Barnett v Chief Executive, Department of Natural Resources [1998] QLC 154

LAND COURT BRISBANE 11 DECEMBER 1998 Re: AV97-194 - Appeal against an Unimproved Valuation - Beaudesert Shire - Valuation of Land Act 1944 MJH Barnett v. Chief Executive, Department of Natural Resources D E C I S I O N As at 1 October 1996 the unimproved value of land situated at 14 Paradise Drive, Eagle Heights, described as Lot 44 on Registered Plan 125393, Parish of Tamborine, was determined by the chief executive in the amount of $88,000. The land contains an area of 1,012 m and is zoned "Residential A". Electricity, telephone and garbage collection services are available but not reticulated town water. Paradise Drive is bitumen sealed, not kerbed or channelled, providing fair access onto the land. Mr Barnett objected to the valuation but the objection was disallowed. He then appealed to this Court against the chief executive's decision. In the notice of appeal, his estimate of unimproved value was $78,000. In the grounds of appeal Mr Barnett suggested that the valuation may have been based on 1990 levels of value, below which values had, in his opinion, fallen. The land is vacant and had been listed for sale since 1995, with no "reasonable" offers having been received. Mr Barnett appeared on his own behalf and gave evidence in support of the grounds of appeal. He had purchased the land in 1991 for $65,000 when the statutory unimproved value had been $86,000. He unsuccessfully objected to that valuation. He had hoped at the date of purchase that the purchase price would have allowed him to achieve reasonable capital gain on a resale. He did not believe however that the land was as valuable then as the statutory valuation suggested. The land was eventually listed for sale with one agent for $80,000, then at a later date was multi- listed at the same price. The various agents had been made aware that offers would be considered but none had been forthcoming. Mr Barnett tendered a letter dated 22 [1998] QLC 154 -- 1 of 5 -- 2 November 1998 from the first agent who advised that "the asking price of $75,000 we set at the time seemed reasonable but during this time we have not had an offer at any price." The agent had enclosed a list of "all the sales of vacant land in the Eagle Heights area since 1996" and noted "how values have dropped off" and "that only three sales have occurred in 1998 and that these were re-sold at prices less than … when they were purchased." Mr Barnett had selected from the list of sales given to him by the agent those lots which had been resold. Lot 862 in Kalais Court had been sold in February 1997 for $66,000 then apparently resold in February 1998 for $45,000. It appeared however that the resale may have been to a member of the vendor's family. Lot 298 in Tolima Drive had been purchased first in May 1992 for $44,000 then resold in April 1996 for $32,000 and again in July 1998 for $29,000. Lot 121 in Magnetic Drive had been purchased in April 1991 for $50,000 then resold in August 1998 for $48,000. Mr Barnett had no specific knowledge as to the comparability of those lots with the subject land. The valuation appealed against had been made by Mr CI Hurman, a registered valuer employed by the State Valuation Service, Department of Natural Resources. He described the land as falling steeply to the east from road level, with panoramic views to the Gold Coast and Pacific Ocean. It was his evidence that in establishing a basis for the valuation, regard had been given to all relevant sales in the Tamborine Mountain area, but in particular to two sales, the details of which were as follows: Lot 134 Magnetic Drive, 1,662 m, sold 21 April 1997 for $97,000, analysed to show an unimproved value of $96,000. The evidence was that an unimproved value of $95,000 had been applied to that lot at the relevant date of valuation. In comparison to the subject land, Lot 134 was described as being superior in size, with superior views and shape, with comparable location and topography, although of lower elevation. Lot 244 Elbert Court, 1,012 m, sold 31 July 1996 for $62,500, analysed to show an unimproved value of $61,500 (applied valuation $60,000). In comparison to the subject land Lot 244 was considered inferior in topography and shape, of lower elevation with inferior views, but comparable in location. Also included in Mr Hurman's schedule of evidence was the sale of Lot 49 in Paradise Drive, in close proximity to the subject land, for $130,000 on 1 January 1998. That sale had been analysed to show an unimproved value of $129,000. The valuation which had been applied to Lot 49 at the relevant date in October 1996, was $105,000. -- 2 of 5 -- 3 Mr Hurman said that for the relevant date valuation the Eagle Heights area had been the subject of close scrutiny and inspection for the purpose of reviewing previously existing relativities. It had been considered that the available sales evidence had supported the levels of value previously applied to the prime lots with panoramic views, although some minor alterations had been made to better reflect Mr Hurman's opinion of relativity from lot to lot. As a result of that fine tuning the valuation of the subject land had been increased from $86,000 to $88,000. However, there had been evidence suggesting that the values previously applied to lots with