with the use of the three sales used by Mr Larking, but thought that they would not support a valuation of $56,000 on Lot 32 which he considered to be somewhat too high. He thought that $45,000 would be more appropriate. In his oral evidence, Mr Cherrett contended that the subject land had suffered from drainage problems caused by run-off from the top of the hill. He said that on occasions water had lapped at the back doors of the motel. However, Mr Larking said that any drainage problems were not obvious on inspection. In any case, that issue had not been included in Mr Cherrett's grounds of appeal and is therefore not a matter which I can take into account (see s.56(2)). Conclusions: The only valuation evidence produced by the appellant was the Herron Todd White valuation made as at 20 January 1998. However, it was a valuation for mortgage purposes and therefore was a valuation of the motel property as an improved entity. There was no evidence of the unimproved value as at that date. The valuer's report merely indicates that the property had been valued by the direct comparison method of valuation at $30,000 per unit for the motel component, plus the added value of spare land. No further details were given. The provisions of the Act require that the property be valued as if the improvements on the land did not exist (s.3(1)(b)). Therefore, the respondent was required to value the three parcels of "Residential B" zoned land at their highest and best economic use, assuming that the improvements on those lands had not been made. "Residential B" zoning does not permit motel development without consent. However, the subject land did have town planning consent for such development. The respondent was entitled to take that into account in valuing the subject land. In Mr Larking's opinion, the highest and best use of the three allotments was development for a motel. In my view, the summation method used by the respondent is appropriate in the circumstances. He attributed an unimproved value to each of the subject parcels -- 5 of 6 -- 6 and then allowed a percentage discount for multiple holding. Although the sales are not ideal to value the allotments, they were not seriously challenged and in those circumstances, I find that they are appropriate. While Mr Cherrett challenged the valuations applied to the subject lands particularly the $56,000 applied to Lot 32, he produced no evidence to indicate that another valuation should be substituted. I have no reason to find that the valuations for each allotment applied by the respondent are inappropriate. There is general agreement that the subject land is a good site for a motel. Burden of Proof: In another appeal by Mr Cherrett in the City of Rockhampton (AV98-559), the decision in which was also delivered today, I dealt with the provisions of the Act concerning the burden of proof. I will not repeat that discussion in this decision, except to say that the same reasoning applies in this case, and that in my opinion Mr Cherrett has not discharged that burden of proof. Therefore, the appeal must be dismissed. Order: The appeal is dismissed and the valuation of the respondent is affirmed. (JJ Trickett) President of the Land Court -- 6 of 6 --