Boshammer v Chief Executive, Department of Lands [1994] QLC 303

[1994] QLC 303 LAND COURT BRISBANE 30 SEPTEMBER 1994 Re: Appeal against Annual Valuation Valuation of Land Act 1944 City of Toowoomba (AV93-696) Darrell J Boshammer v. Chief Executive, Department of Lands (Hearing at Toowoomba) DECISION Mr DJ Boshammer is the owner of land described as Lot 3 on Registered Plan 17802, Parish of Drayton, County of Aubigny, containing an area of 1,214 sq. metres. As at 31st March, 1992, the respondent, under the provisions of the Valuation of Land Act 1944 determined the unimproved value of this land at $95,000. Mr Boshammer's objection against this valuation was disallowed and he appealed to the Land Court advising that his estimate of the unimproved value is $60,000. Mr Boshammer appeals on the grounds that: • the land has been valued as a site for five units, while in reality it is used as two flats; • the rent from these two flats is low and cannot be raised to compensate for the 33',,% increase in rates caused by a 160.27% increase in the valuation; • it is at present uneconomical to increase the number of units on the allotment as there is an over supply of units and rental accommodation in Toowoomba; • the slope of the land presents a rainwater drainage problem; • the land is in a residential area and surrounding residents would object to the development of a multi-unit building, as it would devalue their properties because of the loss of privacy and the creation of extra parking and traffic problems. Mr DJ Boshammer appeared and gave evidence on his own behalf, while valuation evidence for the Chief Executive was given by Mr BL Taylor, a registered valuer employed by the Department of Lands. -- 1 of 7 -- 2 The land is situated at 61 Campbell Street, East Toowoomba, which both parties agree is a desirable residential area. Campbell Street is bitumen sealed with bluestone kerbing, concrete channelling and bitumen footpath. Access to the subject land is good. The property is improved with an old dwelling which is converted into two registered flats. The land has a gentle cross slope to the north-west, falling from 3 to 5 feet (Mr Boshammer) or from 2½ to 3½ feet (Mr Taylor). It was common ground that rainwater would drain to the rear of the property and in any future development some method of disposal would have to be found. Mr Boshammer suggested that some drainage arrangement would have to be negotiated with the owners of neighbouring properties at the rear, while Mr Taylor considered that a sump could be constructed and water pumped to the nearest stormwater drainage facility. Mr Taylor gave evidence that the property is zoned "Residential A" under the town planning scheme for the City of Toowoomba gazetted on 10 June 1989. However, it is designated Residential Development Area 2 (RDA2) under the Development Control Plan No. 2 - Duplex and Accommodation Unit Development, within which the development of residential accommodation units is a consent use. Mr Taylor explained that he arrived at the unimproved value of $95,000 as follows: "The valuation of the subject parcel has been arrived at on a per unit basis (ie 5 standard 2 bedroom unit areas x $19,000 per unit area). The sales have been analysed on this basis. In arriving at the valuation I have adopted the following 'economic' unit areas for the multi-unit lands in the City of T oowoomba: RDA 1 RDA2 RDA3 1 x 2 bedroom unit per 200 M2 1 x 2 bedroom unit per 250 M2 1 x 2 bedroom unit per 300 M2 j -- 2 of 7 -- 3 The Development Control Plan governing the development of multi-unit residential properties in brief, permits the designated lands to be developed as follows: RDA 1 RDA2 RDA 3 1 x 2 bedroom unit per 120 M2 1 x 2 bedroom unit per 150 M2 1 x 2 bedroom unit per 180 M2 to a maximum allowable site coverage of 40%. Through my research into the unit market in the city I have ascertained that very few people ever develop their properties to the maximum allowable number of units under the town planning regulations. It is considered that the average unit area anticipated, closely relates to the 'economic' unit areas adopted above. This however is not always the case as most developers will vary the density of their development according to the type of development (eg. townhouse; ground level units; three storey 'walk-up'). The majority of the unit development in the city would be either ground level units or townhouse type developments with very few multi-level developments. The sales have been analysed and the valuation of all unit lands in the city have been made on this basis. It must be stressed however, that the end result derived from this method of valuation would vary very little, if at all from a valuation calculated using either an overall square metre rate or the standard unit areas as per the town planning regulations. It must also be noted that the sale prices of larger development sites (ie. those capable of being economically developed with in excess of six x two bedroom units) would appear to reflect a slightly lower level per unit area (see Sales Nos. 3 and 5 on the attached Sales Schedule)." Mr Taylor tendered a schedule of six sales of land with similar zoning and RDA to· the subject land. These properties which varied in area from 759 sq. metres to 2,023 sq. metres, sold between May 1991 to April 1992 for sale prices which analysed to show unimproved values of between $45,000 for a three x two bedroom potential economic unit development, to $135,000 for an eight x two bedroom potential economic unit development. The values applied by Mr Taylor to these properties varied from $11,500 per unit for a five x two bedroom unit allotment situated in a greatly inferior area, to $17,750 per unit for a four x two bedroom unit allotment situated in an area which he considered to be somewhat inferior. The details of these sales were not challenged by Mr Boshammer. However, -- 3 of 7 -- 4 he contended that the subject land is situated in an area of good residential development where any proposed development for units would attract objections by the neighbouring land owners. By comparison, the sales were situated in areas where there was already unit development. In support of his argument, Mr Boshammer produced evidence of the type of residents' action that had previously been organised in the form of a letter circulated in about October 1990, urging residents to object to the