Beydoun v Valuer-General[2017] QLC 36

LAND COURT OF QUEENSLAND

1. [1]
   Mr Nabil Beydoun owns a 1,012m² parcel of land at 227 McLeod Street, Cairns North. It is rectangular in shape, with a narrow frontage of 12m and a depth of 84m. As of 1 October 2015, the Valuer-General assessed its site value at $305,000. Mr Beydoun’s objection to that assessment was rejected and he appealed to this Court, contending its site value is no more than $230,000, the site value assessed by the Valuer-General as at 1 October 2014.

2. [2]
   Although he identified four grounds of appeal, those grounds and the arguments Mr Beydoun made to support them, are simply expressed by the following propositions:

1. The increased assessment is not justified, because real estate values in Cairns have fallen, not risen, since 2008 (ground 1).

2. The assessment does not adequately account for disadvantages of this property, namely its narrow frontage, which constrains development, and drainage issues (grounds 2 and 3).

3. The assessment is excessive given the assessment on the adjacent property at 229 McLeod Street (ground 4).

3. [3]
   The property is non-rural land, so the Valuer-General is required to assess its site value.^[1] That is its expected realisation under a bona fide sale assuming the six unit complex now on the property had not been constructed.^[2] In assessing site value, the Valuer-General relied on the report by one of its senior valuers, Ms Amanda Hunter, a registered valuer with some 30 years’ experience.

4. [4]
   Mr Beydoun gave evidence in person and relied on an extract from a report by Herron Todd White called “CairnsWatch December 2016”.^[3] Although Mr Beydoun said he had some training in valuing land before he came to Australia, he worked as an engineer before he retired.^[4] He was not registered as a valuer in Australia and did not produce any qualifications or appear to put himself forward as a valuation expert.^[5]

5. [5]
   The appeal is a re-hearing limited to the grounds of appeal and Mr Beydoun bears the onus of proof on the balance of probabilities.^[6] That is not easy to discharge without the assistance of a registered valuer to contest the Valuer-General’s sales analysis or the comparison with valuations of comparable properties. That does not prevent an appellant from challenging the reasonableness of allowances made in a valuation, but it does demonstrate the difficulty faced by an appellant who does not lead expert evidence in their appeal.^[7]

6. [6]
   Against that background, I turn to the grounds of appeal.

Real estate values in Cairns have fallen, not risen, since 2008.

7. [7]
   Mr Beydoun relied on the Herron Todd White CairnsWatch report as evidence of this proposition. The report includes the following statement:^[8]

“The Cairns median house price trend is continuing to slowly ease, nudging down to $391,200 in October 2016, to be 4.3% lower than it was in October 2015”.

8. [8]
   There are a number of observations that can be made about the extract relied upon by Mr Beydoun. Firstly, this statement forms part of a trends analysis of the Cairns region as a whole. Secondly, it reports a median property price which, the report itself observed, does not necessarily equate to movements in individual property values.^[9] Ms Hunter observed “median sales is really an indicative statement that is really encompassing the entire region and really doesn’t relate to the property that we’re talking about at this point in time”.^[10] This Court has rejected median or averaging of sales as the basis for assessment.^[11] Thirdly, it refers to the trend in relation to house prices, not land prices. The report noted an increase in land prices during the same period. Finally, it relates to a period after the date of assessment.

9. [9]
   In her report, Ms Hunter stated the market in Cairns had remained relatively low since the Global Financial Crisis, and although sales of residential parcels had occurred with development proposals for duplex or triplex purposes, little construction had commenced.^[12] She further noted a particular commercial reluctance in 2015 to embark on major developments “due to an abundance of existing developed stock for sale”.^[13]

10. [10]
    Mr Beydoun has not established real estate values in Cairns have fallen, not risen, since 2008. The CairnsWatch Report does not provide any challenge to Ms Hunter’s assessment.

11. [11]
    It is well established the best basis for assessing unimproved value is comparable sales of vacant or lightly improved parcels of land.^[14] Ms Hunter valued the subject property via a direct comparison with bona fide sales on a rate per m² of the site area, in fee simple.^[15]

12. [12]
    Ms Hunter analysed three sales chosen as the most comparable by reference to their size, location and zoning.

