[2009] QLC 0189

IN THE LAND COURT OF QUEENSLAND

BEFORE MR RS JONES (Member)

CAIRNS, 14 OCTOBER 2009

(Copyright in this transcript is vested in the Crown.  Copies thereof 
must NOT be made or sold without the prior written authority of 
the Registrar of the Land Court.)

VLA675-08 
(formerly AV2008/0675)

In the matter of an appeal against a valuation
Property ID:		40198491
Local Authority:	Cairns

Sharron Lea Probert
v.
Chief Executive, Department of Natural Resources and Water

Ms SL Probert appeared on her own behalf.
Mr GJ Smith (Principal Legal Officer, Appeals & Advocacy Team, Legal 	Services, Department of Environment and Resource Management) 	appeared on behalf of the Respondent.

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DECISION

HIS HONOUR:   I’d like to dispose of this matter today.

MR SMITH:   I have no difficulty, sir.

HIS HONOUR:   My only reservation about that is that - have you got anything else to say?

MR SMITH:   I don’t.  Ultimately it’s a matter for the Court to determine.  I have nothing further to add.

HIS HONOUR:   I had every intention of disposing of this matter today and that is still my aim.  I’d just like to have a few minutes to consider this easement question with some solitude.

MR SMITH:   I have no difficulty with that.

HIS HONOUR:   Can we do it this way:  I will go and have a look at this easement question.  If you could all not scatter to the wind, so to speak, so my Registrar can find you readily.  I’ll go and have a look at this point now.  I’d say within - certainly between now and a quarter past 3 I will have reached a conclusion about whether I can sensibly dispose of this matter today, including this easement question.  Why don’t we just work on that basis?  We’ll resume back here at 3:15 and at 3:15 I will either give my judgment or be telling you that unfortunately I’ve had to reserve it.

MR SMITH:   I have no difficulty with that, Your Honour.

HIS HONOUR:   All right, Mrs Probert?  We will resume back here at 3:15.

THE LAND COURT ADJOURNED

THE LAND COURT RESUMED

HIS HONOUR:   I do intend to dispose of this matter today.  I think it is better if it is dealt with today rather than being left in abeyance.  It will be a bit lengthy because there are a few matters to deal with, but I do not apologise for that.  The only thing I would say by way of a rider is that I reserve the right to tidy the judgment up when it is being typed should it go elsewhere from here.  But any tidying-up will be cosmetic other than perhaps adding authorities if I consider it appropriate.  That will in no way interfere with the substance of what I am going to say.

Ms Probert, the appellant, has appealed against the assessment of the unimproved value attributed to her land by the respondent, the Chief Executive of the Department of Natural Resources and Water.  The appellant is the registered proprietor of a parcel of land located at 9 Colonel Cummings Drive, Palm Cove, more properly described as Lot 1 on Survey Plan 143221, Parish of Dulanban.  The land comprises an area of 501 square metres and is designated for tourist and residential purposes under the town-planning instruments for the city of Cairns.  Consistent with that land use designation, as at the date of valuation, the land is in the process of being developed for a single unit residential dwelling purpose.  That use is also the use adopted by the respondent as being the highest and best use of the land.  All town services and amenities are reasonably available.  Notwithstanding the highest and best use adopted by the respondent, I should note that within the current land use zoning or designation, tourism development is permitted.  But as I understand the evidence, the size of the subject land is under the minimum area required for any meaningful tourist development, including tourist accommodation development.  

The valuation of the respondent, according to Mr Cross, contains no premium for any tourism potential and his evidence about this was not challenged and I accept it.  The unimproved value determined by the respondent is $650,000 and the appellant’s estimate of the unimproved value is $520,000, the relevant date of valuation being 1 October 2007.

The appellant represented herself in these proceedings and she was the only witness called in support of the appellant’s case.  Ms Probert has no valuation qualifications.  The respondent was legally represented by Mr Smith and relied on the evidence of Mr Cross who is a registered real estate valuer also employed by the respondent.  

