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St Columb Limited v Valuer-General[2017] QLC 37

St Columb Limited v Valuer-General[2017] QLC 37

LAND COURT OF QUEENSLAND

CITATION:

St Columb Limited v Valuer-General [2017] QLC 37

PARTIES:

St Columb Limited

(appellant)

 

v

 

Valuer-General

(respondent)

FILE NO/s:

LVA211-14

DIVISION:

General division

PROCEEDING:

Appeal against valuation under the Land Valuation Act 2010

DELIVERED ON:

2 August 2017

DELIVERED AT:

Brisbane

HEARD ON:

23 November 2016

HEARD AT:

Innisfail

MEMBER:

WL Cochrane

ORDER/S:

  1. The appeal is dismissed.
  2. The Valuer-General’s valuation of Eight Hundred and Fifty Thousand Dollars ($850,000) as at 1 October 2013 effective from 30 June 2014 is confirmed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – evidentiary onus – lack of comparable sales

Land Valuation Act 2010 s 17, s 18, s 19, s 155

Valuation of Land Act 1944

Lawson v Valuer-General [2012] QLC 27

Meiers v Valuer-General [2012] QLC 19

St Columb Ltd v Department of Natural Recourses and Mines and Water [2006] QLC 67

Steers v Valuer-General [2012] QLC 12

APPEARANCES:

Mr Winton Veall, a director of the appellant

Mr Predev Prasad, senior lawyer, In-house Legal, Department of Natural Resources and Mines

  1. [1]
    St Columb Limited is the owner of Timana Island which is a freehold island located between the better known Dunk and Bedarra islands. Its formal address is Island Street Dunk Island. Its real property description is Lot 4 on Crown Plan CWL 369, Parish of Dunkalli, County of Cardwell and it has a total area of 15.9851 hectares. It is just off the coast of Queensland, being about 5.5 km south-east of South Mission Beach and about 10 km south-east of Wongaling Beach.
  1. [2]
    The subject land itself has no mains services and there is no water available on the island, there being no natural streams nor watercourses nor springs on the island.
  1. [3]
    It is accessible only by boat, and that access is restricted at low tide to only small vessels.
  1. [4]
    Pursuant to the Land Valuation Act 2010, the Valuer-General issued a valuation as at 1 October 2013, effective from 30 June 2014, at a valuation of $990,000.
  1. [5]
    Upon objection made by St Columb Limited the valuation was altered to $850,000.
  1. [6]
    From that decision the land owner has appealed to this Court, contending in its notice of appeal that the site valuation should be $590,000.

The grounds of appeal

  1. [7]
    In the notice of appeal, the appellant did not particularise individual grounds of appeal but rather attached a report prepared by Mr Robert Cowell, a registered valuer, then of the firm Preston Rowe Paterson, which opined for a valuation of $590,000 as the market value of the subject land having carried out an analysis of three sales of land namely:
  1. Hideaway Resort, Lot 2, Island Street, Bedarra Island
  1. Bedarra Island Resort, Lot 3, Island Street, Bedarra Island
  1. 65 Explorers Drive, South Mission Beach
  1. [8]
    Within that report, which must now necessarily be taken to be the grounds of appeal, Mr Cowell identified factors of the subject land which he says must be taken into account in reaching a valuation figure.
  1. [9]
    Those factors are (using the language of the report):
  1. The value of the land as a private freehold residential island and its permissible use under Council regulations
  1. The size of the island
  1. The availability of services (if any) to the island
  1. The level of actual useable land area
  1. The size and quality of the beach
  1. The views
  1. The restricted availability of gaining access via boat to the beach throughout the day, dependent on the tides
  1. The availability of drinking/fresh water
  1. The economies of scale factor.

Documentary evidence

  1. [10]
    The evidence before the Court consisted entirely of valuation reports and other formal documentation, namely:
  1. Joint expert report prepared by Mr Cowell, the valuer for the appellant, and Mr Michael Donnelly, the valuer for the respondent (Exhibit 1)
  1. A valuation report prepared by Mr Cowell filed 3 November 2016 (Exhibit 2)
  1. The report of Mr Michael Donnelly of 3 November 2016 (Exhibit 3)
  1. Copy of the notice of objection filed by the appellant (Exhibit 4)
  1. A series of photographs of islands which were inspected (Exhibit 5 to 10)
  1. A transfer record and an asset sale purchase agreement in respect of Bedarra Island (Exhibit 11)
  1. A summary of sales evidence (Exhibit 12), together with oral evidence from the authors.

The hearing

  1. [11]
    The appellant was represented by Mr Winton Veall, one of the members of the family who are the beneficiaries of the family owned trust company St Columb Limited.
  1. [12]
    Mr Veall has no legal qualifications but that, of course, does not preclude any party from acting on their own behalf in this Court.
  1. [13]
    The respondent was represented by Mr Prasad, a senior lawyer acting on behalf of the Valuer-General.

The legislative framework

  1. [14]
    This appeal is brought pursuant to the provisions of s 155 of the Land Valuation Act 2010 (“LVA”).
  1. [15]
    The LVA made a number of significant changes to the valuation process which had previously been carried out pursuant to the provisions of the Valuation of Land Act 1944 (“VLA”).
  1. [16]
    The LVA retains the obligation upon the Valuer-General, pursuant to s 5, to carry out a valuation of all properties throughout Queensland for the purpose of rating, land tax and other associated purposes.
  1. [17]
    The Valuer-General is required to comply, in its conduct in the valuation exercise, with the requirements of the LVA when undertaking the various valuations required.
  1. [18]
    The LVA brought about a change to the valuation approach insofar as under the previous Act, the VLA, all valuations were of unimproved value but now, under the LVA, valuations are broken into two categories, namely non-rural land, which embraces residential, commercial and industrial land on the one hand, and rural land on the other.
  1. [19]
    Pursuant to the provisions of the LVA, the value of land to be valued by the respondent is, in the case of non-rural land (as in the present case), its site value which term is defined in the Act and for rural land its unimproved value.[1]
  1. [20]
    Within the Schedule to the LVA “site value” is defined as:

site value, for land, means its site value under chapter 2, part 2, division 3.

