Davis & Ors v Chief Executive , Department of Lands [1993] QLC 141

ILIB y COPY I Re: Appeal against Annual Valuation Valuation of Land Act 1944 Shire of Redland (AV93-495) Keith M Davis and Ann Davis , Eoin B MacDonald and Vick y Olsson v. LAND COURT BRISBANE 29TH OCTOBER 1993 Chief Executive , Department of Lands DECISION The appellants are the owners of land described as Lot 13 on Registered Plan 75327, Parish of Redland, containing an area of 1, 120 sq. metres. In accordance with the provisions of Section 16B of the Valuation of Land Act 1944, the Valuer-General assessed the unimproved value of the subject land as at 31st March, 1992 at $134,500. The owners objected to this valuation and by letter dated 28th June, 1993, they were advised that their objection had been disallowed and that the valuation remained unaltered at $134,500. The owners then appealed to the Land Court against this decision on their objection advising that their estimate of the unimproved value is $99,600. Their grounds of appeal are as follows: " 1. There is substantial erosion due to water traffic; 2 A larger part of the property's boundary is exposed to this erosion, compared to adjacent properties; 3. Surrounding properties have experienced a much lesser percentage increase in unimproved value; [1993] QLC 141 -- 1 of 12 -- 2 4. The property is subjected to continuous noise due to water traffic; 5. There appear to be no records of recent sales of similar land use properties in the area, and therefore no reference point for market increases; 6. There is no sewerage available to this property." Between the date of valuation and the date of hearing of this matter, the Lands Legislation Amendment Act 1992 had the effect of substituting the position of Chief Executive, Department of Lands, for the former statutory position of Valuer- General. Therefore, it is appropriate that the Chief Executive be the Respondent in this matter in place of the former Valuer-General. The subject land is situated at 293 Esplanade, Redland Bay, approximately 2 kilometres south of the Redland Bay Post Office. The Esplanade is bitumen sealed for approximately 15 metres along the eastern boundary of the subject land. The balance of the Esplanade has been formed into a park at the mouth of Weinam Creek. Electricity, telephone and town water supply are available but not sewerage. The land is zoned "Comprehensive Development" under the town planning scheme for the Shire of Redland. It is used as the site for a slipway and boat repair business. According to the Departmental report tendered on behalf of the Chief Executive, the land has approximately 44 metres frontage to Weinam Creek, approximately 20 metres of which has been retained with "loose" materials, the balance is not retained and provides for the slipway. The land is level with the Esplanade and has a slight fall to the creek. -- 2 of 12 -- 3 The subject land is located virtually at the mouth of Weinam Creek, with only the park/esplanade between it and the actual mouth. It is at the seaward entrance of the Weinam Creek Marine Commuter Facility which was constructed approximately 15 years ago. The facility is run by the Redland Shire Council on land which is believed to be leased from the Department of Transport. It comprises a number of jetties from which the ferries and other water transport vessels service the Moreton Bay Islands. There is also a boat ramp with four launching lanes and there are mooring facilities for between 20 and 30 vessels. The lands on the northern shore of the Weinam Creek facility are used for purposes associated therewith or for related purposes. The lands on the southern shore of the facility are used for a mixture of industrial and residential purposes. Mr EB MacDonald appeared on behalf of the owners and tendered a written statement and a number of photographs. Mr MacDonald said that Weinam Creek is the transport terminal for all public water transport to the bay islands. In addition to the passenger vessels, there is a lot of other water traffic in the creek and the wake from all these vessels causes significant erosion to the subject land. Annexed to his statement were the timetables for the two passenger ferries operating from the facility. The earliest ferry leaves at 5.30 a.m. and the last leaves at 7.30 p.m. Each timetabled departure represents the vessel passing the subject land twice. This means that these vessels pass the property 64 times each week day and 40 times per day on weekends. In addition to this, the property faces one of the major small boat ramps for the southern part of Moreton Bay so that the property is constantly exposed to the noise of small boats being launched and started at all hours of the day and night. -- 3 of 12 -- 4 None of these vessels represents any potential custom or benefit to the slipway business, as such small vessels do not require slipping. Mr MacDonald said the noise and erosion from these activities detrimentally affected the subject land. The noise starts from about 