Beachfront Developments & Resorts Pty Ltd v Chief Executive, Department of Lands [1996] QLC 84

LAND COURT BRISBANE 7 JUNE 1996 In the matter of an appeal against a valuation Valuation of Land Act 1944 Valuation Roll No.: 13121 Local Government: Gold Coast (AV95-594) Beachfront Developments & Resorts Pty Ltd v. Chief Executive, Department of Lands (Hearing at Coolangatta) D E C I S I O N This decision relates to an appeal lodged pursuant to the provisions of the Valuation of Land Act 1944 against the application by the Chief Executive of a valuation of $1,250,000 as at 1 January 1995 to the subject land, the appellant contending that the value should be struck at $800,000. Vincent Ferrer Lawrence, a director of the appellant company, appeared and gave evidence, whilst Ian Leonard Hawley, a registered valuer employed by the Department of Natural Resources (which includes the previous Department of Lands), provided a written valuation in support of the Chief Executive's applied figure. The subject property is situated at 3567 Main Beach Parade, Main Beach, Southport on the Gold Coast and was described by Mr Hawley as having unrestricted views of the ocean, being an absolute beachfront lot. Surrounding development comprises a mixture of multi-unit residential properties and single unit residences. Mr Hawley says that the subject land is a regular shaped beachfront lot, having medium elevation rising slightly from the street frontage to a level area where a dwelling is located. Mr Lawrence mentioned in evidence that the subject land, given its beachfront location, runs the risk of beach erosion in times of climatic disturbance and tidal surge. Mr Lawrence also tendered some photographs of the subject property showing the residence and how it had physically depreciated over time with broken windows and a damaged fence caused, according to Mr Lawrence's evidence, by hooligans. The subject land was zoned "Residential-Multi Unit" in the town planning of scheme of Gold Coast Council effective at the date of valuation and, as such, may be developed for a higher use than that to which it is currently put. Nevertheless, the fact that the subject land has a single residence constructed on it which is rented out and therefore is being used for residential purposes, accords the land the protection of s.17 of the Valuation of Land Act which provides, in effect, that the land should be valued for single unit residential purposes, [1996] QLC 84 -- 1 of 4 -- 2 notwithstanding that it may have a higher value for some higher use. Section 17(1) of the Act provides: " In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in case of potential use as aforesaid, that potential use if lawful when the valuation is made." The statement of law provided in s.17 is relevant in a number of regards in this matter. Mr Hawley explained that the Chief Executive had, correctly in my view, valued the land as "a single dwelling house" in accordance with s.17. Another point of significance with respect to s.17 lies in the reference by Mr. Lawrence to a sale referred to as the "Xanadu" property. Xandadu is a redevelopment property, not a single residential site, and therefore on the principle that comparisons should be on a `like with like' basis, this sale is unsuitable as an indicator of the value of the subject land as a residential site. For similar reasons, evidence referred to generally concerning values in the Mermaid Beach and Tugun areas is of no assistance in this matter. Mr. Lawrence mentioned, in a statement tendered to the Court, concerns that he had with what he referred to as "arbitrary" valuation figures being set by the Chief Executive. Certainly, in circumstances where it is found that valuations placed on lands subject to appeal have been arbitrarily applied, this Court will intervene, however, as will be read later in this decision, this case does not validly raise a complaint of this nature. Nevertheless, I think it may be useful it I present the legal background against which this appeal must be viewed. In the context of the appeal lodged, I am to consider the question of the "unimproved value" of the subject land. S.3(1)(b) of the Valuation of Land Act says this about this term:- "`unimproved value' of land means - (b) in relation to improved land - the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist." It is quite clear, on reading these words from the Act, that a sale transaction is hypothesised. It is this thread of the hypothetical sale which holds together the whole fabric of the law of the valuation of land and the nature of this hypothetical transaction is no better expressed than in the following quotation taken from Spencer v. The Commonwealth 5 CLR 418 (per Isaacs J at 441):- "To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all -- 2 of 4 -- 3 circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property." It follows from this that evidence of sales that