Fairweather v Chief Executive, Department of Natural Resources [1997] QLC 41

LAND COURT BRISBANE 4 April 1997 Re: Appeal against Annual Valuation - Valuation of Land Act 1944 - Valuation Roll No: 13561/541 Local Government: City of Brisbane. (AV96-796). RD and DH Fairweather v. Chief Executive, Department of Natural Resources D E C I S I O N Background: The key issues in this appeal relate to the comparison of relevant sales, relativity, and the impact of noise and traffic. The appeal relates to two parcels of land at 4 Dromos Street, Eight Mile Plains, Brisbane City, and described as Lots 40 and 41 on RP 138021. The land is valued as a single dwelling house under section 17 of the Valuation of Land Act 1944, and both parcels are zoned "Residential A" under the Town Plan of the City of Brisbane, 13 June 1987. The land is a good elevated site and is located about 14 kms directly south-east of the Brisbane GPO. There is a single unit dwelling erected upon Lot 41, and Lot 40 is used as a garden area, although the subject is treated for purposes of valuation as one large residential area of 1,692 square metres. Access to the subject is good from Dromos Street which is full width bitumen sealed with concrete kerbing and channelling. The land falls gently from the south to the north, and is slightly below the footpath in Dromos Street. Vehicle access to Dromos Street is good. Utility services available include water, sewerage, telephone and electricity. The Chief Executive, Department of Natural Resources on 26 February 1996, issued a valuation notice for $125,000, with a date of valuation of 1 January 1996. Mr RD Fairweather appeared and gave evidence on behalf of the appellants and Mr R Cranstoun, a valuer, appeared and gave evidence for the respondent. Evidence: The appellant has appealed on the ground that the Chief Executive: [1997] QLC 41 -- 1 of 9 -- 2 •has not analysed and applied the sales evidence correctly; •has not maintained correct relativity; •has not correctly considered the shape of the subject; •has not adequately allowed for traffic noise; •has not allowed adequately for impacts from an adjoining property; •has drawn inappropriate comparisons with adjoining newer areas; •has not adequately allowed for drainage problems; and •has erred in relativities between Eight Mile Plains and Sunnybank and Sunnybank Hills. In respect of the comparison of comparable sales, the appellants analysed four sales of vacant lands, which they contended were bought by local purchasers who understood the market: •Sale 1 (Cintra Place - Eight Mile Plains - Lot 10 on RP 808799) is located in a quiet cul-de-sac about 800 metres directly south-west of the subject. It has similar topography and soils as the subject, with comparable vehicle access, drainage, and elevation. It has a narrower frontage to Cintra Place, and is surrounded by high wooden fences, with no outlook from ground level. It has five neighbours (similar to the subject). The site is zoned "Residential A", and has an area of 1,382 square metres. It was sold in January 1995, for $130,000. The appellants considered the sale to be slightly superior to the subject, and in analysing the sale it was estimated to have $3,000 of existing improvements. The Department currently has determined an unimproved value of $132,000 for the site. •Sale 2 (Totten Close, Eight Mile Plains - Lot 107 on RP 803041) is located in a quiet cul-de-sac about 1.6 kilometres east of the subject, with no through traffic. It is a high lot with good southerly outlook, with a moderate fall from the rear to the front. It widens to the rear and provides a good house site in a good location, and an aspect that cannot be built out. The land is zoned "Residential A" and is overall superior to the subject. It has an area of 1110 square metres and sold in February 1996, for $135,000. In analysing the sale it was estimated to have $1,200 of existing improvements, and it has an unimproved value of $145,000. •Sale 3 (Totten Close, Eight Mile Plains - Lot 106 on RP 803041) is located next to Sale 2, is elevated with a south-westerly aspect, and a fair outlook. It falls steeply from rear to front with a cross-fall. The parcel has an irregular shape, is zoned "Residential A" and is seen as inferior to the subject. It sold in August 1995, for $125,000. It has an area of 1,309 square metres. In analysing the sale it was estimated to have $2,000 of existing improvements, and has an unimproved value of $152,000. -- 2 of 9 -- 3 •Sale 4 (Ngairi Close, Eight Mile Plains - Lot 236 on RP 808805) is located about 2.5 kms east of the