5.30 in the morning when the ferries take on stores, with bread and milk deliveries, etc. The small vessels start arriving at dawn and this continues at all times of the day and night. Erosion of the subject land is caused from the wake of both the transport vessels and the small boats. Mr MacDonald. said that these wakes are significant, as the vessels often fail to observe the speed signs in the harbour and this contributes greatly to the erosion. While there are no facilities for providing supplies or fuel or for servicing these vessels, the Weinam Creek facility is a very busy harbour. The owners counted 350 vessel movements in the harbour on one Saturday morning alone. The main purpose of the harbour was to provide transport terminals and a safe, sheltered launching ramp for small boats, with the facility to moor between 20 and 30 larger boats. The land itself is used for slipway and boat repair purposes, but there is no residential component, not even caretaker's quarters. Mr MacDonald explained that the owners purchased the land in October 1992 in order to continue its previous use. Prior to that it had been known as Weller's Boat Yard, but since purchase the owners have changed the name to Pelican's Slipway. The photographs tendered by Mr MacDonald show the extent of erosion on the subject land. Part of this can be alleviated by the construction of revetment walls. However, the area between the two slips cannot be retained in such a way, as access is required to the boats being slipped. This is the area that is constantly -- 4 of 12 -- 5 being eroded away by the wakes of vessels and has occurred to such an extent that the footings on the shed structure have been eroded by about 30 centimetres. At king tides the water actually enters the shed. The area subject to erosion consists of red gravel which is common to the area and part of the underlying soil structure and, Mr MacDonald said, it just quietly moves down with the erosion. As the owners need the sloping area for access to the boats when they are being slipped, it is difficult to terrace it to prevent further erosion. The owners have considered at the possibility of concreting it but this could be dangerous as the tidal flow tends to make it slippery. They have been advised that the erosion would constantly eat at the seaward side of the concrete ramp and cause further erosion. In addition to these problems, members of the public gain access to the park at the mouth of Weinam Creek by driving onto the subject land and then onto the Esplanade, where they park. This has been the practice for some time and Mr MacDonald said the public consider it to be their right. This adds to the traffic noise experienced by the subject land. Mr MacDonald agreed that a certain amount of noise would be expected in an industrial area and that its effect on the valuation of industrial land would be less severe than its effect on residential land. However, Mr MacDonald said that his information was that the Department had based the valuation on the sale of a property which did have the capacity for residential development. He thought that any such comparison was inappropriate because of the noise suffered by the subject land. Mr MacDonald said the owners were concerned that the latest valuation had -- 5 of 12 -- 6 increased by approximately 49 per cent, whereas those of other lands in the area had increased by about 20 per cent. He gave examples of Lot 8 in Auster Street, which had increased by 22.8 per cent and of Lot 2 in Auster Street, which had increased by 19 per cent, but had succeeded in having the valuation reduced by $4,000. Mr MacDonald was aware that the Department had valued the subject land mainly by reference to the sale of Lot 8 in Auster Street for $70,000. Although the land was zoned "Comprehensive Development", Mr MacDonald believed that the Council had agreed to allow the owners to erect a dwelling on that property. Lot 8 is an inside lot, away from the water with no erosion and no flooding. Although it has no waterfront potential, if a high-set house was built on the land he believed it would get water views. Lot 2 in Auster Street is one property removed from the subject land and has harbour frontage. Mr MacDonald said the former unimproved value was $94,000 and this had been increased to $112,000, then reduced on objection to $108,000. Lot 2 does not suffer as much from erosion, as the ferries are slowly turning at that point into the transport terminal. It has an area of 911 sq. metres, has a smaller frontage of about 20 metres and is slightly higher than the subject land, without the risk of inundation at high tides. The land is used as a residential dwelling site. The subject land has no sewerage service and Mr MacDonald said that because of its low-lying nature, he was unsure whether the owners could install a septic system. At present they have a night cart service provided by the Council, the only land in the area to be so serviced, as the others have septic systems. The only other