Ackerman v Chief Executive, Department of Lands [1996] QLC 98

LAND COURT BRISBANE 19 July 1996 Re: An appeal against a valuation of the Chief Executive, Department of Lands Gladstone City Council - (AV95-325) Geoffrey N and Eina Ackerman v. Chief Executive, Department of Lands (heard in Gladstone) Introduction Geoffrey N Ackerman and Eina Ackerman (the “appellants”) have Special Lease 32811 over Lot 29 on Plan DS391, Parish of Curtis, which is land on Tide Island, approximately 5 kilometres north-west of the Gladstone Harbour and Marina. The respondent Chief Executive determined that the unimproved value of the subject land to be $81,000 as at 1 January 1995, effective from 1 July 1995. The appellant objected against that valuation. The objection was disallowed and the appellants appealed to the Land Court. Their notice of appeal nominated a valuation of $27,000. The grounds of appeal, annexed to the notice of appeal, were more in the nature of submissions than itemised grounds. They referred to a successful appeal to the Land Court against a previous valuation, the lack of evidence of sales of islands since then, and the progressive erosion of the residential amenity of the subject land. The subject land Tide Island is reasonably well located in close proximity to the City of Gladstone with very good views. The Island has good beaches and landing areas. It is zoned Rural Non-Urban and is used for residential purposes. The subject land has an area of 2.226 hectares and is surrounded by an esplanade. Access to the land is by sea. The main thrust of the appellants’ submission was that the residential amenity of the subject land had been seriously eroded by heavy industrial development, some 1,500 to 2,000 [1996] QLC 98 -- 1 of 8 -- 2 metres to the south. Particulars of that development, and its consequences for the subject land, are summarised as follows. The Clinton Coal Facility was constructed many years ago. It is connected to open coal dumps. In the years since 1986 (when the effects of the enterprise of the amenity of the Island were drawn to the Land Court’s attention) the enterprise has expanded, with detrimental consequences for the occupants of Tide Island. (a) The ongoing construction work to increase the capacity of the coal loading facilities at Clinton Wharf, and the maintenance of those facilities, is noisy and a source of rubbish which is carried across the harbour to the southern beach of the Crown Esplanade surrounding Tide Island. The Esplanade is not maintained by the State or the Council. Collection of rubbish and repatriation of it to the mainland by the lessee is necessary on a regular basis, and the costs are borne by the appellants in order to maintain the amenity of the subject land. (b) Dust from the coal dump is blown across Tide Island by prevailing winds from the south to south-east. The dump doubled in size during 1994 and coal dust from there has “had a devastating effect on the amenity of the island, particularly our water storage which is totally from roof collection”. Mr Ackerman acknowledged that a spray system has been installed to reduce dust levels and that spraying had had some influence, but said that dust from shifting coal is still carried to Tide Island. (c) The Clinton Coal Loading and Shipping facility operates 24 hours of every day. Noise from shipping movements, conveyor machinery, railway trucks and warning signs can be heard on the subject land. At night the glaring lights which illuminate those operations are visible from the land. According to the appellants, neighbouring islands (Picnic, Diamantina, Turtle, Compigne and Witt) suffer none of those disabilities. They are located well to the east of the coal facility and cannot be affected by the dust and noise carried by prevailing winds to the subject land. Maps tendered in the hearing (Exhibit 3) show the direction of prevailing winds and I am satisfied that the prime, if not sole, effect of dust and noise from the Clinton Coal Facility would be felt on the subject land. The appellants also referred to a navigational light and tower on the eastern esplanade of Tide Island. Although they agree that the light is necessary, they argue that it is an “intrusion on -- 2 of 8 -- 3 the island’s residential amenity”. The light is intended to be directional, but the oscillating beam passes close to the appellants’ house and disturbs them at night. They also referred to the daytime navigational facility on the tower (an inverted triangle painted in fluorescent orange) which is large enough to be visible at a distance of 5 kilometres. The appellants submitted that the problems are peculiar to the subject island and make it a special case for valuation. Sales Evidence It has long been established by numerous court decisions that the best basis for the unimproved value of land is evidence of sales of vacant or lightly improved parcels of comparable land. The appellants provided no evidence of such sales. For the respondent, Mr RG Hewitt, a registered valuer with the Department of Lands (now the Department of Natural Resources) gave evidence concerning sales which formed the basis of the respondent’s valuation. Mr Hewitt was only aware of Sale 1 when the valuation was made. He subsequently became aware of Sale 2. Information about those sales is set out in Exhibit 4 and was the subject of oral evidence. Sale 1: Land with an area of 9.409 hectares on Turtle Island was sold in March 1994 for $300,000. It had an analysed unimproved value of $300,000 but an applied unimproved value of $225,000. Turtle Island is located in Gladstone Harbour in relatively close proximity to the city of Gladstone with excellent views. A reasonable landing site exists at the northern end and a very small area of beach on the south-western side. The land is zoned Rural Non-Urban and was vacant at the time of sale, but the purchasers have since constructed a residence on the Island. The sale land has more than four