Donnelly v The Valuer-General [1993] QLC 65

Re: Determination of Unimproved Value - City of Brisbane, Division of Stephens - AV91-829 AS and SB Donnell y v. The Valuer-General DECISION LAND COURT, BRISBANE. 14th May, 1993. This is an appeal against the determination by the Valuer-General of an unimproved value of $338,000 for a "Residential A" zoned site situated on the Brisbane River at 31 King Arthur Terrace, Tennyson. The site contains an area of 1095 square metres and is more particularly described as Lot 22 on RP 57361, Parish of Yeerongpilly. The relevant date for the determination of the unimproved value is 31st March, 1990. The appellants contend within the notice of appeal for an unimproved value of $150,000. Evidence in support of the grounds of appeal was furnished by Augustine Stanislaus Donnelly who is a widely known practicing investment adviser. It has come to Mr Donnelly's attention that, in another case involving the determination of unimproved value of land in King Arthur Terrace (AV91-823 - R Andrew v. The Valuer-General) that the respondent Valuer-General relied upon the analysis of a [1993] QLC 65 -- 1 of 10 -- - Page 2 - sale of Lot 33 on RP 54173 Parish of Yeerongpilly, containing an area of 918 square metres. This sale property is located at 53 King Arthur Terrace. Details of this sale have been provided to Mr Donnelly by Mr Andrew. Mr Donnelly provided the Court with his own analysis of the sale. Erected upon the site at sale date was a brick house to which Mr Donnelly attributed a replacement cost value of $130,000 which, when deducted from the purchase price of $365,000 reveals an unimproved value of $235,000 for the land. It is to be noted that the dwelling house at 53 King Arthur Terrace has been erected on the site since at least 1953. The basis for Mr Donnelly's estimate of the value of the dwelling house is his experience with the cost of building an extension in the form of a studio and open terrace to his home about 9 years ago. This cost was $36,000 and on the basis of inflation at 7% per annum since that time, Mr Donnelly estimates the cost of the extension would have been $60,000 to $65,000 to date. Now Mr Donnelly suggests that it is possible that his analysed unimproved value of $235,000 for 53 King Arthur Terrace should be adjusted downwards for its use as a comparable sale. He understands the purchasing company is one in which Mrs Ann Garms and her husband are beneficial owners. Mrs Garms owned a substantial residence in King Arthur Terrace which was sold at about the same time as she purchased 53 King Arthur Terrace and Mr Donnelly suggests that it is possible that Mrs Garms was prepared to pay above market value for a house nearby. He suggests that an allowance of $30,000 should be made for this special factor reducing the analysed unimproved value to $205,000 ($223/m 2) for use as a comparable sale. Mr Donnelly then calculates, using the same rate per square metre for the subject land, that it should be valued at $245,000 without any -- 2 of 10 -- - Page 3 - allowance for what he calls specific disabilities. There is severe erosion of the greater part (80%) of the land adjoining the River, and as a result the use of the river frontage for possible construction of a boat shed or jetty is reduced in width from 17 metres to less than 3 metres. Mr Donnelly also points to the noise nuisance emanating from the use of shunter trains at the Moolabin Railway Goods Yard at night time. Mr Donnelly claims that the valuation of his land is anomalous with that of the sites at 1 King Arthur Terrace and 23 King Arthur Terrace as set out in his grounds of objection and referred to later in this decision. He uses for his comparisons a value per square metre basis. The valuation under appeal was made by Ian Geoffrey Savage who is a registered valuer in the employ of the Department of Lands. Mr Savage describes the nature of the subject land as being above road level and an elevated rectangular river frontage block with a basically level building site (54 metres deep) and which drops steeply (1 O metre cliff) to a narrow shelf fronting the river. The building site ranges in height from RL 15 to RL 16 metres (AHO). The site was flooded to the RL 10 .9 metres (AHO) in 1974. Post Wivenhoe Dam predicted Q100 flood level is RL 7.9 metres (AHD). The property has views of the Brisbane River and Long Pocket (lndooroopilly) Golf Course. Mr Savage relies upon the same sales evidence as a basis for his valuation as he did in the R. Andrew case. One of the sales is indeed that of 53 King Arthur Terrace. Mr Savage analyses this sale to show an unimproved value of $354,000 after making an allowance of $10,000 for the added value of the brick house on the site. He regards the sale land to be inferior to the subject land as it is a smaller -- 3 of 10 -- - Page 4 - site. Mr Savage supports his estimate of the added value of the house at No. 53 King Arthur Terrace on the basis that since sale it has been considerably altered structurally by the purchasers. The building profile is being changed and there have been new roofing sections added together with extensions. The other sale relied upon by Mr Savage is that of 15 Esplanade Street, Yeronga from Dlugolecki to Smith and Other on 20th September 1989 for $150,000. This property was also at sale date improved with a dwelling house which was sold for removal for $10,000 by a subsequent purchaser. The sale is analysed by Mr Savage to show an unimproved value of $138,500 and he considers it to be an inferior site to the subject land which is larger, of higher elevation and with an exclusive river frontage, although 15 Esplanade does have good river views across a roadway and parkland. Mr Savage does not agree with a suggestion