subject, and close to Logan Road. It falls fairly steeply from front to rear, has some outlook, and has a southerly aspect. It is in a quiet cul-de-sac, is zoned "Residential A", and has an area of 1,118 square metres. It sold in November 1995 for $100,000 and is seen as inferior to the subject. Existing improvements are estimated at $2,500, and it has an unimproved value of $105,000. All four sales are located amongst large modern homes. The respondent also provided evidence of three sales of large homesites: •Sale 1 is the same sale as the appellant's Sale 1. Both parties agree on the quantum of the analysis of the sale at an applied valuation of $120,000. However, the respondent saw his Sale 1 as slightly inferior to the subject. •Sale 2 (1 Creswell Street, Sunnybank - Lot 1 on RP 199626) is in the older district of Sunnybank, about 1,650 metres south-west of the subject. It has a slightly lower elevation, a comparable slope, and is also below street level. It is a quieter street but suffers noise from the railway and the railway station is about one kilometres south-west from Sale 2. Overall Sale 3 was considered to be superior to the subject, has an area of 1,487 square metres, and is zoned "Residential A". Existing improvements are estimated at $2,450, and it sold in May 1995, for $170,000, with an old dwelling upon it, which cost $2,000 to demolish. •Sale 3 - (112 Bleasby Road, Eight Mile Plains - Lot 93 on RP 37944) is about 400 metres north of the subject, has comparable elevation and slope, and a superior location and area. It is in a quieter street, but has high voltage transmission lines over the property. It is above street level and is zoned "Future Urban". The sale is considered to be superior to the subject, and sold in July 1995 for $365,000. In respect of the maintenance of relativity between the subject and Sale 1, the appellant argues that prior to the valuation in 1996, the unimproved value of Sale 1 was about $5,000 more than the subject. This relativity between the two properties had continued for some time and has been assessed accordingly by several valuers over a period of time. The recent valuation had reversed that relativity. When asked why he had reversed the relativity, the respondent gave evidence that in determining the valuations for Sale 1 (Cintra Place) and the subject, he "didn't have any regard to the relativity between the two blocks of land, it may well be the case but it wasn't the reason I did it". Clearly the matter of relativity between the parcels did not weigh heavily upon the mind of the valuer in arriving at the valuations for those two parcels. The appellants argued that, as noted in their sales provided, the Chief -- 3 of 9 -- 4 Executive has applied unimproved values to all four properties in excess of sales evidence. Sale Price Paid Unimproved Value Applied 1 $130,000 $ 132,000 2 $135,000 $ 145,000 3 $125,000 $ 152,000 4 $100,000 $ 105,000 The appellants argue that while disparity may occur on occasions, the inconsistency in the valuations of all four sales suggests that an error may have occurred in assessing the unimproved valuations. In considering the shape of the subject, the appellants contend that as a single large homesite the subject has relatively too wide a frontage, and too shallow a depth. They contend that because of the shallow depth, and the location of the existing building, it is not practical to construct a shed or large swimming pool to the rear of the house. They also claim that because of the shallow depth, they are unable to build a tennis court on the part occupied by Lot 40 of the subject. The depth scales approximately 29 metres on the exhibits provided. From a comparison with Sale 1, which has more privacy from Cintra Place, the subject is also restricted towards the rear boundary by a sewer line which would impact the location of a possible swimming pool. The appellants conceded that on an 845 square metre lot it is normally accepted that, by judicious location, a swimming pool can be located with a dwelling with little difficulty. The appellants argued that, when considering potential subdivision of a large parcel, the extra width would be an advantage, however, when considered as a single dwelling site under section 17, the extra width is not necessarily an advantage. In respect of the impact of noise from traffic upon the subject, the appellants provided evidence of intermittent traffic congestion, mainly in peak traffic periods morning and evening. Malbon Street is now the route for traffic seeking alternative ways around peak traffic flows in Warrigal