Brownlow v Chief Executive, Department of Lands [1996] QLC 47

LAND COURT BRISBANE 23 APRIL 1996 Re: Appeals against unimproved valuations - Valuation of Land Act 1944 AV94-680 and AV95-592 N.G. & P.D. Brownlow v. Chief Executive, Department of Lands D E C I S I O N Mr and Mrs Brownlow are the owners of land situated at the Corner of Lamington Avenue and Bradshaw Street, Lutwyche, in close proximity and to the west of Lutwyche Road. The land is described as Lots 83 and 84, RP 19352, Parish of Enoggera, County of Stanley and contains an area of 830 m2. It is zoned "Residential B-RX" (Res B-R4) and is used as a car sales yard and residence. As at 30 June 1993 and then 1 January 1995 the Department's unimproved valuations (after alteration in terms of s.68 of the Valuation of Land Act (the Act)) became as follows: 30 June 1993 - $120,000 1 January 1995 - $127,000 Despite significant alterations to the valuations originally applied at those dates, Mr and Mrs Brownlow hold the opinion that the valuations appealed against remain excessive. Their estimates of value are $60,000 and $65,000 at the respective dates. The grounds of appeal are generally similar in both appeals but the real problems are best summarised as in a statement which Mr Brownlow tendered to the Court: "1.Our land is the lowest point in this block and most of our problems flow from this fact. 2.Largely an old dump site, resulting in subsidence, water problems and bog after heavy rain. 3.Health problems occur due to the foregoing. 4.Construction costs required to combat inherent problems have no relation to foundation costs. 5.Most difficult living conditions exist due to nature of area location." The tendered statement covered nine points to which Mr Brownlow's evidence was directed. Photographs and a statutory declaration, relative to the physical disabilities of the land were also tendered. In its unimproved state, the land embraced "a gully or creek" draining adjacent properties. The land had obviously, at some distant time in the past been used as a [1996] QLC 47 -- 1 of 5 -- 2 dump site. Considerable quantities of household-type rubbish and some soil fill had been placed on the land by others. A retaining wall of substantial depth and construction protects Bradshaw Street on the southern boundary, while the northern and eastern boundaries of the land are retained by private walls, of varying standard of construction and condition both above and below existing filled levels. A brick dwelling with significant structural faulting and a used car yard are constructed at various mostly retained levels. The true unimproved state of the land is not precisely known. At some time subsequent to the objection and appeal process being investigated, it was suggested to Mr Brownlow that he should seek advice as to the cost which would be involved in correcting the site specific problems. Quotations had been obtained and were tendered. The proposal in the quotes was to excavate and place footings to allow construction of concrete block walls on the northern, eastern and southern boundaries together with two internal north-south retaining walls and to concrete, fill and reinforce the block work. All walls would be waterproofed and the site drained to Lamington Avenue. The quotations were based on a direction to create three levels, the lower level being 1 metre above the south-western corner peg with all fill to be compacted and all rubbish removed. Excluding Council fees and the cost of removal of existing buildings, the quotations dated 10 December 1995 and 19 December 1995 were in the amounts of $85,527 and $91,500 respectively. Mr I.G. Savage was the registered valuer employed by the Department who had written both the original valuations and reduced valuations appealed against. He generally agreed with Mr Brownlow's statement as to the land having once formed a gully of some significance, which had been filled to the levels it is today, at various mostly retained depths. He thought the gully would have headed in the subject land, while Mr Brownlow held the opinion that the gully may have partly affected the land adjoining to the east before its retention. Mr Savage described the land as follows: "The subject is the head of a partly filled gully. The gully appears to have started with a steep fall from the south east corner and then gradually levelling out towards the north west corner where it flowed into a swamp over Lamington Avenue. The swamp has since been filled by the Brisbane City Council and made into Bradshaw Park. In its current state the subject falls from RL 20 metres AHD on the east boundary to RL 15 metres AHD on the north western corner, a distance of 40 metres. On the southern boundary fronting Bradshaw Street the property has a natural drop of up 2 metres from the (filled) footpath to the natural ground level. On the eastern boundary there appears to have been an easy fall onto the subject before the land fell away steeply (guessed at 4 metres). Currently the subject is filled on the eastern boundary to approximately 1 metre higher than the ground level of the adjoining property (uphill). -- 2 of 5 -- 3 On the western boundary the land has been terraced for a unit development. This property while having its main fall to Lamington Avenue (west) also has a cross fall towards the subject which causes seepage onto the subject. At the eastern end the subject has been filled to road level (Bradshaw Road). This filled area plus an adjoining area of decking is used as a car yard." Mr Savage agreed that the subject land was once used as a dump. Most of the fill was household rubbish rather than clean fill. The site suffers from seepage problems. However, despite: (a)the poor quality of the fill and (b) the quotes received by Mr Brownlow; Mr Savage had concluded that as developed the