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Lake Maroona Pty Ltd v Valuer-General QLC 23
LAND COURT OF QUEENSLAND
Lake Maroona Pty Ltd v Valuer-General  QLC 23
Lake Maroona Pty Ltd
ACN 010 833 075
Appeals against valuation under the Land Valuation Act 2010
29 May 2019
25 & 26 June 2018; 26 July 2018
Submissions closed 24 September 2018
Gladstone and Brisbane
As regards LVA499-17, Lot 7:
As regards LVA500-17, Lot 8:
REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – where appellant objects to valuations – where site value is the basis of valuation – whether a conditional contract is a “sale” for the purposes of s 18 of the Land Valuation Act 2010 – where there are constraints on the development potential of the land – where land is zoned for limited development – where the subjects are wholly below the Q100 flood line – where access is restricted on one subject – whether the subjects can legally have a dwelling on them – where a valuer contends land should be valued at a nominal value – where appellant argues that there is no market for sale of the subjects
REAL PROPERTY – VALUATION OF LAND – OBJECTIONS AND APPEALS – QUEENSLAND – NOTICE OF APPEAL – evidence – burden of proof – whether the appellant has met the onus of proof – where appellant makes submissions on grounds not in its notice of appeal
EVIDENCE – ADMISSIBILITY – OPINION EVIDENCE – LAY OPINION – where lay witness provides evidence on costings – where opinion evidence of lay witness is not accepted
Land Valuation Act 2010, s 16, s 17, s 18, s 155, s 163, s 169, s 170
Australand Industrial No.111 Pty Limited v Valuer-General  NSWLEC 1255, cited
Briginshaw v Briginshaw (1938) 60 CLR 336;  HCA 34, cited
Brisbane City Council v Valuer-General (Qld) (1978) 140 CLR 41;  HCA 40; (1978) 21 ALR 607, followed
Cattanach v Water Conservation & Irrigation Commission (1962) 9 LGRA 352, cited
Fairfax v Department of Natural Resources and Mines  QLC 11, applied
Public Transport Development Authority v Commissioner for State Revenue  VSCA 266, cited
Spencer v The Commonwealth of Australia (1907) 5 CLR 418, followed
Sri Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam  AC 302, applied
Steers v Valuer-General  QLC 12, applied
Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925  QLAC 7, followed
RJ Allen (solicitor), Project Legal, for the appellant
RA Horsley (instructed by In-house Legal, Department of Natural Resources, Mines and Energy) for the respondent
- The appellant, Lake Maroona Pty Ltd (Lake Maroona), has appealed against the respondent Valuer-General’s decisions on objection relating to two lots of land in the Gladstone region owned by Lake Maroona.
- File LVA499-17 relates to one decision on objection dated 9 August 2017 which resulted in the Valuer-General decreasing the site value of Lot 7 on SP 154229 from $182,500 to $50,000 as at 1 October 2016. Subsequent to Lake Maroona lodging its appeals within this Court, a legal officer of the Valuer-General notified the appellant that, after review of the valuation, the site value of Lot 7 had been reduced to $30,000.
- File LVA500-17 relates to the other decision on objection, also dated 9 August 2017, which provided that the site value of Lot 8 on SP 154229 as at 1 October 2016 had been decreased from $192,000 to $60,000. Similar to Lot 7, Lake Maroona received correspondence from the Valuer-General’s Department on 27 April 2018 which reduced the site value of Lot 8. The value was reduced to $40,000.
- Upon the issuing by the Valuer-General of the reduced site values, the appellant had an option to give an acceptance notice accepting the amended amounts and ending the appeals before this Court. The appellant did not do this, and as a consequence of s 163(4) of the Land Valuation Act 2010 (LVA), the valuation of both Lot 7 and Lot 8 by the Valuer-General on 27 April 2018 are the valuations appealed against in these appeals.
- In its Notices of Appeal, brought pursuant to s 155(1) of the LVA, Lake Maroona contends that the site value of the two Lots of land should be $10,000 for Lot 7, and $20,000 for Lot 8.
The subject Lots
- Lot 7 on SP 154229 has an area of 10,160 and Lot 8 on SP 154229 has an area of 10,750 .
- Lot 7 is an irregular, “hatchet” shaped block, accessible from the bitumen sealed road on Witney Street. Lot 7 gently undulates and is generally fully timbered with the area of the hatchet handle cleared.
- Lot 7 has an easement burdening the land in favour of the Gladstone Area Water Board for the described purpose of water pipelines (Easement B) which is approximately 1,084 . The easement partly runs through the hatchet handle. A section of the hatchet handle falls into a gully where run-off from Tigalee Creek in the north meets a stormwater drain at the southern end underneath a railway line.
- Lot 7 is bounded to the north by Lot 9 which is designated public use land/park vegetation buffer, to the west by Lot 8, to the east an unbuilt gazetted road, and to the south by the Gladstone Moura railway line.
- There have been minimal improvements to Lot 7. The most relevant improvement is the cleared access of the majority of the hatchet handle, and some fencing along the boundary adjoining the railway line comprising poor quality star picket, wire, and two-barb. There is also approximately 90 metres of 1.8 metre high industrial fencing.
- Lot 7 is within the Gladstone Regional Council area, and therefore subject to the Gladstone Regional Planning Scheme. According to the Planning Scheme, Lot 7 is zoned for limited development (constrained development) and is affected by the following overlay codes:
- (a)Acid sulphate soils;
- (d)Bushfire hazard;
- (e)Building heights and frontage;
- (f)Flood hazard; and
- Lot 8 is also subject to the same Planning Scheme and overlay codes (a) to (f).
- Both Lots are currently vacant adjoining allotments, located on Witney Street in Kin Kora, Gladstone.
- Lot 8 abuts Tigalee Creek. Lot 7 is parted from the Creek by Lot 9 on SP 154229 (see figure 3 extracted from Exhibit 4 at ).
- Lot 8 is an irregular shaped inside allotment accessible via Witney Street. Lot 8 gently undulates and is generally fully timbered with a fall to the north-west boundary into Tigalee Creek. There are also some small gullies that appear to run off Tingalee Creek through the centre of the block.
- In addition, there are a number of small gullies that traverse the western section of Lot 8 and restrict access to the higher eastern section. These gullies carry surface water run-off from residential developments located to the south and east of the Moura railway line.
- There have been limited improvements made to Lot 8 which appears to be in its virgin state, save only for a very small amount of clearing made to gain access across a gully.
- Across Tigalee Creek to the north west sits Lot 3 on SP 152520. Lot 3 is 6,764 m2 and is owned by the appellant. Lot 3 was also under appeal against a land valuation of 1 October 2016. That appeal was settled between the parties.
- The below shows Lots 7 and 8 subject to these appeals, as well as Lot 3.
The site inspection and the hearing of this matter
- The appeals by Lake Maroona are two separate appeals which were heard together over two days of hearing. Before conducting the hearing of these matters, a site inspection was undertaken in the presence of both parties, their legal representatives, and the valuation expert witnesses engaged to assist the Court.
- The site inspection of the subject Lots, associated bridges, and various sale properties relied on by the valuers in their joint valuation report (JVR) occurred on 25 June 2018.
- The valuers’ JVR filed on 9 May 2018 was relied on during the site inspection and is Exhibit 4.
- The hearing of this matter commenced in Gladstone Courthouse on 26 June 2018. The remainder of the hearing was heard, and concluded in, Brisbane on 26 July 2018.
- A total of four witnesses gave oral evidence at the hearing. The two valuation experts called were Mr Michael Sheehan for Lake Maroona and Mrs Penny Lentell for the Valuer-General. Mr Graham Allen was a lay witness called by Lake Maroona, and Ms Helen Robertson for the Valuer-General.
- At the end of the hearing, both parties sought orders for written submissions to be filed. I allowed this request, making orders that all written submissions were to be filed by 24 September 2018.
- I have fully taken into account all of the evidence presented at the hearing; all exhibits; and all submissions. These reasons refer to the salient points, but not all of the evidence and material, that I have taken into account.
The grounds of appeal
- The grounds of appeal for both matters are set out in attachments to each Notice of Appeal.
- As regards the appeal relating to Lot 7, there are eight grounds of appeal which are contained within Exhibit 1. Those grounds may be summarised as follows:
- The land is an irregular shaped allotment with access via a strip off Witney Street which is difficult, restricted, and traverses a stormwater gully draining water from the southern side of the railway line.