proposed construction of units at No. 7 Warren Street, Toowoomba, which is situated in close proximity to the subject land. Mr Boshammer said that this project did not proceed and he believed that it was because of the objections to it. Mr Boshammer said that any proposed development of the subject land could attract similar objections. While the two flats on the subject land did not upset the residential amenity, a development with five units would create traffic and parking problems, and would be strongly resisted by residents of the area. In any case, Mr Boshammer said, the demand for units in Toowoomba was decreasing. He produced copies of several articles from the "Toowoomba Chronicle" and from the Queensland Real Estate Review to support this argument. He said that the number of working people in Toowoomba was decreasing and mentioned several enterprises which had laid off staff in the recent past. He claimed that any development of the subject land would oversupply the market for units and therefore the property should not be valued with that potential. The slope of the land away from the street would, according to Mr Boshammer, make unit development difficult, because the drainage would be to the rear of the property and then through neighbouring property. He thought there would be difficulty negotiating drainage arrangements with other land owners. -- 4 of 7 -- 5 Mr Bos hammer said that the adjoining land of similar size has an unimproved value of $60,000. He felt that as his land was being used for two flats, it should have only a slightly higher unimproved value. He cannot understand how it can be valued as having potential for five units. In giving evidence in support of his valuation, Mr Taylor said that the T6owoomba Development Control Plan has tended to define areas where unit development can take place. Prior to its adoption, the Council had more of an ad hoc approach to the location of units. Mr Taylor said there had been a surge in unit development in Toowoomba in the years 1990, 1991 and 1992. While the market for unit land peaked in 1990 and 1991, as at the date of valuation there was still a very strong demand. He admitted, however, that since that time, while market levels appear to have held, the number of units being developed has decreased. From the market evidence, Mr Taylor drew the conclusion that since 1992 the focus had moved to the better residential areas and the price paid per unit was higher. However, all the six sales on his schedule were inferior to the subject land per unit site, none of them being in what he called its "prime location". Since the introduction of the Development Control Plan, he was not aware of the Council refusing any application to develop units that complied with its requirements. In Mr Taylor's opinion, the slope of the subject land from the road would present only minor difficulty. He knew of other developments with comparable slopes where drainage problems had been overcome, either by means of an easement, or by collecting run-off water in .a sump and pumping it out into the drainage system. He thought that the additional cost would be inconsequential compared with the overall cost of development. While Mr Taylor agreed that the subject land was situated in an area that was -- 5 of 7 -- 6 still largely residential, there was recent unit development in streets in close proximity. He was of the opinion that the highest and best use of the subject land was for unit development and therefore the provisions of the Valuation of Land Act required him to value it having regard to that potential. He explained that it was not entitled to a concessional valuation under the provisions of s.3(1) of the Act, as that applied only to land which was used for purposes of a single unit dwelling . Despite the other issues raised by Mr Boshammer, it is clear that his main concern is that the land is valued with potential for development for five units while it is being used for two flats . Mr Taylor explains this by saying that the provisions of the Valuation of Land Act require him to value in this manner. It is therefore necessary to examine those provisions. Section 3(1 )(b) of the Act defines "unimproved value" as "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 at which the value is required to be ascertained for the purpose of this Act, the improvements did not exist". Therefore, Mr Taylor had to assess the unimproved value of the land assuming there were no improvements on it. It is a fundamental principle of valuation that all land must be valued on the basis of its highest and best use. Accordingly, it was Mr Taylor's duty to ascertain what highest and best economical use the property could be put to. From the evidence that he has put forward, the conclusion can be drawn that the property if unimproved would have potential for unit development. It was therefore his duty to value the land with that potential. Mr Boshammer argues that the neighbouring properties have similar potential. However, s.17(1) of the Act requires that where land is exclusively used for purposes of a single dwelling-house, any enhancement in that value because the land has a -- 6 of 7 -- 7 potential for a higher use must be disregarded. This section has been explained as affording a concessional valuation to properties which are so used. Therefore where a property has potential for a higher use, but is used for purposes of a single dwelling-house, then it must be valued as a single residential site, and the potential for unit development disregarded. It appears from the evidence that Mr Boshammer understands this but does not agree with it. However, the fact remains that it is the law and must be followed by Mr Taylor and, indeed, by this Court. I am satisfied that the evidence shows that there is an enhancement in the value of the subject land because of a potential for unit development. The land is not entitled to a concessional valuation under the provisions of s. 17(1) of the Act and therefore must be valued at its highest and best use. I find that the highest and best use is for the development of five units as valued by Mr Taylor. As Mr Boshammer did not present any evidence to refute the values per unit applied by Mr Taylor, the appeal must fail. Accordingly, the appeal is dismissed and the unimproved value of the subject land is affirmed at $95,000. JJ TRICKETT MEMBER OF THE LAND COURT -- 7 of 7 --