Corstorphan & Ors v Chief Executive, Department of Natural Resources [1998] QLC 153

LAND COURT BRISBANE 4 DECEMBER 1998 Re: Appeals against Annual Valuations Valuation of Land Act 1944 Local Government: GCCC-Albert Valuation Roll No: 20951 (AV98-342) Gail Corstorphan (nee Westhoff) v. Chief Executive, Department of Natural Resources Valuation Roll No: 20952 (AV98-253) Peter C and Florence B Feltham v. Chief Executive, Department of Natural Resources Valuation Roll No: 20954 (AV98-254) Alister FM Boyd v. Chief Executive, Department of Natural Resources Valuation Roll No:20955 (AV98-267) Graham R and Dawn P Southgate v. Chief Executive, Department of Natural Resources (Hearing at Coolangatta) D E C I S I O N Background: These matters deal with four parcels of land at 9, 41, 61 and 52 Witheren Road, Clagiraba, Gold Coast, and located approximately 15 km south-west of the Nerang Shopping Centre. The parcels are respectively described as: • 9 Witheren Road - Lot 48 on RP 160437 - area 2.056 ha (Corstorphan); • 41 Witheren Road - Lot 49 on RP 160437 - area 2.571 ha (Feltham); • 61 Witheren Road - Lot 51 on RP 160437 - area 3.115 ha (Boyd); • 52 Witheren Road - Lot 52 on RP 160437 - area 4.727 ha (Southgate). Each parcel is zoned as "Rural" under the City of Gold Coast Planning Scheme of 24 February 1995, and effective at the date of valuation of 1 October 1997. Access is -- 1 of 11 -- 2 available to each lot from Witheren Road, which is a dual-lane bitumen sealed road with gravel shoulders. Electricity and telephone services are available to each site. The subject lands are located in a rural locality where there are large rural homesites, generally up to 3 ha. Shopping and medical facilities are located at the Nerang Shopping Centre. Each site is used for the purpose of a single unit rural residence, and has been valued accordingly. The Chief Executive, Department of Natural Resources, on 2 March 1998 issued the following valuations: (1) Lot 48 - $116,000 (2) Lot 49 - $127,000 (3) Lot 51 - $102,000 (4) Lot 52 - $120,000 Following objections the Chief Executive amended those figures on 20 July 1998 as follows: (1) Lot 48 - $95,000 (2) Lot 49 - $110,000 (3) Lot 51 - $85,000 (4) Lot 52 - $90,000 The appellants have now appealed those figures claiming the valuation should more properly be: (1) Lot 48 - $75,000 (2) Lot 49 - $72,000 (3) Lot 51 - $70,000 (4) Lot 52 - $70,000 Mr B Corstorphan, Mrs FB Feltham and Mr G Southgate appeared and gave evidence for the appellants. Mr AFM Boyd provided a statutory declaration as a statement supporting his appeal, however, he did not appear personally to give or be cross-examined on his evidence. Mrs T Johnson of Counsel from Crown Law appeared for the respondent, calling evidence from Mr AB Van Hees, the registered departmental valuer responsible for determining the valuations. With the agreement of all parties, an inspection of all sites and sales was undertaken. (1) The Nature of the Land - Each of the four parcels is located on the eastern side of Witheren Road, which generally follows the crest of a ridge line rising steeply from north to south. The specific nature of the separate parcels are as follows: -- 2 of 11 -- 3 • Lot 48 - This is a corner lot fronting both Witheren and Clagiraba Roads. This subject land has approximately 139 metres to Witheren Road and a frontage of 162 metres to Clagiraba Road. The land is below Witheren Road from where the existing access is obtained. The land falls generally from south-west to north-east, with slopes varying from medium to fairly gentle. There is evidence of previous slip fault lines along the area below the current house pad. In those areas the timber has been destroyed by the slippage. Other steep parts of the lot towards the south-east are covered with sparse undergrowth and timber. There is rock outcrop, particularly in the south-western corner. There is evidence of attempts to create two dam sites below the house pad. However, because of continued leakage from the earth dams, one dam has now been sealed by concrete, and provides water storage for the site. Evidence was also given of $10,000 being spent about 10 years ago in excavating and consolidating a house pad. Because of the rocky nature of the site, Mr Corstorphan gave evidence of having to import some 110 m of garden soil, and a further $5,000 to stabilise the land below the house pad. The house pad has excellent views to the north towards Mt Tamborine. • Lot 49 - This has a near level ridge line (about 10 metres fall in 164 metres), extending from the front boundary entrance in a north-easterly direction to the existing house pad, then falling steeply towards the rear boundary. This ridge line provides an excellent building pad, which has good views to the north, has high elevation, and is partially cleared and well drained. The timber cover is coastal scrub. The land is rocky and is noted by the Gold Coast City Council (the Council) as an area of low risk of instability due to land slippage. Attempts to develop a dam proved unsuccessful due to leakage of the dam. Soil