Road. To the rear of the subject in Malbon Street, the road is at a low point and drivers start to accelerate towards the junction with Warrigal Road. As congestion occurs, the cars seek alternative routes, including Dromos Street and via Devonlea and Fanfare Streets. The extent of this traffic build-up has resulted in the Brisbane City Council providing special traffic control signs at the intersection of Fanfare Street and Warrigal Road. Extra traffic, during peak periods, causes noise and fumes which impact the site. The respondent's valuer, Mr Cranstoun, agreed that the traffic did build up at certain points but he had considered -- 4 of 9 -- 5 that impact in his valuations. The impact of an adjoining property to the rear of the subject (Lot 45) was also of concern to the appellants. The dwelling is owned by an absentee owner who resides in Sydney, and has leased the dwelling for ten years. Because of the large number of bedrooms, bathrooms and two kitchens, the dwelling attracts large families or groups of young people. During some periods the residents in Lot 45 have caused considerable nuisance during parties and late-night swimming sessions. They also discard rubbish and bottles onto the subject. Of recent times the dwelling is now leased to an extended family, and, while better neighbours, the noise from children using their pool, which is close to the appellants' bedroom, is an ongoing concern. There is also an impact by people smoking on Lot 45, as the appellant suffers from asthma. The respondent contended that while some tenants did cause problems, the impact had now abated, and it is not an uncommon occurrence between neighbours. The matter of any comparison with newer subdivisions in Sunnybank and Sunnybank Hills was also noted by the appellants, who contend that those areas are entirely a different market to Eight Mile Plains. They argued that there is a considerable difference in the range of houses between the two areas, and the appellants contend that the use of sales in the more superior areas of Sunnybank have no relevance to sales in Eight Mile Plains. In the matter of an allowance for water drainage problems through the subject, the appellants provided evidence of recent overflow from the kerb and channelling in Dromos Street. This resulted in preventative action being necessary by the appellants to place a grate across the driveway to the subject. During heavy rain some water did enter the garage of the subject, which has a concrete slab floor. However, this did not appear to be a continually recurring problem now that the remedial action was completed. Decision: In considering the sales of comparable vacant land, both parties have applied the preferred method of valuations by using sales of vacant sites as their basis for unimproved value. Vide PH Clough v. The Valuer-General - Caboolture Shire (1981-82) 8 QLCR 70 (LAC) at p.76. Both parties have considered the sale in Cintra Place as relevant, and generally agree on the analysed quantum of that sale at $120,000 for the unimproved value. However, there is dispute between them over whether that analysed sale is slightly superior, or slightly inferior, to the subject. This appears to be a key issue in the final valuation for the subject. The appellants argue that because of its quieter location in a cul-de-sac, and its -- 5 of 9 -- 6 greater privacy from the road, Sale 1 (Cintra Place) is slightly superior to the subject. This, they claim, has historically been adopted by previous valuers, and reflected in previous relativities between the two parcels. The respondent on the other hand contends that the subject has greater frontage, Sale 1 is smaller in size, and Sale 1 is impacted more by the presence of overhead high-tension power lines down the western side of Kalkadoon Street. While these power lines are not visible from ground level on Sale 1, they probably are from a higher floor level on the site. The possible visual impact upon an owner of Sale 1 was not clearly established as the appellants' enquiries of residents in that area, suggested that the visual impact of the overhead power lines was minimal as far as their amenity was concerned. On balance I see little difference in the two sites, based entirely on the physical features of the land, location and aspect. Because of its greater frontage, I would lean slightly to the subject as the better land. In considering the other sales evidence from the appellants, they have provided, in their opinion, analysed unimproved values for one extra superior sale (Sale 2 - $133,800), and two inferior sales (Sale 