  1. [21]
    Section 19 of the LVA provides as follows:

19 What is the site value of improved land

 (1) If land is improved, its site value is its expected realisation under a bona fide sale assuming all non-site improvements for the land had not been made.

 (2) However, the land’s site value is affected by any other relevant provisions of this chapter.

  1. [22]
    The term “expected realisation” is defined in s 17 of the LVA which provides as follows:

17 What is the land’s expected realisation

 (1) The expected realisation of land under a bona fide sale is the capital sum that its unencumbered estate in fee simple might be expected to realise if that estate were negotiated for sale as a bona fide sale.

 (2) In this section—

unencumbered means unencumbered by any lease, agreement for lease, mortgage or other charge.

  1. [23]
    Section 18 emphasises the utility of a “bona fide sale” and that term is defined in s 18 which provides as follows:

 (1) A bona fide sale, for land, is its sale on reasonable terms and conditions that a bona fide seller and buyer would require assuming the following (the bona fide sale tests)—

  (a) a willing, but not anxious, buyer and seller;

    (b) a reasonable period within which to negotiate the sale;

    (c) that the property was reasonably exposed to the market.

 (2) For subsection (1), in considering whether terms and conditions are reasonable, regard must be had to—

  (a) the land’s location and nature; and

 (b) the state of the market for land of the same type.

 (3) To remove any doubt, it is declared that if—

  (a) there is a sale of the land in question; and

  (b) the bona fide sale tests are complied with; the sale is a bona fide sale.

 (4) In this section—

  land in question means land whose value is being decided.

  1. [24]
    In the decision in the matter of Lawson v Valuer-General,[2] his Honour Member Smith provided a useful overview of the current valuation process.
  1. [25]
    In the course of that decision his Honour referred to a decision of his Honour Member Isdale in Steers v Valuer-General.[3] In that decision his Honour Member Isdale was obliged to consider the valuation of land pursuant to the LVA, and in particular, his Honour referred to those cases which establish the well-established importance of comparable sales in determining what ought be the appropriate value of land. 
  1. [26]
    In the Steers decision his Honour Member Isdale observed as follows:

“[8] The use of sales to provide comparisons of value is well established. In NR and PG Tow v Valuer-General (1978) 5 QLCR 378, the Land Appeal Court constituted by Stable SPJ, Mr Smith and Mr Carter said at page 381:

“Courts of the highest authority have laid down that the best test of value is to be found in the sales of comparable properties, preferably unimproved, on the open market round about the relevant date of valuation and between prudent and willing, but not over-anxious parties.”

[9] This Court is required to follow the decisions of the Land Appeal Court and accordingly must prefer the evidence of comparable sales to the method contended for by the appellant, simply increasing a previous value by a factor of 10. Mr Steers did not explain why this particular multiplier and not some other one should be applied.”

  1. [27]
    In the Lawson decision, to reinforce the point made by his Honour Member Isdale above, his Honour Member Smith said:[4]

“[14] I consider it remains a relevant feature under the LVA, to consider market value. As then President Trickett said in Fairfax v. Department of Natural Resources and Mines.

  ‘[11] The principles for determination of the ‘market value’ of land were established by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418. In that case, the High Court found that the value of land is determined by the price that a willing but not over-anxious buyer would pay to a willing but not over-anxious seller, both of whom are aware of all the circumstances which might affect the value of the land, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding facilities, the then present demand for land and the likelihood of a rise or fall in the value of a property. (See Griffith CJ at 432 and Isaacs J at 441).

  [12] It has been well established that the unimproved value of land is ascertained by reference to prices that have been paid for similar parcels of land in Waterhouse v The Valuer-General (1927) 8 LGR (NSW) 137 at 139, Pike J said that:

‘Land in my opinion differs in no way from any other commodity. It certainly is more difficult to ascertain the market value of it but-as with other commodities-the best way to ascertain the market value is by finding what lands comparable to the subject land were bringing in the market on the relevant date-and that is evidenced by sales.’’

[15] Despite the legislative change, it is refreshing that the views expressed by the High Court in Spencer, now well over a century ago, remain just as current and relevant today as they did when they were first uttered. It is certainly my view, at least at this stage until other authorities may prove me wrong, to continue to apply the Spencer test under the LVA.”

  1. [28]
    In addition to the changes with respect to the valuation process, the regime established by the LVA also brought about a change in the evidentiary onus.
  1. [29]
    Previously, under s 3 of the VLA, the valuation made by the Valuer-General was deemed to be correct unless proved otherwise either upon objection or appeal. That is to say there was the presumption of correctness in favour of the valuation contended for by the Valuer-General.
  1. [30]
    The LVA does not retain that evidentiary presumption but rather provides, inter alia, at s 169, that:
  1. (1)
    The hearing must be limited to the grounds stated in the valuation appeal notice.
  1. (2)
    The appeal must be by way of a rehearing.
  1. (3)
    The appellant has the onus of proof for each of the grounds of appeal.
  1. [31]
    Accordingly, Mr Veall is limited to those matters which are recited in the notice of appeal, carries the onus of proving those grounds, and bears the onus of demonstrating that the valuation for which he contends is the correct one.
  1. [32]
    Numerous cases decided by this Court have reflected upon the importance of sales evidence of comparable land to assist in the obligations imposed upon this Court to consider the contentions of an appellant against the valuation of their land.
  1. [33]
    For example, his Honour Member Smith in Meiers v Valuer-General[5] had to consider the issue of comparable sales.  In that case his Honour noted with approval the observations of his Honour Member Isdale in Steers v Valuer-General[6] where his Honour said:

“[11] The sale properties relied on by the respondent’s valuer were criticised by the appellant who pointed out that, for instance, a sale at Kenmore was not near to the subject land. The same could rightly be said of the sale at Pinjarra Hills and the sale at Tingalpa. The valuer’s evidence however was not contradicted by any witness qualified in that field of expertise. He stated that there were no sales of suitably sized comparable blocks close by and that the sales used were comparable. Mr Kunnath did not merely assert the existence of comparability but provided reasons for it, such as comparable radial distance from the centre of the city, comparable exposure to flooding and constraints such as wetland corridors. He has inspected all of the sale properties.”

