Devenish v Chief Executive, Department of Lands [1996] QLC 34

LAND COURT BRISBANE 22 MARCH 1996 Re: RV95-161 - An appeal against an Unimproved Valuation - Valuation of Land Act 1944 - Townsville City Council C.E. & M.J. Devenish v. Chief Executive, Department of Lands (Hearing at Townsville) D E C I S I O N This appeal is against the unimproved valuation of Special Lease 44/52987 over Lot 730 on Plan EP2241 containing an area of 976 m2, Parish of Abbotsford, County of Elphinstone. The land is situated in Bonito Court, in the seaside village of Cungulla, about 45 kilometres south of Townsville City. Bonito Court is a bitumen sealed cul-de-sac. Electricity, water and telephone services are available. Zoning of the land is "Village Residential". As at 30th June, 1993, the Department of Lands unimproved valuation of the land was $26,000. The appellants estimated the unimproved value in the Notice of Appeal to be in the amount of $22,000. Evidence was led at the hearing to a revised estimate of $17,500. Mr Devenish gave evidence in support of that revised estimate. The grounds of appeal include an alleged lack of relativity between the valuations of adjoining and nearby lots; a physical disability caused by a large depression; the irregular shape; lack of vegetation control on adjacent Crown land; then freeholding valuation implications. With regard to relativity, reference was made in particular to the unimproved valuations applied to Lot 728 - 933 m2, at the corner of Amberjack Court and Bonito Court, $22,000 and $23.58 per m2; Lot 729 - 1,401 m2, in Bonito Court adjacent to the subject land - $28,000 and $19.99 per m2; Lot 731 - 1,171 m2, in Bonito Court also adjacent to the subject land - $27,000 and $23.05 per m2. It is the appellants' submission that the average applied valuation to those three lots, on the unit of area analysis - ie $22.21 per m2 - should be applied to the subject land resulting in a valuation of $21,677. Mr Devenish believes that a precedent had been set for such a basis, when a successful objection had been lodged against an earlier valuation of another lot (Lot 734), based on relative value for unit of area. While the latter particular reduction in valuation may have been seen by Mr Devenish to have resulted from the grounds of objection, the official reason for the reduction was not stated. It is well held that unimproved valuation of residential sites on a unit of area basis should be regarded as an inappropriate approach - if such an approach is not supported by the market. In H & E Grahn v. The Valuer-General (1992-93) 14 QLCR 327 the Land Appeal Court said at p.330: [1996] QLC 34 -- 1 of 4 -- 2 "The appellants fail on this point because the appropriate basis for the valuation of a residential lot is not the application of a rate per square metre but an assessment of the unimproved value of each lot as land used for single unit residential purposes." The Court then referred to a judgment in those appellants' previous appeal where it had said: "for the purpose of valuing residential sites, the preferable method of comparison is on a site to site basis and not on the basis of a unit area valued comparison. Site for site comparison should take into comparison such matters as the size of the lots, the situation of and access to the lots, the shape and topography of the lots etc and comparisons on a unit area basis do not necessarily reflect valuation considerations for the above features." It is a fact that when comparing sales evidence or relativity of valuations, size is one element of comparison but not necessarily on a pro-rata basis and certainly not on any averaging process. The second point is the physical quality of the subject land and the effect of the "large depression" which is said to hold water during very wet weather. That water "takes a considerable time to soak away". Photographs, which showed the depression adjacent to a large metal garage structure were tendered. It was submitted the lots with which valuation comparisons had been made were not similarly affected. "The absolute minimum expenditure required to bring the level of this Lot to a desired standard" was estimated by Mr Devenish as $2,000. The irregular shape of the land is submitted to reduce the market value by $1,000 in comparison with regular shaped lots (the subject lot described as having "a narrow frontage and a long acute angled form towards the left-hand rear of the Lot" and no parallelled sides. Reference was made to the nearby Lot 737 which had a shape disability and which was valued well below the adjoining Lot 738 of similar size but superior shape. The rear boundary of Lot 730 adjoins vacant Crown land. According to Mr Devenish, there has never been and in his opinion unlikely ever to be, maintenance of the Crown land which is described as forming a fire hazard and vermin breeding ground. In the appellants' opinion the existence of the adjacent Crown land devalues the subject land by a further $1,000. Mr Devenish wished to bring to the Court's notice a letter dated 4th May, 1993, from the then Minister for Lands, suggesting that the freeholding valuation based on an application for conversion in 1990, could be expected to be approximately $15,000. Mr Devenish is not happy with the delays and eventual rejection of the application but matters associated with the application for conversion are not relevant to this appeal. The Lands Department valuation report tendered to the Court was prepared by Mr B.J. McComiskie, registered valuer. He had not been the valuer responsible for setting the valuation appealed against, but had been given the task of defending it. He had not established the evidence on which the valuation had been originally based. He did provide to the Court four sales of vacant land in Cungulla which had been effected prior to the date of valuation. Brief details of these sales and associated