tests undertaken revealed a thin weathered clay profile soil over weathered bedrock. There were shallow land slips in the steeper areas. • Lot 51 - This site is below road level and falls steeply towards the rear. It has a high elevation, is partially cleared over the building area, with the balance area covered with coastal scrub and undergrowth. There are major rock outcrops, and a house pad was developed some years ago at a cost of $10,000. The excavation of the house pad required regular checking by Council during the cut-and-fill consolidation to avoid possible land slippage, as the Council has designated the lot as a low risk of instability area due to slips. Because of the very steep nature of the lot, the subject lot is virtually only usable as a house site, with no other secondary use available. Because of its steepness there are also problems with surface water during heavy rains, and Council has directed that a surface drain be created along the down slope northern boundary. • Lot 52 - This is the highest of the four lots appealed against, and is slightly above road level, and falls steeply to the rear boundary. A house pad was developed at a cost of $12,000. The land is mainly rock outcrop, and any -- 3 of 11 -- 4 excavation is both very difficult and very costly. Because of its high elevation it has excellent views towards the north. The land is designated by the Council as a low risk area of instability due to slippage. (2) The Use of the Land The appellants all argue that the subject lands are so steep and rocky that the only use of the land could be as a rural house site. They seek comparison with other parcels in the area, particularly the recent sales of similar lands, which they argue have some other secondary uses for the land which, in their view, enhances the value of those lots. Mr Boyd and Mrs Feltham, in particular, draw comparison with the use of their lands and the use of a recent sale of Lot 32 on RP 156902 on the western side of Witheren Road. Both argue that Lot 32 (Sale 1) provides uses other than as a building site, noting that Lot 32 has been used for the growing of papaws. The also both draw comparison with the use of a parcel at Lot 17 on RP 164061 in Clagiraba Road, which virtually has 100% of the land as suitable for purposes other than as a building site. They argue that the restricted use of their lands must impact the value of those lands compared to Lot 32 and Lot 17. (3) Relativity - All appellants argue that relativity between lots to the west of Witheren Road and the subject lands does not represent a true comparison of the attributes of those parcels. They argue that the lands to the west of Witheren Road all have better soils, good views, less major outcrop and are less steep than the subject lands. To have the subject lands at higher values is inconsistent, in their opinion, with the former relativity prior to the current valuation. Mr Boyd further argues that if the unimproved values to the west of Witheren Road were determined in relation to the recent Sale 1 of Lot 32, then to apply Sale 1 to the subject lands would indicate, in his opinion, that Mr Van Hees has incorrectly interpreted the comparison of the sale with the subject lands. Mr Boyd further argues that should Mr Van Hees seek to apply a special loading for what might be considered as more outstanding views from the subject lands, evidence from sales should be supplied to demonstrate that buyers have in fact paid more for such outstanding views. He argues there is no such evidence, and in any case, all of the parcels to the west of Witheren Road also have excellent views. Mr Boyd also draws relativity with two other properties in Clagiraba Road, Mt Nathan, described as Lots 42 and 43 on RP 852355. Lot 42 has an area of 0.81 ha and -- 4 of 11 -- 5 an unimproved value of $77,000 ($81,381 per ha), while Lot 43 has an area of 3.657 ha and an unimproved value of $105,000 ($28,712 per ha), although both lots have access to Clagiraba Creek. Mr Boyd and Mrs Feltham argue that it is not appropriate to seek comparison between parcels with significantly smaller areas to the subject lands. Mrs Feltham also draws comparisons with the unimproved values of Sale 2 ($32,000 per ha), Sale 3 ($63,000 per ha), and Lot 17 - Clagiraba Road ($49,000 per ha). Mr Boyd further argues that the agreement to reduce the unimproved values of the subject lands after the objection conferences, represents some acknowledgment by the respondent that their original relativities established on 2 March 1998 were incorrect. He now argues that the adjustments made on 20 July 1998 only partially corrected the relativities. Mr Van Hees argues that the unimproved values established prior to 1997 had actually been found to be incorrect, and he had sought to correct those relativities in the current valuation. He argues that the unimproved values established on 20 July 1998, following further reassessment of the subject lands, now represents the true relativity. (4) Comparison of Sales - In support of his valuations, Mr Van Hees supplied the