- The land is zoned “Limited Development (Constrained Development)” and is within the flood affected lands precinct – see 220.127.116.11 of the Gladstone Regional Council Planning Scheme.
- The land is located within the Q100 flood line which has been recently redrawn by Council to further impinge into the subject land.
- Filling of the land to permit development will not be approved by Council.
- The access strip adjoins the Moura Short railway line and coal traffic noise would be a disability. Traffic noise associated with the railway crossing in Witney Street should also be a consideration in assessing value.
- Lot 75 on SP 231545 was also affected by the increased area of the redrawn Q100 flood line. The property was under a recent contract of sale which did [not] [sic] proceed due to the Council extended flood line and its effect on property values. A number of other residential developed allotments are also now illustrated as subject to inundation in the revised Q100 floodplain.
- The land as zoned has no development potential as none of it is available for development.
- No comparative sales evidence is available. The appellant did, however, provide a schedule of sales which it considered were of some assistance to determining site value.
- The grounds of appeal are very similar for Lot 8. They are set out in Exhibit 2. There is, however, an additional ground of appeal and there are some subtle differences in other grounds due to the different attributes of Lot 8 when compared to Lot 7. The grounds of appeal for Lot 8 which are different to Lot 7 are grounds 1 and 5, with the addition of 9. Those changes are below:
- The land is an irregular shaped allotment with access off Witney Street which is difficult and restricted due to the railway line crossing.
- The land is in close proximity to the Moura Short railway line and coal traffic noise would be a disability. Traffic noise associated with the railway crossing in Witney Street should also be a consideration in assessing value.
- As stormwater gully draining water from the southern side of the railway line to Tigalee Creek traverses the allotment.
- The above grounds of appeal were referred to, to greater or lesser extents, throughout the hearing. Many of the attributes and disabilities of Lot 7 and Lot 8 are agreed between the parties.
The valuation process
- It is the responsibility of the Valuer-General, pursuant to the provisions of the LVA to undertake valuations of all properties throughout Queensland. Those valuations are the basis for rating and land tax and related purposes.
- In an appeal against the Valuer-General’s decision on objection (valuation appeal), an appellant bears the onus of proof for each of the grounds of appeal articulated in its notice of appeal. If the appellant meets the onus of proof, the task for this Court is to either, confirm the valuation of the Valuer-General or, make the correct valuation under the LVA by reducing or increasing the Valuer-General’s valuation the subject of the appeal. There is a recent Land Appeal Court decision on this point.
- In Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925(Tennyson Reach) the Land Appeal Court considered the interaction between ss 169(3) and 170 of the LVA. The Land Appeal Court was unanimous in its conclusion that the appellant had to satisfy the onus of proof, based on all of the evidence before the Court, before consideration was given to s 170. As her Honour Justice Dalton put it:
“…If the Body Corporate did not satisfy that onus, its appeal should have been dismissed. Section 170(b) of the LVA did not change that position. It did not mean that the Member was compelled to make a valuation in circumstances where the appellant before him had not satisfied its onus of proof.”
- Similarly in Tennyson Reach, I had this to say (with his Honour Member Cochrane concurring):
“…As I understand the operation of the LVA, the Court has a duty to undertake a two-step process in considering an appeal. The first step is to determine whether or not the evidence in its totality supports the case put by an appellant that the issued valuation is in error, on the balance of probabilities, so that the onus of proof is discharged. If the onus of proof is discharged, the second phase of the evaluation to be undertaken by the Court comes into play. That is, what is the correct valuation of the subject land? The Court can only get to a consideration as to the correct valuation of the subject land and thus, s 170(b) of the LVA, in circumstances where the onus of proof has been discharged.”
- By way of clarification, I should point out that there was an appeal to the Court of Appeal in Tennyson Reach which was resolved by consent of the parties. That appeal, however, only related to the issue of the majority decision of the Land Appeal Court in referring the appeal back to the Land Court and not the substantive issue relating to the onus of proof. I stress that on the substantive issue as to the manner in which the LVA operates for the onus of proof, the Land Appeal Court was unanimous in accepting the submissions of the appellant (the Valuer-General) and there was no appeal from that decision. Therefore, that aspect of the Tennyson Reach decision is undisturbed and remains good law.
- Returning to my evaluation of the valuation process, once the appellant has discharged the onus of proof, consideration is then to be given to s 170 of the LVA. How is this Court to make a proper determination? In this regard, I note with approval what his Honour Member Isdale said in Steers v Valuer-General:
“ 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.’
 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.”
- Market value is also a relevant feature to consider under the LVA. As then President Trickett said in Fairfax v Department of Natural Resources and Mines:
“ 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).
 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.’”
- The concept of a bona fide sale in the Spencer test has, in essence, been codified in s 18 of the LVA. As the question of what is, or is not, a bona fide sale has been raised as an issue in this appeal, it is essential to consider closely the specific provisions of the LVA.
- Section 16 of the LVA provides that, for deciding the value of land, all land is taken to be granted in fee simple; that is, freehold. Section 17 then goes on to provide 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.
- Bona fide sale is then described in s 18 of the LVA:
18 What is a bona fide sale
- (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.
Summary positions of the parties
- Lake Maroona has provided very detailed, but relatively concise, written submissions. Helpfully, Lake Maroona has also, at paragraphs 117–130, made detailed concluding submissions. I have carefully considered all of the submissions made by Lake Maroona from which I have gleaned some significant points as set out below. These listed points are a general guide only and certainly do not encompass all of the submissions made by Lake Maroona. In my view, Lake Maroona’s submissions can effectively be stated by the following:
- (a)The Valuer-General’s valuer, Mrs Lentell, erred in applying the tests in s 18 of the LVA when attributing value to the subject lots, or, erred in failing to adjust the value of the subject Lots for risk (if the Court accepts a conditional contract is a “sale” for the purposes of s 18);
- (b)A hypothetical prudent purchaser would think that there is a very high probability that any access for Lot 7 would have to be above the Q100 level and therefore, would require the filling of an access road to above the Q100 level plus a bridge or culvert;
- (c)A hypothetical prudent purchaser would only consider the rear of Lot 8 to be suitable for development;
- (d)A hypothetical prudent purchaser would consider a sewer connection traversing Tiaglee Creek to be a disadvantage;
- (e)Mrs Lentell erred by failing to make necessary adjustments for costs of development and access to comparative sales;
- (f)Mr Sheehan’s evidence of the impact of flooding should be preferred and Mrs Lentell erred by not agreeing that the availability of flood free alternative rural residential sites would impact the price a purchaser would pay for Lots 7 and 8;
- (g)A use of rural residential house site, as contended for by the Valuer-General, is uneconomic and legally impermissible. If the Court does not agree with Mrs Lentell, then the appeal must be allowed;
- (h)It is not necessary to determine the precise highest and best use, but the hypothetical development must be economically feasible;
- (i)The Valuer-General bears the onus of proving its submission that the Planning Scheme restrictions would be relaxed to allow each Lot to be developed for a single dwelling and it has not done so;
- (j)As the Q100 level covers both Lot 7 and Lot 8, a hypothetical prudent purchaser would not consider it legally possible for a dwelling house to be approved due to the restriction when subdivision occurred that any development on the land be above the Q100 level;
- (k)Market factors are a factor in the Spencer test;
- (l)A hypothetical prudent purchaser would consider the likelihood of a rise or fall in the value of a property, and, if the appeal is allowed, any valuation must include a further adjustment to include the prudent purchaser’s assessment of a likely fall in future;
- (m)The valuations contended by the Valuer-General are not supported by the comparative sales nominated by Mrs Lentell as the sales relied upon by Mrs Lentell are not truly comparable; the Bundaberg and Rockhampton sales should not have been used as they are outside the market for sales of house sites in Gladstone;
- (n)The Rockhampton and Bundaberg sales do not meet the Cattanach Test to make them comparable;
- (o)In valuing a house site, the market should be limited to the Gladstone region because it is implausible a hypothetical prudent purchaser would look outside the locality where they wished to purchase;
- (p)Although the land is partially affected by flood, Mrs Lentell’s Sale 1 (11 Centaurus Close, Gladstone) is not comparable because development is not affected by flooding;
- (q)If the Court accepts the Bundaberg sales to be comparable, they should be excluded because they have been assumed to be directly comparable without adjustments for time or market differences;
- (r)Mr Sheehan’s Sale 1 (Kirkwood Road, Glen Eden) is the only comparative sale of a rural residential allotment before the Court;
- (s)Lake Maroona does not accept the Valuer-General’s submission that Mr Sheehan’s Sale 2 (19 Parsloe Street) was sold by an anxious seller;
- (t)Lot 3 on SP 152520 is superior to the subject Lots;
- (u)If the appeal is allowed, the Court should consider the valuation of Lot 3 in a relativity exercise and that relativity supports the valuation contended for by Mr Sheehan;
- (v)Even if the Court finds a house could be developed on the area of Lot 8 bordering Witney Street (as opposed to the rear of Lot 8), the valuation of Lot 3 at $20,000 supports a valuation of $20,000 for Lot 8;
- (w)Costs of development as proposed by Mr Allen and Mr Sheehan should be accepted on the basis that Mr Allen has expertise as a civil contractor and developer including of lands surrounding the subjects, and his evidence is uncontested by another contractor or developer;
- (x)Where the Spencer test is not available, the Court should approach site value of the subject Lots using Sri Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam  AC 302; Public Transport Development Authority v Commissioner for State Revenue  VSCA 266; Australand Industrial No.111 Pty Limited v Valuer-General  NSWLEC 1255; and Brisbane City Council v Valuer-General (Qld)  HCA 40.