The views of the experts

  1. [34]
    In their joint expert report the experts, Mr Cowell for the appellant and Mr Donnelly for the respondent, agreed on a number of matters, many of which are entirely uncontroversial.[7] In particular they agree with respect to matters of contamination, existing improvements, land features, zoning classification and agreed sale as follows:[8]

“g) Location:

The subject property is Timana Island, a freehold island located between Dunk and Bedarra Island. All three of these Islands are part of the Family Group of Islands. Timana Island is approximately 5.5 kilometres south easterly of Wongaling Beach Water Taxi service and about 3.65 kilometres east south-east of Tam O'Shanter Point.

h) Services:

The property is not currently connected to any mains services. There is no water available on the island. There are no natural streams, watercourses or springs on the island. Any residential development would have to be fully self-sustainable and self-sufficient.

i) Access:

The subject island is accessible by boat only, however being a private freehold island no regular service is available, although private charter is available from the local Water Taxi service that operates out of Wongaling Beach. Direct access to the beach section on the north-west corner of the island is best obtained on a higher tide to avoid the fringing reef influence. Boat access is restricted at low tide to small type vessels.

j) Contamination:

Both valuers agree that the subject land is not included in the Environmental Land Register or the Contaminated Land Register and neither valuer has been made aware of any possible contamination on the site.

k) Existing Improvements:

Erected on the subject land is a hexagonal shaped medium set timber dwelling with a concrete block storeroom under. This dwelling was damaged in Cyclone Yasi.

l) Description of land features:

The subject island is best described as a moderate to steeply sloping granite boulder strewn island thickly vegetated with predominantly tropical rainforest country down to the water line in parts. The island has a predominantly rocky foreshore with the exception of a small beach/sandy point on its north-western side. Approximately 65% of the island perimeter is ringed by fringing reef with the remaining 35% comprising the most rugged rocky foreshore. Excellent expansive coastal, island and ocean views are offered from the small beach area.

m) Zoning Classification:

The land is currently zoned Environmental Management and Conservation under Cassowary Coast Regional council planning scheme adopted 3 July 2015. Under this scheme a Dwelling house use and reconfiguration of a lot is Code Assessable. Formerly zoned Conservation under the IPA Planning Scheme for the Council of the Shire of Cardwell adopted 28 June 2007. Under this scheme the erection of a dwelling house is a Self-Assessable development whilst the reconfiguration of a lot is Code Assessable.

n) Encumbrances on Title:

Nil

o) Highest and Best Use:

Residential Island Site

p) Agreed Sales:

Both Valuers agree the sale of Lot 2 on RP712273, Parish of Dunkalli Island Street, Bedarra Island for $1,520,000 + GST as at 18 November 2011 is a comparable sale and overall superior to the subject property.

q) Use:

The subject land has been valued as a large single unit residential site in accordance with its use and the requirements of section 45 of the Land Valuation Act 2010.”

  1. [35]
    In his report, Mr Cowell calculates the beach as having approximately 180 m of lineal frontage.[9]

The sales evidence of the valuers

  1. [36]
    Normally in appeals of this sort, the valuers engaged by the parties are able to identify a number of what they contend to be comparable sales.
  1. [37]
    In the present case that has not really proved possible, save with one exception.
  1. [38]
    In their joint statement[10] the valuers agreed that the sale of Lot 2 on RP712273 Parish of Dunkalli (Hideaway Resort, Bedarra Island) for $1,520,000 plus GST as at 18 November 2011 is a comparable sale, and they also agree that it is overall superior to the subject property.
  1. [39]
    Their joint statement succinctly identifies the three matters upon which they disagree, namely:
  1. Use of sales evidence and relativity;
  1. Valuation of subject lot;
  1. The sales evidence.[11]
  1. [40]
    With respect to the use of sales evidence and relativity, the approach advanced by Mr Cowell for the appellant was that he had adopted a direct comparison to his sales while recognising that there is a dearth of recent comparable freehold island “land only” sales which he considers to be “market” sales in the general North Queensland area. He pointed out that traditionally, islands are tightly held throughout Queensland and accordingly he has relied on sales with similar land, climate and zoning characteristics primarily.[12]
  1. [41]
    Because of the shortage of recent land only island sales, Mr Cowell has analysed improved island sales and apportioned the added value of such improvements.
  1. [42]
    In Mr Cowell’s opinion, the inclusion of the land in the Environmental Management and Conservation Zone under the Cassowary Coast Regional Council Planning Scheme considerably restricts the future developmental potential of the subject land and he is of the view that that must be taken into account when comparing the subject site with sales evidence of other lands that have tourist/resort type zoning instruments that increase their developmental potential.[13]
  1. [43]
    Mr Cowell, the valuer called for the appellant, in his report referred to the following sales:
  1. Hideaway Resort, Lot 2 on RP712273 Parish of Dunkalli Island Street, Bedarra Island which sold in November 2011 for $1,520,000;
  1. Sale of Bedarra Island Resort, Lot 3, Island Street Bedarra Island which sold in November 2011 for $3,050,000;
  1. Sale of land at 65 Explorers Drive South Mission Beach in October 2012 for $580,000; and
  1. Sale of Victor Island, Lot 39, Island Street, Victor Island in January 2015 for $975,000.
  1. [44]
    Mr Donnelly, the valuer called for the respondent, relied upon the following sales:
  1. The Hideaway Resort (in common with Mr Cowell);
  1. Sale of Lot 2, crown plan CWL19 Parish of Dunkalli (Dunk Island) sold in November 2009 for $1,100,000; and
  1. Sale of Lot 9, on GTP 70307 Parish of Dunkalli on Bedarra Island which sold in December 2003 for $575,890.