following sales: • Sale 1 - (Witheren Road, Clagiraba - Lot 32 on RP 156902). This is a 2.496 ha site which is immediately opposite the subject lands. The sale has similar access and services available, is zoned "Large Rural Homesite", and has similar locality. The sale is below the street level and falls steeply to the rear. It has a high elevation and good views towards the north-west. The sale has a difficult building site which would require major excavation and possible retaining walls or piers. The sale is seen as comparable in location, services and zoning, and overall inferior to all subject lands, due to its steep topography and western aspect. The sale sold on 2 April 1998 for $78,000 which, after allowing for improvements, was analysed at $75,750, and applied at $72,000. • Sale 2 - (Glen Circuit, Clagiraba - Lot 142 on RP 863662). This is a 1.21 ha site located approximately 200 metres west of the subject lands. The sale is zoned as "Large Rural Homesite", and has similar services, but inferior access. The sale is above street level with a more gentle fall from south to north. The sale is cleared and irregular in shape, and has good rural views, with a north-eastern aspect. It has a lower elevation, and is noted by Council as being subject to a moderate risk of instability due to slippage. The sale sold in July 1997 for $95,000 which, after allowing for improvements, was analysed at $92,500, and applied at $85,000. -- 5 of 11 -- 6 • Sale 3 - (Diamantina Court, Mt Nathan - Lot 35 on RP 863859). This is a 4.929 ha parcel located approximately 800 metres south of the subject lands. The sale fronts Diamantina Court which is a bitumen sealed cul-de-sac with gravel shoulders, and is the other side of the main ridge separating the sale from the subject lands. There is similar zoning and services as Sales 1 and 2. The sale is cleared and falls steeply from west to east and north to south. There is a north/south gully through the centre of the sale. The land has no apparent rock outcrop, and the soils appear easier to cut and fill for a house site, which is situated towards the rear of the sale. A lengthy steep access road has subsequently been built to the house site. The sale is seen overall as inferior due to access costs. The sale sold in January 1997 for $96,000 which, after allowing for clearing, was analysed at $92,500, and applied at $89,000. To support his valuation, Mr Boyd provided what he saw as the only relevant sale: • Sale 4 - This is the same as Mr Van Hees' Sale 1. Mr Boyd provides a comparison of the sale with Lot 51 considering 10 features of each parcel. He argues the sale is superior in respect of country type, soil, land use, a house site, and timber cover, and inferior in area and views. Overall he sees the sale as superior, at an applied unimproved value of $72,000. (5) Changes in the Valuation - Mrs Feltham also draws comparison with changes in the unimproved value of Lot 48 which she argues has increased out of proportion to the level of the property market in the area. She provides evidence of verbal advice from real estate agents to indicate that the current improved property of Lot 48 was likely to attract a selling price similar to the $228,000 paid by her in 1989. In view of that conclusion, she argues that there is no support for the rise in the unimproved value of Lot 48 from $42,500 (1989), to $68,000 (1990), and now $110,000 (1997). Mrs Feltham also draws comparison between the average increase on the Gold Coast (5.3%) and Lot 48 (39.6%). Decision: (i) The Nature of the Land - I consider first the nature of the land on each parcel and note that each of the four subject lands is steeply sloping and very rocky. Each parcel provides excellent views from the building site, and all have required considerable costly earthworks to excavate a building pad. I note also that Lot 49 has the benefit of a ridge line passing across the parcel from which a good building site was obtained. All parcels are subject to some minor instability from slippage. -- 6 of 11 -- 7 Evidence was also supplied that the damming of surface or roof water is difficult due to leakage, and some method of sealing any dam so constructed must be undertaken in order to develop an additional water storage capacity upon the sites. Based upon the topographic mapping supplied in Mr Van Hees' statement, and substantiated by the inspection, I believe that Lot 49 is the best of the four parcels. If I consider the relative quality of Sale 1 and the subject lands, I accept that Sale 1 has more usable soil cover, and the subject lands are all very rocky. However, I can agree with Mr Van Hees that the overall nature of the parcels to the east of Witheren Road are superior to those to the west of the road. I accept that major development costs (up to $12,000) have been required for the subject lands, but I would see little difference for comparable costs for building pads to the lots on the west side of Witheren Road. There was clearly an emphasis on hard rock excavation on Lots 48, 51 and 52, but any costs of retaining walls