- Like Lake Maroona, the Valuer-General has also provided detailed, but relatively concise, written submissions. Further, the Valuer-General has provided the following summary:
- To succeed in the appeals, the Appellant must prove on the balance of probabilities that the valuations are incorrect on the grounds set out in the Notices of Appeal. For the reasons explored above, the Court ought conclude that the Appellant has not done so.
- It is submitted that Ms Lentell’s evidence should be preferred to, and afforded greater weight than, that of Mr Sheehan. Ms Lentell’s primary method of direct comparison with sales is the preferred method.
- Applying the comments of his Honour Mr Jones in Nimmo v Department of Natural Resources and Mines, it is abundantly apparent in this case that:
a. Mr Sheehan’s opinion insofar as the hypothetical development method is ‘expressed in a manner or upon bases which are unable to be scrutinized’ given that there is no upper value attributed to either subject from which costs estimates are deducted (beyond that stated in [90 & 91-JVR] by reference to an assumption that the Respondent’s site values are accurate) and he relies on a conversation with Mr Cox (unable to be tested);
b. in reaching his opinion, Mr Sheehan has relied on information shown to be unreliable and unclear, given he has adopted estimates from Mr Allen (a director of the Appellant) which were subsequently, in part, altered during evidence in chief without explanation; and
c. Mr Sheehan has failed to take into account relevant and material facts, including the alternate outcome if a culvert is not required (and instead a low level bridge crossing were required), the likelihood that the owners of Lot 7 and 8 would not work together, and the potential for development approval on terms different to those speculated.
- Deciding the appeal on the evidence, no basis is shown by the Appellant to discredit the [sic] Ms Lentell’s assessment in respect of either Lot 7 or Lot 8. Ms Lentell has complied with the expert evidence rules by:
a. identifying the comparable sales and other facts on which she bases her opinion;
b. identifying the differences between the sales and subject which require consideration in drawing inferences about the value of the subject from sales; and
c. explaining her reasoning process in applying the sales while taking account of those differences.
- The Court ought determine that the evidence of Mr Sheehan as to the value of Lot 7 and 8 is of no assistance as an indicator of value. The hypothetical development method employed by Mr Sheehan might be useful background evidence if all of the underlying factual premises were made out on the evidence, but should not be relied upon as a primary indicator of value - in the way that it apparently has - in circumstances where there remain so many unknowns.
- On that basis, the Respondent respectfully seeks that the Court dismiss the appeal in relation to Lot 7 and 8, and confirm the valuations appealed against.”
- Just as I did with Lake Maroona’s submissions, I have also carefully considered all of the submissions made by the Valuer-General from which I have set out below some significant points. These listed points are only a guide and do not encompass all of the submissions made by the Valuer-General. In my view, the Valuer-General’s submissions can effectively be stated in the following points:
- (a)The Land Court is not an investigative tribunal, despite the necessity of the Court to be mindful of equity and good conscience; section 7 of the Land Court Act 2000 does not affect, influence, or lower the standard of proof an appellant must meet;
- (b)Relying on Briginshaw v Briginshaw (1938) 60 CLR 336;  HCA 34, the civil standard of proof should not be lowered in matters where consequences which flow from a particular finding are less grave or that a lower standard of evidence be accepted in establishing the discharge of an onus of proof;
- (c)The greater the difference between two properties, the less reliable the evidence of the sale of the allegedly comparable property, however, that does not mean the evidence is totally irrelevant, if there remain significant points of similarity;
- (d)The use of the hypothetical or notional development method has always been regarded as suspect – it is a less reliable valuation method because of the number and nature of assumptions that have to be made;
- (e)The hearing must be limited to the grounds of appeal in the valuation appeal notices;
- (f)The estimates of costs involved obtained by Mr Sheehan has not been provided by an independent third party, disinterested in the outcome of the proceedings, rather, they are from Mr Allen, a director of the appellant in these appeals. Some of Mr Allen’s figures, “inexplicitly” changed during the hearing;
- (g)After considering two larger home sites with access and infrastructure, Mr Sheehan concluded that a prudent purchaser would not undertake to develop either Lot 7 or Lot 8. His comparison on a “cost to develop” basis has not made allowances for other factors such as the superior location of the subject Lots;
- (h)Mr Sheehan’s approach to sales cannot be seen as a genuine attempt to yield value as he has not attempted to come up with an appropriate valuation for the Lots, rather, attempted to reason that the respondent’s valuation must be too higher and therefore ought be reduced to a lesser figure;
- (i)In  of the JVR, Mr Sheehan has assumed that two hypothetical owners would halve the costs of bringing both Lots to a state where access and infrastructure are available – there is no basis for this assumption, nor can it be seen as reliable;
- A prudent purchaser of Lot 8 would not share in the costs of arranging access to Lot 7, or vice versa, unless it resulted in a more affordable outcome and the access were being arranged at a time contemporaneous to when their own access arrangements would otherwise have been made;
- This approach ignores the alternative that individual lot owners may undertake the exercise and bear the costs of bringing only their allotment to a state where access and infrastructure is available;
- (j)Mr Sheehan’s evidence that if he treated the Lots separately, that the cost for Lot 8 would be higher than Lot 7 cannot be persuasive when he acknowledged in evidence that he did not know the cost of putting a roadway through Lot 8 (T1-76, lines 4 to 24);
- (k)None of the sales listed in the Notices of Appeal were put into evidence as comparable in the JVR;
- (l)Mrs Lentell appropriately explained and acknowledged the differences between the subject Lots and the sales, and consistently maintained that there were significant points of similarity between each of those sales and the subjects, relevant to the determination of their value;
- (m)Mrs Lentell’s approach acknowledges that a bona fide purchaser could be expected to require, as a condition to the sale, “pending approval of a development application” if they were to be purchasing Lot 7 or 8 for its highest and best use as a rural home site;
- (n)It has not been established that a culvert would be required by the Gladstone Regional Council to traverse the gully on Lot 7;
- Mr Allen and Mr Sheehan concede that it is unknown whether one would be required;
- Mr Allen did indicate though, that in a previous approval on for Lot 7 and 8, a low-level crossing was required;
- (o)Mrs Lentell does not “gloss over” the issue of flooding as suggested in the appellant’s submissions. She relies appropriately on the evidence from the Gladstone Regional Council inviting the submission of a development application with a flood hazard and mitigation report as one way of clarifying the Q100 flood hazard event;
- (p)The evidence of the appellant that the Lots have no development potential is inadequate and not supported by Mr Sheehan’s evidence;
- (q)Having regard to authorities, it was appropriate for Mrs Lentell to have regard to Ms Robertson’s evidence and the historical conduct of the Gladstone Regional Council in respect of the probability of the relaxation or variation of the planning scheme and the means by which that is likely to be achieved;
- (r)There is no ground of appeal directed to the issue of the state of the market in the period post 1 October 2016 and the appellant did not put same to Mrs Lentell during evidence;
- (s)Mrs Lentell’s evidence that she could not point to sales of fully flood affected lots in Gladstone was limited to the 12-month period preceding the valuation date;
- (t)No ground of appeal is directed towards the issue of relativity; the Court’s consideration is limited to the grounds of appeal and therefore, relativity should not be considered;
- (u)If the Court accepts Mrs Lentell’s assessment as to the comparability of Lot 3 against the subject Lots, the site value of Lot 3 is not out of step with the values contended for by the respondent for the subjects – however, if the Court determines the values for Lots 7 and 8 are incorrect, the respondent “will in turn consider the implications (if any) that arise in relation to the site value applicable to Lot 3”;
- (v)Mr Allen’s costings were not formally conducted and his figures were no more than a best estimate and a rough guess from his perspective; Mr Allen could not provide an explanation for the significant variations in his estimates presented in oral evidence;
- (w)Both Lot 7 and Lot 8 have potential and the land should be valued – it cannot be suggested that there are no potential purchasers of those Lots;
- (x)If the Court considers there are no comparative sales, then the sales identified by Mrs Lentell could nonetheless be used, with appropriate adjustment to ascertain what a willing vendor might reasonably expect to obtain from a willing purchaser.
