Elmer v Chief Executive, Department of Lands [1996] QLC 146

LAND COURT BRISBANE 31 October 1996 In the matter of an appeal against a valuation Valuation of Land Act 1944 Valuation Roll No.: 1841/44600 Local Government: Pine Rivers (AV95-149) Mark A V and Lynette K Elmer v. Chief Executive, Department of Lands (Hearing at Brisbane) D E C I S I O N Mark Albert Vincent Elmer and Lynette Kay Elmer are the registered proprietors of land described as Lot 88 on RP 191089, County of Stanley, Parish of Bunya, containing an area of 810 m². The land is situated at 44 Leonarda Drive, Ferny Hills, is zoned “Residential A” and used as a residential home site. As at 1 January 1995, the unimproved value of the land was assessed by the respondent at $77,000 under the provisions of the Valuation of Land Act 1944. On objection by the owners, that assessment was reduced to $73,000. The appellants contend for a value of $61,000. Their grounds of appeal were: “ 1. Relativity of valuation at an immediate local and regional level with other similar/different properties; and 2. Valuation process did not take into account all relevant considerations.” Mr. Elmer, who conducted the appellants’ case, submitted an extensive written document in support of these grounds of appeal and also gave oral evidence. In support of the first ground of appeal, Mr. Elmer argued that there had been an extraordinary increase in the annual valuation of the property, it having risen from $61,000 on 1 January 1994 to $73,000 on 1 January 1995, an increase of 20%. He argued that such an increase was totally inconsistent with the average increase in values of residential properties in the Pine Rivers Shire, which was 5.3% and also inconsistent with the average increase of land in the more local area, the “Hills District” (Ferny Hills, Acacia Hills and Everton Hills) which was 6.16%. Further, Mr. Elmer submitted that the valuation of his property was totally inconsistent with valuations attributed by the Department to similar lots in the immediate vicinity. The amount of the increase in the valuation is not a matter that can taken into account by this Court where there is evidence of comparable sales available. It was held in Tow v. The Valuer-General (1978) 5 QLCR 378 at 381 that “a large increase over and above the previous [1996] QLC 146 -- 1 of 6 -- 2 valuation is in itself not a relevant issue provided bona fide sales of comparable parcels support the new valuation”. Mr. Elmer challenged the appropriateness of the sales relied on by the respondent to support the valuation, a matter which is dealt with later in this decision. Similarly, comparison with the average increases in the Shire or more local area, is not a valid basis for determining the value of land. “Revaluation of a Shire is not a matter of applying a more or less uniform increase to various types of land when comparing component parcels. What has to be determined is the unimproved value of each parcel of land within the Shire at the relevant date, and the best method or basis for making such determinations is the use of analysed sales evidence.” (Henricks v. The Valuer-General (1982) 8 QLCR 176 at 178. Although this case went on appeal to the Full Court of Queensland, there is nothing in that judgment which challenges the validity of this statement of principle). The Elmers purchased their property in November 1994, just two months before the date of the valuation in issue in this case. The purchase price was $162,000. The property included a modern-style home and significant landscaping improvements. Mr. Elmer clearly understood that the best evidence of the unimproved value of his property at the relevant date is sales of similar lots of unimproved land at the relevant time. He indicated that he had read the decision of the Land Court of Queensland in Caltex Oil (Australia) Pty Ltd v The Chief Executive, Department of Lands, 30 September 1994. Nevertheless, Mr. Elmer argued that the valuation under challenge must be fundamentally wrong because the improvements on his property could not be constructed for $89,000 ($162,000 minus $73,000). While that may be the case, the Court cannot assess the unimproved value of land by taking the sale price of the land and deducting the value of the improvements. In Toohey's Ltd v. The Valuer-General [1925] AC 439 at p.443, the Privy Council said: "Now, what he [the valuer] has to consider is what the land would fetch as at the date of valuation if the improvements made had not been made. Words could scarcely be clearer to show that the improvements were to be left entirely out of view. They are to be taken, not only as non-existent, but as if they never had existed. It is, therefore, to approach the question from a completely wrong point of view to begin with a valuation which takes in the improvements and then proceed by means of subtraction of a sum arrived at by an independent valuation in order to find the required figure. " Mr. MM Woodbridge, a registered urban and rural valuer employed as a valuer by the Department of Natural Resources (which includes the former Department of Lands), gave evidence on behalf of the respondent. Mr. Woodbridge had prepared the valuation report before the Court. Mr. Woodbridge described the subject land as lying above road level and having a moderate to gentle cross fall to the eastern boundary. The land is well elevated in relation to the immediate estate. Town water, sewerage, underground electricity and telephone are -- 2 of 6 -- 3 connected to the property. Leonarda Drive, in which the land is situated, has a bitumen surface with concrete kerbing and channelling. Details of the sales relied on by Mr Woodbridge were as follows: Sale 1 is Lot 39 on RP 191088. The land is situated in Dena Street, Ferny Hills, has an area of 973 m² and was sold on 20 December 1993 for $70,000. Its analysed unimproved value is $69,000 and a value of $69,000 was applied to it. The sale property rises gently from the road and then falls steeply to the rear boundary. It has only 600 m² of usable land. The property backs onto a nature reserve which is fully timbered and is severed by