3 - $123,000, and Sale 4 - $97,500). The respondent by comparison provided only two extra sales, both of superior unimproved values (Sale 2 - $169,550 and Sale 3 - $360,600). In seeking the relevance of the respondent's Sale 2 (Creswell Street), it is noted that this was a sale for $170,000, with an old dwelling which was then demolished at a cost of $2,000. While the demolition of the old dwelling, on the surface, would appear to satisfy the criteria that the purchaser valued the property only as a vacant site, the doubt remains that the old dwelling may in fact have had a value to another purchaser greater than the negative value of $2,000 to demolish it. While this does not preclude the sale as being comparable, the very existence of the old dwelling, and its possible use by another prudent purchaser, raises the question of whether the new owner paid more for a vacant site than an otherwise prudent purchaser may have paid. Vide Spencer v. The Commonwealth (1907) 5 CLR 418, at p.432. In analysing Sale 3 of the respondent (Bleasby Road), there is no doubt that it is a superior site than the subject. However, there are some notable differences to the subject which raise the question of the level of comparability of the sale. The area of Sale 3 (Bleasby Road) is 4,047 square metres, and is more than twice the area of the subject. The respondent argued that the extra area of Sale 3 accounted for the increase in price paid for the lot. However, he conceded that "area" was only one factor in determining the value of a property, and it is not the most important one. The zoning of Sale 3 is "Future Urban" and its use as a large single residential site has clearly attracted a different market to normal "Residential A" parcels of the -- 6 of 9 -- 7 size of the subject. While Sale 3 is impacted by overhead transmission lines, its analysed market price at $360,600 is clearly a different market segment to the subject. I would agree with the appellants that Sale 3 is not a wise benchmark upon which to analyse the value of the subject, and I would discredit that sale accordingly. On the balance of the extra sales provided, I believe the appellants have provided the stronger case, which supports a valuation about $120,000. In the matter of relativity between Sale 1 (Cintra Place) and the subject, I seek guidance in comparing the other factors claimed by the appellants. The matter before the Court is whether the valuation of the subject is correct, not whether its relativity is consistent with surrounding relativities as currently established by the Chief Executive. While the respondent could claim that existing relativities in properties adjoining the subject are in line, relativity is not preferred to override sales evidence. Vide WM and TJ Fischer v. The Valuer-General (1983) 9 QLCR 44 (LAC), at p.46. On this basis it would seem prudent to seek some comparison, and relativity, between Sale 1 (Cintra Place) and the subject, particularly as both parties rest heavily upon Sale 1. The appellants gave evidence that historically the unimproved value of Sale 1 (Cintra Place) was approximately $5,000 greater than the subject. Now this does not of itself constitute sound argument that such relativity between the lots should be continued. As noted in the Full Court of Queensland, Macrossan J (CJ) said in CH and BD Henricks v. The Valuer-General (1983) 9 QLCR at p.63: "The appellants also relied upon a schedule, Exhibit 4 in the Land Appeal Court, which shows percentage increases in the value applied by the Valuer-General to a number of select parcels of land from the date of the preceding valuation up to the March 1979 valuation date. The percentage increase shown in the selected cases was in each instance considerably less than the increase applied to the subject land as between the two valuation dates. The weakness in such a selective comparison is obvious as there could be any number of reasons why blocks in the same valuation area should increase at different rates over a period of five years. " As the Full Court said, there could be many reasons why relativities could change over time, most noticeably the evidence of sales of land during that period. In this respect the appellants argued that a comparison of the unimproved value ($132,000) with the sale price ($130,000) of Sale 1 (Cintra Place) creates some uncertainty about the reliability of the current unimproved valuations. This inconsistency between the sale prices paid and the unimproved values adopted by the Department for Sales 1 to 4 of the appellants, further erodes confidence in the