Some opening observations
- In order to understand the issues in dispute in these matters, it is helpful to detail the valuation process leading up to the current values for Lots 7 and 8 as determined by the Valuer-General, and the amounts contended for by Lake Maroona.
- As I have already indicated, the initial site valuation of the Valuer-General for Lot 7 was $182,000. Following the notice of objection process, the site valuation for Lot 7 was reduced by the Valuer-General to $50,000. Subsequently, the Valuer-General further reduced the site value of Lot 7 to $30,000. Lake Maroona has throughout contended for a site value of $10,000 for Lot 7.
- Similarly, Lot 8 was originally valued by the Valuer-General at $192,500. Following the objection process, the site value of Lot 8 was reduced by the Valuer-General to $60,000. Subsequently, the Valuer-General further reduced the site value of Lot 8 to $40,000. Lake Maroona has throughout contended for a site value for Lot 8 of $20,000.
- Even a cursory glance at the submissions in this matter would lead the reader to the conclusion that, for what can only be classed as very low level appeals from a monetary sense, in circumstances where Lake Maroona has already had considerable success in having the site values of Lot 7 and Lot 8 significantly reduced, there remain complex issues of valuation law, theory, and approach raised by both parties.
- Fortunately, the underlying facts are basically straightforward as set out earlier in these reasons. I will specifically refer to disputed facts as the need arises later in making my decisions. The core of these appeals come down to differences of opinion between the valuers as to the impact of the facts on the valuations of Lots 7 and 8. The resolution of these appeals, therefore, is chiefly undertaken by an analysis of the opinions reached by each valuer and the legal consequences that flow, in light of the LVA and related authorities, as submitted by the respective parties.
- As a consequence, I will only briefly refer to the evidence placed before the Court by each of the witnesses when considering each witness under separate headings below. Following that, I will make findings and determinations with respect to the core issues in dispute between the parties in order to arrive at my decision as to, firstly, whether the appellant has met the burden of proof in each case and, if the burden of proof has been met, then go on to consider the appropriate valuations for Lots 7 and 8.
Mr Graham Allen
- Mr Allen was called by Lake Maroona. He provided a statement of evidence and gave oral evidence. His statement of evidence is lengthy and includes a large number of attachments.
- Mr Allen’s evidence is that he is the Managing Director of Lake Maroona. Mr Allen’s wife is also a Director of Lake Maroona. Mr and Mrs Allen have operated businesses since 1970 engaged in earthmoving, civil construction, quarrying, and property development. Mr Allen has 49 years’ experience in earthmoving and civil construction and over 30 years’ experience in property development in Gladstone.
- In 1989, Lake Maroona purchased a large parcel of undeveloped en globo land. Lots 7 and 8 were part of that large parcel. Lake Maroona has subsequently subdivided the large parcel of land progressively, resulting in the creation of hundreds of residential lots together with the subdivision and construction of other lots for units, duplexes, a supermarket, shopping centre, childcare centre, two churches, and two parks.
- Mr Allen says that, despite the amount of development undertaken, four subdivided lots remain undeveloped, including the appeal Lots 7 and 8, and Lot 3.
- In his statement of evidence, Mr Allen goes on to set out the development history of Lots 7 and 8; access roads; current zoning and constraints; overlay constraints; acid sulphate soils; biodiversity and vegetation management; bushfire; flood hazard; and future development potential.
- As the Valuer-General has correctly pointed out in its submissions, Mr Allen has given evidence on a wide range of topics in circumstances where he is not an expert and able to give his opinion. I accept that Mr Allen is not an expert (such as an expert engineer, town planner, engineer or the like) and I do not take into account any of the opinions that he has given in those regards.
- However, in my view, the bulk of Mr Allen’s evidence related to statements of fact and, given his lengthy and detailed knowledge of Lots 7 and 8, he is not only entitled to give such evidence, I generally find such evidence to be well expressed; clear; and reliable.
- It is certainly the case that his estimate of some construction costs, such as the costs of constructing a culvert or a bridge, were not only changed during his oral evidence, but clearly, from his own account, can be viewed as little more than guestimates only. Such evidence is of little, if any, weight.
- Leaving to one side Mr Allen’s estimate of construction costs, I found Mr Allen to be a reliable witness with a detailed knowledge of a myriad of facts relating to Lots 7 and 8.
- From a property developer’s perspective, Mr Allen is clearly of the view that Lots 7 and 8 cannot be economically developed and are, in reality, a burden on an owner instead of being an asset. Unfortunately for Mr Allen, that perspective is largely irrelevant for LVA purposes. What is relevant is the site value of each lot, which is ascertained by relevant market evidence. Although property developers are certainly part of the market, they do not make up the entirety of the market. Even if, taking the best position of Lake Maroona, being that Lots 7 and 8 cannot be developed for residential or rural residential use, that does not mean that some potential buyer would not be interested in the properties for some purpose, be that keeping of animals (such as horses), green space, or something else.
Ms Helen Robertson
- Ms Robertson was called by the Valuer-General. She gave affidavit evidence and oral evidence.
- Ms Robertson is employed as the Manager, Development Services, Gladstone Regional Council. It must be noted at the outset that Ms Robertson was not called to give expert town planning evidence to the Court. Rather, the extent of Ms Robertson’s affidavit evidence is to put into evidence, by way of exhibits to her affidavit, correspondence of 20 November 2017 that she authored on behalf of the Gladstone Regional Council to Mr Sheehan in response to his correspondence of 31 October 2017 (also exhibited), together with an email from the Valuer-General of 4 April 2018, and her response on behalf of the Gladstone Regional Council by email of 5 April 2018. The two questions raised in the email from the Valuer-General related to the potential for approval to construct a dwelling house on either Lots 7 or Lot 8.
- I am certainly in no doubt that the letters and emails are, as a question of fact, on their face, exactly what Ms Robertson says they are.
- Given that Ms Robertson was not providing the Court with expert town planning evidence, her evidence can only be received on the basis of the fact that certain letters and emails were exchanged with the Council. I am also prepared to accept, to a limited extent, that the views expressed by the Council in its letter and email were at the time, the views of the Council. Importantly, however, such views, as clearly made evident by Ms Robertson, are at best, general statements only and, specifically, do not form the concluded view of Council on any Development Application (DA) or application for a Material Change of Use (MCU) as no such applications are in existence.
- Absent existing DA or MCU applications, or expert town planning evidence, the evidence of Ms Robinson is of assistance from a valuation perspective in considering risks to be taken into account by any hypothetical prudent purchaser of Lot 7 or Lot 8, but cannot be taken further than that.
- Subject to the qualifications set out above, I find Ms Robertson to be a reliable witness.
Expert valuation evidence
Mr Michael Sheehan
- Mr Sheehan was called by Lake Maroona. He has a very long history as a registered valuer in Queensland, having been registered in May 1973. Mr Sheehan was originally employed as a valuer by the Valuer-General in Brisbane, Redlands and Fitzroy/Central West of Queensland.
- In the mid-1980s, Mr Sheehan changed his employment to that of a private valuer. He is currently the Director of M.D. Sheehan, Valuer.
- Mr Sheehan’s valuation approach is set out at paragraphs 78–93 of the JVR. His starting point is that there are no comparable vacant land sales within the Gladstone area. As a result, Mr Sheehan has given consideration to larger home site sales where access and infrastructure are available to show land that could be purchased as an alternative without the disadvantages of Lot 7 and Lot 8. Mr Sheehan then investigated the cost of providing access and infrastructure to Lot 7 and Lot 8. He primarily relied upon the evidence of Mr Allen for his costings.
- Mr Sheehan’s investigation of the costs of a hypothetical development of Lot 7 and Lot 8 leads him to the conclusion that both Lots do not have any development potential when a hypothetical prudent purchaser takes those costs into account.