times the area of the subject land. Mr Hewitt described it as superior to the subject in area, location, and views. It is not adjacent to the Clinton Coal Facility and is not affected by navigational signals. Although there was approval for resort development at the time of sale, the purchasers acquired the land for residential purposes only and have had that approval revoked. The fact that the approval was in place was given as the reason for the conservative application of the sale price. Mr Hewitt described the subject land as having superior beaches to Turtle Island, but described Turtle Island as overall superior to the subject land. Mr Ackerman took issue with -- 3 of 8 -- 4 that description on the basis that Tide Island has only one small beach and Turtle Island has a superior beach on the north-east of the island. Mr Ackerman also compared the features of the two islands. He stated that, whereas Turtle Island has deep soil suitable for cultivation, Tide Island has little soil but has shale rock. He argued that, although Turtle Island was used for residential purposes, the improvement could be used in tandem with a resort use. Relying on his 23 years in the tourism industry, Mr Ackerman said that Turtle Island with its vantage point in the harbour has eco-tourism potential and potential for subdivision (as has occurred on the neighbouring Compigne Island). By comparison, tourist use and subdivision are not permitted on Tide Island. Sales 2: The sale land comprises Witt Island which has an area of 2.259 hectares of land zoned Rural Non-Urban. Witt Island is well located in Gladstone Harbour, between Tide Island to the west and Turtle Island to the east. Witt Island is in close proximity to the city of Gladstone and has excellent views. A reasonable landing site exists at the western end and the Island has no reasonable beaches. In comparison to the subject land, Mr Hewitt described Witt Island as slightly superior in proximity to the city and its views. Witt Island is not affected by navigational signals, however the subject land has superior beaches and landing areas. He described the sale land as overall “slightly superior” to the subject land. Mr Ackerman said that he had not considered the sale to be relevant to this case. In his opinion, the islands are different. He had visited his neighbours on Witt Island and knows that they do not experience the same dust and noise problem as Tide Island. Tide and Witt Islands are more than one kilometre apart and the winds carrying dust and noise from the coal dumps rarely, if ever, pass across Witt Island. Witt Island is approximately the same size as Tide Island. It does not have an esplanade, and there is a beach on the north-west corner. Although it has little scope for subdivision, Witt Island would be good for eco-tourism with long banks of sand where pelicans can be observed. Mr Ackerman said that he would value Witt Island at $40,000. The land, however, was sold in January 1995 for $300,000. It was improved with a two bedroom residence, one bedroom guest house, generator shed, storage shed and boat shed. After allowing for those improvements, the analysed unimproved value was said to be $152,050 and the applied unimproved value was $90,000. Although the sale occurred not long after the -- 4 of 8 -- 5 relevant date of valuation, Mr Hewitt was not aware of it at the time of making the valuation. In his submission, however, it provides good evidence that the new level of values is “very conservative”. There was an issue about what use can be made of Sale 2, given that the sale occurred some 29 days after the relevant date of valuation. For annual valuation purposes, the best sales evidence concerns sales of comparable blocks of unimproved land which occurred within a year before the date of valuation. Some support for the use of subsequent sales can be drawn from the following passage from Williams J in McCathie v Federal Commissioner of Taxation: "Values must be calculated in the light of circumstances which existed on the material date, ... but subsequent events can be taken into account in order to determine the proper weight to attach to such circumstances. Subsequent sales are just as admissible in evidence as prior sales, provided that in all the circumstances they are comparable. If between the material date and the date of the subsequent sale supervening events occur which alter the condition previously existing, the subsequent sales would not be comparable and would be useless." ((1944) 69 CLR 1, at p. 16). In GA Nichol v the Valuer-General (1961) 28 QCLLR 161 the Land Appeal Court rejected a submission that sales after the effective date of valuation should be ignored. Having quoted the dicta of Williams J in McCathie, the Court noted that his Honour had stated the rationale for the approach as being the tendency of courts "to admit evidence of any events prior to the date of the trial which will throw any real light on the issues" (69 CLR at p.16 and authorities cited there). In the opinion of the Land Appeal Court, "there appears to be no sound reason why a Court or any of the parties should be denied the assistance of sales of comparable land occurring after the effective date, provided market conditions or other relevant conditions have not materially altered" (at p.292). The statement by Williams J has been applied by other courts. The law is that, if evidence of subsequent events is available which shows that the possibility of an event occurring has become a reality, it is proper for the Court to have regard to the actual events when assessing the position as it was at the relevant date (Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, at p. 18 per Bowen CJ, see also Deane J at p. 19). The limitation on the principle stated by Williams J is that subsequent events can only be used to determine the weight to attach to circumstances which existed at the relevant date. The subsequent event -- 5 of 8 -- 6 cannot create an expectation which was not in existence at the relevant date (Federal Commissioner of Taxation v Harris (1980) 30 ALR 10, at p. 25 per Fisher J; John Martin (Elizabeth) Limited v Commissioner of Land Tax (1965) SASR 217, at p. 225). In the present case this Court can only have regard to significantly later sales evidence to confirm the circumstances which applied at the relevant valuation date. In some annual valuation cases, the date of sale may be so far after the relevant date of valuation, and so close to the next date of valuation, that evidence about the sale should be disregarded or given very little weight. In Eastwell Pty Ltd v The Valuer-General (1987) 11 QLCR 169, the appellant submitted that only one sale presented by the Valuer-General in that case could be used as a basis for valuation because the other sale was an after date sale. The Court considered that the sale in issue had occurred "a mere 26 days after the relevant date" and there was no suggestion that there was any change in the market place in "that short space of time". It held that the valuer quite properly had had regard to the later sale (see (1987) 11 QLCR at pp. 173, 176-177). In light of the authorities just mentioned, and the reasonable proximity of the date of sale and the relevant valuation date, there is no reason to ignore the evidence about Sale 2. The sales evidence relied on by the respondent provides a sound basis for the valuation of the subject land. The appellants provided no evidence of sales of comparable land to support their valuation of the subject land at $27,000. In the absence of sales evidence from the appellants, and having regard to the sales evidence provided by the respondent (read together with the statutory presumptions in section 33 of the Valuation of Land Act 1944) I am satisfied that, subject to the significant qualification discussed below, the valuation of the subject land was made having regard to evidence of the sale of comparable land. Other evidence The appellants relied on a decision of the Land Court given in respect of the valuation of the subject land in 1985 and a decision on objection in respect of the 1986 valuation of the subject land. The Land Court determined the value of the land to be $20,000, rather than the $25,000 assessed by the Valuer-General. Apparently, the Court relied on the sale of She Oak Island in January 1985. Little assistance was gained from evidence of sales of residential allotments in Gladstone and Southend and the sale of Turtle Island for $89,785 in 1981, some four years before the date of valuation. I have not been provided with a copy of the reasons for -- 6 of 8 -- 7 decision in that case. Without those reasons, it is not possible to see how it could be relevant to the determination of the present appeal. The appellants stated that, since 1986, there has been little evidence of sales on islands generally. They also sought to rely on their failure to sell the lease and improvements by public auction in May 1993 and in November 1994. No bids were made and a later offer of $100,000 was not accepted since the improvements were valued at $145,000. The failure to sell a lease is no evidence as to the value of the lease nor, more importantly, the unimproved value of the land. The appellants are concerned that certain features of the lease restrict the value of the land. In particular, legislative changes to the revaluation process (from 10 year valuations to annual valuations) have led to some uncertainty which, in turn, has been a major reason for their inability to sell the lease. I accept the respondent’s submission that, for the purpose of determining the unimproved value of the subject land, there is no restriction or limitation in the lease of the type contemplated by section 14(5) of the Valuation of Land Act 1944. As indicated earlier, the bulk of the appellants’ case relied on problems which were said to be peculiar to the subject land. In Brisbane City Council v The Valuer-General for the State of Queensland (1978) 140 CLR 41, the High Court considered the provisions of the predecessor to section 33 (section 13(7)) of the Valuation of Land Act 1944. Gibbs J (as he then was) with whom the other members of the Court agreed said : “In my opinion once it is shown that in making the valuation the Valuer- General acted upon a wrong principle or made a serious error of fact, the presumption created by section 13(7) is rebutted ... In my opinion once it is shown that a valuation was made by a method fundamentally erroneous the presumption is rebutted.” (at p.56.) There was no real suggestion that in this case the Chief Executive acted upon a wrong principle or that the valuation was made by a method fundamentally erroneous. I am satisfied, however, that the Chief Executive made a serious error of fact in not allowing sufficiently for the extent of detriment suffered on the subject land by the amount of noise, coal dust and refuse carried from the Clinton Coal Facility to Tide Island. Although, strictly speaking, the rubbish on the beach is not on the subject land (being on the Crown esplanade), its presence would diminish the attraction of that part of the coastal land and detract from the subject land. Although he has sailed past Tide Island, Mr Hewitt had not inspected it and did not seem to be aware of the nature and full extent of the detriment flowing from the Clinton Coal Facility. He -- 7 of 8 -- 8 made some allowance for the proximity of the subject land to the Clinton Coal Facility and the impact of navigational signals on the amenity of the subject land, but I am not satisfied that he made sufficient allowance for the other related disabilities. Accordingly, I would allow a reduction of approximately 25% from the respondent’s valuation. Order The appeal is upheld. The valuation of the Chief Executive is set aside and the unimproved value of land is determined at $60,000. GJ NEATE MEMBER -- 8 of 8 --