13. [13]
    Two of those properties (44 Clare Street, Parramatta Park and 30 Lily Street, Cairns North) were vacant at the time of sale. 44 Clare Street was a vacant, early sale of a hatchet shaped parcel, purchased for the construction of a dwelling.^[16] Ms Hunter analysed it at $250,000 or $438/m² .^[17] 30 Lily Street was a vacant, “far smaller corner parcel” in Cairns North which Ms Hunter analysed at $325,000 or 584/m² .^[18]

14. [14]
    The third (28 Grove Street, Cairns North) is a narrow parcel with a frontage of 11m and a depth of approximately 67m and bounded by the Cairns – Kuranda Railway line to the western boundary.^[19]

15. [15]
    When 28 Grove Street was sold the property had a high set house in poor condition.^[20] The purchaser has since cleared the site and redeveloped it. On the information provided to her by the purchaser, Ms Hunter analysed the sale to include the cost of demolition. Assuming it was valued as a vacant multi-unit site, Ms Hunter considered its value would be $285,000 or 388/m² as at 1 January 2015.^[21]

16. [16]
    Ms Hunter identified 28 Grove Street as the most comparable evidence to the subject due to its “close proximity being about 690m directly south-south-east of the subject; same underlying zoning; and similar attribute of a narrow street frontage”.^[22] Further, the zoning under the Cairns Plan 2009 as at the date of the sale was Residential 3 – which is comparable to the subject property.^[23]

17. [17]
    Although Mr Beydoun did not accept these sales were the best evidence of the site value of his land, he did not propose any other sales.

The assessment does not adequately account for disadvantages of this property.

18. [18]
    Mr Beydoun argued the assessment was excessive because it did not adequately account for the following disadvantages of this property, when compared with the adjacent property: (a) the narrow frontage (12m) which constrained development; and (b) drainage issues which resulted in water pooling during heavy rain to a depth of 80mm in the carpark at the rear and 40mm at the doors of the flats at the front of the site. Mr Beydoun said substantial costs would need to be incurred to rectify the drainage problem. He estimated the combination of those disadvantages meant the property was worth 25% less per m² than the adjoining property.^[24] 

19. [19]
    I will return to his comparison with the adjoining property shortly.

20. [20]
    Ms Hunter accepted the narrow frontage was a disadvantage for this site.^[25] She said she would have assessed a much higher site value if the property had the usual frontage of approximately 20m. For this reason, she placed particular reliance on her analysis of the sale of 28 Grove Street as it had a comparably narrow frontage (11m). Although 28 Grove Street is a smaller block (735/m² ), it is immediately adjacent to a railway line. Ms Hunter applied a site value of $388/m² compared with $301/m² for Mr Beydoun’s property.^[26]

21. [21]
    Ms Hunter did not accept the drainage issues described by Mr Beydoun represented a significant issue in assessing value.^[27] Mr Beydoun agreed during evidence that the drainage issues were difficult to fix because of the existing flats. Ms Hunter said each of the sales she analysed involved land which would have required some minor site works prior to development. In the absence of evidence to the contrary, I accept Ms Hunter’s opinion that if Mr Beydoun’s property was vacant, the drainage issues could be dealt with by minor earth works to reshape the profile of the site.

22. [22]
    I am not persuaded Ms Hunter’s assessment fails to adequately account for the narrow frontage of the property and the drainage issues described by Mr Beydoun.

The assessment is excessive given the assessment of 229 McLeod Street

23. [23]
    Mr Beydoun said the assessment of his property was excessive when compared to the block next door at 229 McLeod Street. The Valuer-General assessed the value of that property at $990,000 which equates to $278.95/m² for the 3,549m² block. Mr Beydoun submitted it was unfair that the rate/m² for his property was greater (at $301.38/m² ) given 229 McLeod Street has a wider frontage to a bitumen road and does not flood.

24. [24]
    Ms Hunter said it is an accepted valuation principle that the rate/m² was lower for larger properties. I accept that. She also said she did not consider the assessed value of 229 McLeod Street in arriving at her assessment of Mr Beydoun’s property because it was not comparable in size or in other features.^[28]

25. [25]
    In his Notice of Appeal, Mr Beydoun also referred to the percentage increase in the last two assessments of his property. That, alone, does not demonstrate the assessment is excessive if it is supported by bona fide sales of comparable parcels of land.^[29]

26. [26]
    I consider the sales relied upon by Ms Hunter provided an appropriate basis for assessing the value of Mr Beydoun’s property. Mr Beydoun has not persuaded me that Ms Hunter has incorrectly analysed those sales or that there were sales she should have considered. Nor has Mr Beydoun persuaded me there was any other error in the approach Ms Hunter took to her assessment. Given those findings, his appeal must fail.

Orders

27. [27]
    The orders of the Court are:

1. The appeal is dismissed.

2. The valuation appealed against is confirmed.

FY KINGHAM

PRESIDENT OF THE LAND COURT