commercial/industrial premises fronting the Weinam Creek -- 6 of 12 -- 7 facility on the southern side of Weinam Creek is Redland Mower and Marine, situated on Lots 4 and 5, three allotments removed from the subject land. This is an outboard motor and motor mower repair business. Two other allotments are used for residential purposes (including Lot 2) while the land adjacent to the subject land (Lot 1) is vacant. The owners purchased the subject land for $225,000 in October 1992. Mr MacDonald said that while they thought they got it at a fair price, there was goodwill involved, as the Weller's Boat Yard had been established for many years. While he could not estimate the extent of this goodwill, about 60 per cent of their customers have used the slip in the past. He said that he did not regard the land as having a great diversity of uses. It would make an ideal site for a restaurant, but the owners were unable to obtain rezoning for that purpose. They had also investigated the possibility of using the land as a refuelling facility, but because of the 9 metre setback requirement the land was too small for this purpose. Mr GW Knight, registered valuer employed by the Department of Lands, gave evidence on behalf of the Chief Executive. Mr Knight said that with the exception of the subject property, no sales of directly comparable lands had been recorded in Redland Shire. The subject land was purchased by the current owners in October 1992 for $225,000. The sale price included buildings and slipway facilities suitable for boat repair operations. He described the improvements as old and as of an obsolete nature. Because it occurred after the date of valuation, Mr Knight only carried out a cursory analysis of the sale. He gave details of this analysis which showed him an unimproved value of $199,000. However, Mr Knight did admit that, in retrospect, he should have allowed something for goodwill. -- 7 of 12 -- 8 However, he did not have enough information to express a view on the matter. His basis of valuation was the sale in Auster Street of Lot 8 on RP 75327, with an area of 822 sq. metres, which sold on 4th November, 1991 for $70,000. This sale is situated approximately 150 metres west of the subject land, but not on the waterfront. It is also zoned "Comprehensive Development" and designated for marine-orientated uses. It is situated on the southern side of Auster Street, opposite Redland Mower and Marine. Auster Street is a bitumen strip to the eastern boundary of Lot 8 and thereafter is unformed and unmade. Mr Knight considers the sale to be inferior to the subject property because it does not have waterfrontage, is smaller and is inferior in situation, access, exposure and development potential. His investigations revealed that the Council had given consent for a dwelling to be constructed on Lot 8. However, the purchaser of the property had recently resold it at auction and he did not know the details of this resale. He agreed that the property had probably been purchased for residential dwelling purposes. Mr Knight said that this sale indicated to him a value for land in the immediate area which was zoned "Comprehensive Development" and which could be used for marine-orientated activities. Although it had approval for residential dwelling purposes, there had been a risk involved in getting that approval. He said it was the only evidence which was available to him as a basis for valuing the subject land. Mr Knight said that the sale had showed him $84 per sq. metre. After he had adjusted this for the size of the subject land, he added a 50 per cent premium for waterfront and applied a rate of $120 per sq. metre to the subject land. -- 8 of 12 -- 9 He also gave evidence of the sale of land in the Crown industrial estate at Cleveland, where a property of 1,337 sq. metres had sold for $90,000. Although this property is situated some distance away from the subject land, when the rate per metre disclosed by this sale is adjusted for size and an allowance made for the frontage to the river, he considers it supports his application of $120 per sq. metre to the subject land. Mr Knight also gave evidence of the relativity of values in the area. He had valued Lots 4 and 5, the Redland Mower and Marine Centre land, at $242,000, being 1,670 sq. metres at $145 per sq. metre. Lot 3, a residential site, was valued under the provisions of Section 11 (9) of the Valuation of Land Act at $107,000. Lot 2 was valued at $112,000 but reduced on objection to $108,000. This property is also developed with a dwelling-house and valued under the provisions of Section 11 (9). Lot 1, with an area of 885 sq . metres, situated next door to the subject land, is vacant land zoned "Comprehensive Development" and was valued at $139,000, a rate of $157 per sq. metre. Mr Knight said that he considered marine-orientated use is a higher and better use than residential. If he was valuing the subject land as a home site, the noise, the uncertainty of installing a septic system, the disturbance from