have taken place will be a guide to the assessment of value. In Clough v. The Valuer-General (1981-82) 8 QLCR 70 at 76 the Land Appeal Court made it quite clear that unimproved sales comprise the best evidence:- " It has been judicially laid down many times and in many jurisdictions that in ascertaining unimproved value, sales of unimproved land of comparable quality, situation, etc., to the subject parcel, if they are available, are to be preferred as the best guide for arriving at unimproved value." Notwithstanding, what was said in Clough, it is also the case that maintenance of correct relativity of value is of importance for rating valuations and the values applied to comparable properties by the Chief Executive can also provide assistance (WM & TJ Fischer v. The Valuer-General (1983) 9 QLCR 44). What I have set out above should provide a useful foundation for what is written later in this decision, however, it should also be instructive to Mr Lawrence, some of whose concerns about this matter appeared to me to arise, not only from the valuation figure applied by the Chief Executive, but from a, not uncommon, limited understanding of the basic concepts involved. I have already mentioned the Xanadu sale referred to by Mr. Lawrence, however, for the sake of completeness should set out a little more about his reliance on that transaction. From his evidence, it appears that a sale took place of the Xanadu land in the late 1980s for an amount of $19.5 million and the property was resold recently for $11.5 million. I note in passing that Mr. Hawley gave evidence that the unimproved value of this land as at 1 January 1995 was $9.8 million. Mr. Lawrence calculated the reduction in sale prices between the earlier figure and the recent sale at 41% and said that the subject property valuation appealed against is inconsistent with this evidence in that between the annual valuation in 1993 and the figure now applied by the Chief Executive, there was an increase from $750,000 to $1,250,000 not a reduction. In the same context Mr. Lawrence mentioned that local authority rates had increased, as had land tax applicable to the appellant, yet there had been no improvement in services available to the subject land. I have already mentioned that the Xanadu sale is of no assistance in considering the value of the subject land as a single unit residential site, however, I need to comment on the other aspects of Mr. Lawrence's submission which I have just outlined. I can make no better comment than that provided by the Land Appeal Court in Tow v Valuer-General (1978) 5 QLCR 378 at 381: " Subject to certain statutory requirements as to the onus of proof and the restriction of the appellants to the grounds of appeal specified in their notice of -- 3 of 4 -- 4 appeal, the duty of the Land Court and of this Court is to make determinations of unimproved values based on the evidence presented to it by the parties and conforming to the aforementioned statutory formula. 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. The Valuer-General and the Court are concerned with finding unimproved value and not with the amount of rates that may be levied as a result. Rates are fixed by Local Authorities and may be varied annually according to the fiscal requirements of the Local Authority concerned. Any such variation may be made at any time during a valuation period and may be entirely independent of a new and increased valuation." I will add to this that it is not unusual for the values of lands with different uses to move, over time, at different rates and in different directions. Even within one broad usage area, such as residential, there will be sub-markets which move differently from other sub-markets. I now turn to consider the valuation evidence presented by Mr. Hawley. Given the rarity of the type of property under consideration here, Mr. Hawley was fortunate in having available as a basis composite transactions, just three allotments away from the subject land in the same block. By "composite" transactions I mean that the one party purchased two sites at different times, which were then amalgamated. The first of these comprised a lot of 498 m2 which was purchased on 19 November 1993 for an amount of $975,000, having a dwelling constructed upon it. Then on 11 March 1995, the adjoining vacant lot of 465 m2 was purchased for an amount of $842,500, gaining its classification as a residential usage following the amalgamation with the earlier purchase. The total of these transactions is $1,817,500. Mr. Hawley's basic evidence supports the value applied to the subject land by the Chief Executive. On the other hand Mr Lawrence has not adduced evidence which indicates to me that some value lower than that applied by the Chief Executive ought to be determined by me. Accordingly the appeal is dismissed and the Chief Executive's valuation is affirmed. RP SCOTT MEMBER OF THE LAND COURT -- 4 of 4 --