The oral evidence of Mr Cowell

  1. [45]
    Mr Prasad, for the respondent, spent a good deal of time at the beginning of his cross examination of Mr Cowell attempting to elicit from him the basis upon which he had prepared his valuation.
  1. [46]
    Mr Cowell acknowledged that he had prepared a report, later attached to an objection, under the letterhead of Preston Rowe Paterson Valuers of Cairns, which is the firm at which he worked as at August 2014.
  1. [47]
    Further, Mr Cowell acknowledged that in the report which was tendered before this Court[14] a portion was merely uplifted from the earlier report.[15]
  1. [48]
    Mr Prasad put to Mr Cowell that he had not prepared his report for the purposes of an appeal. Mr Cowell’s evidence was that he had prepared his site valuation based on principles of market value which are clearly defined by the International Valuation Standards Council.[16] What that meant was never explained.
  1. [49]
    I am bound to observe that in the course of him giving evidence, Mr Cowell was somewhat over sensitive to implied criticism of the manner in which he had prepared the objection which became Exhibit 2 before the Court.
  1. [50]
    This is exemplified by the following passage of evidence:[17]

“Thank you. And your basis for assessment at page 9 of your report has been done in accordance with an International Valuation Standards Council; correct?---Correct.

And it hasn’t been prepared or made pursuant to the provisions of the Land Valuation Act?---Well, it doesn’t say that, does it. It might be – still be prepared on that basis as well.

Where does it say that?---Because – well, just the fact that it doesn’t, doesn’t mean it hasn’t been.

Well, I’m trying to read it and make sense of it, Mr Cowell, and my reading of it I can’t see anywhere in the – your valuation report that makes any reference whatsoever to the Land Valuation Act?---Is it mandatory – well, sorry. Can I - - -

Does it?---I – I – I don’t think it’s mandatory to state sections of the Act for - - -

Well - - -?--- - - - a document to be binding - - -

Okay - - -?--- - - - and - - -

Okay - - -?--- - - - suitable under an Act.

HIS HONOUR: Hang on. Let him finish. Let him finish?---Yeah. And I’d, yeah, prefer not to be interrupted when I’m speaking.

You can just settle down a bit too, Mr Cowell?---Sorry, your Honour.

MR PRASAD: Thank you, your Honour. Mr Cowell, you just said a moment ago that the court has to determine site value under the Land Valuation Act; correct?---Yes.

And your report doesn’t anywhere state or refer to the Land Valuation Act; does it?---No.

And I put it to you that it’s been done for a purpose which is under the International Valuation Standards Council; correct?---It has been prepared in line with the principles of that Council.”

  1. [51]
    Mr Prasad then asked Mr Cowell the following:

“Where in your report do you reconcile or make any reasoning or connection between the Land Valuation Act and the International Valuation Standards Council?---I don’t think I did.”[18]

  1. [52]
    Mr Cowell responded by telling the Court that:

“The subject land does have a residential/conservation type zoning instrument and under this zoning is considerably restricted in its future development potential. This must be considered when comparing the subject with the sales evidence as most sales have tourist/resort type zoning instruments that increase their development potential.”[19]

  1. [53]
    Mr Cowell said in his report that “[t]he primary and secondary sales provide a good level of confidence when considering an appropriate site rate per hectare to be applied to the subject site as well as on an overall site value basis.”[20]

The Hideaway Resort sale

  1. [54]
    Given that both valuers considered the Hideaway Resort sale as a useful comparable sale, it is appropriate to spend a little time describing the Hideaway Resort.
  1. [55]
    It closed operations as a fully operating resort more than 20 years ago closing down in 1991.
  1. [56]
    Prior to that, it had operated as an “upmarket” resort with 14 standalone bungalows. The original development approval was for 16 bungalows, but it appears that as a result of cyclone damage at least one if not two of the buildings had either washed into the ocean or fallen apart. There were considerable improvements on the island including the substantially sized restaurants, a bar and kitchen, separate staff quarters, resort swimming pool, storerooms and sheds, paved and concrete pathways plus other miscellaneous resort-type buildings.
  1. [57]
    The island has two natural springs and, as was disclosed by the inspection, had a water reticulation system installed on the site, although it was not functioning.
  1. [58]
    The sale price in November 2011 was for $1,520,000.
  1. [59]
    It was put by Mr Prasad to Mr Cowell that the resort was in a poor state with no maintenance done, and the impact of damage caused by cyclone Yasi was still evident.
  1. [60]
    In his analysis of the sale, Mr Cowell allowed $50,000 for each bungalow and $20,000 for the staff quarters. He also apportioned $150,000 to the restaurant and bar, $30,000 to the resort pool and $20,000 for ground improvements.
  1. [61]
    Accordingly, he achieved a total of $920,000 for the value of the improvements which led him to promulgate an analysed land value of $600,000.
  1. [62]
    I am bound to observe that nowhere in his report, nor in his oral evidence, does Mr Cowell identify the basis upon which a figure of $50,000 was ascribed to each of the units.
  1. [63]
    I note, however, that in the copy of the transfer documents for the sale there is an agreement between the buyer and the seller that the purchase price was apportioned as follows:
  1. (a)
    Unimproved land – $600,000.
  1. (b)
    Improvements – $920,000.
  1. [64]
    Those apportioned figures of course could not be taken to be the outcome of some valuation process, unless that was made clear in the asset and sale purchase agreement document.[21]
  1. [65]
    One inference is that Mr Cowell has simply relied upon that apportionment.
  1. [66]
    Otherwise, it appears to be a figure plucked out of the air. Having had the benefit of an extensive inspection of the Hideaway Resort in the company of both valuers, I am bound to observe that any suggestion that any of the bungalows were habitable would be entirely contrary to what was observed during the inspection.
  1. [67]
    I must acknowledge, however, that several of the bungalows had some attention paid to the steps leading up to them, and one of them had clear evidence of someone having slept on a mattress under a mosquito net in a bungalow which had no running water and no toilet.
  1. [68]
    On any sensible assessment such conditions do not amount to a bungalow being “habitable.” I note the Macquarie Dictionary defines habitable as “capable of being inhabited.”[22]  Hikers may occasionally sleep in cow sheds but that does not make them habitable.
  1. [69]
    In cross examination, Mr Cowell was pressed as to whether he had made any allowance for the difference in condition as between the 14 units which remain standing.
  1. [70]
    Mr Cowell told the Court, in explaining why he didn’t differentiate between the units that:[23]

“No because I think based on my thoughts that whilst they’re all different, they’re all in pretty much – they were pretty much the same condition to a certain degree, not identical, and their inherent value would be to fix each one of them up at a certain price and then possibly lease them out which would derive an inherent value to each of the 14 bungalows. To say that, my thinking to say there’s no value just because there’s a structure there but it’s not inhabitable doesn’t mean there’s no value at all. There’s hardwood there, floors were in all right condition, all the walls were up, the roofs were on. So I had attributed value to each of the 14 bungalows.”