by Mr Donnelly that it is inappropriate to value some properties at a higher value per square metre than larger properties and that this proposition has no basis in valuation law. Mr Savage's view on the matter has merit since there is an authority in valuation law for the proposition that "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 value comparison" - vide Judgment of the Land Appeal Court in Re: H and E Grahn v. The Valuer-General (AV89-246 and 247) - Judgment dated 13th December, 1990 - not reported. Mr Savage does not agree with Mr Donnelly in so far as his claim that the subject land is valued out of relativity with 1 King Arthur Terrace and 23 King Arthur -- 4 of 10 -- - Page 5 - Terrace is concerned. His is quite happily with the relativity in values in King Arthur Terrace on a site to site basis. Mr Savage does not dispute that there has been erosion on the river front but he says there would be expected to be erosion on all the river frontages in King Arthur Terrace including on his sale land at 53 King Arthur Terrace. For the reason that Mrs Garms has lived in King Arthur Terrace for some time, Mr Savage submits that she would be well familiar with disadvantages such as the noise from the railway yards before investing in 53 King Arthur Terrace which would suffer from the same problem. Now there are unfortunately difficulties for Mr Donnelly with regard to his evidence about the analysis of the sale at 53 King Arthur Terrace. One relates to his grounds of appeal which read:- "1. The grounds set out in the Notice of Objection dated 14th December, 1990 and supporting statements. 2. The valuation does not adequately take into account the special disabilities of the property, namely the loss of a considerable amount of soil in two floods and the considerable value of the rock wall which had to be installed to prevent further erosion. 3. The valuation is not equitable in relation to valuation of nearby properties. 4. Because of that inequity the valuation discriminates unfairly and illegally against the owners. 5. The statement made by officers of the Division of Valuation of the Lands Department that it is appropriate to value some properties at a higher value per square metre than larger properties has no basis in valuation law. It ignores market realities. 6. The valuation is excessive on the basis of potential earning capacity in the view of rental achieved by an adjacent property. -- 5 of 10 -- - Page 6 - 7. The information as to effect of flood on various properties on which the valuation of this property is based is grossly incorrect." The grounds set out in the notice of objection dated 14th December, 1990 and supporting statement are:- "DETAILS OF OBJECTION BYAS AND SB DONNELLY TO VALUATION NO 00514100/00000 RELATIVITY WITH OTHER PROPERTIES The valuation of this property is completely unrealistic in relation to other properties on the basis of the area as the following table shows - Property Area Valuation Area per Metre Sq 1 King Arthur Tee 6121 $970,000 158.47 Tennyson 23 King Arthur Tee 1730 $390,000 225.43 Subject property 1095 $375,000 342.47 On the above basis the current valuation is 2.16 times the value of 1 King Arthur Tee, Tennyson. To be realistic the value of this property per square metre should be less than the value of 1 King Arthur Terrace because that property has water frontage to two sides, namely Brisbane River and Oxley Creek. Our property has only one water frontage. The valuation notice of 1 King Arthur Terrace indicates that it was affected by flood and that our property was not affected by flood. This is incorrect as both properties wee in the same situation in that a significant part of the land was under water but no part of the house was under water. If your records indicate differently they are incorrect because during the flood I made frequent visits to No 1 King Arthur Terrace and to the neighbouring houses in the process of helping residents take precautions against the flood. CONSIDERATION OF SPECIAL DISABILTIES Our property is subject to special disabilities which do not apply to the other two properties referred to above. The disabilities are considerable loss of a river bank portion of the land through water erosion in various floods over the 37 years since we purchased the property. This fact.may not be apparent to a valuer as the areas have been overgrown by vegetation. The effect of this flood damage is that two large holes mean that our access to the river is limited to about one quarter of -- 6 of 10 -- - Page 7 - the width of the property at water level. This is a considerable disadvantage in relation to the erection of a jetty or swimming pool or any other area for recreation on the river bank. COMPARABLE SALES NOT RELEVANT Any comparable sales that any have been used in arriving at the valuation would not be relevant to our property because of the disabilities referred to above. As most purchasers of riverside property would be interested in erecting a jetty, swimming pool or other recreation facilities on the riverbank close to the water, the disability would result in those buyers looking elsewhere. Hence it would not be fair to value the property on the basis of comparable sales of other properties which do not have those disabilities. BASIS OF CALCULATION OF ALTERED FIGURE On the basis of the area of the subject block of 1095 sqm and the area of 1 King Arthur Terrace of 6121 sqm and the valuation of that property of $970,000, a reasonable valuation for our property could be calculation as under - 1095/6121 X 970,000 = $173,526 From that figure would be deducted an allowance for two other items namely 1. The fact that 1 King Arthur Terrace has two water frontages and our property has only one. 2. The special disabilties referred to above which significantly reduce our access to the water. If the total of these two factors were calculated at a very modest figure of 15%, they would amount to $26,029. This would give a realistic valuation of $147,497 calculated as under - 1. 