a deep gully. In his report, Mr. Woodbridge said that the subject property is similar in services connected and access, inferior in immediate locality and area and superior in elevation and topography to the sale land. In Mr. Woodbridge’s opinion, the sale land is slightly inferior to the appellants’ property. The value applied to the sale property is $4,000 less than the valuation in issue, the difference being accounted for, said Mr. Woodbridge, by the fact that the appellants’ property has more usable land and is more elevated. Mr. Elmer disagreed with some details of Mr. Woodbridge’s assessment of Sale 1, but said that in his view although Lot 39 Dena Street was different in many respects from his land, it probably was the closest comparison available. He stated that the sale property is 15% larger than the subject property, has a broader frontage, better access to the recreation reserve, shares an alignment with a relatively inaccessible section of the reserve, increasing considerably the effective area of the lot, and has fewer disabilities than the subject property. The sale property has less elevation and views than the subject land. Clearly Mr. Elmer considered the appellants’ property to be inferior to the sale property. Sale No.2. This property is located at 70 Leonarda Drive and is 1175 m² in area. Mr. Woodbridge described the property as a hatchet-shaped block with four immediate neighbours. The hatchet access consists of a 30 metre long concrete track driveway and services to the property will need to be taken up the handle of the property. He said in his report that the sole access to the property is via the hatchet leading from Yingally Drive. Access via Leonarda Drive is restricted because of the steepness. The land rises steeply from Leonarda Drive and there is a moderate to gentle fall to the eastern boundary. The property has drainage problems. There is an easement for drainage purposes at the eastern boundary of the property. The land sold for $75,000 in April 1994, its analysed value is $72,500 and its applied value $66,000. In Mr. Woodbridge’s opinion, the sale property is inferior to the appellants’ property because, although the sale property is larger in area, it is inferior in elevation, outlook and topography. Mr. Elmer challenged this evidence on a number of bases. He argued that the sale property is about 45% larger in area than the appellants’ land and has the advantage of entry from two streets, one of which gives direct access to parkland. He conceded that the property would be difficult to develop because of its slope. Mr. Elmer also argued that the sale was not comparable because, although in the same street as the subject property, it is further away from -- 3 of 6 -- 4 the subject property, as the crow flies, than properties in Hutton Road and Woodhill Road which are of lower value, he said, than the sale property. When pressed by Mr. Dunn, appearing on behalf of the respondent, Mr Elmer said he did not know whether the sale property was inferior or superior to the subject property. Sale No. 3. This property is Lot 50 on Yingally Drive and has an area of 728 m². It sold on 27 February 1995 for $72,000, has an analysed value of $70,000 and an applied value of $61,000. Mr. Woodbridge described the property as lying slightly above road level but generally level. A concrete path runs parallel to its eastern boundary. In his opinion, the sale property is inferior to the subject property because although the subject property is inferior in topography, it is superior in elevation. The sale property has drainage problems, said Mr. Woodbridge, with run off from the rear neighbour. Mr. Elmer challenged this evidence on the grounds that properties in Hutton Road and Woodhill Road had valuations which were equally as relevant as one in Yingally Drive. According to Mr. Elmer, the highest valuations in those two streets is $65,000, with an average in the case of Hutton Street of $53,000 to $54,000. Lot 50 is flat, he said, requiring only cosmetic earthworks to enable the construction of a dwelling and is opposite a fully developed recreation reserve. In his opinion, the sale property is considerably superior to the subject property. Sale No. 4. This property is Lot 7 Alan Court, Ferny Hills and has an area of 798 m². It was sold on 7 July 1992 for $84,000, has an analysed value of $83,000 and an applied value of $82,000. Mr. Woodbridge described the property as situated in a cul-de-sac and backing onto a nature reserve. He said that it has sufficient room for a house pad at the front and falls steeply to the rear. Mr. Elmer submitted that Alan Court was too far from the subject land to be properly used as a comparable sale. While not specifically aware of the details of land in Alan Court, he was of the opinion that the land and housing were of higher quality than his property. Some general comments can be made about the evidence relating to the sales of unimproved lots in the area. First of all, Mr. Elmer challenged the appropriateness of selecting Sales 2, 3 and 4 as comparisons with his property. In his view, there were properties in closer proximity to the subject land which should have been used. I do not accept that the sales selected by Mr Woodbridge were inappropriate because of their location. I accept that the reason for his selection was that these properties are within the same estate as the subject property (the Hickinbotham Estate) and reflect the same advantages and disadvantages of that estate. The advantages are that the estate is surrounded by a nature reserve and there is a one-way in, one-way out road system into the estate so that there is little through traffic. The major disadvantage, if not the only disadvantage, is the lack of public transport to the estate. -- 4 of 6 -- 5 By way of contrast, there was no direct evidence as to the features of the properties which Mr Elmer suggested would have been more appropriate as comparisons. In fact, Mr Elmer adduced no sales evidence at all of his own and, instead, chose simply to challenge the applicability of the sales evidence produced by Mr Woodbridge. In the