- In reaching that conclusion, Mr Sheehan considered difficulties of access, reticulated water, sewerage, electricity, flood hazard, and mitigation. At the time of the JVR, Mr Sheehan considered that the total costs to bring Lot 7 and Lot 8 up to the standard of other residential allotments without those difficulties would be $226,700 which he split to make a sum of $113,350 per Lot. It must be noted that the figures Mr Sheehan arrived at in the JVR relied upon earlier estimates by Mr Allen which Mr Allen corrected to some degree during his oral evidence.
- Mr Sheehan considered in the JVR that if development costs of $113,350 were expended for each Lot, then, adopting the site values of the Valuer-General which were at the time $50,000 and $60,000 respectively and adding the development costs to each Lot, Lot 7 would have a value of $163,350 and Lot 8 a value of $173,350.
- It must of course be noted that the site values ultimately contended for by the Valuer-General are $30,000 for Lot 7 and $40,000 for Lot 8. Applying Mr Sheehan’s same methodology as set out in the preceding paragraph, but maintaining Mr Sheehan’s development figures from the JVR, and using the current valuations for each Lot, results in an updated value for Lot 7 of $143,350 and $153,350 for Lot 8.
- As indicated, the development costs did change during Mr Allen’s oral evidence. Allowing for a further one half of the cost differential between Mr Allen’s initial estimate for the cost of a culvert at $115,000 and his second estimate provided during his evidence-in-chief of $140,000, the figure then increases to $155,850 for Lot 7, and $165,850 for Lot 8.
- The figures are, however, reduced if the Council does not require a culvert but instead a low level crossing.
- At first blush it would appear that the evidence above of Mr Sheehan supports site values applied by the Valuer-General for Lot 7 and Lot 8. Mr Sheehan, however, goes on in the JVR to make it clear that there are other considerations that a hypothetical prudent purchaser would take into account when purchasing either of the Lots. At paragraph 92 of the JVR Mr Sheehan has this to say:
“However, the allotments would still [sic] subject to periodic inundation, have access that was subject to periodic inundation and subject to periodic maintenance at the owners expense. Any development would also be required to address - acid sulphate soil issues, biodiversity, bushfire hazard and vegetation management issues. Finance and insurance would also be a matter of consideration by intending purchasers.”
- Further, Mr Sheehan also made reference in the JVR under the heading “Appellant Sales”, indicating that the “only vacant land sales evidence within the City of Gladstone is of allotments with street access with infrastructure available”. He then went on in the next paragraph of the JVR to set out details of two sales as follows:
- Mr Sheehan’s conclusion is that Lot 7 should be valued at $10,000 and Lot 8 at $20,000.
Mrs Penny Lentell
- Mrs Lentell was called by the Valuer-General. She is employed by the Valuer-General as a valuer and is currently responsible for statutory valuations of properties in the Gladstone locality. Mrs Lentell has 15 years’ experience in property and 10 years’ experience in statutory valuation.
- Mrs Lentell holds the degree of Bachelor of Property from the Central Queensland University.
- The valuation approach adopted by Mrs Lentell in assessing the site value of Lot 7 and Lot 8 is by direct comparison with vacant and lightly improved sales, in fee simple, but with existing use rights and accounting for any encumbrances.
- From a market perspective, Mrs Lentell considers Lot 7 and Lot 8 to be quite unique in character as they are large hectare sites, centrally located within the Gladstone township with the full extent of Council services available for connection. She also refers to considerable detrimental characteristics which, again, makes them quite unique in that they fall within the Q100, adjoin railway line, and are zoned “Limited Development – Constrained Land (Flood Affected)”. She also notes that there are only 20 properties in the entire Gladstone region that have this specific zoning.
- Later in the JVR, Mrs Lentell goes on to note that of the 20 properties with the specific zoning, only five of those are vacant, with all but one of those vacant properties owned by the appellant, making the availability of directly comparable sales extremely limited. She further notes that the other properties with the same zoning in Gladstone have been developed with dwellings, two-storey units, and a caravan park.
- Mrs Lentell is of the view that a prudent purchaser of Lot 7 or Lot 8 would be expected to sign a contract pending approval of a DA, as even preliminary over-the-counter enquiries about the subjects would suggest to a prudent purchaser that there were difficulties with development of the block, and that this point would also be reflected in a lower than average asking/selling price.
- Mrs Lentell has relied upon six sales which she says are comparable in order to value Lot 7 and Lot 8. Helpfully, just as Mr Sheehan did, Mrs Lentell has assisted the Court by summarising her sales into a table found at paragraph 147 of the JVR as follows:
- Mrs Lentell’s conclusion is that Lot 7 should be valued at $30,000 and Lot 8 at $40,000.
- Both of the parties in their written submissions refer to various issues in these appeals to support the different valuations which they contend for. In the headings that follow, I will set out my findings as regards the issues in contention that require analysis and determination in order to arrive at a conclusion as to whether or not the onus of proof has been satisfied by Lake Maroona in each appeal and, if it has, to then go on and set the correct valuation for each Lot.
- The issues for my consideration relate to:
- Flooding and waterways;
- Legal development potential of Lot 7 and Lot 8;
- The highest and best use, planning, and associated risks;
- The costs of development;
- The sales evidence put before the Court;
- Whether the appellant has met the onus of proof; and
- If the onus is met, what the correct valuation for Lots 7 and 8 are under the LVA.
- Each issue is listed under a separate heading. The issues are listed in no particular order.
- There is a marked difference in the access to Lot 7 compared to Lot 8. The access to both Lots is off Witney Street. Lot 7, which is described as a hatchet block, has a narrow hatchet handle entry from Witney Street. There is no dispute between the parties that the hatchet handle runs through a gully creating access difficulties to the majority of the block. What is in dispute, is whether a low-grade crossing, a culvert, or a bridge would be required over the gully.
- Ms Robertson gave oral evidence regarding the issue of access. She had the following to say during cross-examination:
“So I’m sure you’re aware of these two lots, but the means of any access and egress is to Whitney Street. And that access has to cross a gully which, I guess, takes flood water from the town area. Are you aware of that?---Mmm.
So if your planning scheme does state that, in a flood risk area that the escape – the access may have to be above the Q100 level. Is that correct?---Correct. Yes.
So if the access must cross that gully, the construction of any – or to make it all weather access, it has to cross that gully, and the level of that access road has to be above the Q100 level. Do you accept that?---Correct. Yes.
So you accept that, in crossing that gully, any structure would have to be a significantly high structure?---Yes.
A number of metres. Right?---Yep.
So a structure of that height might require a bridge or a culvert?---Correct.”
- Ms Robertson further clarified her evidence regarding access during re-examination:
“In response to a query regarding access may have to be above the Q100 level regarding that gully, you responded “yes.” And the next question put to you was that, it would have to be above Q100 level. Is there any other alternative approvals that might be achieved through a development application process?---Yes. The clearance above that level is what’s called an AO. There are – the PO under the planning scheme says:
Road and pathway way out (SIC ensures) residents are physically – are not physically isolated from adjacent flood free urban areas, and provide safe and clear evacuation route path.
So that’s the performance outcome of – the – being above the Q100 is what’s called an acceptable outcome. So that’s an automatic tick if you like. And – but there’s always alternative ways the applicants can demonstrate how to meet that, effectively providing for new technologies and those types of things to be considered. So during that application process an alternative may be found to be suitable.”
- I did not read anything in the evidence of Mr Allen, and particularly that evidence to be found at paragraph 91 of Exhibit 3, to be inconsistent with the evidence of Ms Robertson. Mr Sheehan for his valuation of Lot 7 views the need to traverse the gully as a major cost impediment that would impact any purchaser. Mrs Lentell certainly agrees that there are difficulties in the access but she has not taken those difficulties into account to the same degree as Mr Sheehan. In fairness to Mrs Lentell, her evidence clearly indicated that the reductions in value for Lot 7 were influenced by, amongst other things, the difficulties of access over the hatchet handle because of the gully.
- It is not the function of this Court in appeals under the LVA to reach a concluded view as to the precise form of works, such as to allow access, required to be undertaken on properties issued with a site valuation. Absent a DA and decision by the local authority, and/or any appeal to the Planning and Environment Court, any attempt to make a finding by this Court would be mere speculation. What is required of this Court, is to take into account the difficulties associated with the access to Lot 7 and determine how those difficulties would impact on the site value of Lot 7.