comments were: (1)Lot 229 in John Dory Street, 810 m2, 9.4.93, $31,500, unimproved - subject better located and better access, mostly offset by sale having corner location and better sea glimpse, -- 2 of 4 -- 3 similar physically requiring levelling for building purposes, subject irregular in shape. (2)Lot 522 in Whiting Court, 1182 m2, 9.3.93, $30,000, unimproved - subject better located, both irregularly shaped cul-de-sac lots adjacent to vacant Crown land, sale has larger area but this is offset by subject having sea glimpse. (3)Lot 610 in Whiting Court, 809 m2, 18.6.93, $31,500, unimproved - reasonably comparable overall, subject has better sea glimpse, larger area, slightly superior location, sale has corner position and regular shape, both adjoin vacant Crown land. (4)Lot 336 in John Dory Court, 972 m2, 12.3.93, $30,000, unimproved - reasonably comparable, subject better located, inferior shape, both adjoin vacant Crown land, both have natural depression requiring levelling for building purposes. Mr McComiskie had not given specific consideration to the examples of relativity provided by Mr Devenish, but did not challenge the accuracy of that information. In his opinion, where site values were in the lower general range as was the subject land, the question of difference in market values for what he regarded as minor physical differences was less identifiable than where values were in the higher range. In his opinion, relatively small differences in size had little, if any effect on value, but agreed the difference between the size of the subject (978 m2) and the adjoining Lot 729 (1,401 m2), as an example, would be a matter to be considered. In his opinion Lot 731 had better sea glimpse than did the subject, while Lot 729 had inferior sea glimpse, but then did not adjoin the vacant Crown land. It was Mr McComiskie's opinion that while some people may share Mr Devenish's opinion as to the Crown land creating a disability he felt that others would see the lack of human neighbours as an advantage. Apart from the larger area of Lot 729, it also had better shape. Lot 729 had superior topography but he was unsure if that had been the result of past site improvement. If that had not been established I would accept, on Mr Devenish's evidence, that Lot 729 was physically superior in its unimproved state. Mr McComiskie was confident that the sales evidence indicated a genuine and consistent level of market value when matters such as size, shape, location and physical condition were taken into consideration. One sale in particular, Sale 4, was affected by a depression of similar if not greater depth than that on the subject land. In his opinion, the sales evidence indicated that the statutory valuation as at the relevant date and as applied should be seen to be, if anything, overly conservative. The Land Appeal Court said in WM & TJ Fischer v. The Valuer-General (1983) 9 QLCR 44 at p.46: "It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of sales evidence." -- 3 of 4 -- 4 Then, also in Grahn v. The Valuer-General (supra) at pp.328, 329 when referring to R & M Barnwell v. The Valuer-General (1989) 13 QLCR 13 the Land Appeal Court had said: "If possible, the Valuer-General should obtain uniformity between different blocks in the same land category or type but should do so (preferably by reference to sales of comparable land) by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error." One problem in this matter is that the sales evidence referred to by Mr McComiskie was not used as the basis for the overall valuation of the village of Cungulla as at the relevant date. In Cairns Resort Investment Pty Ltd v. Chief Executive, Department of Lands (AV91-3 and AV91-321) the Land Appeal Court also followed Grahn (supra) in a judgment delivered on 31st August, 1993, but found that as a particular sale had not been adopted as the valuation basis at the relevant date for the sale land, the valuation of that land should not be regarded as being fundamentally wrong and put aside when considering the question of relativity of valuations. In the context of that judgment, I am unable to find here that the apparently conservative level of value applied generally to land in Cungulla but more particularly to the three lots identified by Mr Devenish was fundamentally wrong. On that basis, the question of relativity is an issue which formed one of the grounds of appeal and which should have been specifically addressed by the Department. It is clear that adjustment of site values from lot to lot had taken place in the three examples given by Mr Devenish. Although both the advantages and disabilities of the subject land may well have been recognised, I am not convinced that recognition of the disabilities has expressed itself sufficiently in the site value adopted for the subject land. I reject the unit of area value approach although the area of the subject land in comparison with other lands is a criterion which requires consideration, just as much as the other matters raised. I have decided to marginally reduce the valuation to $25,000 which amount appears to provide better site value relativity particularly with regard to Lots 729 and 731. There is insufficient evidence before the Court for any cogent relativity comparison to be made with Lot 728, or indeed any other lots in Amberjack and Bonito Courts. If relativity issues and inaccuracies appear as a result of this decision, then those issues might be subjected to closer scrutiny and if necessary, the provision of better evidence if the future question of the valuation of this land for statutory purposes comes before the Court again. The appeal is allowed, the valuation of the chief executive put aside, and the unimproved value of the Special Lease determined in the amount of Twenty-five Thousand Dollars ($25,000) as at 30th June, 1993. RE WENCK MEMBER OF THE LAND COURT -- 4 of 4 --