reliability of the valuations of those parcels. -- 7 of 9 -- 8 In the absence of other comparable sales of vacant land near to Sale 1, and as the sale was not discredited by the respondent, the differences noted by the appellants would seem reasonable and the unimproved value of Sale 1 at $132,000 would seem inconsistent with the market. In comparing the impact of traffic in respect of Sale 1 and the subject, it is noted that, because of its location in a quiet cul-de-sac, against the subject's proximity to the intermittently busy traffic in Malbon Street, Sale 1 would be the superior site. In the matter of noise from adjoining owners, while recognising that the appellants have historically suffered some impact upon their privacy, there was no evidence supplied of similar impacts, if any, upon Sale 1. For this reason, I cannot weigh the impact of adjoining owners upon Sale 1 or the subject any differently. The impact of any unreasonable comparison upon Sale 1 or the subject with newer subdivisions in Sunnybank and Sunnybank Hills, would be comparable to both sites, and have not been applied anyhow in this matter. Likewise, in the absence of any evidence of water damage to Sale 1 from drainage problems, I am unable to compare the impacts upon both properties. On balance, while noting that relativities can change over time, there is little evidence to conclude that other factors have had much of an impact. I believe there is really little difference between Sale 1 and the subject, and they basically should be assessed as having equal value. The appellants argued that the current unimproved value of Sale 1 (Cintra Place) at $132,000, would appear to be incorrect, and should be lower. Agreement between the parties suggests a figure of about $120,000. Summary: The appellants have provided the better sales evidence, in that they provided a range of both inferior and superior sales, which supported the agreed comparable Sale 1 (Cintra Place). The respondent by comparison provided only superior sales evidence. The appellants also compared parcels as near as they could in proximity to the subject which were similar in size and location. The respondent chose one sale (Bleasby Road) which differed significantly in character from the subject. Both parties agree on a valuation of about $120,000 for Sale 1 (Cintra Place), which was the common sale used by both parties. The relativity between Sale 1 and the subject suggests that there is only marginal difference between the two properties which basically are of equal value. In determining amendments or alterations to the valuation, the onus of proof -- 8 of 9 -- 9 rests upon the appellants, under Section 33 of the Valuation of Land Act 1944: "Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered. " This is further clarified by Section 45(4) of the Act which establishes: "Such notice shall state the grounds of appeal shall be limited to the grounds so stated and the burden of proving any and every such ground shall be upon the owner. " However where the chief executive has given evidence at issue with the appellant, and that evidence reveals some weakness in the chief executive's process of his valuations, then the assumption of correctness afforded by Section 33 of the Act, cannot be claimed. Guidance in this matter in this jurisdiction can be found in State Government Insurance Office (Qld) v. The Valuer-General (1980/81) 7 QLCR 171 at 193: "The Valuer-General joined issue with the appellant and in so doing revealed omissions and weaknesses in the process of his valuation. Consequently, in my opinion, he cannot claim the protection of Section 13(7). The judgment of Gibbs J, as he then was, in Brisbane City Council v. The Valuer-General for the State of Queensland (1977-78) 140 CLR 41 at p.57 gives support to this opinion. " In the current case the evidence suggests that there is some inconsistency between the unimproved values of the sales provided, and the actual quantum of the sales themselves, and therefore there is some uncertainty about the process used in arriving at the valuations. I believe the appellants have satisfied the onus of proof that the Chief Executive has failed to take full consideration of the sales evidence. Conclusion: After having considered the whole of the evidence, I am persuaded that the appellants have proved their case. The appeal is partly allowed, the Chief Executive's valuation is set aside and the unimproved value of Lots 40 and 41 on RP 138021 is determined at One hundred and twenty thousand dollars ($120,000). (NG Divett) Member of the Land Court -- 9 of 9 --