existing site works, together with the structures which had been erected added value to the site and therefore did not constitute a "worsement". He conceded however that "if only the fill and retaining walls had been placed on the site, they would not constitute an improvement, but would require remedial action and therefore be a worsement." He took the view that "the works on the site must be looked at as a total entity and the sum of the added value of the total works adds value to the land and therefore comprises an improvement overall". He did not provide any valuation exercise to support that opinion as to the improved value of the property. As I understood the thrust of his evidence, the structures, although suffering the effects of subsidence, water seepage and drainage problems generally, could not have existed in their present form in the absence of the site works which have occurred, regardless of the poor quality of the fill. As there has been no evidence offered to rebut Mr Savage's opinion that the development on the site adds value to the unimproved value of the land, I lean to the view that "worsement" does not exist. In other words, the site should be valued on the basis of its true unimproved condition, in terms of s.3(1)(b) of the Act, where "unimproved value" means - "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." That was the exercise which Mr Savage set out to complete. He endeavoured to picture the land in its unimproved pre-dump condition before any filling or internal retention had taken place. This proved to be an almost impossible task. He saw the highest and best use of the land being as zoned, for multi-unit residential development. He envisaged some style of building development which would be designed to incorporate any site works development within the foundations and drainage specifications. For example, as he understood it, the quotations obtained by Mr Brownlow, included, unintentionally, work which could also be regarded as part of the foundations of a building, and then not necessarily the best designed building for the highest and best use of the site. Mr Savage had not understood the full extent -- 3 of 5 -- 4 of the unimproved disabilities of the site until it had become necessary to deal with the appeals. He had specifically inspected the site and discussed the problems with Mr Brownlow. He was frank in stating that without knowing the true unimproved physical state of the land, the unimproved value could range anywhere between $20,000 and $60,000 below his original valuation of $160,000, as at 30 June 1993. He indicated that the original valuation had taken into consideration the environment in which the land was situated and its obvious features both positive and negative. The amended valuation took that first valuation as a base then an amount of $40,000 was deducted in a genuine attempt to find a value which should have been a reasonable interpretation of the true unimproved market value. Previous valuations apparently had not recognised or been based on any accurate knowledge of the actual unimproved state of the land. Mr Savage's amended 1993 valuation, of $120,000, is equivalent to a unit of area value of $145/m2. Sales of four "Residential B" zoned sites showed values ranging from $152/m2 to $200/m2. (On the evidence of those sales the original 1993 valuation of $160,000 had been equivalent to a rate of about $190/m2). In the 1995 valuation, from two sales showing analysed unimproved values of $208/m2 and $198/m2 Mr Savage had concluded that values for "Residential B" zoned land had increased from the previous date. He had increased the valuation from $145/m2 to $152.50/m2. I agree with Mr Savage that the subject land, although poor physically, should be regarded as having highest and best use potential for multi-unit residential development, as zoned. However, it seems obvious that a vendor of unimproved land of such poor quality would be confronted with a most limited and speculative type market. Buyers would be expected, in the absence of precise development cost estimates, to negotiate on the worst case scenario. Without intending to be critical of him, (and indeed to the contrary), Mr Savage has taken it appears, a middle-of-the-range yet imprecise site works development cost estimate. That estimate might, with precise investigation, prove to be reasonable or even generous. However, it seems to me that this is a matter where this Court should further extend the benefit of the real doubt which exists. The one thing which does seem clear is that if "worsement" is not involved, then the quotes obtained are for works which reflect other than the condition of the land and its potential as unimproved. Mr Brownlow has proved the substantive grounds of appeal at least against the original valuations. However, the amended valuations have now been carried out on the basis that the unimproved condition of the land was significantly worse than was first thought. For the reasons given, I am unable to gain specific assistance from the quotations obtained. In extending the benefit of doubt I have decided to adopt a site value of $110,000 as at 30 June 1993. Then, on the evidence, it seems reasonable that some increase in value might have occurred even for land of this quality, in the period between the two valuations. For future reference, market trends relevant to land of relatively sound physical quality would not be -- 4 of 5 -- 5 seen to flow automatically to a site such as is the subject. I will adopt an .unimproved value for the land of $115,000 as at 1 January 1995. The appeals are allowed, the valuations of the chief executive set aside and the unimproved values determined as follows: As at 30 June 1993 - $110,000 As at 1 January 1995 - $115,000. RE Wenck MEMBER OF THE LAND COURT -- 5 of 5 --