At pages 4 over to 5 of his report, which is Exhibit 3, Mr Cross describes the subject land in these terms [quote]:  “The subject property is a small elevated irregular-shaped parcel of predominantly rock knoll forming part of the Buchan Point headland.  Though not beach or esplanade frontage, the property experiences excellent extensive ocean, island and coastal views of approximately 300 degrees to the north, west and south from its elevated vantage point.  The property is substantially above road level with the base building or site pad level approximately 70 metres in elevation.”  I accept this description of the land, but note here that one of the matters specifically raised by the appellant, which is directly related to the physical characteristics of the land, was the question of development costs and access and I will come to those matters in a moment.

Pursuant to s. 33 of the Valuation of Land Act, the valuation appealed against is presumed to be correct and, accordingly, the onus is on the appellant to prove that it is wrong.  In the decision of the Brisbane City Council v. The Valuer-General 140 CLR 41 at pages 56 to 57, the High Court considered that the presumption in favour of the correctness of the statutory valuation is able to be rebutted where it can be shown that the valuation was based on the wrong principle and/or involved a significant error of fact and/or was made by a fundamentally erroneous method.

If I turn then to the issues of the appeal by reference to the appellant’s grounds of appeal, essentially five issues were raised.  As they are set out in the notice of appeal, there is no point in me repeating them here.  As the evidence in chief led on behalf of the appellant evolved, it became apparent that the more substantive matters, which, according to the appellant, showed the valuation appealed against wrong, could be summarised perhaps in this way:  first, that when regard is had to certain statistical data and market trends and to a comparison between the unimproved values assigned to other properties valued by the respondent - and here particular reference is made to a property identified by the appellant at 46-48 Hibiscus Lane, Holloways Beach and by reference to other evidence concerning land at 11 Colonel Cummings Drive - the unimproved value assigned to the subject land by the respondent was excessive and there was no justification for an increase in the unimproved value of the land of some 25%.  According to the appellant, the increase in the unimproved value of the 46-48 Hibiscus Lane land from 1 October 2006 to 1 October 2007 was about 9.3%.  In respect of these matters I refer specifically to the information provided by the appellant and tendered and marked Exhibit 1.  I think it would be fair to say that perhaps at the heart of the appellant’s case is the increase of 25% which the appellant says is unjustified in what she described as being a flat market between 1 October 2006 and 1 October 2007.  

The evidence contained in Exhibit 1 was expanded upon in a further document - Exhibit 2.  This document deals with three specific issues under three headings, namely “No Market Evidence”, “Disparity in the Valuation Process” and “Disparity in Valuations”.  I will deal with each of those matters in turn, but, before I do so, I should deal with some other matters raised during the appellant’s evidence in chief by way of oral testimony.  The appellant referred to two particular matters over and above those matters identified in Exhibits 1 and 2.  These matters were the construction costs associated with the land and issues concerning an access easement.

Turning to the construction cost issue, the appellant gave evidence that construction costs of in the order of $500,000 were involved in constructing the residence being erected on the land - that cost, again as I understand the evidence, being predominantly associated with foundation costs and did not include any slab construction.  There was no real challenge to this evidence led by the appellant save for in this way:  it was said that in comparison with one of Mr Cross’s sales - sale 7 - there would not be such a difference in the construction costs between the two blocks as to make the comparison of sale 7 to the subject unreasonable.  The other point raised by Mr Cross was that the cost of $500,000 for foundations to some extent reflected the extent and nature of the dwelling being constructed on the land and that construction costs need not necessarily have been that high.  The appellant responded to that by saying, to the effect, that anything less than what was being built on the land would amount to an undercapitalisation.  At the end of the day I accept that there would be significant construction costs associated with building any meaningful residence on the land, but I do not consider the evidence on this matter alone or in conjunction with the other evidence, which I will come to in a moment, sufficient to require a conclusion that none of the sales relied on by Mr Cross could be relied on as providing probative evidence of value of the subject land.