that are likely to be necessary on Sale 1 will also be substantial. Mr Corstorphan agreed during the inspection that, in his experience as a builder, even a relatively simple building pad can cost up to $2,000 on normal building sites. In the matter of views, I accept that there are views from parcels both to the west and the east of Witheren Road. I also accept that any value that might be placed upon those views is subjective, and there is no evidence to substantiate that views from the subject lands are in fact superior to Sale 1. However, in that respect Mr Van Hees has relied upon his experience in coming to that conclusion. (ii) The Use of the Lands - Mr Boyd and Mrs Feltham argue that any additional secondary use of the lands should be reflected in their unimproved values. In their opinions, the subject lands only have use as rural homesites, while Sales 1, 2 and 3 and Lot 17, Clagiraba Road, all have a secondary use for some purpose other than as a home. However, while that conclusion may have a certain logic, the reality in the marketplace is that people buy rural homesites for a variety of reasons. Some select parcels for their views, isolation and privacy, while others seek an area to run a horse or other animals. But whatever the purchaser's particular expectations, all potential purchasers compete in a single market in a locality for a rural homesite. The outcome of that market is that people often pay as much for only a single land use capability, if that is their prime objective. Mr Boyd provides no evidence to the contrary. -- 7 of 11 -- 8 In seeking guidance on that matter, I note the findings of the Land Appeal Court in AT Dewar v. The Valuer-General (1980-81) 7 QLCR 112, where the Land Appeal Court noted at p.114: " The term 'rural homesite' is a widely accepted and commonly used expression in the real estate profession. The term recognises the trend in more recent times where people are seeking to escape the confinement, bustle, noise, pollution, etc., of smaller allotments within the high density residential areas of cities and towns and are buying lands in a rural setting on the outskirts of towns and cities whereon to build their homes and either live in a pleasant rural setting or engage, part time or full time, (and to varying degrees as they choose) in some form or forms of rural hobby or pursuit." The Land Appeal Court further noted at p.115: " The market for rural homesites demonstrates that they are purchased on a sight basis and not on a pro rata per hectare basis." That was also held by the Land Appeal Court in DF & M Ward v. The Valuer- General (1983) 9 QLCR 48, at p.50. The subsidiary or secondary use of any rural homesite was, however, noted by Wells J in Crouch v. Minister of Works (1979) 36 LGRA 254, at p.256: " The owner of a farmlet does not, however, see his land simply as part of the assets of a professional farming venture; he sees it as a rural living block; farming is undertaken by him as a subsidiary activity - in some cases, almost as a pretext." However, comparability of rural homesites, in my opinion, should not merely be broad banded together into one sub-market area (SMA) merely on the basis that they are in one market, if there is evidence to suggest that different localities in that area reflect varying market perceptions. Mr Boyd argues that the Mt Nathan locality, in fact, is different to the Clagiraba locality. However, he provides no sales evidence to support that conclusion. On the evidence before me, I have nothing to suggest that Mr Van Hees' Sale 3 is not a reasonable comparison on a locality basis. (iii) Relativity - In seeking to establish true relativity, I have before me the following evidence: Lot unimproved value (2/3/98) Relativity Unimproved Value 2/7/98 Relativity Unimproved Value (By Appellants) Relativity -- 8 of 11 -- 9 48 $116,000 1.61 $95,000 1.32 $75,000 1.04 49 $127,000 1.76 $110,000 1.53 $72,000 1.0 51 $102,000 1.42 $85,000 1.18 $70,000 0.97 52 $120,000 1.67 $90,000 1.25 $70,000 0.97 32 (Sale 1) $72,000 1.0 $72,000 1.0 $72,000 1.0 142 (Sale 2) $85,000 1.18 $85,000 1.18 $85,000 1.18 35 (Sale 3) $89,000 1.24 $89,000 1.24 $89,000 1.24 I note also that the former relativity was concluded by Mr Van Hees to be incorrect and he undertook a fresh appraisal for all parcels in the area. Both parties agree that Sale 1 is the key sale, but it is in the application of that sale that they diverge. However, if I were to accept the appellants' values, relativity would suggest that the dearer land lay generally to the west of Witheren Road, a conclusion in conflict with my own assessment of the nature of the land. If I examine then the relationship between each of the subject lands, I find that the appellants see Lot 48 as the better parcel, with Lot 49 next highest, and then Lots 51 and 52 virtually almost equal with Lot 49. However, the topography and access to Lot 49 suggests that it is clearly the better lot, a conclusion supported by Mr Van Hees. On balance, I believe Mr Van Hees' relativity on 20 July 1998 is nearer to the true relationship