2. Valuation based on an area compared with 1 King Arthur Terrace Deduct allowance for the fact that we have only one water frontage and the special disabilties outlined above Realistic value for our property 173,526 26,029 $147,497 So that our claim can not be considered unreasonable we suggest that the -- 7 of 10 -- - Page 8 - above figure be rounded up to $150,000." Section 16J(3) of the Valuation of Land Act of 1944 provides - "An appeal shall be instituted by filing a notice of appeal in the Land Court Registry. Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated and the burden of proving every such ground shall be upon the owner." That owners are bound in the conduct of appeals of this nature by the grounds of appeal cannot be in dispute. Authorities in support of this proposition abound. In the judgment of the High Court in Re: Appeals against determinations of the Valuer-General - Brisbane City Council v. The Valuer-General - Shire of Esk - Somerset Dam lands (1978) 5 QLCR 283 p. 304, after quoting the same appeal provisions in section 21 (3) of the Valuation of Land Act 1944, that Court said:- ''The effect of these provisions is that an owner on appeal to the Land Appeal Court has the burden of proving the grounds of appeal" Again, in the judgement of the Land Appeal Court in Re: App eal by S.A.G. Pratt against the determination of the Valuer-General - Shire of Kilcoy (1981-2) 8 QLCR 141 at p.147 that Court held:- " It is important for both parties to an appeal under the Valuation of Land Act to this Court to be ever mindful that, while the matter does come before the Land Appeal Court by way of a re-hearing, the appeal is limited to the grounds set forth in the original notice of appeal." In Re: G Franklin and Others v. The Valuer-General - Shire of Johnstone (1978) 5 QLCR 181 at p. 184 the Court said:- "The provisions of the Valuation of Land Act as to appeal procedure are restricted in their operation, more especially to an appellant who has made his appeal on narrow and particular grounds rather than on a broad general ground such as 'The valuation is excessive and contrary to law'. The language used by the legislature is mandatory and thus binding not only on the parties but also on this Court and the Land Court ........ In simple terms, in the conduct of his appeal before us, an appellant remains limited to the grounds of his original notice of appeal to the Land Court ..... The effect of these provisions is that an owner on appeal to the Land -- 8 of 10 -- - Page 9 - Appeal Court has the burden of proving the grounds of his appeal ...... " Nowhere in the grounds of appeal is there reference to sales evidence in support of the appeal. Even worse, as previously outlined in the grounds of objection, the consideration of comparable sales is claimed by the appellants to be not relevant. In these circumstances, I cannot rely on Mr Donnelly's dissection of the sale of 53 King Arthur Terrace. Even if I did, I could not adopt his analysed unimproved value since his estimate of the value of the dwelling house is its replacement cost with no allowance having been made for depreciation and or obsolescence, and I note that the building was at lease 36 years old. In addition his replacement value estimate has a rather tenuous basis. The disabilities raised by Mr Donnelly are recognised by Mr Savage and he says they are, for the most part, shared by one of his basic sale properties ie. that of 53 King Arthur Terrace. In another case heard at the same sittings of the Court - AV92-824 - Appellant: RG Crebert - valuation and quantity surveying evidence was led by the appellant but for the reasons set out in my decision in that matter, that evidence could not be relied upon in that case. That valuation and quantity surveying evidence would have led me to conclude that Mr Savage's analysis of sale of 53 King Arthur Terrace was defective. But of course that evidence is not part of this case and accordingly I cannot give it any cognisance here. This is so because of the judgment of the Land Appeal Court in Re: App eal by B.T. Dillon against the determination of the Valuer-General - Shire of Livin gstone and Ci ty of Rockhampton (1986-87) 11 QLCR 231 where at p 233 that Court said:- 'The legislature has not given this Court any investigatory power under the valuation -- 9 of 10 -- - Page 10 - of Land Act. If the appellants case is not strong enough in its own right to establish the values contended for or to disprove the Valuer-General's values, the Court is not empowered of its own valuation to probe the fairness or correctness of the valuers General's values and by this means arrive at its own estimate of value." However, Mr Donnelly's evidence about the erosion of the riverbank is such that I feel it deserves special attention. There is no specific suggestion by Mr Savage that this is a common problem nor that it is a problem with the property at 53 King Arthur Terrace. I propose to make an allowance against the valuation assessment specifically for this disability. Mr Donnelly quantifies an allowance for this disability at 15%. Doing the best I can, I find that an unimproved value of $300,0000 makes an appropriate adjustment for that disability. It follows then that the appeal is allowed, that determination of the Valuer- General be set aside, and that the unimproved value of Lot 22 on RP 57361, Parish of Yeerongpilly is determined in the sum of $300,000. (C.H. Carter) Member of the Land Court. -- 10 of 10 --