- Lake Maroona, in its submissions, put it this way:
“The Appellant submits that, applying the test in Spencer, the issue regarding access depends on what the Hypothetical Prudent Purchaser, on reading the planning scheme, enquiring with the council and viewing all information available and the land itself, would consider regarding access. The Appellant submits on this basis and on the evidence, such a purchaser would think there is a very high probability that any access would have to be above the Q100 level and therefore requiring filling of an access road to above the Q100 level plus a bridge or culvert.”
- I agree with Lake Maroona’s assessment of Spencer. In my view, a hypothetical prudent purchaser, on the evidence before me, would be highly concerned as to the difficulties that they would encounter in dealing with the local authority in order to have a legal access over the gully on the hatchet handle to the balance of the land contained within Lot 7 and would, very significantly, seek to reduce the purchase price that they were willing to pay for Lot 7 as a result.
- The situation is quite different regarding Lot 8. Lot 8 has a 36.91 m frontage to Witney Street. In particular, following cross-examination of Mr Sheehan, there is not a great deal in dispute between the valuers regarding the access to Lot 8 from a traffic sense off Witney Street. What differences remain are that Mr Sheehan believes that part of Lot 8, most suitable for development, to be at the rear of the block. It is Mr Sheehan’s view that access to the rear of the block would be across the same gully.
- Taking into account all of the evidence before me, in my view, a purchaser of Lot 8 would be much less concerned as regards the access to Lot 8 than to Lot 7. Clearly, a significant area of Lot 8, before the gully, is available by way of direct access onto the property. I do accept that a potential purchaser would see the gully as a limiting factor for development to the rear of the property but, purely from an access perspective, such purchaser would clearly see good access to much of the property in its current state.
Flooding and waterways
- The evidence relating to Lot 7 and Lot 8 on the topics of flooding and waterways are relatively clear despite the way those topics were dealt with in the JVR. It would certainly have been more helpful had both valuers concentrated on their areas of agreement, particularly relating to flooding, in the JVR, rather than listing flooding and waterways as disagreed by the parties for both Lots.
- What is clear from the evidence is that both Lots are below the Q100 flood line in their entirety. What is also clear is that the local authority has changed the Q100 flood line and that such change, which increased the height of the flood line, has had a marked impact on both Lots. The Q100 flood level for Lot 7 is 14.13 AHD with the required habitable floor level for a dwelling of 15.13 AHD. The Q100 flood level for Lot 8 is 14.07 AHD with the required habitable floor level for a dwelling of 15.07 AHD.
- As the correspondence from the Gladstone Regional Council of 20 November 2017 makes clear, a proposal to construct a dwelling on either Lot 7 or Lot 8 triggers Code Assessable development under the current Planning Scheme and is subject to the relevant assessment benchmarks including the Flood Hazard Overlay Code. That correspondence also indicates the likelihood of a Council requirement for any housing application on either Lot of a Flood Hazard Assessment and Mitigation Report in accordance with Schedule 6.7 of the Planning Scheme. The Council’s correspondence went on to state as follows:
“Upon receipt and assessment of this Report; the results may allow for the habitable floor levels to be revised, allowing for an alternative outcome. This report may explore may [sic] alternate construction techniques comparing 'slab on ground' as opposed to 'post and beam' and the influence on earthworks. However, should you not wish to provide this report, all Dwelling Houses will be required to meet the habitable floor levels highlighted above and any earthworks involving fill may not be supported by Council.”
- Just as was the position regarding access, this Court does not need to, for site valuation purposes under the LVA, reach any concluded view as to whether or not flooding prevents a dwelling being constructed on either Lot. Rather, the facts for this Court to take into account are that a purchaser of either Lot would be concerned about the entirety of each Lot lying below the Q100 level and would decrease any offer as a result. Such purchaser would also be concerned by the cost of providing a flood report to Council should such purchaser be intending to construct a dwelling on either Lot.
- I agree with both valuers that the flooding characteristics of each Lot would have a negative impact on the purchase price of those Lots and that that must reflect in the site value of both Lots. In my view, Mr Sheehan tends to overstate this impact by ignoring the potential for other purchasers not desiring to construct a dwelling on either Lot, whilst Mrs Lentell tends to downplay, to some extent, the difficulties that the Q100 flood line impose on any purchaser.
- I stress, however, that each valuer has taken flooding impacts of Q100 into account. On the approach of either valuer, the site value of either Lot, when compared to other vacant lots without Q100 impacts of the same magnitude, are significantly reduced, and I take the reduction by each valuer to have occurred with the Q100 flooding issue as an important part of their opinion forming process.
Is development of a house site on the Lots legally permissible?
- In the submissions of Lake Maroona, there is a contention, closely linked to the evidence on flooding, that it is not legally permissible, given the conditions put in place when Lot 7 and Lot 8 were created, for there to be development of either Lot as a house site. Lake Maroona has this to say at paragraph 69 of its submissions:
“As the Q100 level now covers all of each of Lot 7 and Lot 8, on the evidence the Appellant submits that a purchaser would consider it is not legally possible for a dwelling house to be approved. Mrs Robertson, in cross examination, confirmed that Condition 05 would bind any future application. The Appellant submits that, in considering the highest and best use, a hypothetical prudent purchaser would not consider development of a dwelling house on either Lot 7 or Lot 8 would be legally permissible because the past conditions during subdivision requiring any development to be on land above Q100 would bind any such application. In light of such evidence, the Appellant submits that the Court should not find that the council advised development of a house is legally permissible as Mrs Lentell contends, and therefore the appeal should be allowed.”
- I cannot agree. It is clear that an owner of either Lot could apply to the Council to have a dwelling approved. It is not for me to say what the outcome of such an application would be. It may be that a dwelling would not be approved; it may be that a Planning and Environment Court appeal would occur. I am in no position to speculate on such matters. However, what I can say is that the owner of Lot 7 or Lot 8 can make an application to Council for approval for a dwelling house, but that the acceptance of any such application is in considerable doubt.
- That, however, is a different thing altogether than contending that construction of a dwelling is not legally possible.
Highest and best use, planning, and risk
- These issues bear a striking similarity to the issue discussed immediately above.
- In the JVR, Mrs Lentell contends at paragraphs 71 and 72 as follows:
“71. The highest and best use of the sites are considered to be as rural homesites as per the planning scheme and as confirmed by the Manager of Development Services, H A Robertson, who states that the 'future development of each subsequent allotment shall be restricted to single dwelling and ancillary structures.'
- Highest and Best Use defined by the Australian Property Institute (API) and International Valuation Standard Council (IVSC) is:
• The use of an asset that maximises its potential and that is physically possible, legally permissible and financially feasible.”
- It is of course necessary to take the totality of Ms Robertson’s evidence into account. I have already set out some evidence from her correspondence on behalf of Council in this regard. There is no doubt a possibility, as previously discussed, of housing approval being obtained on either Lot. That, however, is a different thing to stating emphatically that the highest and best use of each Lot is, at the current time, that of rural home sites. That is as much an overstretch as Lake Maroona’s contention that home site development is not legally possible.
- What is without doubt is that both Lot 7 and Lot 8 are currently zoned Limited Development (Constrained Land), and that the approval of Council would have to be sought before a house could be developed on either Lot.
- Put simply, what development could be undertaken on either Lot 7 or Lot 8 is a matter of risk assessment by any hypothetical prudent purchaser. Clearly, one use of either Lot could be their current use. Alternatively, another use could be as green space, although that was not really advanced by either valuer. Another use could be for horses or other livestock. Another use of each Lot, but with a significantly higher risk, could potentially be that of rural home site if Council approval was obtained.
- Both valuers gave evidence as to the relativity of the site valuation for Lot 3. Lake Maroona contends that I should accept the evidence of Mr Sheehan in this regard over that of Mrs Lentell. However, before I can even get to that point, there is a fundamental submission made by the Valuer-General that I must consider.
- At paragraph 176 of its written submissions, the Valuer-General contends that this aspect cannot be considered as relativity was not a ground of appeal in either Notice of Appeal.
- The grounds of appeal have been set out earlier in these reasons at  and . The Valuer-General’s submissions are quite correct. Any appeal to this Court under the LVA must be limited to the grounds set out in the Notice of Appeal.
- In the absence of relativity as a ground of either appeal, it is unnecessary for me to consider this issue further.
Costs of development
- I have already touched on the evidence regarding the costs of development insofar as those costs related to access. For housing approval and development to occur on either Lot, no doubt additional costs would be required, due to the flooding issues, to bring any housing site, and the emergency escape route from such site, up to an appropriate standard for housing to be constructed.