between the subject lands. However, in seeking relativity with Sale 1 I turn to the comparison of sales. (iv) Comparison of Sales - In seeking to draw comparisons, Mr Van Hees has analysed Sale 1 (2.496 ha), Sale 2 (1.21 ha), and Sale 3 (4.929 ha). Mr Boyd argues it is inappropriate to compare the subject lands with the sale of a parcel about half the size of the subject lands. However, there is ample evidence to suggest that purchasers of rural homesites seek a property for that purpose on a site basis and not on an area basis. Indeed, the Land Appeal Court in Ward v. The Valuer-General (1983) 9 QLCR 48, said at p.50: " Sites are valued overall and not on a rate per hectare basis. The experience of the market place reflects the former not the latter practice." The market for such sites tends to suggest that sites from about 1 to 10 ha can fall within that general range of areas suitable for the rural home purchaser. Larger than 10 ha purchasers see the land as for other purposes, and land of area less than 1 ha tends to attract a different market. In fact, much of the hinterland of Brisbane and the Gold Coast many years ago was developed to satisfy a 1 ha (2.5 acre) market for semi-rural living. The continued existence of many of those former surveyed lots still influences -- 9 of 11 -- 10 the rural homesite market. While I can understand Mr Boyd's concern, there is nothing to discredit Mr Van Hees' selection of Sales 1, 2 or 3 on an area basis. In seeking comparisons, I note that Mr Van Hees has drawn the following conclusions: Subject Lands Sale 1 Sale 2 Sale 3 Lot 48 Inferior Inferior Inferior Lot 49 Inferior Inferior Inferior Lot 51 Inferior Comparable Comparable Lot 52 Inferior Inferior Comparable (Analysed Value) ($75,750) ($92,500) ($92,500) (Applied Value) ($72,000) ($85,000) ($89,000) While I have no evidence of differing values in the Mt Nathan locality, it is clear that Sale 3 has a different local community environment. The sale itself would appear to have good views and an easier building site for excavation. However, it has a longer access road to reach the building site, including the possible piping of a road culvert across the gully that runs through the centre of Sale 3. On balance, I would see little extra development costs applicable to Sale 3 as for Lots 48, 51 and 52, while Lot 49 would cost less to develop a building pad. On balance, I find nothing to discredit Mr Van Hees' unimproved values as determined on 20 July 1998. (v) Changes in the Valuation - I turn finally to the concerns of Mrs Feltham that there has been a flattening of the property market which does not support any increase in the unimproved values. Her inquiries with local real estate agents would suggest that the advice she received related to the likely selling prices of improved properties. Her comparison with an overall increase as reported by the Press for the overall Gold Coast area (5.3%) provides little insight into what occurred in certain market sectors in the Clagiraba and Mt Nathan localities. As noted in NR & PG Tow v. The Valuer-General (1978) 5 QLCR 378, it is not the percentage change in the values that are important, but really a comparison with comparable sales of vacant lands in the locality at the relevant date. In that matter the Land Appeal Court found at p.381: " It follows that a large increase over and above the previous valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation." Summary: -- 10 of 11 -- 11 In examining this matter, I am reminded that s.33 of the Valuation of Land Act dictates that every valuation is deemed to be correct unless proved otherwise. The onus to prove that an error has been made, or a wrong principle adopted, lies with the appellants under s.45(4) of the Act. (See also Brisbane City Council v. The Valuer- General HC (1978) 5 QLCR 283, at p.303; and also 140 CLR 41, at 56). In the current matter I find that Mr Van Hees has carried out his responsibilities appropriately, and I see no reason to change his conclusions. Conclusions Having considered the whole of the evidence, I find that the appellants have not proved their cases. I determine as follows: AV98-342: The appeal is dismissed, and the unimproved value as determined by the Chief Executive, Department of Natural Resources, for Lot 48 on RP 160437 in the sum of Ninety-five Thousand Dollars ($95,000) is affirmed. AV98-253: The appeal is dismissed, and the unimproved value as determined by the Chief Executive, Department of Natural Resources, for Lot 49 on RP 160437 in the sum of One Hundred and Ten Thousand Dollars ($110,000) is affirmed. AV98-254: The appeal is dismissed, and the unimproved value as determined by the Chief Executive, Department of Natural Resources, for Lot 51 on RP 160437 in the sum of Eighty-five Thousand Dollars ($85,000) is affirmed. AV98-267: The appeal is dismissed, and the unimproved value as determined by the Chief Executive, Department of Natural Resources, for Lot 52 on RP 160437 in the sum of Ninety Thousand Dollars ($90,000) is affirmed. NG DIVETT MEMBER OF THE LAND COURT -- 11 of 11 --