the trespassing cars and the vehicles parked on the Esplanade, would be detrimental to the residential value of the property. However, they had limited effect on its value for marine-orientated use. He did not believe the problems of noise and erosion were as great as Mr MacDonald perceives them to be. Mr MacDonald made the point that apart from boatbuilding and slipways, marine-orientated industries do not need absolute waterfrontages. He contrasted -- 9 of 12 -- 10 this with residential properties where there is strong demand for absolute waterfrontages which cannot be built out. These aspects were not nearly so important for most industrial uses. The difficulty facing Mr Knight was to value the subject land when there are no directly comparable sales available. The only sale zoned "Comprehensive Development" is a much smaller property, situated well away from the waterfront, in a street predominantly occupied by residential dwellings. Whatever the zoning of the land may have been, the evidence indicates that the purchasers of the property obtained Council consent . for the construction of a residential dwelling. It would therefore be reasonable to assume that the property was purchased for that purpose and represents the value of residential land rather than the value of land zoned "Comprehensive Development". In such circumstances, it is virtually of no use whatsoever to value the subject land. The only other sale was that of the subject land in October 1992. Although well after the date of valuation, Mr Knight made what he called a "cursory" analysis and did not discuss the matter with either of the parties. This "cursory" analysis yielded a result much in excess of the valuation which he applied. However, there is evidence from one of the purchasers of the property that they considered that there was a considerable amount of goodwill in the purchase price, as 60 per cent of the present customers of the slipway were customers of the previous owner. Despite the change of name of the premises, this would seem to indicate that there is a degree of goodwill in the transaction. However, whether this is site goodwill or goodwill in the business, I have no evidence. There is also evidence from Mr MacDonald that there was some degree of sentimentality in the purchase. This -- 10 of 12 -- 11 sale, also, is not a good indication of the value of the land at the date of valuation. I am therefore left with no reliable evidence upon which I can base a determination of the unimproved value of the subject land. In the circumstances, I seek assistance from the valuations applied to other properties in the area. However, many of these properties are valued under the provisions of Section 11 (9) of the Valuation of Land Act as the provisions of the Act required them to be valued as residential sites rather than on the basis of their zoning. The only property that is valued in accordance with its zoning is the land occupied by Redland Mower and Marine, Lots 4 and 5, which is valued at $145 per sq. metre. Mr Knight obviously considers that this land is superior to the subject land and the evidence shows that it is inside the sheltered area of the harbour and does not suffer from the erosion or the noise problems to the same extent as the subject land. Nor is it troubled by trespassing vehicles gaining access to the Esplanade. It is also assumed that this land is serviced by a septic system. It seems that Mr Knight has changed the relativity of the valuation of the subject land compared with those other lands in the area. He is perfectly entitled to do this as the Act requires him to arrive at the unimproved market value of each individual property in an area. Relativity, although important, does not persist from< valuation to valuation and if a valuer considers that it is incorrect, it is his duty to change it. However, in these circumstances, there appears to be very little evidence to guide the valuer as to what weight to place on the positive attributes of the subject land, or what allowances to make for the problems from which it suffers. Weighing the attributes against the detriments, I have come to the -- 11 of 12 -- 12 conclusion that Mr Knight may have taken a somewhat optimistic view of the subject property. However, I have no evidence to indicate just what percentage allowance should be applied. After consideration, I have come to the conclusion that a percentage of 15 per cent discount would sufficiently allow for the problems suffered by the subject land. It may well be in a future valuation of the area better evidence is available as to the appropriate value for this almost unique parcel of land. Until then, I think that it suffers from a number of problems which are not suffered by Lots 4 and 5. Accordingly, I intend to reduce the valuation by 15 per cent. Therefore, the appeal is allowed, the valuation of the Chief Executive is set aside and the unimproved value is determined at the sum of $114,000. J J TRICKETT MEMBER OF THE LAND COURT -- 12 of 12 --