If I could then turn to the question of the access easement.  An unsigned, undated copy of an easement document was tendered - Exhibit 4.  Under that document, a company - Gem View Pty Ltd - is identified as the grantor and the servient tenement, being the burdened land described as Lot B on Lot 2 on Survey Plan 143221.  The dominant tenement, the benefited land, is Lot 1 on Survey Plan 143221.  That, of course, is the subject land.  The grantee is identified as Sharron Lea Probert, the appellant.  On behalf of the appellant, it has been submitted that this document has to be read literally - that is, the only person entitled to the benefit of the easement is her.  No other person, be it husband, family, other relative or visitors, would be entitled to take benefit of this access easement.  As it evolved in evidence, the appellant said there was at least one legal opinion, if not two, in existence which supported that construction.  No legal opinion in support of the construction advanced by the appellant was provided to the Court.  I acknowledge that the easement is certainly one of the briefer easement documents which I have had experience with and I also acknowledge, as I have already identified, that the only grantee expressly identified is the appellant.  Notwithstanding that, though, I find the construction advanced by the appellant to be an extremely unlikely construction and in the absence of there being some persuasive legal argument in support of that intention, I find it too difficult to accept.  No such legal argument was advanced.  It is my opinion that, when read in context, the easement should properly be construed to include not only the appellant in person but also the grantee’s guests, visitors and others who come to the land consistent with the purpose to which the land is being put - relevantly, for residential purposes.  In reaching this conclusion, though, I acknowledge, as did Mr Smith, that it is quite likely that any use involving heavy earthworks equipment during construction might well fall foul of the terms of the easement.  It would be apparent from what I have said that I do not accept the appellant’s construction of the easement document.  But that said, as Mr Smith pointed out perhaps at a more practical level, when regard is had to the unimproved value of the land, the terms and conditions of the easement to which I have just referred is not determinative of the question.  There is no probative evidence that practical access to the land is limited to that area over which the subject easement exists and from my recollection it was not put to Mr Cross that that was the case.

To summarise on the last point that I have just referred to, there is no probative evidence to say that the access to the land has to be limited to that area covered by the easement.  

Now if I can then just go back to Exhibit 2 for a moment and deal with some of the matters raised by the appellant there.

Under the heading “No Market Evidence”, the appellant first refers to three properties located at 4 Buchan Street, 8 Buchan Street and 12 Buchan Street which sold between January 2005 and October 2007 for $1.37 million, $1.45 million.  In respect of the last property, that was not a sale in fact.  It was passed in at auction at $1.4 million.  All of these properties are improved and the appellant has not provided any real details about the nature of the improvements nor evidence about the value of the improvements on the land.  

In respect of the property located at 8 Buchan Street, that was an improved sale that Mr Cross had regard to and he analysed it to a land value of $1,020,000.  That can be found at Exhibit 3, page 19.  There was no serious challenge to Mr Cross’s assessment of the value of that land and according to Mr Cross, when properly analysed, this sale tends to support the valuation of the respondent rather than contradict it.  For these reasons I do not find the evidence concerning those three properties very probative at all.

Next the appellant refers to an auction of an improved property at 11 Colonel Cummings Drive.  I also regard this evidence as providing no probative evidence of value.  Again, it was an improved property with little, if any, meaningful evidence about the nature and value of the improvements on the land.  I also note that this sale occurred on the 26th of September 2009.  There was no evidence about what market movements might have occurred between the relevant date here and that date.

Reference is again made in Exhibit 2, as was the case in Exhibit 1, to statistical data.  Whilst statistical data might provide a useful broad market overview, it must give way to more specific market evidence and relevantly here to probative sales evidence.  I will come to that in a moment.

Moving on to the next heading, “Disparity in the Valuation Process”, the appellant identified a number of features which allegedly distinguish her block from other residential blocks.  While I accept the appellant’s evidence on these matters, I am sufficiently satisfied that the respondent has taken these differences into account in valuing the land.

Turning then to the final heading, “Disparity in Valuations”, the appellant effectively challenged the respondent’s valuation by reference to the unimproved values assigned to beachfront properties at Holloways Beach.  I will deal with these sales in more detail in a moment.

If I could turn then to the evidence relied on by the respondent.  Mr Cross’s report contains reference to numerous sales, many of which occurred in 2002.  In the circumstances of this appeal, I do not find the evidence concerning the 2002 sales to be particularly useful in determining the unimproved value of the land at 1 October 2007.  I also find that Mr Cross’s evidence concerning the resale of land at Yorkeys Knob in September 2004 to be of little use.