  1. [71]
    Mr Prasad for the respondent put to Mr Cowell that “[t]he majority of those villas are either derelict condition, termite infested or unusable. Would you agree with that proposition?” to which Mr Cowell responded “I would generally agree with you, yeah. They were in below average condition however, I would state that they’re not – what would you say – in such condition that they were nearly demolished.”[24]
  1. [72]
    Mr Prasad continued to press Mr Cowell about the apportionment as between Real Property and Improvements in the Hideaway Resort sale, and ultimately Mr Cowell conceded “it was done for financial or tax purposes most probably.”[25]
  1. [73]
    Later, Mr Cowell confirmed his awareness of the contract apportionment prior to his own valuation exercise. He said:

“… as I said last time, I had knowledge of the contract of sale. I had reviewed it. I had discussed this purchases with the purchaser when we sat down. He ran through what he thought his-level of improvement were worth. I did my independent analysis. I inspected improvements. I depreciated them accordingly. I looked at development potential, that there are existing approvals in place and based on the numbers I ran I generally supported his apportionment and in that case that’s not unusual to do in valuation principles. So it doesn’t mean I didn’t do it independently and run my own figures.”[26]

  1. [74]
    With respect to the issue of Mr Cowell coming up with precisely the same apportionment as contained within the contract, he explained that outcome this way:

“…contracts of sale happen all the time and as valuers we review them and if they-you know, if they are for than the-the terms of market value by the Spencer principles than I think that they’re accurate. No one has a better mind than a purchaser himself beside the Valuer and I strongly agreed with the apportionments. I analysed independent sales evidence and based on my conclusions they seem very-very reasonable based on all analysis I’ve done. So I wouldn’t say it’s a coincidence. I would say I was aware that the contract was in place and that those apportionments where there and I supported them independently.”[27]    

  1. [75]
    Curiously, that did not seem to accord with what Mr Cowell said earlier in that same passage of cross examination when he said, having been asked whether it was a coincidence that his assessment came to the same figure of $920,000 as the purchasers apportionment:

“no - I don’t think it’s a coincidence. I did my valuation and I-you know, I’ll be honest, I didn’t know this appointment was in place. I did my independent analysis and yeah my-my numbers where almost identical to the numbers in the contract of sale.”

  1. [76]
    Mr Cowell stated in the joint report in respect of Hideaway Resort that:

“When comparing this property to the subject on its land value only I consider that this sale is far superior due to its much larger size of useable land area, its topography, its far longer sandy beach/shore, and the fact that there is a permanent water supply coming from a spring. The semi-island sale is directly opposite the subject and therefore has identical locality characteristics with similar views. Based on the above, the analysed land value of $600,000 is considered to be superior.”[28]

  1. [77]
    Mr Cowell’s consideration of the Hideaway Resort sale was premised upon his view that the highest and best use was as a resort.
  1. [78]
    That view has to be contemplated in the context of an email provided to Mr Donnelly for the respondent, which became Annexure B to his further statement.[29]
  1. [79]
    That email, dated 12 August 2016, has strongly suggested that the owner of Hideaway Resort was considering to have its categorisation changed to a residential use in order to reduce the rate burden attached to ownership of the land.
  1. [80]
    Curiously, recognising that the resort use had, according to Mr Cowell, ceased in 1991[30] and had apparently not operated since, a period of 22 years up to October 2013, there was no suggestion in any of the material that the use rights for the land as a resort may have been extinguished.
  1. [81]
    Further, Mr Cowell in his observations about the resort describes it at the date of purchase as being “[b]elow average to relatively poor condition.”[31]
  1. [82]
    Under cross examination from Mr Prasad, Mr Cowell agreed that the majority of the villas “are either derelict condition, termite infested or unusable.”[32]
  1. [83]
    He also acknowledged that with respect to development approvals required from governments that there was some risk in getting those approvals which would have been in a purchaser’s mind.[33]
  1. [84]
    The inspection of that property suggests to me that its condition is almost uniformly relatively poor. Mr Cowell does, however, say “[t]he property was once operated as a boutique hotel in the past. This type of operation may be permissible once again in the future, subject to gaining the relevant Government approvals.”[34]
  1. [85]
    Mr Cowell relies heavily upon the apportionment between land and improvements relied upon by the purchaser and vendor in lodging the transfer documentation.[35]
  1. [86]
    Without further evidence I would not be prepared to accept that document as proper evidence of the fair apportionment between improvements and the value of the land notwithstanding that it was apparently accepted by the Queensland Land Registry. It is a matter of notoriety that such apportionments often have more to do with apportioning land tax than anything else.
  1. [87]
    Mr Prasad, in his cross examination of Mr Cowell, was keen to point out the apparent inherent contradiction in his logic wherein he analysed the value of the land element of the Hideaway Resort sale at $600,000, and having done so described the Hideaway Resort land as “far superior due to its much larger size of useable land area, its topography, its far larger sandy beach/shore and the fact that there is permanent water supply coming from a spring.”[36] At the same time he then values the subject land at $590,000.[37] That represents a difference of only 2%.