- I have already set out the limitations which must be provided to Mr Allen’s evidence as to the costs of development. He was not put forward as someone entitled to give expert opinion evidence in that regard. He is not a quantity surveyor nor a civil engineer. I have, however, accepted, in a limited way, factual (as opposed to opinion based) evidence that he has given as to development costs. This factual evidence is of course lay evidence at best.
- Consistent with my earlier findings, I am of the view that the costs of development would be another significant factor and risk that any purchaser would take into account before arriving at any potential purchase price for either Lot.
- The sales relied upon by each valuer have already been set out in table form above. Given the manner in which the evidence unfolded, I am able to deal with the sales rather quickly. I will start with Mr Sheehan’s two sales.
- Mr Sheehan’s first sale is Daly Road/Kirkwood Road, Glen Eden. Mr Sheehan notes the sale price of $150,000 and also notes the 2016 site value of $131,000. The sale is not subject to flooding. Mr Sheehan considers it markedly superior to the subjects. Mrs Lentell considers the sale to be in an inferior location and to have inferior services because water, sewerage stormwater and rubbish collection services are not available. I agree that the sale has inferior services to the subject Lots. I also agree that the sale is, at least, superior to the subject Lots.
- As the sale is not subject to Q100 flood restrictions, which are such a significant factor for Lots 7 and 8, I consider such sale to be of only very limited use, if any at all, in assessing the value of the subject Lots.
- Mr Sheehan’s other sale is that of 19 Parsloe Street. It sold for $70,000 and has a 2016 site value of $131,000. The allotment is not subject to flood, vehicle or railway noise, and is considered superior by Mr Sheehan to the subject Lots.
- Mrs Lentell gave evidence that she is concerned that the vendor was over anxious and for that reason the sale was not used for the 2017 site valuation process by the Valuer-General. I share Mrs Lentell’s concerns regarding this sale. Sales in which a vendor or purchaser are over anxious do not meet the Spencer test/s 18 of the LVA.
- Even if this sale could be considered bona fide, which I seriously doubt, it would not assist the valuation process for the subject Lots, as again, this sale is not subject to Q100 flood restrictions. I consider such sale to be of only very limited use, if any at all, in assessing the value of the subject Lots.
- I now turn to Mrs Lentell’s sales. Mrs Lentell’s Sale 1 is at 11 Centaurus Close, Telina. It sold for $138,000; it has an analysed sale price of $135,838; and a 2016 site value of $120,000. Mrs Lentell considers this smaller parcel with inferior flooding impediment, superior zoning and development potential, inferior slope, and superior location, to be overall superior to the subject Lots.
- Mr Sheehan notes that Sale 1 is located within a residential area, with good bitumen road access, with all services available and that, although the rear of the land is within the Q100 flood line, a building site is available at the front of the allotment. He considers it markedly superior to the subject Lots. I agree. Although some of the block is subject to flooding restrictions, that is to the rear of the sale, and down a steep slope. As far as the construction of a house goes, the evidence shows that a normal suburban residence in all respects could be constructed at the front of the Lot with absolutely no flood concerns at all. For that reason, I again consider such sale to be of only very limited use, if any at all, in assessing the value of the subject Lots.
- I will deal with Mrs Lentell’s Sales 2 and 3 together. Both of those sales are subject to flood inundation. They are located in Rockhampton. They both have direct access to a major river. During her oral evidence Mrs Lentell stated that both were purchased by fishermen who liked going there over weekends to “drop a line”.
- Mrs Lentell confirmed in her oral evidence that, given the specific purpose for which the fishermen had purchased Sales 2 and 3, they would not have been in the market for either Lot 7 or Lot 8. Mrs Lentell went on to accept the proposition that her Sales 2 and 3 required further analysis because of a different use to the subject Lots, and, when comparing them to housing sites, they are not comparable due to their use being on the river for fishing purposes.
- Mr Sheehan made the point that Sales 2 and 3 are in an entirely different city and used for an entirely different purpose.
- In my view, the different market that applies for Sales 2 and 3, combined with the fact that the sales are in a different city, render them of no use for a direct comparison approach to Lots 7 or 8.
- That then leaves Mrs Lentell’s Sales 4, 5 and 6. These sales are all in Bundaberg and followed the significant 2013 flooding event in that city. They were each subject to inundation in 2013.
- Sale 4 sold for $37,000. It has an analysed sale price of $36,130 and a 2016 site value of $36,000. Mrs Lentell considered Sale 4 to have a superior flooding impediment to the subject lots, similar zoning and development potential, superior slope, and comparable location and services. In her assessment, Sale 4 is inferior to Lot 8 and superior to Lot 7.
- Mr Sheehan notes that the sale had a superior zoning of “Limited Development – Limited Residential”. He also stated that Sale 4 had superior access. He obtained advice that the footings required for the house subsequently constructed on the site required additional expense of approximately $10,000 over that of a normal house build. In Mr Sheehan’s opinion, the costs to develop Sale 4 were significantly lower than the costs to develop Lot 7 or Lot 8.
- I find some difficulty in the contention put by Mrs Lentell that Sale 4 is a comparable location to the subject Lots. It is in a different city and allowances must be made for that fact. I am, though, satisfied that Mrs Lentell has made allowances for the different location. I am also satisfied, on Mr Sheehan’s evidence, that the sale has superior zoning, and that it has superior access.
- Overall, I am satisfied, when all factors are taken into account, that Sale 4 is slightly superior to Lot 8 and much more superior to Lot 7.
- Sale 5 sold for $115,000, had an analysed sale price of $110,000, and a 2013 site value of $95,000. Mrs Lentell considered Sale 5, when compared to Lot 7 and Lot 8, to be a large parcel with superior flooding impediment, inferior zoning and development potential, superior slope, inferior location, and services available to the area. She considered Sale 5 to be overall superior to the subject Lots.
- Mr Sheehan noted, as was agreed by Mrs Lentell, that Sale 5 was purchased by an adjoining owner. Mr Sheehan spoke to one of the purchasers who advised that a condition to obtain finance for the purchase was that the land could be developed with a residence. The local authority provided written advice confirming that a dwelling could be constructed on the site in compliance with the Queensland Development Code and council conditions.
- Mr Sheehan also noted that Sale 5 had bitumen street access and infrastructure available.
- In my view, Sale 5 is significantly superior to Lot 7 and Lot 8. It certainly has superior access to Lot 7. Even more importantly, Sale 5 had a significant element of risk removed by the local authority providing written confirmation of the ability to develop a residence, such advice being of sufficient weight to satisfy the financier of the purchase.
- Sale 6 had a sale price of $30,000, an analysed price of $24,750, and a 2013 site value of $23,000. Mrs Lentell considered Sale 6, when compared to the subject Lots, to be a smaller parcel with a superior flooding impediment, similar zoning and development potential, superior slope, inferior location, with full services available. In her opinion Sale 6 is overall inferior to both subject Lots.
- Mr Sheehan notes that Sale 6 is for an allotment with a bitumen street access with reticulated water, sewerage, and electricity available. Mr Sheehan also referred to the 2014 purchaser attempting to construct a dwelling on the land but failing to do so as construction costs were considered unrealistic. The land was subsequently resold in 2017 to a purchaser who never inspected the land and was unaware of the construction costs or the conditions likely to be imposed.
- Apart from the different location, I certainly see comparisons between Sale 6 and Lot 8. However, in my view, the significant access issues on the hatchet handle of Lot 7 render Sale 6 superior to Lot 7. This is another example where Mrs Lentell has underplayed the access impediments of the hatchet block.
No market/Raja’s case
- Lake Maroona has, in effect, contended that there is no market for Lot 7 or Lot 8 because of the costs of development and the restrictions imposed by the existing local authority requirements and the Q100 flood line.
- I have considered above the relevant attributes of Lot 7 and Lot 8. In my opinion, Lake Maroona is correct in its assertion that the site value of both subject Lots is impacted by the significant uncertainties which exist regarding the question of either Lot having any potential to have a dwelling constructed thereon. However, I also agree with the Valuer-General that both Lots do have some form of potential.
- I also have no doubt that there is a market for both subject Lots for their current use and also, as previously discussed, for uses such as green space, horses, other livestock, or the like. This remains so even in the event that a purchaser found the risk of dwelling development too great and/or uncertain and/or costly.