Turning then to the sales evidence that Mr Cross really relies on, it is identified in his report as being [quote] “the most relevant comparisons”.  These sales comprise of five lots at Clifton Beach with prices ranging from $1.45 million to $1.55 million.  The sales occurred between May and August 2007.  All five sales fall within a development known as the “Argenta Beachfront Community Management Scheme”.  Three of the lots are subject to vegetation covenants, but this seems to have had little effect, either positive or negative, on price.  As I understand it, three of these lots front an unformed part of the Upolu Esplanade at Clifton Beach and despite there being some difference between the lots concerning land use designations, these land use designations’ differences also appear to have little impact on price, perhaps because various covenants associated with the land effectively limits development on all the lots to single-unit residential development.  Mr Cross gives the description of these sales at pages 14 to 15 of his report.  I do not intend to repeat what is said there other than to state that I accept his evidence about this and I note that it wasn’t seriously challenged, in my view.  

In my opinion, these sales set a benchmark in the sense that they establish a value above which the subject property could not exceed.  In my opinion, Mr Cross’s sales 8 and 9 also fall into this category.  These sales also have direct beachfront reserve access and were purchased for a total price of $2.2 million.  

Mr Cross then has regard to six non-beachfront sales within the same development as the five sales that I have just referred to.  These sales, while larger than the subject, occurred between April 2007 and January 2008 and, like the subject, as I have already said, are non-beachfront lots.  According to Mr Cross, they also have significantly inferior views when compared to the subject.  Not surprisingly, when comparing these sales to the previous five sales, they reveal a much lower lot price ranging from $612,500 to $750,000.  There’s a description of these sales at page 15 of Mr Cross’s report and again I do not intend to set that evidence out in detail.  

I accept that evidence with perhaps one caveat and that is that Mr Cross has failed to acknowledge that, whilst the views might be inferior to the subject, these sales are superior to the extent that they are much closer to the beach than the subject land.

The next sale that I specifically want to deal with is Mr Cross’s sale 7.  In my opinion, this sale represents the best evidence of value of the subject and while I acknowledge that there are very real physical differences between this block and the subject land, the respective positives and negatives, at least to some extent, tend to balance one another out.  To some extent, this is recognised in Mr Cross’s report at page 17.  In broad terms, I accept Mr Cross’s evidence about this sale and in particular note that while the sale has very good if not excellent ocean views, they are still materially inferior to those from the subject.  Ocean views, of course, being one of the major influences on price for premium lots such as we are dealing with here.  This sale, combined with the supportive evidence of Mr Cross’s sales 1 to 6 and sales 8 and 9, leads me to the conclusion that the valuation appealed against is a reasonable valuation of the unimproved value of the subject land as at 1 October 2009.  In reaching this conclusion, I should reinforce that the appellant has not led any expert valuation evidence or otherwise provided any probative sales evidence which would contradict the valuation of the respondent.  

For the sake of completeness, I should also mention here that Mr Cross had regard to three improved sales.  However, given the availability of the more probative sales evidence to which I have already referred, I do not consider it necessary to say anything more about these sales other than to emphasise what I had to say in respect of that improved sale located at 8 Buchan Street.  I will not repeat what I have said about that sale.

For the reasons expressed above, I have reached the conclusion that the appellant has failed to prove that the valuation appealed against is the result of an application of a wrong principle or the result of an erroneous methodology or involved a significant error of fact.  To put it another way, the appellant has failed to upset the presumption of correctness accorded to the valuation pursuant to section 33 of the Valuation of Land Act.

It may be that with the assistance of an expert valuer, a number of the matters, including market movement and costs of building and access difficulties, might have been able to more forcibly been dealt with to advance the appellant’s case.  But how the appellant elects to present her appeal is, at the end of the day, a matter for her and the end result was that I did not have the benefit of any expert evidence which contradicted that provided by Mr Cross.

For all the reasons I have given, the order of the Court is that the appeal is dismissed. 

Anything arising?

MR SMITH:   I have nothing further, Your Honour.

MR JONES:   Ms Probert?

MS PROBERT:  No.

MR JONES:   We will adjourn.

THE LAND COURT ADJOURNED