Other sales evidence

  1. [88]
    In addition to his reliance upon the Hideaway Resort sale, Mr Cowell also referred to three other sales.
  1. [89]
    The first of those was a sale with respect to the Bedarra Island Resort on Bedarra Island.
  1. [90]
    This property had operated as a boutique resort prior to being damaged by cyclone Yasi in February 2011.
  1. [91]
    The property was subsequently purchased in November 2011 with the improvements in a below average condition.
  1. [92]
    In its original condition, it had operated as a resort with 16 guest villas including two premium pavilions, two point villas, a general manager’s residence and staff accommodation, a restaurant, boutique retail stores, a gymnasium, a water desalination plant, a sewerage treatment plant and an electricity generation area. The property is described as Lot 3 Island Street, Bedarra, and sold on 18 November 2011 for $3,050,000.
  1. [93]
    The property itself lies within conservation zoning and has a site area of 45.04 hectares.
  1. [94]
    This was one of the properties which was inspected by the Court in company with the valuers.
  1. [95]
    Having regard to the sale price of $3,050,000, Mr Cowell assessed the added value of improvements as at the date of sale to be of the order of $2,200,000 which equated to an underlying land value of $850,000.
  1. [96]
    The property has since been refurbished and is currently operating as a luxury boutique resort with at least eight architecturally designed high-quality guest villas, a restaurant, bar, pool and other standard resort facilities.
  1. [97]
    It is unfortunate that in his report Mr Cowell does not provide any details of the basis upon which he analysed value of the land and determined it to be $850,000 or $18,872 per hectare.
  1. [98]
    Mr Cowell considers that particular sale to be superior:

“When comparing this property to the subject on its land value only I consider that this sale is far superior due to its much larger size of useable land area, its topography and its far larger sandy beach/shores. This island sale is situated in very close proximity to the subject and therefore has identical locality characteristics with similar views. Based on the above, the analysed land value of $850,000 is considered to be superior.”[38]

  1. [99]
    The failure by Mr Cowell to explain in his report the basis upon which he calculated the added value of improvements to be of the order of $2,200,000 is an inhibiting factor to the use that can be made of his report.
  1. [100]
    To be of use to the Court, valuations ought to be composed in the form of speaking valuations which disclose the process of logic and the calculations which are used to achieve an analysed value. His report does not do this.
  1. [101]
    With respect to the Bedarra Island Resort sale, which is Mr Cowell’s sale number two in the joint report,[39] he was cross examined about the sale price at $3,050,000 and his allowance for the added value of improvements of $2,200,000 to produce an underlying land value of $850,000.
  1. [102]
    Pressed under cross examination, because there was no evidence in his report of how the $2,200,000 value of improvements was calculated, Mr Cowell produced what he said was notes from his file, which unfortunately added up to $2,300,000 which was a disparity he was unable to explain.[40]
  1. [103]
    He did confirm that he regarded it as a commercial resort site and he did not make any allowance for development interest, holding costs, rates or land tax.
  1. [104]
    He disagreed that by using a commercial resort site to develop a value for a site where it was agreed that the highest and best use was residential or bed and breakfast type accommodation. It would be necessary to make allowance for such items.[41]
  1. [105]
    Further, where Mr Cowell described the properties as having been “converted into a luxury boutique resort” he meant to say that it had been restored and refurbished.[42]
  1. [106]
    Further pressed about his calculations relating to Bedarra Island Resort, Mr Cowell confirmed that he hadn’t done what he described as “full back of house inspection”[43] and conceded that, for a heavily improved site, in order to make allowance for the types of allowance which he was required to make it was necessary to do a proper inspection. He confirmed “that would definitely be the best option.”[44]
  1. [107]
    Some of the many shortcomings in Mr Cowell’s report might be explained by the fact that he confirmed to the Court he had not previously given evidence in the Land Court.
  1. [108]
    Mr Cowell also acknowledged that when a valuer is dealing with a heavily developed site the more adjustments which need to be made to the sale price the more prone the resultant valuation is to error.[45]
  1. [109]
    Mr Cowell’s third sale was a property of 2.02 hectares at 65 Explorers Drive, South Mission Beach. That partially cleared residential site, which Mr Cowell described as having “absolute beach frontage of approximately 150 lineal meters”, sold on 1 October 2012 for $580,000.
  1. [110]
    Mr Cowell in his report acknowledged “this is not an island sale however has been included as it is considered to be a high sale price for absolute beach front land in the Mission Beach district post cyclone Yasi.”[46]
  1. [111]
    Mr Cowell went on to acknowledge that the land has all services available and is clearly serviced by a road to the frontage of the land as evidence by the aerial photography that was tendered in these proceedings.[47]
  1. [112]
    That photograph makes clear as well that the site does not have absolute beach frontage but is separated from the beach by an esplanade. Mr Cowell’s explanation for his terminology was that he regarded it as absolute beach frontage because you could walk directly to the beach.[48]
  1. [113]
    It is somewhat surprising to see a reference to a mainland residential sale when such sales were considered and dismissed out of hand by his Honour Member Jones in the earlier decision of 2006 involving this same lot.[49]
  1. [114]
    In that case his Honour observed:[50]

“… the fact that they are mainland lots of such a small area means, in my opinion, that they are not able to be sensibly compared to the subject. Mr Cross candidly conceded as much referring to those sales as having little or none of the privacy and exclusivity elements usually associated with island properties.”

  1. [115]
    The Explorers Drive property enjoys the benefit of services, water and electricity as well as road access and, inevitably, access to facilities such as schools and shops.
  1. [116]
    In my opinion, on no basis can such a sale be relied upon in respect to the subject land.

The oral evidence of Mr Donnelly

The Hideaway Resort sale

  1. [117]
    Mr Donnelly takes a contrary view to that of Mr Cowell with respect to the Hideaway Resort sale.
  1. [118]
    Mr Donnelly in considering the Hideaway Resort sale informed the Court that he has difficulty rationalising Mr Cowell’s comparison of the sale with the subject property given he states this sale is far superior with an analysed land value of $600,000, whilst he (Mr Cowell) values the subject property at $590,000.
  1. [119]
    In his report, Mr Donnelly observes as follows:

“1. Style, age and condition of improvements.