absence, therefore, of any persuasive evidence on this aspect of the matter produced by the appellants, I am not able to conclude that sales of properties in Hutton Road and Woodhill Road would have been more reliable indicators of the value of the subject land than the sales relied on by the respondent. As to the challenges mounted by Mr Elmer to the comparability of each individual sale with his property and the conclusions reached by Mr Woodbridge on the relative merits of each property as compared with the appellants' property, I find as follows. Sale 1 is accepted by Mr Elmer as being the most comparable with the appellants’ property. However, there is direct conflict between the evidence of Mr Woodbridge, who considered the subject property to be superior to the sale property, and Mr Elmer, who considered the subject property to be inferior to the sale property. I am of the opinion that each of the witnesses gave evidence honestly. However, bearing in mind that the onus of proving the appellants' case lies upon the appellants, I have reached the conclusion that that onus of proof has not been discharged in respect of the challenge to the evidence of Mr Woodbridge. (See s.45(4), Valuation of Land Act). In relation to Sales 2 and 3, Mr Elmer’s challenge rested primarily on the appropriateness of the selection of the sites as a comparison with his property. That matter has been dealt with above. In so far as Mr Elmer dealt with the specific attributes of these properties, I consider that he has not discharged the onus of proof lying on the appellants in relation to this ground of the appeal. I do not regard the evidence relating to Sale 4 to be particularly useful in assessing the value of the appellants’ property. The sale took place in July 1992, that is some 2½ years before the date of valuation in issue. It is probably convenient at this point to deal with another matter which, while not strongly relied on by Mr Elmer, was mentioned on various occasions during the hearing. This was evidence to the effect that the annual valuation of the subject land as at 1 January 1996 had decreased. The relevant date for the valuation in issue is 1 January 1995. In Mr Woodbridge’s opinion the market had peaked in early 1995 and had started to drop in about May 1995. There was no other evidence before the Court to refute this and on that basis the evidence as to the 1996 valuation would not appear to be relevant. Mr Elmer’s second ground of appeal was that the valuation process was flawed in that it did not take into account relevant considerations. He submitted that the appellants’ property has significant disadvantages which adversely affect its use as a residential site. In particular, the property lies on sloping land which has necessitated cut and fill to construct the house which is situated there now, and has also necessitated the construction of retaining walls. In addition, the property has drainage and soil problems. The crux of the appellants’ case in this regard is that these matters should have been taken into account in assessing the value of the property and -- 5 of 6 -- 6 that they have been unable to establish whether these matters were taken into account by the valuer in reaching his valuation figure. While Mr Elmer did not prove that his property suffers from soil instability problems, he did establish to my satisfaction that the subject property does have significant drainage problems caused by run-off from higher blocks. Evidence was presented by him as to the cost of remedial drainage works, the cost of the cut and fill necessary to prepare the site for construction of the house and the cost of retaining walls on either side of the property. However, these works are of course improvements to the property and it does not follow that their cost should be deducted from the unimproved value propounded by the Department. While factors such as drainage problems and soil instability undoubtedly affect the unimproved value of the land and should be taken into account for that purpose, the evidence is that the respondent arrived at the unimproved valuation by examining comparable sales of land in the area. While exact comparisons are not possible, the evidence was that Sales 1 and 2 were properties with sloping land and while Sale 3 was generally level, it also was affected by run-off of water from neighbouring land. Mr Woodbridge has therefore selected sales which are generally comparable with the appellants' property and has adjusted the valuations to take account of the differences between those properties and the subject property. Mr Elmer also argued that the appeal should be allowed because no natural justice was afforded to the appellants in that no proper reasons for the determination of the valuation were given by the decision maker at the time the decision was originally made, nor at the time that the decision on the objections raised by the owners was made. This was exacerbated by the fact that the response to Mr Elmer’s objection was via an unsigned letter from the respondent Department. While it does appear that the appellants were not given detailed reasons for the decision before the hearing in this case, this is not a ground on which the appeal can be allowed. Finally, Mr Elmer argued that the sales evidence relied on by Mr Woodbridge was selective and the sample was too small to be representative. I do not accept that the sales relied on had been chosen selectively and in the absence of any evidence adduced by Mr Elmer of specific sales of land comparable to his land, there is no other evidence before the Court of comparable sales. I reject therefore Mr Elmer’s argument that the appropriate way to proceed is to adopt the previous year’s valuation and to apply the average increase in valuations in the area and then to adjust for disabilities. Having regard to the provisions of the Valuation of Land Act, the evidence provided by the respondent and the lack of persuasive evidence provided by the appellants, the appeal is dismissed and the valuation of the Chief Executive is affirmed. (CAC MacDonald) MEMBER OF THE LAND COURT -- 6 of 6 --