inferior elevation, position and/or views, had become excessive. Relativities were adjusted accordingly. Mr Hurman was confident that the levels of value struck for the prime blocks continued to be supported by sales evidence subsequent to the date of valuation and that, as I understood it, was the purpose for introducing the evidence of the sale of Lot 49 in January 1998. He did not agree with Mr Barnett's suggestion, or his agent's advice, that land values in this area had declined across the whole range from inferior to prime lots. It was Mr Hurman's opinion that the market had become somewhat volatile with many lots being available for sale but he saw that as having affected the level of value for only the lesser quality lots. Mr Hurman agreed that while generally in the Paradise Drive area dwellings were of above average quality, there is and was at the relevant date, an incomplete owner-builder structure adjoining the subject land. However, although the structure was of an inferior and unattractive nature in its incomplete state, he believed that it did not detract from the market value of the subject land. In his opinion the structure would be seen to have the potential to be eventually completed as a dwelling of reasonable quality. Mr Barnett argued that the 1998 sale of the nearby Lot 49 had no relevance to the market value of the subject land. Apart from it having taken place subsequent to the relevant date, he said the sale land was regarded locally and by all local agents as a somewhat unique "landmark site" of special quality and in a category of its own. Mr Barnett agreed that the sale land Lot 244 in Elbert Court was inferior to the subject land. However, it was his opinion that the sale land Lot 134 in Magnetic Drive, with a relatively quiet, cul-de-sac position, backing onto the escarpment providing generally uninterrupted and superior views in comparison to the subject (which overlooked rooftops nearby), combined with its significantly larger area, -- 3 of 5 -- 4 provided a homesite with superiority far greater than the 8 per cent differential indicated in the applied valuations. It was Mr Barnett's opinion that the subject land should not be regarded as being within the "prime" land category for the area. However, I prefer Mr Hurman's evidence that the subject land is located within a better quality area of Eagle Heights and one where there was no evidence of a falling market as at the relevant date, or, if it was relevant, even subsequent to that date. For example, the sale price of Lot 134 supported the valuation which had been applied to that land. The sale of Lot 49 in Paradise Drive cannot, by itself, be accepted as evidence of value of that land as at October 1996, but it does support Mr Hurman's argument that there was no evidence to suggest that there had been a fall in the value of that particular site, subsequent to the date of valuation. The difficulty that Mr Hurman had was his task to value each and every lot in the locality and to establish reasonable relativity of valuations from one lot to another based on the available evidence. However, for the proof of the correct level of value for this specific subject lot, he had found it necessary to rely on two sales, one clearly inferior and one clearly superior, albeit the second to an arguable degree of superiority. It is clear that Mr Hurman took a professional approach to the task of interpreting a somewhat volatile market. It is well recognised that establishment of correct relativity is an important function in valuations used for revenue-gathering purposes. However, while I am loath to disturb general relativity which was specifically reviewed and professionally considered, it is necessary to determine this matter on the evidence presented. The crux of the issue, as it developed, is whether, in particular, the sale of Lot 134 in Magnetic Drive supports the valuation applied to the subject land. The overall evidence as to comparability, including that of Mr Hurman, has led me to the conclusion that the valuation of the subject land is too high in comparison with the valuation applied to Lot 134, based on its sale. The question of comparability with the second sale in Elbert Court cannot be answered with precision, because the sale land is not readily capable of comparison - the subject land being significantly superior. There is then the further question of the effect of the yet unattractive development adjoining the subject land. That seems to me to be a matter which could -- 4 of 5 -- 5 have, until remedied, a greater specific effect on an otherwise prime block, than Mr Hurman has envisaged. The fact that the land has not sold at the asking price is not determinative of the question of value, although it must create some doubt as to the market's appreciation of the attributes of the specific site. I have decided to adopt an unimproved value of $80,000, which valuation I am satisfied identifies a warranted level of inferiority in comparison with Lot 134 in Magnetic Drive, whilst still retaining a distinct level of superiority over Lot 244 in Elbert Court. The appeal is allowed, the valuation of the chief executive set aside and the unimproved value of the land determined in the amount of Eighty Thousand Dollars ($80,000) as at 1 October 1996. RE WENCK MEMBER OF THE LAND COURT -- 5 of 5 --