Following on from the extensive photos of the improvements on the sale and the fact that the improvements were in below average to poor condition. The added value of the improvements is restricted by their age, condition post Cyclone Yasi and their obsolescence by modern design standards. Further, and not shown by the photos is the underlying condition of the below ground improvements such as the water supply and effluent disposal system, the septic tanks and grease traps. The non-operational nature of this resort for over twenty years accelerated the depreciation of all improvements through non-use, lack of maintenance or upkeep and damage through encroachment and infestation of the surrounding vegetation.”[51]

  1. [120]
    In the joint report Mr Donnelly analysed the Hideaway Resort site to a site value of $1,050,000 and an applied site value in 2013 at $990,000[52] which, it would be noted, is almost twice the valuation contended for by Mr Cowell. Mr Cowell’s value is achieved by applying a figure of $920,000 to the value of improvements.
  1. [121]
    Mr Donnelly, in his further statement, told the Court in his view the highest and best use of the Hideaway Resort site was now as an island home site or at best an island bed and breakfast accommodation as at the date of contract.[53]
  1. [122]
    He identified three particular reasons for his adopting of this view including:
  1. The style, age and condition of the improvements.
  1. The immediate competition from Bedarra Island Resort and other nearby resorts.
  1. Plight of Queensland island resort sell offs and closures as evidence by Courier Mail article dated 6 January 2012.
  1. [123]
    As indicated earlier, Mr Donnelly was the co-author of the joint expert report and the author of a further statement of evidence.[54]
  1. [124]
    At the outset of his oral evidence Mr Donnelly conceded that the number of bungalows on Bedarra Island Resort was not the seven referred in his report.[55] But actually eight.[56]
  1. [125]
    Mr Donnelly was invited to explain to the Court his approach to the valuation exercise he was required to carry out and he told the Court:

“For the valuation of the subject property of $850,000 I looked at the subject property itself, and it’s a 16 hectare on site with a small beach. There’s no services. It has-there’s a large percentage of rainforest and rocky foreshore. And in comparison my most comparable sale is the sale of Hideaway Resort on Bedarra Island, which took place 18 November 2011 for 1.52 million plus GST. I’ve analysed that property to the land value of a million and fifty.”[57] 

  1. [126]
    Mr Donnelly was asked in evidence in chief to explain the major difference between himself and Mr Cowell which appeared to be the added value of the bungalow, Mr Cowell having had regard to 14 bungalows at $50,000 each and Mr Donnelly considering only three bungalows at $50,000 each.
  1. [127]
    Mr Donnelly explained:

“Given that I’ve looked at it on its highest and best use is residential come B and B, under the planning scheme – under the current planning scheme there’s – you’re permitted three bungalows on a property with B and B separate to a – a dwelling. With the – with this particular property I realised that none of the bungalows at present are – are habitable, so there is a cost that the – that the owner has to go through. The – also the resort building isn’t – hasn’t got a residential charge to it either so there’s actual further costs to go through that he has to take property to qualify for – but in the marketplace I consider that the highest and best use isn’t as a resort site. It definitely is something less than a resort site.”[58]

  1. [128]
    By way of secondary explanation in support of his approach to this valuation exercise Mr Donnelly in his further statement says as follows:

“The common sale to both Valuers, “Bedarra Hideaway” is the most comparable sale to the subject property given its proximity and its similar expansive costal, island and ocean views. This sale is larger in total area and useable area and has longer beach frontage, however is part of a larger island offering good privacy, whilst the subject property is a separate island offering excellent privacy. The sale property has better boat access via Casuarina beach on the western section of the property. Both properties have no services however the sale property has a permanent spring, which provides a sufficient water supply. The sale analysed to $1,050,000 and has an applied 2013 site value of $990,000. Overall the sale property is considered superior to the subject property.”[59]

  1. [129]
    Having effectively limited his relevant comparable sale to the single transaction involving Bedarra Hideaway, Mr Donnelly sought some comfort for his views in comparing relativities.

Other sales evidence

  1. [130]
    While Mr Donnelly relied heavily upon a single sale, namely the Bedarra Hideaway sale, he also contemplated the sale a lot on Dunk Island which adjoined the Dunk Island Resort.
  1. [131]
    That sale of land with a description of Lot 2 on Crown Plan CWL19, Parish of Dunkalli was a lot of 16.167 hectares adjoining the Dunk Island Resort. It has no beach frontage but a foreshore frontage only which provides fair boat access.[60] He described it as:

“… the sale has no services but a sufficient water supply given the intersecting freshwater creek. This is a rainforest lot, which offers fair to good privacy as the National Park access track intersects the lot’s south western boundary. This sale analysed to $1,050,000 with a 2013 applied site value of $1,100,000. Overall this sale is considered superior to the subject property.”[61] 

  1. [132]
    In order to demonstrate what he says is the conservative value of $590,000 made by Mr Cowell for the subject property, Mr Donnelly referred to a further sale of a lot within the “East Bedarra” group title plan development on Bedarra Island.
  1. [133]
    The sale involved Lot 9 on GTP70307 which has an area of 2,938 square meters and sold for $575,890 on 16 December 2003.
  1. [134]
    That East Bedarra sale was land on a ridgetop site, having excellent views similar to the subject property.
  1. [135]
    Mr Donnelly described it as follows:[62]

“This lot is within a Group Title Development and benefits from an on-site care taker, back-up communal water supply and access to a body corporate vessel when available.”