- Lake Maroona, in its submissions, went to some length to discuss the applicability of the case of Sri Raja Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapatam(Raja’s Case). In Raja’s Case, Lord Romer, after discussing the market value test, had this to say:
“But sometimes it happens that the land to be valued possesses some unusual, and it may be, unique features, as regards its position or its potentialities. In such a case the arbitrator in determining its value will have no market value to guide him, and he will have to ascertain as best he may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities.”
- I note the submissions of Lake Maroona that Raja was applied by the High Court of Australia in Brisbane City Council v Valuer-General (Qld). In that case the High Court allowed an appeal against the Queensland Court of Appeal’s decision and reinstated the Land Appeal Court’s decision to value lands submerged by Somerset Dam at $1 per acre. In the facts of that case, the Land Appeal Court had no evidence of value at that rate but had evidence before it from a valuer, Mr Jones, that value of “marginal lands” not submerged permanently were between $1 and $15 per acre. Lake Maroona specifically quoted the following from Justice Gibbs, who delivered the judgment of the Court:
“Even if it had been shown in the case stated that there was no direct evidence as to the value of the submerged land in terms of money it would not have followed that the decision of the Land Appeal Court was erroneous in law. Since it would be unsatisfactory to decide this appeal simply because the case stated did not contain sufficient material, it may be assumed for the purposes of argument that the reasons for judgment did set out all the relevant evidence. Clearly the Land Appeal Court was entitled to hold that the submerged land had some value for the purpose of water supply and recreation. One valuer, Mr Jones, said that he was not competent to assess a value and that he knew of no comparable values that he could use for the purpose. However, he did value the marginal land; his figures, which the court adopted, ranged from $4 per acre to $25 per acre for the dry emergent land, and from $1 per acre to $15 per acre for the marginal land. It would seem to have been a legitimate if not a necessary inference that the value of the submerged land was less than that of the marginal land. Mr Conroy took the matter no further. Thus the court had evidence of the nature and uses, possible and actual, of the submerged land, of the fact that there appeared to be no comparable sales, and of the value of adjacent but more valuable land. Brisbane City Council had discharged the onus of proving the grounds of its appeal, for it had shown that the Valuer-General had valued on an incorrect basis; the court therefore could not affirm the valuation appealed against…”
- In response, the Valuer-General had this to say at paragraph 198 of its submissions:
“If the Court considered no comparative sales to be available (for example, on the basis that the Rockhampton and/or Bundaberg sales were insufficiently proximate to the subject lands and/or irrelevant as they were sales found in an alternative market subset), the sales identified by Ms Lentell could nonetheless be used by the Court, with appropriate adjustment, to arrive at the value contended for by her on the basis that the Court should ‘ascertain as best [it] may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities’.”
- It is of course important, as the Valuer-General has pointed out, to keep the quote from Justice Gibbs in context with his quote from Raja’s case.
Determination for Lot 7
- Having considered the evidence and the submissions of the parties, my first task for Lot 7 is to determine whether or not the evidence in its totality supports the case put by Lake Maroona that the issued valuation is in error, on the balance of probabilities, so that the onus of proof is discharged.
- In my view Lake Maroona has, on the balance of probabilities, established that the issued valuation for Lot 7 is in error. In particular, Lake Maroona has established that the issued valuation does not properly take into account the difficulties with access to the bulk of the Lot caused by the gully over the hatchet handle part of the land. In addition, Lake Maroona has established that the issued valuation does not properly take into account the significant risks facing any purchaser contemplating seeking approval for a dwelling in light of the revised Q100 flood line, and the costs associated with bringing Lot 7 up to a state that the local authority may consider appropriate for a dwelling.
- Having discharged the onus of proof is but the first part of the test that I am to apply under the LVA. I am now required, pursuant to s 170 of the LVA, to determine the correct value for Lot 7.
- I am not satisfied that Mr Sheehan has provided a compelling basis for Lot 7 to receive a nominal value only. There is no reasoning to support why Mr Sheehan would set that nominal value at $10,000 rather than $5000, $1000, or even $15,000.
- Having found that the onus of proof has been satisfied, I am of course required, on the evidence before me, to arrive at a site value for Lot 7 doing the best that I can. I have set out in detail the difficulties that I have with the evidence presented by both valuers.
- I am satisfied that the Bundaberg sales give some guidance for setting the site value for Lot 7. I prefer the evidence of Mr Sheehan to that of Mrs Lentell with respect to the comparability of the Bundaberg sales to Lot 7. Specifically, I find Lot 7 to be inferior to each of the Bundaberg sales.
- I also specifically find, for the reasons already stated, Sale 6 to be of the greatest use in determining a site value for Lot 7.
- Doing the best that I can, and noting the site value of Sale 6 of $23,000, and taking into account that Lot 7 is inferior to Sale 6, but considering that Lot 7 does have some use, I determine the site value of Lot 7 as at 1 October 2016 to be $20,000.
Determination for Lot 8
- Just as I did for Lot 7, having considered the evidence and the submissions of the parties, my first task for Lot 8 is to determine whether or not the evidence in its totality supports the case put by Lake Maroona that the issued valuation is in error, on the balance of probabilities, so that the onus of proof is discharged.
- In my view Lake Maroona has not, on the balance of probabilities, established that the issued valuation for Lot 8 is in error. The evidence clearly shows that, at the very least, the substantial area of Lot 8 before the gully has significant access to it. Most importantly, such access has nowhere near the difficulties of the hatchet part of Lot 7 over the gully which creates a major impediment for development on Lot 7.
- Further, I am satisfied that Lake Maroona has failed to establish that Sales 4 and 5 cannot be used, with appropriate adjustments, as comparable sales for which to value Lot 8.
- As Lake Maroona has failed to discharge its onus of proof, I am bound by the decision in Tennyson Reach not to undertake the second step of the requirements of the LVA to determine a site value for Lot 8.
- It follows that the appeal with respect to Lot 8 must be dismissed.
As regards LVA499-17, Lot 7:
- The appeal is allowed.
- The site value of Lot 7 as at 1 October 2016 is determined in the sum of Twenty Thousand Dollars ($20,000).
- Should either party seek any order as to costs, that party must provide written notice of its intention to do so by 12 noon on Thursday, 30 May 2019, to the other party and to the Court.
- In the event that either or both parties seek costs, the parties are to make oral submissions as to costs at 10 am on Friday, 31 May 2019.
As regards LVA500-17, Lot 8:
- The appeal is dismissed.
MEMBER OF THE LAND COURT
Land Valuation Act 2010, s 163(2).
Exs 1 and 2.
The details for Lot 7 and Lot 8 are taken from the agreed facts of the valuers’ Joint Valuation Report (JVR), Exhibit 4.
References to direction are taken directly from the JVR. I note that the directions are indicative only due to the irregular shape of Lot 7.
Marked up (with consent of the parties), from Ex 4 page 13.
Land Valuation Act 2010, s 169(3).
Land Valuation Act 2010, s 170.
 QLAC 7.
 QLC 12, –.
Land Valuation Act 2010, s 18(2)(b).
Fairfax v Department of Natural Resources and Mines  QLC 11, –.
Spencer v Commonwealth of Australia (1907) 5 CLR 418.
See Cattanach v Water Conservation & Irrigation Commission (1962) 9 LGRA 352.
T 1-28, line 30 to T 1-29, line 25.
T 1-6, line 15 to T 1-7, line 25.
T 1-5, lines 19 to 33.
In the Valuer-General’s case, the figures in this scenario reduce to $105,850 for Lot 7 and $115,850 for Lot 8 – see Valuer-General’s submissions .
Ex 4 .
Ex 4 .
Ex 4 .
T 1-23, line 41 to T 1-24, line 10.
T 1-24, line 36 to T 1-25, line l5.
Lake Maroona’s submissions .
Ex 4 ;  and Ex 5, Exhibit HR01.
Ex 5, Exhibit HR01.
See Land Valuation Act 2010, s 169(1).
T 2-28, lines 42 to 44.
T 2-28, line 46 to T 2-29, line 19.
 2 All ER 317;  AC 302.
(1978) 140 CLR 41;  HCA 40; (1978) 21 ALR 607.
Brisbane City Council v Valuer-General (Qld) (1978) 140 CLR 41, 59;  HCA 40; (1978) 21 ALR 607.
Valuer-General v Body Corporate for ‘Tennyson Reach’ Community Titles Scheme 39925  QLAC 7, .
- Published Case Name:
Lake Maroona Pty Ltd v Valuer-General
- Shortened Case Name:
Lake Maroona Pty Ltd v Valuer-General
 QLC 23
29 May 2019