  1. [136]
    Mr Donnelly regarded that sale as markedly inferior to the subject property.
  1. [137]
    It is also noted that the sale occurred back in 2003.
  1. [138]
    By way of seeking to support his views Mr Donnelly also made reference to site valuations of properties associated with the Associated Marine Park Tourism Operators (AMPTO) agreement whereby the site valuations of those islands were out sourced to a private valuation firm for the 1 October 2010 revaluation.
  1. [139]
    There is a consequence of that valuation exercise whereby Bedarra Hideaway was valued at $1,100,000 and Bedarra Island Resort at $1,000,000.
  1. [140]
    In the 2013 revaluation of Cassowary Coast Regional Council those values were reduced by 10% on the 2013 revaluation of the Cassowary Coast Regional Council area with Bedarra Hideaway being given a 2013 site value of $990,000 and Bedarra Island Resort having a 2013 site value of $900,000.
  1. [141]
    Having regard to those figures Mr Donnelly comments:

“To that end it is commented Mr Cowell’s analysed value of “Bedarra Hideaway” at $600,000 and “Bedarra Island Resort” at $850,000 are contrary to existing historical site values of these properties originally assessed by Herron Todd White and reinforced by the Department in subsequent revaluations.”[63]

  1. [142]
    Mr Donnelly was not challenged in cross examination by Mr Veall as to those views expressed by him.

Conclusion  

  1. [143]
    On the evidence which was put before the Court, I have come to the view that the appellant has not discharged the onus imposed upon it and has not identified any basis upon which I could be satisfied that the unimproved value of the subject land on 1 October 2013, effective from 30 June 2014 should be valued at $590,000 or that the methodology used by the valuer engaged by the appellant was the appropriate methodology.
  1. [144]
    The methodology and approach adopted by Mr Donnelly for the respondent accords with the methods which this Court has found to be the best tests of value, and Mr Donnelly’s opinions were not seriously challenged or demonstrated to be incorrect in the process of cross examination.
  1. [145]
    In all of the circumstances of this case the appellant has not been successful in establishing the correct and alternative level of value for which it contended and accordingly I have no option but to dismiss the appeal.

Orders

  1. The appeal is dismissed.
  2. The Valuer-General’s valuation of Eight Hundred and Fifty Thousand Dollars ($850,000) as at 1 October 2013 effective from 30 June 2014 is confirmed.

WL COCHRANE

MEMBER OF THE LAND COURT

Footnotes

[1]Land Valuation Act 2010 s 8.

[2]  [2012] QLC 27.

[3]  [2012] QLC 12.

[4] Lawson v Valuer-General [2012] QLC 27, [14] to [15].

[5]  [2012] QLC 19.

[6]  [2012] QLC 12 [11].

[7]  Ex 1, pages 3 and 4.

[8]  Ibid.

[9]  Ex 2, page 14.

[10]  Ex 1, page 4, para 17.

[11]  Ex 1, page 4, para 21 and page 5, para 31.

[12]  Ex 1, page 5, para 22.

[13]  Ibid.

[14]  Ex 2.

[15]  T 1-17, line 40 to T 1-18, line 5.

[16]  T 1-22, lines 16 to 20.

[17]  T 1-24, lines 4 to 40.

[18]  T 1-25, lines 1 to 3.

[19]  Ex 2, page 20.

[20]  Ibid.

[21]  Ex 11, page 21, para 15.

[22]  Macquarie Concise Dictionary, 4th Edition.

[23]  T 1-31, lines 35 to 47.

[24]  T 1-32, lines 1 to 9.

[25]  T 1-46, line 1.

[26]  T 1-50.

[27]  T 1-47, lines 15 to 23.

[28]  Ex 1, page 6, para 47.

[29]  Ex 3, Annexure B, page 19.

[30]  Ex 4.

[31]  Ex 2, page 21.

[32]  T 1-32, lines 5 and 6.

[33]  T 1-32, line 45.

[34]  Ex 2, page 21.

[35]  See Ex 11.

[36]  Ex 2, page 22.

[37]  Ex 2, page 29 and Ex 1, page 5.

[38]  Ex 1, page 7.

[39]  Ex 1.

[40]  T 1-51, line 25.

[41]  T 1-52, line 15.

[42]  Ex 2, page 23.

[43]  T 1-52, line 45.

[44]  T 1-53, line 4.

[45]  T 1-54, line 10.

[46]  Ex 2, page 26.

[47]  Ex 8.

[48]  T 1-55, line 43.

[49] St Columb Ltd v Department of Natural Recourses and Mines and Water [2006] QLC 67.

[50]  Ibid.

[51]  Ex 3, page11.

[52]  Ex 1, page 25.

[53]  Ex 3, page 11, para 36-38.

[54]  Ex 1 and Ex 3.

[55]  Ex 3, Page 11, para 36-38.

[56]  T 1-67, line 26.

[57]  T 1-68, lines 8 to 14.

[58]  T 1-69, lines 7 to 15.

[59]  Ex 3, page 14, para 25.

[60]  Ibid.

[61]  Ibid.

[62]  Ibid.

[63]  Ibid.

Close

Editorial Notes

  • Published Case Name:

    St Columb Limited v Valuer-General

  • Shortened Case Name:

    St Columb Limited v Valuer-General

  • MNC:

    [2017] QLC 37

  • Court:

    QLC

  • Judge(s):

    Member Cochrane

  • Date:

    02 Aug 2017

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Lawson v Valuer-General [2012] QLC 27
3 citations
Jump To
Cite 1 - [2012] QLC 27
Cite 2 - [2012] QLC 27
Cite 3 - [2012] QLC 27
Meiers v Valuer-General [2012] QLC 19
2 citations
Jump To
Cite 1 - [2012] QLC 19
Cite 2 - [2012] QLC 19
NR and PT Tow v The Valuer-General Redland Shire (1978) 5 QLCR 378
1 citation
Jump To
Cite 1 - (1978) 5 QLCR 378
Spencer v The Commonwealth (1907) 5 CLR 418
1 citation
Jump To
Cite 1 - (1907) 5 CLR 418
St Columb Ltd v Department of Natural Resources and Water [2006] QLC 67
2 citations
Jump To
Cite 1 - [2006] QLC 67
Cite 2 - [2006] QLC 67
Steers v Valuer-General [2012] QLC 12
3 citations
Jump To
Cite 1 - [2012] QLC 12
Cite 2 - [2012] QLC 12
Cite 3 - [2012] QLC 12
Waterhouse v The Valuer-General (1927) 8 LGR NSW 137
1 citation
Jump To
Cite 1 - (1927) 8 LGR NSW 137

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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